Legislature(2013 - 2014)BARNES 124

03/10/2014 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 316 WORKERS' COMPENSATION MEDICAL FEES TELECONFERENCED
Heard & Held
+= HB 152 PERS TERMINATION COSTS TELECONFERENCED
Heard & Held
*+ HB 328 BOARD/LICENSING OF MASSAGE THERAPISTS TELECONFERENCED
Heard & Held
+= HCR 15 TASK FORCE ON UNMANNED AIRCRAFT SYSTEMS TELECONFERENCED
Scheduled But Not Heard
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 10, 2014                                                                                         
                           3:29 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Bob Herron                                                                                                       
Representative Dan Saddler                                                                                                      
Representative Andy Josephson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Charisse Millett                                                                                                 
Representative Craig Johnson                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 316                                                                                                              
"An  Act  relating  to workers'  compensation  fees  for  medical                                                               
treatment  and   services;  relating  to   workers'  compensation                                                               
regulations; and providing for an effective date."                                                                              
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 152                                                                                                              
"An Act  requiring certain employers who  terminate participation                                                               
in   the  defined   benefit  retirement   plan  or   the  defined                                                               
contribution retirement plan of  the Public Employees' Retirement                                                               
System to  make contributions related  to past  service liability                                                               
and  pay   termination  costs;   repealing  a   requirement  that                                                               
employers   who   terminate    participation   in   the   defined                                                               
contribution retirement  plan or  the defined  benefit retirement                                                               
plan  of  the  Public  Employees' Retirement  System  pay  for  a                                                               
termination cost study; and providing for an effective date."                                                                   
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 328                                                                                                              
"An Act  establishing the Board  of Massage  Therapists; relating                                                               
to  the licensing  of massage  therapists; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 15                                                                                              
Relating to the continuation of the Task Force on Unmanned                                                                      
Aircraft Systems.                                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 316                                                                                                                  
SHORT TITLE: WORKERS' COMPENSATION MEDICAL FEES                                                                                 
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/19/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/14       (H)       L&C                                                                                                    
03/07/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/07/14       (H)       Heard & Held                                                                                           
03/07/14       (H)       MINUTE(L&C)                                                                                            
03/10/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 152                                                                                                                  
SHORT TITLE: PERS TERMINATION COSTS                                                                                             
SPONSOR(s): THOMPSON                                                                                                            
                                                                                                                                
03/04/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/13       (H)       L&C, FIN                                                                                               
04/05/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/05/13       (H)       Heard & Held                                                                                           
04/05/13       (H)       MINUTE(L&C)                                                                                            
03/05/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/05/14       (H)       -- MEETING CANCELED --                                                                                 
03/10/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 328                                                                                                                  
SHORT TITLE: BOARD/LICENSING OF MASSAGE THERAPISTS                                                                              
SPONSOR(s): NAGEAK                                                                                                              
                                                                                                                                
02/21/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/14       (H)       L&C, FIN                                                                                               
03/05/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/05/14       (H)       -- MEETING CANCELED --                                                                                 
03/10/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ANNA LATHAM, Staff                                                                                                              
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of the House Labor & Commerce                                                                  
Standing Committee (HL&C), Kurt Olson, Chair, explained the                                                                     
proposed committee substitute (CS) for HB 316, Version O.                                                                       
                                                                                                                                
MICHAEL MONAGLE, Director                                                                                                       
Central Office                                                                                                                  
Division of Workers' Compensation                                                                                               
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified regarding HB 316.                                                                              
                                                                                                                                
LUKE HOPKINS, Mayor                                                                                                             
Fairbanks North Star Borough (FNSB)                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 316.                                                                          
                                                                                                                                
MARIANNE E. BURKE                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 316.                                                               
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as prime sponsor of HB 152.                                                                    
                                                                                                                                
JANE PIERSON, Staff                                                                                                             
Representative Steve Thompson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the sponsor of HB                                                                 
152 on the changes in Version Y.                                                                                                
                                                                                                                                
MICHAEL BARNHILL, Deputy Commissioner                                                                                           
Department of Administration (DOA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Responded to questions regarding HB 152.                                                                 
                                                                                                                                
KATHIE WASSERMAN, Executive Director                                                                                            
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 152.                                                                                     
                                                                                                                                
BOB BARTHOLOMEW, Director of Finance                                                                                            
City and Borough of Juneau (CBJ)                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified regarding HB 152.                                                                              
                                                                                                                                
JIM WILLIAMS, Chief of Staff                                                                                                    
Office of the Mayor                                                                                                             
City of Fairbanks                                                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 152.                                                                          
                                                                                                                                
LUKE HOPKINS, Mayor                                                                                                             
Fairbanks North Star Borough (FNSB)                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified regarding HB 152.                                                                              
                                                                                                                                
KATIE KOESTER, Community and Economic Development Coordinator                                                                   
City Manager's Office                                                                                                           
City of Homer                                                                                                                   
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 152.                                                                          
                                                                                                                                
LUCINDA MAHONEY, Chief Financial Officer                                                                                        
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified regarding HB 152.                                                                              
                                                                                                                                
JENNIFER JOHNSTON, Member                                                                                                       
Anchorage Assembly                                                                                                              
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified regarding HB 152.                                                                              
                                                                                                                                
REPRESENTATIVE BENJAMIN NAGEAK                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as the prime sponsor of HB 328.                                                                
                                                                                                                                
MARY SCHLOSSER, Staff                                                                                                           
Representative Benjamin Nageak                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 328 on behalf of                                                                            
Representative Nageak, sponsor.                                                                                                 
                                                                                                                                
AMANDA UNSER, Chair                                                                                                             
Alaska Massage Therapy Licensure Coalition (ANTLC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 328.                                                               
                                                                                                                                
DON HABEGER, Director                                                                                                           
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community, & Economic Development                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 328.                                                               
                                                                                                                                
TRACI GILMOUR, Massage Therapist                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 328.                                                                          
                                                                                                                                
CARL KANCIR, Massage Therapist                                                                                                  
Northern Comfort Massage Therapy                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 328.                                                                          
                                                                                                                                
CHERI ZEP, Massage Therapist                                                                                                    
Chez Sante                                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 328.                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:29:00 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee  meeting  to  order  at   3:29  p.m.    Representatives                                                               
Reinbold,  Chenault, Josephson,  and  Olson were  present at  the                                                               
call to  order.   Representatives Herron  and Saddler  arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
           HB 316-WORKERS' COMPENSATION MEDICAL FEES                                                                        
                                                                                                                                
3:29:11 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 316,  "An Act  relating to  workers' compensation                                                               
fees  for medical  treatment and  services; relating  to workers'                                                               
compensation regulations; and providing for an effective date."                                                                 
                                                                                                                                
3:29:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHENAULT moved  to adopt  the proposed  committee                                                               
substitute  (CS)  for  HB   316,  labeled  28-LS1362\O,  Wallace,                                                               
3/10/14, as the working document.                                                                                               
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:30:17 PM                                                                                                                    
                                                                                                                                
ANNA  LATHAM,  Staff,  Representative Kurt  Olson,  Alaska  State                                                               
Legislature,   explained  the   changes  in   proposed  committee                                                               
substitute (CS) for  HB 316, Version O.  She  related that the CS                                                               
contains  two new  subsections pertaining  to the  duties of  the                                                               
Medical Services Review  Committee (MSRC).  She  referred to page                                                               
2,  lines  24-26,  Section  2,   which  explicitly  requires  the                                                               
Workers'  Compensation  Board  (WCB)   to  request  and  consider                                                               
recommendations from  the MSRC on setting  conversion factors and                                                               
rates.  Additionally,  language on page 2,  lines 27-29, requires                                                               
the WCB  to consult with  the MSRC before evaluating  or revising                                                               
conversation factors for the fee schedules.                                                                                     
                                                                                                                                
3:30:40 PM                                                                                                                    
                                                                                                                                
MS.  LATHAM  explained that  there  was  some opposition  to  the                                                               
[Workers'   Compensation  Board]   setting  conversion   factors,                                                               
including raising questions about  the WCB's expertise in setting                                                               
the  medical schedules.   The  MSRC is  already defined  under AS                                                               
23.30.095 in  the original bill.   However, the MSRC has  not met                                                               
since 2009.   The intent of  this change is to  make it extremely                                                               
clear  in  statute  that  the   MSRC  will  advise  the  Workers'                                                               
Compensation Board (WCB) on setting the rates.                                                                                  
                                                                                                                                
MS. LATHAM  referred to  page 3, line  17, subsection  (n), which                                                               
provides an exemption  for critical access hospitals.   There are                                                               
13  federally  designated  critical access  hospitals  in  Alaska                                                               
certified   under    Medicare   conditions    of   participation.                                                               
Typically, these small  hospitals are under 25  beds, are located                                                               
in  rural areas,  and patients  have  a 96-hour  average stay  or                                                               
less.   For examples, critical  access hospitals are  in Cordova,                                                               
Valdez,  and Kodiak,  and these  facilities represent  a separate                                                               
provider type  with their own  Medicare conditions of  payment as                                                               
well as a separate payment  method.  The critical access hospital                                                               
certification  allows  these   hospitals  to  receive  cost-based                                                               
reimbursements for  Medicare instead of the  standard fixed-based                                                               
rates.    Page 3,  line  21,  subsection  (o) adds  language  for                                                               
geographical area  differential, which was  inadvertently omitted                                                               
in the  original bill.   The  sponsor felt  it was  imperative in                                                               
Alaska  for   the  board  to   have  the  option  of   using  the                                                               
geographical adjustment factor.   She noted that  the language is                                                               
"may" rather than "shall," so  the board will have flexibility to                                                               
determine whether  to use this option.   She referred to  page 3,                                                               
line  24,  Section 3,  relating  references  AS 44.62.245,  under                                                               
which future  amended document or  reference material,  as listed                                                               
can be incorporated by reference in future regulations.                                                                         
                                                                                                                                
