02/11/1998 03:18 PM House L&C

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

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HOUSE LABOR AND COMMERCE STANDING COMMITTEE February 11, 1998 3:18 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Jerry Sanders Representative Joe Ryan Representative Tom Brice Representative Gene Kubina MEMBERS ABSENT All members present COMMITTEE CALENDAR CS FOR SENATE BILL NO. 110(L&C) am "An Act relating to licensure of landscape architects; relating to exemptions from laws regulating the practice of architecture, engineering, and land surveying; and relating to fees collected by the Board of Registration for Architects, Engineers, and Land Surveyors." - MOVED HCS CSSB 110(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 225 "An Act relating to legislative approval of the terms of state employee collective bargaining agreements." - HEARD AND HELD * HOUSE BILL NO. 323 "An Act relating to the calculation of credited service in the public employees' retirement system for noncertificated employees of school districts, regional educational attendance areas, and state boarding schools; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: SB 110 SHORT TITLE: LICENSING OF LANDSCAPE ARCHITECTS SPONSOR(S): SENATOR(S) MACKIE, Kelly, Taylor; REPRESENTATIVE(S) Mulder Jrn-Date Jrn-Page Action 02/27/97 538 (S) READ THE FIRST TIME - REFERRAL(S) 02/27/97 538 (S) L&C, FIN 04/15/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203 04/15/97 (S) MINUTE(L&C) 04/17/97 1236 (S) L&C RPT CS 2DP 1NR NEW TITLE 04/17/97 1236 (S) DP: KELLY, MACKIE; NR: LEMAN 04/17/97 1236 (S) FISCAL NOTE TO SB & CS (DCED) 01/20/98 (S) FIN AT 10:00 AM SENATE FINANCE 532

01/21/98 (S) RLS AT 11:25 AM FAHRENKAMP RM 203

01/21/98 (S) MINUTE(RLS)

01/21/98 2249 (S) FIN RPT (L&C)CS 2DP 2NR

01/21/98 2249 (S) DP: SHARP, DONLEY

01/21/98 2249 (S) NR: PHILLIPS, TORGERSON

01/21/98 2249 (S) FN TO CS (DCED)

01/21/98 2253 (S) COSPONSOR(S): KELLY, TAYLOR

01/22/98 2260 (S) RULES TO CALENDAR 1/22/98

01/22/98 2264 (S) READ THE SECOND TIME

01/22/98 2265 (S) L&C CS ADOPTED UNAN CONSENT

01/22/98 2265 (S) ADVANCED TO THIRD READING UNAN CONSENT

01/22/98 2265 (S) READ THE THIRD TIME CSSB 110(L&C)

01/22/98 2265 (S) PASSED Y16 N3 A1

01/22/98 2266 (S) TAYLOR NOTICE OF RECONSIDERATION

01/23/98 2281 (S) RECON TAKEN UP - IN THIRD READING

01/23/98 2281 (S) RETURN TO SECOND FOR AM 1 UNAN CONSENT

01/23/98 2282 (S) AM NO 1 ADOPTED UNAN CONSENT

01/23/98 2282 (S) AUTOMATICALLY IN THIRD READING

01/23/98 2282 (S) PASSED ON RECONSIDERATION Y18 N- E2

01/23/98 2283 (S) TRANSMITTED TO (H)

01/26/98 2131 (H) READ THE FIRST TIME - REFERRAL(S)

01/26/98 2131 (H) LABOR & COMMERCE, FINANCE

01/30/98 2190 (H) CROSS SPONSOR(S): MULDER 02/02/98 (H) L&C AT 3:15 PM CAPITOL 17 02/02/98 (H) MINUTE(L&C) 02/09/98 (H) L&C AT 3:15 PM CAPITOL 17 02/09/98 (H) MINUTE(L&C) BILL: HB 225 SHORT TITLE: APPROVAL OF PUBLIC EMPLOYEE AGREEMENTS SPONSOR(S): REPRESENTATIVES(S) HUDSON Jrn-Date Jrn-Page Action 04/03/97 922 (H) READ THE FIRST TIME - REFERRAL(S) 04/03/97 923 (H) LABOR & COMMERCE, FINANCE 02/11/98 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 323 SHORT TITLE: PERS CREDIT FOR NONCERTIFICATED EMPLOYEES SPONSOR(S): REPRESENTATIVES(S) BRICE, Kubina Jrn-Date Jrn-Page Action