3:33:24 PM                                                                                                                    
                                                                                                                                
MS. LATHAM pointed out that  the sunset provision in the original                                                               
bill  [Section  5] was  removed.    The language  was  originally                                                               
envisioned as  a safety net to  give the board four  years to set                                                               
rates,  conduct  an  audit, and  require  legislative  action  to                                                               
extend  the  new  fee   schedules;  however,  substantial  public                                                               
opposition occurred,  such that providers and  insurers testified                                                               
against it, noting it would be difficult for future planning.                                                                   
                                                                                                                                
CHAIR OLSON  interjected that  the sunset  provision is  the only                                                               
provision that  brought all  the stakeholders  together.   No one                                                               
liked the sunset provision except for the sponsor, so it's gone.                                                                
                                                                                                                                
3:34:19 PM                                                                                                                    
                                                                                                                                
MS.  LATHAM concluded  her testimony  by outlining  the effective                                                               
dates.   She referred to  page 4,  lines 15-17, to  the effective                                                               
date  language.   With  the  sunset  provision removed,  new  fee                                                               
schedules and  conversation factors will be  effective on January                                                               
2015; and proposed Section 5,  would make subsections (h) and (i)                                                               
effective on July 1, 2014. Thus,  the board has an opportunity to                                                               
begin its  review to set fee  schedules on July 1,  2014, and the                                                               
fee  schedules  and  conversion factors  would  be  effective  on                                                               
January 1, 2015.                                                                                                                
                                                                                                                                
3:36:33 PM                                                                                                                    
                                                                                                                                
MICHAEL MONAGLE,  Director, Central Office, Division  of Workers'                                                               
Compensation,  Department   of  Labor  &   Workforce  Development                                                               
(DLWD), introduced himself.                                                                                                     
                                                                                                                                
3:37:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether  the  [WCB] with  advice                                                               
from the MSRC would set this conversion rate.                                                                                   
                                                                                                                                
MR. MONAGLE answered yes.                                                                                                       
                                                                                                                                
3:37:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked for more information on the WCB.                                                                 
                                                                                                                                
MR.  MONAGLE answered  that the  board is  actually the  Workers'                                                               
Compensation Board.   He  acknowledged it  has an  advisory role,                                                               
but  most importantly  under the  statutes it  provides that  the                                                               
department may not adopt a  regulation unless the regulations are                                                               
approved  by the  WCB.   Thus, the  WCB has  authority under  the                                                               
statutes  to be  the final  voice  for any  regulations that  the                                                               
department  proposes.   The WCB  is  comprised of  18 members;  9                                                               
representing labor,  9 representing industry, and  all 18 members                                                               
are appointed by the governor.                                                                                                  
                                                                                                                                
3:38:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether the  nine labor  members                                                               
are required to  have any specific background before  they can be                                                               
nominated for  confirmation by  the governor.   He  further asked                                                               
what identifies these appointees as being associated with labor.                                                                
                                                                                                                                
MR. MONAGLE answered that the  Office of the Governor, Boards and                                                               
Commissions makes the  selection process.  He  commented that the                                                               
division rarely is consulted, unless  it relates to the knowledge                                                               
or activity  of potential board  members.  He offered  his belief                                                               
that the people who serve on  the WCB are typically involved in a                                                               
labor union  with representation  from most  of the  larger labor                                                               
organizations in the state.                                                                                                     
                                                                                                                                
CHAIR OLSON remarked that the  committee has been responsible for                                                               
the language  in HB 316, and  it was a unanimous  decision by all                                                               
members to put  forth the resolution which led to  a good portion                                                               
of the bill, including labor, medical insurance, and lay people.                                                                
                                                                                                                                
3:40:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  recalled   earlier  testimony  from  a                                                               
previous committee hearing that indicated  that there needs to be                                                               
an effort to control treatment.   He asked how the committee will                                                               
know that this reform doesn't go  too far and that rates will not                                                               
be  set in  a  way that  undermines the  capacity  of an  injured                                                               
worker to obtain the treatment he/she needs.                                                                                    
                                                                                                                                
MR. MONAGLE  agreed it is a  balancing act that the  MSRC and the                                                               
WCB are  challenged to  achieve, which is  to set  the conversion                                                               
factors at a  level that appropriately awards doctors  but not so                                                               
low as to cause providers to  elect not to treat injured workers.                                                               
He offered  his belief  that a  broad range  of data  exists that                                                               
suggests some  specialties - as  provided in members'  packets as                                                               
price comparisons  - that some allowable  reimbursement rates are                                                               
400-500  percent   higher  than   in  regional  states   such  as                                                               
Washington,  Oregon, and  Idaho.    He said  he  can't speak  for                                                               
either  the MSRC  or  the WCB,  but those  would  be areas  these                                                               
entities  would be  focused on  when determining  the appropriate                                                               
conversion  factors.   Additionally,  rates  for other  treatment                                                               
such  as evaluation  and management,  office physician,  physical                                                               
medicine,   physical  therapist,   and   chiropractor  are   more                                                               
reasonable,  although they  are higher  than regional  costs, but                                                               
don't represent 400  percent higher costs.  He  further said that                                                               
one of the  values of the conversion factors is  the MCRC and WCB                                                               
can customize them  for each specialty and "it's not  going to be                                                               
one size fits all."                                                                                                             
                                                                                                                                
3:42:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked whether  the bill should spell out                                                               
and define the  goal of a conversion factor so  those involved in                                                               
setting the factor know the policy they are trying to implement.                                                                
                                                                                                                                
MR. MONAGLE  answered that he  certainly would leave  that policy                                                               
decision to  the committee.   He said  he thought there  was some                                                               
public testimony -  both written and in person last  week to that                                                               
effect.                                                                                                                         
                                                                                                                                
3:43:18 PM                                                                                                                    
                                                                                                                                
LUKE  HOPKINS,  Mayor,  Fairbanks   North  Star  Borough  (FNSB),                                                               
testified in support  of HB 316.   He said the FNSB  and the FNSB                                                               
school  district  workers'  compensation  plans  are  self-funded                                                               
programs.   The FNSB spends  approximately $1.1 million  per year                                                               
on workers'  compensation benefits.   The  FNSB continues  to see                                                               
medical costs  increasing.   The regulation  of fees  and charges                                                               
for  medical treatment,  equipment,  and drugs  could reduce  the                                                               
overall workers' compensation  costs.  The FNSB  doesn't have any                                                               
ability to  steer the workers'  compensation related  injuries to                                                               
the PPOs network,  where certain services are provided.   In most                                                               
circumstances the FNSB  is paying the additional  costs for these                                                               
claims more than  if they were non-work  related injuries covered                                                               
under the self-funded  plan.  He said that allowing  the board to                                                               
adopt  a  fee  schedule  based on  quantified  data,  based  upon                                                               
federal Centers  for Medicare and  Medicaid service scales,  is a                                                               
positive change  and would provide  the needed reform  to address                                                               
the highest workers' compensation costs  in Alaska.  The FNSB and                                                               
the  FNSB assembly  fully  support  HB 316.    The FNSB  assembly                                                               
adopted a  resolution on February  13, 2014.  He  thanked members                                                               
for the opportunity to express the FNSB's concerns.                                                                             
                                                                                                                                
3:45:05 PM                                                                                                                    
                                                                                                                                
MARIANNE E. BURKE  said she is representing herself.   She stated                                                               
there  are some  problems with  the workers'  compensation system                                                               
with respect to the value for the single person.                                                                                
                                                                                                                                
CHAIR OLSON informed Ms. Burke that  the bill she is referring to                                                               
is not currently  the bill before the committee [so  he would not                                                               
take her testimony at this time.]                                                                                               
                                                                                                                                
[HB 316 was held over.]                                                                                                         
                                                                                                                                
                 HB 152-PERS TERMINATION COSTS                                                                              
                                                                                                                                
3:46:55 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE  BILL NO.  152,  "An Act  requiring  certain employers  who                                                               
terminate participation  in the  defined benefit  retirement plan                                                               
or  the  defined  contribution  retirement  plan  of  the  Public                                                               
Employees'  Retirement System  to make  contributions related  to                                                               
past  service liability  and pay  termination costs;  repealing a                                                               
requirement  that employers  who terminate  participation in  the                                                               
defined  contribution  retirement  plan or  the  defined  benefit                                                               
retirement plan  of the Public  Employees' Retirement  System pay                                                               
for  a termination  cost study;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
3:48:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   STEVE   THOMPSON,  Alaska   State   Legislature,                                                               
introduced himself.                                                                                                             
                                                                                                                                
3:48:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHENAULT moved  to adopt  the proposed  committee                                                               
substitute (CS) for HB 152,  labeled 28-LS0272\Y, Wayne, 2/26/14,                                                               
as the working document.                                                                                                        
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:49:24 PM                                                                                                                    
                                                                                                                                
JANE PIERSON, Staff, Representative  Steve Thompson, Alaska State                                                               
Legislature,  explained   that  HB   152  addresses   the  future                                                               
financial   stability   of   the  municipal   Public   Employees'                                                               
Retirement System  (PERS) employers and PERS  unfunded liability.                                                               
Legislation  was  passed in  2008  establishing  that PERS  is  a                                                               
consolidated  system combining  the defined  benefit and  defined                                                               
contribution salary  bases to pay down  the unfunded obligations.                                                               
Paying off  the unfunded  obligation is  predicated on  a stable,                                                               
reasonably growing  system-wide base.   She related a  concern in                                                               
the 2008  legislation was that  employers might en mass  elect to                                                               
convert PERS salaried employees  to contracted positions to avoid                                                               
PERS costs thereby  shrinking the PERS salary base  needed to pay                                                               
off the unfunded obligation.   To address this concern, the state                                                               
set a  contribution floor such  that employers would  be required                                                               
to pay  the greatest of 22  percent based on the  current defined                                                               
benefit  and  defined  contribution  salary  base  or  the  total                                                               
payroll for the period ending  June 30, 2008.  Language providing                                                               
for termination  studies was also  added requiring  employers who                                                               
terminate  participation   of  a   department,  group   or  other                                                               
classification  of  employee to  pay  the  following:   the  cost                                                               
associated  with  obtaining a  termination  study  from the  PERS                                                               
actuary; the actuarial  cost to the employer  for future benefits                                                               
due  employees whose  coverage is  terminated;  the past  service                                                               
cost  annually on  each position  terminated  until the  unfunded                                                               
liability paid off decades from now.                                                                                            
                                                                                                                                
MS. PIERSON  said the requirement  for termination  studies makes                                                               
it difficult for employers to  manage their delivery of services,                                                               
discriminates  against small  municipalities,  even though  their                                                               
impact  on  the   system  is  minimal,  is   costly,  and  nearly                                                               
impossible to  implement in an  equitable manner.  It  also fails                                                               
to  recognize  the  original   and  personnel  structures  differ                                                               
between municipalities.  The  system-wide salaries have increased                                                               
by  $325 million  or  18.6  percent over  the  salary base  floor                                                               
established  in 2008.   As  a result,  contributions towards  the                                                               
unfunded liability  have not been compromised;  rather, they have                                                               
increased  at a  greater than  actuarial assumed  growth of  four                                                               
percent, which  is what was  assumed in  2008.  Thus,  Version Y,                                                               
would  eliminate  termination  costs and  provide  municipalities                                                               
with  the  operational  flexibility  to  effectively  manage  the                                                               
delivery of  programs and services while  maintaining the minimum                                                               
22 percent contribution requirement.                                                                                            
                                                                                                                                
3:52:32 PM                                                                                                                    
                                                                                                                                
MS.  PIERSON  provided  a   section-by-section  analysis  of  the                                                               
proposed  committee substitute  (CS) for  HB 152,  Version Y,  as                                                               
follows [original punctuation provided]:                                                                                        
                                                                                                                                
   Section 1. Amends AS 39.35.615(i) Conforming language due                                                                  
     to the repealing of termination costs in AS 39.35.625,                                                                     
     eliminates being current on the termination costs as a                                                                     
     bar for an employer to renew a terminated department,                                                                      
     group or classification of employees into the PERS                                                                         
     system.                                                                                                                    
                                                                                                                                
   Section 2. Amends AS 39.35.620(k) Conforming language due                                                                  
     to the repealing of termination costs in AS 39.35.625,                                                                     
     eliminates being current on the termination costs as a                                                                     
     bar for a terminated employer participant to return into                                                                   
     the PERS system.                                                                                                           
                                                                                                                                
     Section 3. Repeals:                                                                                                      
        · AS 39.35.625 Termination Costs                                                                                        
        · AS 39.35.958(c) Assessing Termination costs                                                                           
        · AS 39.35.958(e) Payment of termination costs                                                                          
        · AS 39.35.958(f) Payment of the termination cost                                                                       
          study                                                                                                                 
                                                                                                                                
     Section 4. Annuls AAC 35.235.                                                                                            
                                                                                                                                
     Section 5. Is a conditional effective date upon the                                                                      
     legislature taking action this session to smooth the PRS                                                                   
     accrued liability.                                                                                                         
                                                                                                                                
     Section 6. Provides for an immediate effective date for                                                                  
     sections 1-4 of the bill, upon the passage of section 5.                                                                   
                                                                                                                                
                                                                                                                                
3:54:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  the  $1.2  billion  in                                                               
Section  5 is  in  addition to  the $3  billion  the governor  is                                                               
proposing.                                                                                                                      
                                                                                                                                
MS. PIERSON answered  no; that it was basically  a placeholder in                                                               
case the  $3 billion did not  come through that the  governor was                                                               
proposing.                                                                                                                      
                                                                                                                                
3:54:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  this  would  mean  the                                                               
governor would  only be contributing  $1.8 billion to  reduce the                                                               
unfunded liability.                                                                                                             
                                                                                                                                
MS. PIERSON answered yes.  She  pointed out that funds would also                                                               
go into  the Teachers Retirement  System (TRS).  She  pointed out                                                               
that this bill just addresses the PERS unfunded liability.                                                                      
                                                                                                                                
3:55:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON referred  to the  fiscal note  from the                                                               
DOA  Retirement  and  Benefits, which  suggests  the  institution                                                               
paying the  costs would change,  but the costs would  not change,                                                               
and this could add $75 million to the state's burden.                                                                           
                                                                                                                                
MS. PIERSON  acknowledged that is  true; it assumes a  20 percent                                                               
reduction  for a  $75 million  fiscal note,  which is  the latest                                                               
draft fiscal note from the agency.                                                                                              
                                                                                                                                
3:56:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  referred  to the  2013  Administrative                                                               
Order 37 issued by Mayor  Sullivan, which he characterized as one                                                               
of the  most divisive in  his community.   He asked how  to avoid                                                               
incentivizing reduction  in the  public sector, since  the public                                                               
sector tends to be more responsive to citizens.                                                                                 
                                                                                                                                
MS.   PIERSON  said   she  believes   his   concern  relates   to                                                               
privatization.  She  noted that there may  be some privatization,                                                               
but if  that is happening that  some divisions might not  be able                                                               
to be maintained.  She recalled  that happened in Fairbanks.  She                                                               
said that  currently the employer  must keep departments  that it                                                               
cannot maintain due to the termination costs and studies.                                                                       
                                                                                                                                
3:57:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked  why HB 152 was  abandoned for the                                                               
wholesale repeal of the termination studies in Version Y.                                                                       
                                                                                                                                
MS. PIERSON  answered that the  sponsor thought it was  a cleaner                                                               
approach.                                                                                                                       
                                                                                                                                
3:58:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON stated  that  as a  former mayor  having                                                               
faced costs  of PERS  when the  actuarial presented  the actuals,                                                               
and   in   observing   how  termination   costs   have   affected                                                               
municipalities, he predicted many  small communities will go away                                                               
because they can't  afford to exist.  He explained  that with the                                                               
current  budget situation  and  potential  reductions to  revenue                                                               
sharing,  municipalities will  likely layoff  more people,  which                                                               
will lead to more termination  studies and increased liabilities.                                                               
He  offered  his belief  that  this  is  something that  must  be                                                               
addressed,  that  it  has  a   fiscal  note,  but  it  will  save                                                               
communities.                                                                                                                    
                                                                                                                                
3:59:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    CHENAULT    expressed   concern    about    the                                                               
municipalities and  the costs  associated with  PERS and  TRS and                                                               
said  the  state has  stepped  up  to  the  tune of  hundreds  of                                                               
millions of dollars, if not $1  billion.  The state has picked up                                                               
the  amount in  excess  of  22 percent  for  municipalities.   He                                                               
cautioned that  as the  committee reviews this  it needs  to make                                                               
sure that it considers the  municipalities "bottom line" but that                                                               
the committee  also consider the  state's "bottom line"  in terms                                                               
of continuing to pay for associated costs.                                                                                      
                                                                                                                                
4:00:13 PM                                                                                                                    
                                                                                                                                
MICHAEL    BARNHILL,   Deputy    Commissioner,   Department    of                                                               
Administration (DOA), stated  that the DOA has  been working with                                                               
municipalities and  the Alaska Municipal League  (AML) on various                                                               
versions  of  HB 152  for  about  three  years.   He  said  that,                                                               
generally  speaking,  the  DOA is  sympathetic  to  the  concerns                                                               
expressed by the  sponsor in terms of the  difficulty in managing                                                               
the personnel  workforce for municipalities, which  is one reason                                                               
the DOA  has been  working with them.   He asked  to take  a step                                                               
back  and  understand the  reasons  for  termination studies  and                                                               
costs  in   the  first  place,   which  Ms.   Pierson  adequately                                                               
addressed.    The  DOA  is  fundamentally  concerned  about  cost                                                               
shifting.   He reminded  members the state  has an  $11.9 billion                                                               
unfunded liability  across the PERS  and TRS.  In  2007-2008, the                                                               
legislature   wanted   to    maintain   some   participation   by                                                               
municipalities in paying  off the unfunded liability.   The state                                                               
was concerned  that without statutory provisions  to maintain the                                                               
participation, that  positions would be  pulled out of  the PERS,                                                               
reducing the payroll  base and the unfunded  liability that would                                                               
be  paid by  the positions  being  included in  the PERS  payroll                                                               
would then shift to the state.                                                                                                  
                                                                                                                                
MR.  BARNHILL   acknowledged  that   as  Speaker   Chenault  just                                                               
mentioned, since  the enactment of  Senate Bill 125 in  2008, the                                                               
state  has  paid   in  excess  of  $600  million   on  behalf  of                                                               
municipalities through FY  2014.  The state will  continue to pay                                                               
substantial amounts  on behalf  of municipalities  going forward.                                                               
This happens  through the 22  percent employer  contribution rate                                                               
cap.   If the actuarial rate  is greater than 22  percent, and it                                                               
has been  in the PERS since  208, the state  pays it.  IN  FY 15,                                                               
the  actuary is  recommending adopting  an employer  contribution                                                               
rate of 44  percent.  The employers are capped  out at 22 percent                                                               
but the  actual rate will  be 44  percent, which means  the state                                                               
pays  22 percent  of the  total  payroll on  behalf of  municipal                                                               
employees,  which is  considerable relief.   He  said he  has not                                                               
done a state-by-state comparison,  but he imagined this magnitude                                                               
of  state  assistance  on  behalf   of  municipalities  is  quite                                                               
extraordinary.   The state  has gone  a considerable  distance in                                                               
providing  relief, he  said.    In 2008,  one  means of  avoiding                                                               
further cost  shifting, which is  the reason for  the termination                                                               
cost studies.   Another feature put into law was  the 2008 salary                                                               
floor; thus,  if the  municipal payroll base  goes below  what it                                                               
was in 2008,  that 22 percent will be based  on the 2008 payroll.                                                               
These  are important  measures to  keep  in place  to preserve  a                                                               
certain  amount of  municipal participation  in  paying down  the                                                               
unfunded liability.                                                                                                             
                                                                                                                                