01/15/98 2054 (H) READ THE FIRST TIME - REFERRAL(S)

01/15/98 2054 (H) LABOR & COMMERCE, HES 02/11/98 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER SHIRLEY ARMSTRONG, Legislative Assistant to Representative Norman Rokeberg Alaska State Legislature Capitol Building, Room 24 Juneau, Alaska 99801 Telephone: (907) 465-4954 POSITION STATEMENT: Provided information on proposed committee substitute for CSSB 110(L&C) am. CHUCK O'CONNELL, Business Manager Local 52, General Government Bargaining Unit Alaska State Employees Association American Federation of State, County and Municipal Employees 3510 Spenard Road Anchorage, Alaska 99507 Telephone: (907) 277-5200 POSITION STATEMENT: Testified in support of HB 225. MIKE McMULLEN, Personnel Manager Division of Personnel Department of Administration P.O. Box 110201 Juneau, Alaska 99811-0201 Telephone: (907) 465-4431 POSITION STATEMENT: Provided department position on HB 225. HAROLD CLEEK Local 52, General Government Bargaining Unit Alaska State Employees Association American Federation of State, County and Municipal Employees 9340 Turn Street Juneau, Alaska 99801 Telephone: (907) 789-4123 POSITION STATEMENT: Testified in support of HB 225. FRANK SMITH, retired state employee former union shop steward Alaska State Employees Association P.O. Box 1199 Barrow, Alaska 99723 Telephone: (907) 852-4983 POSITION STATEMENT: Testified in support of HB 225. ROBERT MILLER, state employee union shop steward and member Alaska State Employees Association P.O. Box 22274 Juneau, Alaska 99802 Telephone: (907) 586-6220 POSITION STATEMENT: Testified in support of HB 225. MARY GRAHAM, state employee union shop steward Alaska State Employees Association 235 5th Street, Number 2 Juneau, Alaska 99801 Telephone: (907) 586-4938 POSITION STATEMENT: Testified on her own behalf in support of HB 225. BILL CHURCH, Retirement Supervisor Division of Retirement and Benefits Department of Administration P.O. Box 110203 Juneau, Alaska 99811-0203 Telephone: (907) 465-4460 POSITION STATEMENT: Answered questions on HB 323. GUY BELL, Director Division of Retirement and Benefits Department of Administration P.O. Box 110203 Juneau, Alaska 99811-0203 Telephone: (907) 465-4460 POSITION STATEMENT: Answered questions on HB 323. THEODORE SIMMONS, President Lower Kuskokwim Educational Support Personnel Association NEA-Alaska P.O. Box 1011 Bethel, Alaska 99559 Telephone: (907) 543-4883 POSITION STATEMENT: Testified in support of HB 323. DAVID GIBBS, employee Delta/Greely School District Rural Education Attendance Area 15 P.O. Box 1095 Delta Junction, Alaska 99737 Telephone: (907) 895-4710 POSITION STATEMENT: Testified in support of HB 323. JACKI NELSON-LIZARDI, President Delta/Greely Educational Support Personnel Association NEA-Alaska HC 60, Box 4180 Delta Junction, Alaska 99737 Telephone: (907) 895-4217 POSITION STATEMENT: Testified in support of HB 323. JAN WRIGLEY P.O. Box 1036 Delta Junction, Alaska 99737 Telephone: (907) 895-4033 POSITION STATEMENT: Testified in support of HB 323. VIRGINIA BUCHER P.O. Box 1138 Homer, Alaska 99603 Telephone: (907) 235-2435 POSITION STATEMENT: Testified in support of HB 323. CYNTHIA FARRENS P.O. Box 3821 Homer, Alaska 99603 Telephone: (907) 235-2166 POSITION STATEMENT: Testified in support of HB 323. DIANA PISTRO P.O. Box 3542 Kodiak, Alaska 99615 Telephone: (907) 486-9213 POSITION STATEMENT: Testified in support of HB 323 on behalf of the classified employees of Kodiak Island and villages. SANDY PEVAN, President Classified Employees' Association Matanuska-Susitna Borough School District NEA-Alaska P.O. Box 871256 Wasilla, Alaska 99687 Telephone: (907) 323-0800 POSITION STATEMENT: Testified in support of HB 323 on behalf of 550 non-certificate educational support employees. SHARON CARTNER, President Education Support Staff Association NEA-Alaska 2441 Outside Boulevard North Pole, Alaska 99705 Telephone: (907) 456-4435 POSITION STATEMENT: Testified in support of HB 323. KAREN MAHURIN, President Kenai Peninsula Educational Support Association NEA-Alaska P.O. Box 1073 Kenai, Alaska 99611 Telephone: (907) 283-4697 POSITION STATEMENT: Testified in support of HB 323. JOHN CYR, President NEA-Alaska 114 2nd Street Juneau, Alaska 99801 Telephone: (907) 586-3090 POSITION STATEMENT: Testified in support of HB 323. ACTION NARRATIVE TAPE 