4:04:03 PM                                                                                                                    
                                                                                                                                
MR. BARNHILL pointed out that  the municipalities have found this                                                               
particular feature of  law as being restrictive so  the state has                                                               
been  examining   ways  to  make  adjustments   without  shifting                                                               
unfunded liabilities to  the state.  He explained  that Version Y                                                               
repeals  all termination  study cost  requirements.   The state's                                                               
actuary  has said  that  if  this is  passed  into  law that  all                                                               
municipalities will take 22 percent  of their payroll out of PERS                                                               
service.    He  said  the  state   isn't  sure  that  is  a  good                                                               
assumption,  but certain  municipalities  are considering  making                                                               
changes that  will pull a  considerable number of  PERS positions                                                               
out of PERS  service.  He did not think  it would be unreasonable                                                               
to assume  a 20  percent reduction  over time.   The  actuary has                                                               
reported that the net present value  out of pulling 20 percent of                                                               
the positions  out of PERS  will cost approximately  $75 million,                                                               
assuming this takes place over an extended period of time.                                                                      
                                                                                                                                
4:05:30 PM                                                                                                                    
                                                                                                                                
MR.  BARNHILL  explained  that   the  governor  has  proposed  to                                                               
appropriate  $3 billion  from the  state's Constitutional  Budget                                                               
Reserve to the PERS and TRS  retirement trusts.  He reported that                                                               
it  would be  allocated  at $1.9  billion to  the  PERS and  $1.1                                                               
billion to the TRS.  Equally  important to the governor's plan is                                                               
that on a  going forward basis the state assistance  for the PERS                                                               
will  be capped  at  $172 million  per year  as  compared to  the                                                               
current fiscal year  in excess of $300 million per  year for PERS                                                               
grading up to close to $500  million.  In response to a question,                                                               
Mr. Barnhill  answered that  the $157  million in  the governor's                                                               
plan  is state  assistance from  the  general fund  on behalf  of                                                               
municipal employers,  including the  state since  state employees                                                               
participate in PERS.                                                                                                            
                                                                                                                                
4:06:54 PM                                                                                                                    
                                                                                                                                
MR. BARNHILL  stated that capped  state assistance is  roughly 50                                                               
percent of the current costs for  PERS, which is fixed until 2036                                                               
and  should give  substantial fiscal  certainty  with respect  to                                                               
general  fund expenditures  going  forward.   Additionally,  this                                                               
plan better aligns  the municipal and state's  interests in terms                                                               
of new  unfunded liability.   New unfunded liability can  come in                                                               
the  form of  investment losses  and changes  that municipalities                                                               
may make  to their payroll.   Under the governor's  proposal, any                                                               
new  unfunded  liability  will  get  added  to  the  end  of  the                                                               
amortization  term in  2036, which  is shared  on a  proportional                                                               
basis  between  the state  and  the  municipalities.   Under  the                                                               
status  quo any  new unfunded  liabilities that  are created  are                                                               
borne entirely by the state.   When the legislature passed Senate                                                               
Bill 125 in  2008, there was an assumption that  the payments the                                                               
state would  make on behalf  of municipalities would  grade down,                                                               
but  the opposite  has  happened  and the  costs  have graded  up                                                               
steeply.    The  reason  for  that  is  due  to  the  substantial                                                               
dislocations in  the investment markets.   In FY 2009,  the state                                                               
lost 25 percent of its investment assets.                                                                                       
                                                                                                                                
MR. BARNHILL  reiterated that  the state  has borne  the unfunded                                                               
liability  associated with  that  loss in  the  form of  steadily                                                               
increasing  state  assistance  payments.   Under  the  governor's                                                               
proposal, new  unfunded liability  would be  shared.   In viewing                                                               
the  conditional   effect  of  this  bill,   if  the  legislature                                                               
appropriates $1.2 billion from the  CBR for PERS and TRS, without                                                               
any  indication how  that would  be allocated  if the  bill takes                                                               
effect.  It is not clear  that Version Y will accomplish what the                                                               
governor proposes,  which is that  $1.9 billion for  PERS, capped                                                               
$157 million  payments going forward through  2036, and alignment                                                               
of the state and municipal  interests.  The $1.2 isn't sufficient                                                               
to  do that,  so the  $75 million  - if  all employers  remove 20                                                               
percent out of  PERS service - would still be  borne by the state                                                               
under this  version of  the bill.   He  said that  DOA's concerns                                                               
remain  the same  until a  conditional effect  is put  into place                                                               
which  is  to   align  the  interests  through   a  capped  state                                                               
assistance that  will put  new unfunded liability  at the  end of                                                               
the  amortization   terms  to   be  shared   by  the   state  and                                                               
municipalities.                                                                                                                 
                                                                                                                                
4:10:45 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked what  kind of shape PERS would be  in if it had                                                               
gone forward with Senate Bill 125 in 2008.                                                                                      
                                                                                                                                
MR. BARNHILL  answered that employer  contribution rates  paid by                                                               
employers and  municipal employers  would have paid  $609 million                                                               
more than they did since the  state picked up those payments.  He                                                               
said you'd  have to  ask your constituents  what that  would have                                                               
felt like.                                                                                                                      
                                                                                                                                
CHAIR OLSON  offered his  belief that a  good number  of entities                                                               
would not have been able to pay that.                                                                                           
                                                                                                                                
MR.  BARNHILL answered  absolutely.   He said  that other  states                                                               
have not  provided this sort  of relief to  municipalities, which                                                               
are  evident  by the  various  bankruptcy  proceedings that  have                                                               
happened in Detroit, Stockton, and San Bernardino.                                                                              
                                                                                                                                
4:12:22 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML),  stated  that  municipalities   truly  appreciate  the  22                                                               
percent  that   has  saved  numerous  municipalities   from  huge                                                               
financial concerns.   This bill  was crafted with  the governor's                                                               
proposal  in mind,  she  said.   She  understood discussions  are                                                               
being  held about  the  amount.   The first  concern  was not  to                                                               
repeal,   but  after   the   governor's  proposal,   considerable                                                               
discussion was  held with  the DOA, the  AML's members,  and some                                                               
PERS board  members that this  could be tacked  on to the  end of                                                               
the amortization  schedule.  In  other words,  the municipalities                                                               
chose "to remortgage our home and  extend the payments out."  The                                                               
municipalities will cost share those  costs with the state at the                                                               
end  of the  amortization over  31 years.   She  reminded members                                                               
that  the  non-state  employers  are 38  percent  of  the  entire                                                               
liability.    The  AML  and  municipalities  support  Version  Y.                                                               
Referring  to Senate  Bill 125,  she said  the termination  costs                                                               
have made  a huge  difference on  whether municipalities  want to                                                               
accept grants  that would entail  hiring a grant person  since it                                                               
would trigger a termination study  and costs on that employee for                                                               
the next 25 years or until the end of the liability.                                                                            
                                                                                                                                
4:15:03 PM                                                                                                                    
                                                                                                                                
MS.   WASSERMAN   recalled  Representative   Thompson's   earlier                                                               
remarks.   When  you  go  to the  small  communities, the  people                                                               
terminated must  be included in a  class or group.   For example,                                                               
in  the City  of Pelican,  if  one harbormaster  exists, and  the                                                               
harbormaster  is   laid  off,  it  will   immediately  trigger  a                                                               
termination study; whereas in a  larger community, laying one off                                                               
wouldn't trigger a study.                                                                                                       
                                                                                                                                
4:15:43 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether this applies to seasonal employees.                                                                   
                                                                                                                                
MS. WASSERMAN  answered that will  depend on agreements  with the                                                               
state.     She  acknowledged  that  Mr.   Barnhill  has  assisted                                                               
municipalities considerably.   She  understood that cuts  will be                                                               
happening  throughout  the  state,  which usually  results  in  a                                                               
trickledown effect.  She stated  that municipalities are in a "no                                                               
win situation" since municipalities  to raise extra money through                                                               
taxes or cutting services since they cannot cut employees.                                                                      
                                                                                                                                
4:16:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT asked for  clarification if Anchorage and                                                               
Pelican  laid  off  harbormasters,  whether it  would  result  in                                                               
termination studies.                                                                                                            
                                                                                                                                
MS. WASSERMAN responded  that it would likely result  in only one                                                               
study, through the City of Pelican.                                                                                             
                                                                                                                                
REPRESENTATIVE CHENAULT  asked if two municipalities  eliminate a                                                               
harbormaster if it would result in two termination studies.                                                                     
                                                                                                                                
MS. WASSERMAN  answered that the  municipalities would  have done                                                               
that if it were possible.                                                                                                       
                                                                                                                                
REPRESENTATIVE CHENAULT suggested that  perhaps everyone could be                                                               
reclassified.                                                                                                                   
                                                                                                                                
4:17:24 PM                                                                                                                    
                                                                                                                                
MS.  WASSERMAN stated  that the  municipalities  have looked  for                                                               
ways to  make this work  but are not  trying to slip  through the                                                               
cracks.                                                                                                                         
                                                                                                                                
REPRESENTATIVE CHENAULT related he is trying to find a solution.                                                                
                                                                                                                                
MS. WASSERMAN  summarized that most municipalities  know that the                                                               
governor's proposal at  22 percent is something  they can budget;                                                               
that  the municipalities  are willing  to pick  up more  years if                                                               
that is  what it takes,  but to have ongoing  termination studies                                                               
constantly  arising creates  difficulties  and  it affects  their                                                               
hospitals, schools, and economic development.                                                                                   
                                                                                                                                
4:18:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  said  after reviewing  correspondence  he                                                               
understood  municipalities  want  to  eliminate  the  termination                                                               
studies.  He wondered what would  happen if a cost shift occurred                                                               
and  the small  municipalities didn't  pay the  costs.   He asked                                                               
whether the PERS needs the termination cost study.                                                                              
                                                                                                                                
MS.  WASSERMAN  answered that  if  the  governor's proposal  goes                                                               
through  in some  form, the  entire termination  study that  each                                                               
city incurs will  be "pushed to end" and everyone  will share the                                                               
costs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE HERRON asked  whether the state would  pay for the                                                               
studies.                                                                                                                        
                                                                                                                                
MS. WASSERMAN  answered that the  [municipalities and  the state]                                                               
will all pay for them.                                                                                                          
                                                                                                                                
REPRESENTATIVE  HERRON clarified  that if  there was  no cost  to                                                               
municipalities  whether  the  state  would  pick  up  termination                                                               
costs.                                                                                                                          
                                                                                                                                
4:19:27 PM                                                                                                                    
                                                                                                                                
MS. WASSERMAN answered that is not what is being proposed.                                                                      
                                                                                                                                
4:19:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON asked  if it  would be  acceptable if  the                                                               
municipalities  were not  responsible but  someone else  paid the                                                               
termination study costs.                                                                                                        
                                                                                                                                
MS. WASSERMAN said that AML is not attempting to cost shift.                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  asked  whether   the  AML  would  support                                                               
something like that to look out for the smallest employers.                                                                     
                                                                                                                                
MS. WASSERMAN  answered that she  would like to see  the proposal                                                               
in writing.                                                                                                                     
                                                                                                                                
4:20:12 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON said he's been  out of municipal government for about                                                               
12 years.   He asked whether the  AML has been seeing  a trend in                                                               
privatization, in which the jobs are contracted out.                                                                            
                                                                                                                                
MS.  WASSERMAN   answered  that  some  communities   are  holding                                                               
discussions, but most of Alaska's  communities cannot do so.  She                                                               
recalled  only  two  situations  in  a list  of  jobs  that  were                                                               
contracted  out.    She  did  not believe  there  has  been  much                                                               
discussion  overall;  however,  she anticipated  there  could  be                                                               
considerable "push back" from people in the community.                                                                          
                                                                                                                                
4:21:26 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  understood that many communities  might be desperate                                                               
enough to do so since they may not see any other alternative.                                                                   
                                                                                                                                
MS.  WASSERMAN offered  her belief  the  communities would  still                                                               
incur a termination study so they haven't done so.                                                                              
                                                                                                                                
CHAIR OLSON  suggested it would  do away with  future termination                                                               
studies.                                                                                                                        
                                                                                                                                
MS. WASSERMAN indicated she was  unsure what municipalities might                                                               
do.   She  said she  hoped that  municipalities would  not layoff                                                               
people.                                                                                                                         
                                                                                                                                
4:22:10 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  asked whether smaller  communities are not  aware of                                                               
the issues or are not prepared.                                                                                                 
                                                                                                                                
MS. WASSERMAN  asked for  clarification on  whether he  meant not                                                               
prepared for extra costs or  for termination studies.  She stated                                                               
that municipalities  are aware  of the issues  and many  have not                                                               
laid  off  any employees  since  they  don't  want to  incur  the                                                               
termination study costs.                                                                                                        
                                                                                                                                
4:22:59 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON stated that there isn't any easy answer.                                                                            
                                                                                                                                
MS. WASSERMAN  responded that  the AML has  been working  on this                                                               
issue for three years.   The AML has not been  trying to push off                                                               
employee costs to  the state and is  trying to find a  way to all                                                               
share  the [unfunded  liability  costs],  but the  municipalities                                                               
cannot absorb  the upfront costs  every time they need  to manage                                                               
their personnel.                                                                                                                
                                                                                                                                
4:23:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  related  his understanding  that  this                                                               
bill will shift costs to 2036.                                                                                                  
                                                                                                                                
MS.  WASSERMAN  answered  that   the  AML  hopes  the  governor's                                                               
proposal will pass.  If so,  this bill will transfer the unfunded                                                               
liability  cost to  the end  of the  amortization.   The AML  and                                                               
state would  each pay 22  percent.  She acknowledged  there would                                                               
be some transfer of costs, but  everyone shares the costs and the                                                               
payments would be extended at least five to six years or more.                                                                  
                                                                                                                                
4:24:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON suggested that  the original bill seemed                                                               
to  take more  a  "scalpel  than a  knife"  approach  and have  a                                                               
graduated system  with payrolls  under $1 million,  $1-5 million,                                                               
and over $  5 million.  He wondered if  smaller cities are having                                                               
more  difficulty  since they  have  one  harbormaster instead  of                                                               
three,  whether  the  committee   should  consider  the  original                                                               
version of the bill as the approach.                                                                                            
                                                                                                                                
MS. WASSERMAN  answered that  AML is very  supportive of  HB 152,                                                               
but  with the  governor's proposal  the AML  envisioned a  way to                                                               
help even more and contain costs.                                                                                               
                                                                                                                                
4:25:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  said   if  he   heard  Mr.   Barnhill                                                               
correctly, there is some resistance  from the administration.  He                                                               
asked  whether the  committee is  back at  "ground zero"  on this                                                               
issue.                                                                                                                          
                                                                                                                                
MS.  WASSERMAN  answered  no,  she  did not  think  so,  but  Mr.                                                               
Barnhill would need to assess any pushback.                                                                                     
                                                                                                                                
CHAIR OLSON  said everyone seems  to still  be talking so  he did                                                               
not think that the stakeholders were at loggerheads.                                                                            
                                                                                                                                
4:25:50 PM                                                                                                                    
                                                                                                                                
BOB BARTHOLOMEW, Director of Finance,  City and Borough of Juneau                                                               
(CBJ), commented  that the  CBJ has  been working  with AML.   He                                                               
said that at  times CBJ would be considered a  small employer and                                                               
at  others  a  large  employer.     From  CBJ's  perspective  the                                                               
termination study  is very difficult  to implement and to  try to                                                               
manage changes  in the workforce.   Two recent instances  did not                                                               
try  to remove  PERS positions  -  and historically  CBJ has  not                                                               
removed  many  PERS  positions  -  but  CBJ  has  tried  to  make                                                               
organizational  changes that  would  result in  some classes  not                                                               
being  used.   For example,  an investment  officer might  not be                                                               
needed, but  CBJ might  need an  investment accountant,  and that                                                               
simple reclassification  would trigger a termination  study, even                                                               
though CBJ would still retain  the same number of PERS employees.                                                               
Therefore,  CBJ doesn't  do something  that  makes logical  sense                                                               
because CBJ doesn't know what that study will be.                                                                               
                                                                                                                                
MR. BARTHOLOMEW  said the statement  that it's hard  to implement                                                               
and administer  is true, which  is something  many municipalities                                                               
are  encountering.   He  stated  that  the bill  eliminating  the                                                               
termination  study  makes things  simpler.    Secondly, the  "big                                                               
picture" of the unfunded liability  still exists and how it would                                                               
be  affected  by the  bill  creates  some uncertainty,  which  is                                                               
difficult  for employers.    Representative Josephson's  question                                                               
about how to  minimize the risk and incentives to  do some gaming                                                               
or downsizing brings  the issue back to  the governor's proposal.                                                               
He acknowledged  considerable effort  was made in  the governor's                                                               
proposal  and suggested  that a  comprehensive  solution to  move                                                               
forward  and how  to address  the  unfunded liability  is how  to                                                               
minimize the risk.   If employers are confident  that their share                                                               
will stay at  22 percent, and an infusion of  capital occurs [via                                                               
the  governor's  proposal],  the financial  markets  will  likely                                                               
consider it  as a positive,  and local government  credit ratings                                                               
won't  be adversely  affected. He  offered his  belief that  this                                                               
bill on  its own needs help  as far as a  comprehensive solution,                                                               
which includes the  contribution and commitments to  cap the rate                                                               
that will  give the  state some fiscal  certainty on  the general                                                               
fund.  In  response to Chair Olson, he stated  that he previously                                                               
worked  for  the  Alaska  Permanent   Fund  Corporation  and  the                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
4:29:36 PM                                                                                                                    
                                                                                                                                
JIM  WILLIAMS, Chief  of  Staff,  Office of  the  Mayor, City  of                                                               
Fairbanks,  stated  that  he echoes  the  comments  and  concerns                                                               
expressed by  Ms. Wasserman.   The  City of  Fairbanks recognizes                                                               
that  termination studies  were added  to prevent  employers from                                                               
initiating  steps  to  intentionally and  unfairly  reduce  their                                                               
portion of  the growing unfunded liability  obligation.  However,                                                               
evidence has  shown that  employers have not  acted in  this way.                                                               
In fact,  the salary  base has grown  since 2008.   Additionally,                                                               
the  unintended   consequences  of  the  termination   study  and                                                               
contributions   have   led   to   some   challenges   for   small                                                               
municipalities  and employers.    The impact  of the  termination                                                               
studies   and  long   term   continuing   past  service   payment                                                               
obligations is  significant and  burdensome.   The laws  make the                                                               
day to day  management of workforce impractical  and difficult to                                                               
implement  changes.   He expressed  concern  about the  long-term                                                               
sustainability and fairness of the PERS and supports HB 152.                                                                    
                                                                                                                                