98-12, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:18 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson and Sanders. Representative Brice arrived at 3:21 p.m., Representatives Kubina and Ryan arrived at approximately 3:30 p.m. and 3:32 p.m. respectively. CSSB 110(L&C) am - LICENSING OF LANDSCAPE ARCHITECTS Number 0068 CHAIRMAN ROKEBERG stated the committee's first order of business was CSSB 110(L&C) am, "An Act relating to licensure of landscape architects; relating to exemptions from laws regulating the practice of architecture, engineering, and land surveying; and relating to fees collected by the Board of Registration for Architects, Engineers, and Land Surveyors." He stated he would like the committee to take up the proposed committee substitute, and he asked Ms. Shirley Armstrong, committee aide for the House Labor and Commerce Standing Committee, to explain the changes since the last discussion of CSSB 110(L&C) am based on Dwayne Adams' suggested amendments Number 0115 SHIRLEY ARMSTRONG, Legislative Assistant to Representative Norman Rokeberg, came forward. She noted she was staff to the House Labor and Commerce Standing Committee. Ms. Armstrong referred to the proposed committee substitute, 0-LS0634\Q, Lauterbach, 2/11/98. She pointed to added language on page 10, Section 25, line 26, after "crafts" the additional language reads "earthwork, grounds keeping, or nursery operations". Ms. Armstrong said this language was recommended by Mr. Adams who has been working on this bill. This subsection now reads: "(2) workers in building trades crafts, earthwork, grounds keeping, or nursery operations, and superintendents, supervisors, or inspectors in the performance of their customary duties;". Number 0211 MS. ARMSTRONG indicated the next change was on page 11, line 13, to subsection (B) of subsection (6) of Section 25. After the wording "farm or ranch buildings" the language "and their grounds" has been added. The subsection now reads: "(B) farm or ranch buildings and their grounds, unless the public health, safety, or welfare is involved;". She then referred to page 11, line 17, subsection (C), after "not more than two stories high" the language, "and the grounds of the building;", has been added. The subsection now reads: "(C) a building that is intended to be used only as a residence by not more than four families and that is not more than two stories high and the grounds of the building;". On line 20, "and the grounds of the building has been added to subsection (D) after "purpose". Subsection (D) now reads: "(D) a garage, workshop, or similar building that contains less than 2,000 square feet of floor space to be used for a private noncommercial purpose and the grounds of the building;". On line 26, "or its grounds" has been added after "repairs to a building" in subsection (8), which now reads: "(8) a person furnishing drawings, specifications, instruments of service, or other data for alterations or repairs to a building or its grounds that do not change or affect the structural system or the safety of the building, or that do not affect the public health, safety or welfare;". Number 0269 MS. ARMSTRONG stated on page 12, subsections (11), (12), and (13) were added. These subsections read: "(11) a person while involved in revegetation, restoration, reclamation, rehabilitation, or erosion control for disturbed land; (12) a person while maintaining or directing the placement of plant material; (13) a person designing or preparing plans and specification for the person's own use with respect to property owned by the person." She noted these were based on some of the comments received during the February 2, 1998 House Labor and Commerce Standing Committee meeting. She stated it was not exactly Mr. Adams' language, but the content was pretty much the same. Ms. Armstrong noted it was easier to add subsections (11), (12) and (13), and those were changes that the House Labor and Commerce Standing Committee had come up with two years ago. Number 0324 MS. ARMSTRONG referred next to Section 26, page 12, line 13. She commented she had a discussion with Senator Rick Halford's office staff and she was told, "It automatically exempts people who are not dealing with public health or safety, and that the board will go ahead and - and come up with the exemptions, and then people (indisc.) -- anybody who's not in those particular categories will be exempt." However, she stated, "The attorney still says that people out there who are doing landscaping may not know what those exemptions are, so they're gonna have to still come ... to the board and ask whether or not they're covered." She commented she had decided not to argue with Senator Halford's staff, noting Senator Mackie's office did not have an opinion. Ms. Armstrong said, "He said it does exactly what they intended it to do, you know the Senators, exempt 'em. We've done what we wanted to do by exempting ... individuals from being covered and landscapers and nurserymen and all that, so, I guess, and Senator Mackie's didn't have any opinion, so I just left it alone." Number 0445 MS. ARMSTRONG noted the next change was in Section 28, subsection (17), page 12. She stated Mr. Adams came up with a better definition of the practice of landscape architecture and this was his wording verbatim. She indicated this was the last change to CSSB 110(L&C) am contained in the proposed committee substitute. Subsection (17) now reads: "(17) "practice of landscape architecture" means professional services or creative work in site investigation, reconnaissance, research, planning, design, and preparation services related to drawings and construction documents, observation of construction, and location, arrangement, and design of incidental and necessary tangible objects and features for the purpose of" Subsection (17) previously read: "(17) "practice of landscape architecture" means consultative, investigative, reconnaissance, research, planning, design, and preparation services related to drawings and construction documents, observation of construction, and location, arrangement, and design of incidental and necessary tangible objects and features of the purpose of" Number 0473 CHAIRMAN ROKEBERG asked if the committee had any questions for Ms. Armstrong. He commented he and Representative Sanders had been present two years ago when subsections (11), (12) and (13) had originally been drafted. Number 0496 REPRESENTATIVE JOHN COWDERY made a motion to move Version Q (0- LS0634\Q, Lauterbach, 2/11/98), proposed House committee substitute for CSSB 110(L&C) am, to the next committee of referral with individual recommendations and the attached fiscal note. Number 0540 CHAIRMAN ROKEBERG asked the committee if there were any objections. Hearing none, he stated HCS CSSB 110(L&C) was so moved. He noted Representative Brice had been present during the vote. HB 225 - APPROVAL OF PUBLIC EMPLOYEE AGREEMENTS Number 0572 CHAIRMAN ROKEBERG stated the committee's next order was HB 225, "An Act relating to legislative approval of the terms of state employee collective bargaining agreements." He informed those present and on teleconference that, since this was the bill's first public hearing, it was unlikely the committee would move HB 225 at this meeting. Number 0629 REPRESENTATIVE BILL HUDSON presented HB 225 to the committee. He noted had introduced HB 225 at the beginning of the first session of the Twentieth Alaska Legislature. He said he did it primarily because he felt there was something missing in the argument about a multi-year contract where this legislature had funded the first year of that contract and then there was great discussion as to whether or not subsequent years were constituted within the terms of the contract. He said he wanted to clarify what appears to be an ambiguity under current law. Representative Hudson said this legislation adds new language to the section of the law which addresses the monetary terms of a collective bargaining agreement. Currently AS 23.42.15 (a) states that the monetary terms of any collective bargaining agreement are subject to yearly appropriation by the legislature's approval. He said HB 225 does not change the statutory requirement giving the legislature authority to approve the appropriation of funds for state employee contracts each year; it adds language stating that once the legislature agrees to the monetary terms of a collective bargaining agreement between the state and a bargaining organization, they, the legislature, approve all of the monetary terms in the contract pending yearly legislative appropriation. Number 0725 REPRESENTATIVE HUDSON referred to