4:31:46 PM                                                                                                                    
                                                                                                                                
LUKE  HOPKINS,  Mayor,  Fairbanks   North  Star  Borough  (FNSB),                                                               
suggested  that  if   it  was  possible  to  roll   back  to  the                                                               
discussions  on   unfunded  liability,  the  FNSB's   past  chief                                                               
financial   officer,  Michael   Lamb,  identified   the  proposed                                                               
municipal share  at 22 percent.   He offered his belief  that the                                                               
proposed appropriation of  $1.9 billion for PERS  should be done.                                                               
He urged  members to move forward  with HB 152.   With respect to                                                               
termination study  costs, he recalled Buck  Consultants projected                                                               
$75 million in costs.  He  indicated that 20 percent reduction in                                                               
workforce seems to be a  "pretty wild assumption."  He emphasized                                                               
that  he wanted  to manage  his workforce.   He  stated that  the                                                               
FNSB's  workforce has  grown and  the idea  of termination  costs                                                               
being assessed to municipalities seems unwarranted to him.                                                                      
                                                                                                                                
MAYOR  HOPKINS  asked  the committee  to  consider  removing  the                                                               
termination study costs.  He said, "It  is real.  It is not going                                                               
away, but  there are ways  to manage it."   He suggested  that HB                                                               
152 puts  forward pieces  that are reasonable  for the  state and                                                               
all the other employers who are paying [the liability] to PERS.                                                                 
                                                                                                                                
4:35:41 PM                                                                                                                    
                                                                                                                                
KATIE  KOESTER, Community  and Economic  Development Coordinator,                                                               
City  Manager's  Office,  City  of Homer,  asked  to  testify  in                                                               
support  of HB  152,  which eliminates  termination study  costs.                                                               
Municipalities are feeling  "the pinch of lean  times and reduced                                                               
budgets."   Personnel  costs represent  the  largest expense  and                                                               
it's important  for municipalities to manage  their workforce and                                                               
personnel.   Homer  is  one  of the  municipalities  that have  a                                                               
number  of  very  small  departments.   In  fact,  the  personnel                                                               
department  has a  personnel  director  and economic  development                                                               
consists  solely of  her position.    As the  city makes  choices                                                               
about how  to organize the  workforce, it  is limited due  to the                                                               
termination costs even  in instances in which  the city considers                                                               
whether  it  would  be  beneficial   to  have  a  city  attorney.                                                               
Currently, the  city contracts out  its legal work, but  it can't                                                               
consider  creating  a new  class  of  employees.   She  expressed                                                               
support  for  transferring  funds  to the  retirement  trust  and                                                               
thanks the legislature  for its leadership on  the serious issues                                                               
of past  service cost, and  PERS and  TRS retirement costs.   She                                                               
encouraged members to continue to work on this thorny issue.                                                                    
                                                                                                                                
4:37:25 PM                                                                                                                    
                                                                                                                                
LUCINDA  MAHONEY,   Chief  Financial  Officer,   Municipality  of                                                               
Anchorage,  stated  that  the  MOA   needs  to  have  flexibility                                                               
especially as  the state faces  fiscally challenging times.   She                                                               
acknowledged that repeal  of termination costs will  give the MOA                                                               
the  ability to  adjust  the staffing  levels  as funding  levels                                                               
change year to  year.  She emphasized that the  MOA needs this to                                                               
determine what  programs to  offer citizens.   For  example, some                                                               
grant  funding could  be  reduced or  eliminated  due to  changes                                                               
beyond  municipal  control,  such  as reduced  state  or  federal                                                               
funding.  That  loss of funding may result in  our need to reduce                                                               
staff and  change staff  classifications.   For instance,  if the                                                               
MOA  transferred  an  employee  from one  job  classification  to                                                               
another and in the process  eliminate a classification, this will                                                               
trigger a  termination cost even  though the  particular employee                                                               
is  still employed.    Anchorage is  working  on modernizing  and                                                               
standardizing  its  job  classification  to  achieve  efficiency.                                                               
This  effort  could  result in  fewer  classifications,  but  not                                                               
necessarily fewer  employees.   She said  that the  MOA currently                                                               
has many  classifications on  the books that  have been  vacant -                                                               
some for over  10 years.  She indicated it  would be efficient to                                                               
eliminate these  positions since  it would  reduce administrative                                                               
costs,  but  the   MOA  doesn't  do  so  since   it  may  trigger                                                               
termination costs.                                                                                                              
                                                                                                                                
MS. MAHONEY said  the MOA understands the  fiscal impact everyone                                                               
faces due  to the  unfunded liability, but  the fiscal  impact of                                                               
the   termination  costs   is  significant   to  Anchorage,   but                                                               
immaterial to the  total PERS unfunded liability  of $12 billion.                                                               
Certainly,  the MOA  appreciates  every dollar  that reduces  the                                                               
unfunded liability  and are committed  to partner with  the state                                                               
to  reduce  this burden  by  supporting  the governor's  plan  to                                                               
contribute $3  billion and assuming  a greater  financial portion                                                               
of the unfunded  liability.  This represents  nearly $300 million                                                               
more that  the MOA would pay  into the unfunded liability  if the                                                               
$3 billion  is contributed.   As Kathie Wasserman  explained, the                                                               
way that happens  is because the 22 percent of  our payroll would                                                               
be  contributed   for  approximately   five  more   years,  which                                                               
illustrates the importance of this bill.                                                                                        
                                                                                                                                
4:40:59 PM                                                                                                                    
                                                                                                                                
JENNIFER  JOHNSTON, Member,  Anchorage Assembly,  Municipality of                                                               
Anchorage, stated  that she is  past president  of the AML.   She                                                               
thanked  the legislature  for its  assistance  with the  unfunded                                                               
liability.  She stressed that  the governor's plan outlines a way                                                               
in  which the  municipalities can  share the  risk and  will have                                                               
alignment as  far as  managing the liability.   She  considered a                                                               
different  perspective, and  what  happens  with the  termination                                                               
costs.    For  example,  when   the  permanent  dividend  program                                                               
initially  started,  it  was  extremely  labor  intensive.    She                                                               
surmised  that the  PFD program  probably does  not have  as many                                                               
employees  or the  employees may  be working  differently in  the                                                               
current "My Alaska" program.  She  asked what would happen to the                                                               
state  if  it  maintained  the  past  employees  in  non-existent                                                               
positions,  and  how  they  could   adapt  to  the  21st  Century                                                               
technology.   She said that  is how the state  and municipalities                                                               
will have  to manage.  She  suggested that the MOA  wants to grow                                                               
and manage its  workforce.  She emphasized that the  MOA wants to                                                               
grow its workforce but adapt to the 21st Century technology.                                                                    
                                                                                                                                
4:42:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for  the AML's  position at  the                                                               
time  Senate  Bill   125  passed.    In  other   words,  did  the                                                               
municipalities believe that dispensing  with Tier III and defined                                                               
benefits was  a bargain they'd be  happy to take in  exchange for                                                               
the  burden of  termination costs  and termination  cost studies.                                                               
He asked what whether she knew about the history.                                                                               
                                                                                                                                
MS.  JOHNSTON answered  that  she  came in  late  in  2008.   She                                                               
related  her  understanding that  a  number  of retirement  funds                                                               
existed  but  no   one  knew  the  allocation   of  the  unfunded                                                               
liability.   Trying to come  up with  something that was  fair to                                                               
everyone  going forward  was "trying  to wrap  their arms,  their                                                               
huge arms  around a big  problem."  She  was unsure of  the AML's                                                               
policy at the  beginning, but she understood the  AML was active.                                                               
She stated that if the state  didn't come up with another program                                                               
other  than defined  benefits  that the  state  would extend  the                                                               
situation  to   a  point   at  which   it  would   be  completely                                                               
unmanageable.  She suggested that  Mr. Barnhill and Ms. Wasserman                                                               
could probably better answer the question.                                                                                      
                                                                                                                                
4:45:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON related a scenario  in which it was 2036                                                               
and  the $11  billion  unfunded  liability was  gone,  but a  new                                                               
unfunded liability was  created by another stock  market crash or                                                               
other   variables.     He  wondered   what   would  prevent   the                                                               
municipalities  from  asking the  state  to  absorb the  unfunded                                                               
liability  from  the  permanent  fund.    He  wondered  why  this                                                               
wouldn't become a "moving target" for decades.                                                                                  
                                                                                                                                
MS. JOHNSTON  acknowledged that the  MOA and state  can't predict                                                               
the future.  She offered  her belief that the governor's proposal                                                               
does  "set the  table" for  managing the  unfunded liability  and                                                               
having alignment between the employers and the state.                                                                           
                                                                                                                                
4:46:26 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  removed objection  to adopt the  work draft.   There                                                               
being no further objection, the  committee substitute (CS) for HB                                                               
152, Version Y was before the committee.                                                                                        
                                                                                                                                
[HB 152 was held over.]                                                                                                         
                                                                                                                                
4:46:43 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:46 p.m. to 4:48 p.m.                                                                       
                                                                                                                                
          HB 328-BOARD/LICENSING OF MASSAGE THERAPISTS                                                                      
                                                                                                                                
4:48:38 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE  BILL NO.  328 "An  Act establishing  the Board  of Massage                                                               
Therapists; relating to the licensing  of massage therapists; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
4:48:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   BENJAMIN  NAGEAK,   Alaska  State   Legislature,                                                               
introduced himself and his staff, Mary Schlosser.                                                                               
                                                                                                                                
4:49:28 PM                                                                                                                    
                                                                                                                                
MARY  SCHLOSSER, Staff,  Representative  Benjamin Nageak,  Alaska                                                               
State Legislature, stated  that Alaska is one of  six states that                                                               
does not  regulate massage therapists.   She stated  the standard                                                               
of practice  or regulation allows  consumers to  self-educate the                                                               
expected standard  of care and  an appropriate therapy  for their                                                               
individual  care.   This bill  endorses  business development  by                                                               
allowing  massage therapists  to become  an in-network  provider,                                                               
giving them the  ability to bill insurance  directly versus going                                                               
through  chiropractors,   physical  therapists,   or  physicians'                                                               
offices.  This  may be especially important in light  of the roll                                                               
out  of the  Affordable Care  Act.   She  surmised that  physical                                                               
therapists may  see an increase in  demand.  Regulation may  be a                                                               
nuisance but it is expected.                                                                                                    
                                                                                                                                
MS. SCHLOSSER  related that  in the fall  of 2013,  Forbes graded                                                             
states in  terms of  their legal and  regulatory framework.   She                                                               
reported that Alaska ranked 37th  in business friendliness.  Part                                                               
of  the standing  ranks the  states'  regulatory environment  and                                                               
Alaska is  ranked 44th  of 50  states.  She  said that  this bill                                                               
encourages  greater  professional opportunities  for  therapists.                                                               
The  massage  therapy   profession  is  growing  at   a  rate  of                                                               
approximately 120  therapists per  year in the  state.   The time                                                               
has come  to bring  clear industry standards  for the  health and                                                               
safety of Alaskans.  She  reported that 84 percent of respondents                                                               
in the field  support state licensure.  The  sponsor requests the                                                               
committee  to support  this bill  and raise  the massage  therapy                                                               
standard in the state.                                                                                                          
                                                                                                                                
4:51:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  said  he  was  familiar  with  massage                                                               
therapist rates, which  range from $60 to $120,  depending on the                                                               
time.   He surmised that  providers that massage  therapists work                                                               
under  receive a  portion of  the fees.   He  asked whether  this                                                               
would change that in massage therapists' favor.                                                                                 
                                                                                                                                
MS. SCHLOSSER deferred to the professionals to answer.                                                                          
                                                                                                                                
4:52:55 PM                                                                                                                    
                                                                                                                                
AMANDA UNSER,  Chair, Alaska Massage Therapy  Licensure Coalition                                                               
(ANTLC),  stated the  ANTLC  represents 600  members.   She  also                                                               
serves  as  the  first  vice-president of  the  American  Massage                                                               
Therapy Association,  Alaska Chapter,  in charge  of legislation.                                                               
She  has  practiced  massage  therapy  for 12  years.    She  has                                                               
previously  been   licensed  in  the  State   of  Washington  and                                                               
maintains that license.   The majority of  massage therapists are                                                               
employed by chiropractors.   She referred to a  letter of support                                                               
from the chiropractors  in members' packets.   She explained that                                                               
the  Alaska Massage  Therapy Licensure  Coalition formed  in 2012                                                               
and  houses two  major groups  that represent  massage therapists                                                               
nationwide:   the [Associated  Bodywork &  Massage Professionals]                                                               
ABMP  and the  [American Massage  Therapy Association]  AMTA, and                                                               
massage  therapists throughout  Alaska.   The intentions  were to                                                               
assess whether  massage therapists  were ready for  licensure and                                                               
to get  feedback on  bill provisions,  such as  grandfathering or                                                               
transition  provisions, education,  cardiopulmonary resuscitation                                                               
(CPR)  requirements,  exemptions,  and how  the  licensing  board                                                               
would  be  formed.   The  result  was overwhelming  support  from                                                               
massage  therapists throughout  the state.   After  two years  of                                                               
research  and much  deliberation, the  result  was HB  328.   She                                                               
urged members to pass HB 328 out of the committee.                                                                              
                                                                                                                                
4:55:28 PM                                                                                                                    
                                                                                                                                
DON HABEGER,  Director, Division  of Corporations,  Business, and                                                               
Professional   Licensing   (DCBPL),   Department   of   Commerce,                                                               
Community, &  Economic Development (DCCED), stated  that bring up                                                               
one  issue.    He  referred  to  page  3,  line  24,  related  to                                                               
qualifications of a license.  He  read [beginning on page 3, line                                                               
22]:"[Sec.08.61.030. Qualification for  license.] The board shall                                                             
issue a license  to practice massage therapy to a  person who (1)                                                               
applies on  a form provided by  the board; ...."   He stated that                                                               
the division  is happy  to allow  the board to  do that  work but                                                               
typically  it is  delegated to  the department.   The  same issue                                                               
occurs  on  page 4,  line  18.    He  stated that  this  language                                                               
requires  the  boar  to  supply  the  form,  but  often  this  is                                                               
something that  the department does.   He offered  his neutrality                                                               
on this issue, but if the  board wants to delegate this activity,                                                               
the department  will take the  responsibility.  In response  to a                                                               
question, he directed attention to page 4, line 18.                                                                             
                                                                                                                                
4:57:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for assurances  that fees  won't                                                               
rise  above $500.   He  further  asked what  assurances that  the                                                               
biennial fees  would be predictable  and massage  therapists will                                                               
not see marked increases.                                                                                                       
                                                                                                                                
MR. HABEGER  responded that predictability  is one of  the issues                                                               
the  department   and  the   legislature  have   been  discussing                                                               
recently.  He  said there are no assurances that  it will be $500                                                               
year after year.   He explained that the license  fees are a cost                                                               
and  fee relationship.   The  centralized licensing  in AS  08.01                                                               
basically requires costs incurred by  the program results in fees                                                               
adjusted  accordingly.   Licensees are  required to  pay for  the                                                               
activities of the program; however,  fees don't tend to fluctuate                                                               
but are concentrated more on small programs.                                                                                    
                                                                                                                                
4:59:33 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON offered  his belief  that  a bill  before the  House                                                               
Finance  [Standing  Committee] would  attempt  to  level out  the                                                               
fees.                                                                                                                           
                                                                                                                                
MR. HABEGER answered yes.                                                                                                       
                                                                                                                                
4:59:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  said  he  has read  the  bill  and  asked                                                               
whether this  bill provides a  typical, normal setup for  any new                                                               
licensed profession.                                                                                                            
                                                                                                                                
MR.  HABEGER  answered that  this  program  looks similar  to  an                                                               
existing program,  and the fiscal note  is based on the  Board of                                                               
Social Work  Examiners, consisting of five  board members, likely                                                               
with a shared licensing examiner  based on the time spent working                                                               
on the program.                                                                                                                 
                                                                                                                                
REPRESENTATIVE HERRON asked  whether the state has  a position on                                                               
the bill.                                                                                                                       
                                                                                                                                
MR. HABEGER answered no.                                                                                                        
                                                                                                                                
5:00:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked if there is a need for this bill.                                                                   
                                                                                                                                
MR. HABEGER stated  that the division has not  received any calls                                                               
prior to advocates requesting the program about a year ago.                                                                     
                                                                                                                                
REPRESENTATIVE  HERRON  noted one  letter  in  opposition to  the                                                               
bill.  He asked whether he has read the letter.                                                                                 
                                                                                                                                
MR. HABEGER answered no.                                                                                                        
                                                                                                                                
CHAIR  OLSON asked  whether the  suggested changes  would provide                                                               
more comfort to the division.                                                                                                   
                                                                                                                                
MR. HABEGER answered the two  changes are merely suggestions that                                                               
may make it easier for the board.                                                                                               
                                                                                                                                
5:02:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked him to  read the letter in opposition                                                               
to the bill.                                                                                                                    
                                                                                                                                
MR. HABEGER agreed to do so.                                                                                                    
                                                                                                                                
5:02:18 PM                                                                                                                    
                                                                                                                                
TRACI GILMOUR, Massage Therapist, stated  she has waited 19 years                                                               
for  licensure.   She is  a fourth  generation Juneauite  and has                                                               
been practicing  massage since 1994  in Juneau.  She  attended an                                                               
800-hour massage program in Seattle,  and has held a license from                                                               
Washington for  her entire career.   She owns a  massage business                                                               
and has practiced under the  supervision of a chiropractor for 17                                                               
years.   She  practices  medical  massage as  a  majority of  her                                                               
business and  passing this bill  will allow her to  be recognized                                                               
as a  health care provider.   She  has been required  through her                                                               
license and  national membership to receive  continuing education                                                               
annually.  She has not  felt burdened by her Washington licensing                                                               
fees and the American Massage  Therapy Association (AMTA) not the                                                               
costs associated with her initial  and continuing education.  She                                                               
indicated that she holds a  business license, pays sales tax, and                                                               
charges  $60 per  hour.    She did  not  believe  her fees  would                                                               
increase due to  costs incurred with licensure.   She takes great                                                               
pride  in  the diverse  knowledge  she  has  about the  body  and                                                               
welcomes the opportunity to discuss  massage and how she can help                                                               
her  clients.     This  bill  will  assist   nearly  600  massage                                                               
therapists become current with their  education, knowledge of the                                                               
body and the many ways they can  help or harm their clients.  She                                                               
urged members to pass the bill from the committee.                                                                              
                                                                                                                                
5:04:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked how many people  who are practicing                                                               
massage therapy will be barred from doing so under the bill.                                                                    
                                                                                                                                
MS.  GILMORE answered  that the  grandfathering provisions  would                                                               
permit  anyone  practicing  massage  therapy right  now  and  can                                                               
properly prove it.  There are  seven ways in which they can prove                                                               
they have been currently working in the industry.                                                                               
                                                                                                                                
5:04:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER understood that no one would be barred.                                                                  
                                                                                                                                
MS.  GILMORE agreed  so long  as they  have been  working in  the                                                               
industry for  fees.  In response  to a question, she  deferred to                                                               
Ms. Unser to reference the specific provisions.                                                                                 
                                                                                                                                
MS.  UNSER  referred  to  page  10, line  3,  to  the  transition                                                               
provision  in  HB  328.    She  specified  the  bill  allows  six                                                               
different  ways to  transition in,  which can  date back  to five                                                               
years prior to the [effective date of the bill].                                                                                
                                                                                                                                
5:05:57 PM                                                                                                                    
                                                                                                                                
CARL   KANCIR,  Massage   Therapist,  Northern   Comfort  Massage                                                               
Therapy, stated that  he received his training  at the University                                                               
of Alaska Anchorage  (UAA).  He started in  approximately 2000 or                                                               
2001 to get state licensure  for massage therapists.  He strongly                                                               
supports  state licensure  for massage  therapists,  but he  does                                                               
have some  questions and comments  on the  bill.  He  referred to                                                               
page  3, line  27, to  the number  minimum of  hours of  in-class                                                               
supervised instruction, which  he felt should be 1,000  hours.  A                                                               
number of other  states require a minimum of 750  to 1,000 hours.                                                               
He offered his  belief that increasing the number  of hours would                                                               
lend credibility  for massage therapists, in  particular, to gain                                                               
knowledge on  healing and  yet still stay  within their  scope of                                                               
practice and not  "run afoul of doctors,  chiropractors and other                                                               
health  care professionals."   Again,  he suggested  it would  be                                                               
more  credible  to raise  the  minimum  to  1,000 hours  for  the                                                               
minimum hours for a course of study.                                                                                            
                                                                                                                                
5:08:16 PM                                                                                                                    
                                                                                                                                
MR.  KANCIR referred  to  page  2, line  26,  to  the one  public                                                               
member, which seemed  confusing.  The language  read, as follows:                                                               
"(2) one public member; the governor  may not appoint as a public                                                               
member (A) a licensed health  care provider; ...."  Additionally,                                                               
he  expressed  concern  about  requirements  for  submitting  the                                                               
person's Form W-2,  which he believes is private  and personal to                                                               
obtain licensure as  a massage license.  Instead,  he thinks that                                                               
this  provision should  be limited  to  those applicants  without                                                               
education.   He  indicated that  his accredited  studies required                                                               
1,250 hours, although  he wished he had obtained more  hours.  He                                                               
suggested  that provision  may need  further  clarification.   He                                                               
related he  has obtained numerous  hours of  continuing education                                                               
costing several  thousand dollars.   He just finished  a February                                                               
1-2 course  that cost $400,  which illustrates his  commitment to                                                               
his profession.                                                                                                                 
                                                                                                                                
5:11:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  referred to  the transition language.   He                                                               
asked whether the committee should  base the minimum requirements                                                               
on the length of time a person has practiced massage therapy.                                                                   
                                                                                                                                
MR.  KANCIR  answered yes.    He  pointed  out that  the  current                                                               
massage therapists  can't go  backwards to gain  more hours.   He                                                               
reiterated his  belief that from  this point forward  the minimum                                                               
number of hours  for massage therapists should be  increased.  He                                                               
knows many massage  therapists, some of whom worked  on the issue                                                               
of licensure  for massage therapists  who also objected  to being                                                               
required to submit  federal income tax forms.  He  said, "It just                                                               
doesn't make  sense."  He acknowledged  that he not a  lawyer and                                                               
suggested  the   bill  language  could  be   stated  in  "plainer                                                               
language" so it could better be understood.                                                                                     
                                                                                                                                
5:13:02 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked  whether it is common to  require applicants to                                                               
submit federal income tax documents and records.                                                                                
                                                                                                                                
MR. HABEGER answered that he could  not think of any program that                                                               
requires it.                                                                                                                    
                                                                                                                                
MS.  SCHLOSSER  responded  that the  transition  language  offers                                                               
numerous options  and the signed  federal income tax is  only one                                                               
of many  options applicants can  use to  prove they have  met the                                                               
education and examination requirements.   She referred to page 10                                                               
to [paragraph (2)(A)-(F)] that lists the options.                                                                               
                                                                                                                                
5:14:22 PM                                                                                                                    
                                                                                                                                
CHERI ZEP,  Massage Therapist,  Chez Sante,  stated that  she was                                                               
raised  in  Southeast  Alaska and  has  been  practicing  massage                                                               
therapy for 10  years.  She stated she is  self-employed and owns                                                               
and  operates  Chez Sante  in  Juneau.    She said  she  provides                                                               
employment for  six other  massage therapists.   The  hourly rate                                                               
for massage is  $60 plus tax and she does  not anticipate raising                                                               
rates  since she  currently engages  in continuing  education and                                                               
associated costs.  She supports  massage therapy licensure in the                                                               
state  to  provide public  safety  for  clients and  the  massage                                                               
therapists.   The  bill sets  a standard  of education  to ensure                                                               
massage therapists  are trained  in contraindications as  well as                                                               
the body  systems and  the effect  of massage on  the body.   She                                                               
acknowledged  that   if  massage  therapists  are   not  properly                                                               
educated  they  can  cause  harm.     It  protects  clients  from                                                               
potential  sex  offenders  and  human  traffickers.    Currently,                                                               
anyone  can call  themselves massage  therapist since  the person                                                               
doesn't need  to submit to  background checks  or fingerprinting.                                                               
Thus it  is possible to  have sex offenders and  sexual predators                                                               
working on innocent people without  their knowledge.  She chooses                                                               
respect and asked members to pass HB 328.                                                                                       
                                                                                                                                
5:15:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked whether she pays  for malpractice                                                               
insurance.                                                                                                                      
                                                                                                                                
MS.  ZEP answered  that  she pays  for  liability or  malpractice                                                               
insurance.                                                                                                                      
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked about the cost of the insurance.                                                                 
                                                                                                                                
MS. ZEP answered she pays $195 per year for a $2 million policy.                                                                
                                                                                                                                
REPRESENTATIVE JOSEPHSON remarked that is a bargain.                                                                            
                                                                                                                                
5:16:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  asked  whether  some  massage  therapists                                                               
"won't make the cut" if HB 328 passes.                                                                                          
                                                                                                                                
MS. ZEP answered that she didn't  know.  She suggested that those                                                               
who cannot meet the standards  are those currently "hiding behind                                                               
the curtains"  without a  business license  and not  paying sales                                                               
taxes.  She  offered her belief that there are  lots of people in                                                               
Juneau that do not want the bill to pass.                                                                                       
                                                                                                                                
5:17:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked if there  are inappropriate people in                                                               
the business.  He asked whether this activity is prevalent.                                                                     
                                                                                                                                
MS. ZEPP said  she has heard about some issues  in larger cities.                                                               
She said, "It's  not happening here in our town  so I don't think                                                               
it's going on right now...."  She said that it could happen.                                                                    
                                                                                                                                
[HB 328 was held over.]                                                                                                         
                                                                                                                                
5:18:17 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There  being  no further  business  before  the committee,  House                                                               
Labor  & Commerce  Standing Committee  meeting  was adjourned  at                                                               
5:18 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB316 Supporting Documents-Letter AK Surgery Center 3-05-2014.PDF HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Opposing Documents-Written Testimony-Assorted 3-7-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter AK Public Entity Insurance 3-07-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 316
HB328 Supporting Documents-Written Testimony- Susan Endsley 3-07-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 328
HB316 Supporting Documents-Letter Anchorage Fracture & Orthopedic Clinic 3-07-2014.PDF HL&C 3/10/2014 3:15:00 PM
HB 316
HB152 Ver C.pdf HL&C 4/5/2013 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Sponsor Statement ver. C.pdf HL&C 4/5/2013 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Sectional Analysis.pdf HL&C 4/5/2013 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Fiscal Note-DOA-DRB-4-03-13.pdf HL&C 4/5/2013 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-PERS Employer Salaries FY08 vs. FY12.pdf HL&C 4/5/2013 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Letter to DOA from Buck Consultants 3-28-2013.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Draft Proposed Blank CS ver Y.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Sectional Analysis ver Y.pdf HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Sponsor Statement ver Y.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Letter City of Fairbanks 3-03-2014.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Letter FNSB 02-28-2014 with Resolution 2014-06.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
SB 2
HB152 Supporting Documents-Letter-City of Craig 2-14-14.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Letter-City of Homer 3-03-2014.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Letter-Ketchikan Gateway Borough 2-14-14.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Letter-Muni of Anchorage 2-26-14.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Resolution Denali Borough 12-21.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB152 Supporting Documents-Resolution FNSB 2013-38.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
SB2013
HB152 Supporting Documents-Resolution Ketchikan Gateway Borough 2316.pdf HL&C 3/5/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 152
HB316 ver N.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Sponsor Statement.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Sectional Analysis.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Fiscal Note-DOLWD-WC-03-03-14.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Fiscal Note-DOA-RM-02-28-14.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter NFIB 3-5-2014.PDF HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Resolution ASHBA.PDF HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-WC Board Resolution 13-01.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-WC Fee Comparison.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-AHLA 3-5-2014.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Legislative Research Brief.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter AK Chamber 03-05-2014.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter ASHNA 3-4-2014.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter FNSB 2-28-14.pdf HL&C 3/7/2014 3:15:00 PM
HL&C 3/10/2014 3:15:00 PM
HB 316
SB 2
HB316 Opposing Documents-Email Ron Richards 3-10-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Draft Proposed CS ver O.pdf HL&C 3/10/2014 3:15:00 PM
HB 316
HB152 DRAFT Fiscal Note to draft blank cs ver Y 2-28-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 152
HB328 Opposing Documents-Email-Rebecca Albert 03-09-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 328
HB152 Supporting Documents-Letter City of Ketchikan 3-7-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 152
HB203 Supporting Documents-Letter AAHU 3-13-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 203
HB203 Supporting Documents-Written Testimony Lenard Sorrin 3-14-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 203
HB316 Opposing Documents-Letter AK Medical Assoc 3-12-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 316
HB316 Supporting Documents-Letter Anchorage Fracture & Orthopedic Clinic 3-12-2014.pdf HL&C 3/10/2014 3:15:00 PM
HB 316