surety and fairness, stating this was essentially an affirmation. He said, having been a member of an administration that negotiated with public employees for four years out of his professional life, he knew how difficult it was to have an employee representative who is trying to speak for 12,000 or 17,000 state employees under the various ages of the contract negotiations, come in and try to bind their membership to certain terms and conditions only to find that the administration agrees, but when they come to the legislature, the legislature only takes it step by step. He commented that, like any other contract with a multi-year provision, the legislature needed to give some affirmation that it understands the terms and conditions of the contract and that it essentially affirms to it. Representative Hudson stated that does not mean the next legislature may necessarily be bound by that; it means the legislature has looked carefully at the terms and conditions, and essentially gives it "a higher level of affirmation." In HB 224, once the legislature accepts the terms of the contract and agrees to fund the first year of a multi-year contract, that agreement, negotiated in good faith, should be honored pending the appropriation of funds by the next and subsequent legislature. He emphasized it was not an appropriation bill, and asked the committee to hear some of the members of the public and perhaps the Administration. HB 225 consists of one section which reads: "Section 1. AS 23.40.21(a) is amended to read: (a) The monetary terms of any agreement entered into under AS 23.40.070 - 23.4.260 are subject to funding through legislative appropriation. Action by the legislature to fund any monetary term of a collective bargaining agreement entered into between the state and a bargaining organization representing state employees constitutes approval of all monetary terms in the contract." The sponsor statement for HB 323 read: HB 224, "Approval of Public Employee Agreements", would add new language to the section of the law (AS 23.40.215) that address the monetary terms of a collective bargaining agreement. This new language states that once the legislature agrees to the terms of a collective bargaining agreement by funding the first year of a multi-year contract, they approve all the terms in the contract, pending yearly legislative appropriation. Once the legislature enters into a contract, negotiated in good faith, I believe it is the fair and right thing to do to honor the negotiated contract for its entirety. The time for the legislature to disagree with the terms of a negotiated multi-year contract would be before ever appropriating funds during the first year of such a contract. HB 225 does not change the statutory requirement giving the legislature the authority to approve the appropriating of funds for state employee contracts each year. Appropriation would still be on a FY by FY [fiscal year by fiscal year] basis, but employees of the state would sense a commitment to full funding if the legislature appropriated funding the first year of the contract. Number 0870 CHAIRMAN ROKEBERG asked for Representative Hudson's assistance in determining order of witnesses to be called. Number 0887 REPRESENTATIVE GENE KUBINA asked if the chairman was ready for a motion to move the bill. Number 0897 CHAIRMAN ROKEBERG responded that Representative Kubina had missed the chairman's previous comments regarding the public hearing on HB 225. Number 0907 REPRESENTATIVE HUDSON recommended calling someone who negotiated for the state as a witness, perhaps taking some preference from the people who represent the largest group of state employees. Number 0923 CHAIRMAN ROKEBERG stated the committee would take testimony first from Chuck O'Connell in Anchorage. Number 0933 CHUCK O'CONNELL, Business Manager, Local 52, General Government Bargaining Unit, Alaska State Employees Association (ASEA), American Federation of State, County and Municipal Employees (AFSCME), testified via teleconference from Anchorage. He said on the one hand they see the state entering into long-term leases, they see the state entering into revenue bond arrangements how Spring Creek Correctional Center and the Kenai courthouse were built, they have seen the state enter into long-term consultant contracts, and they have seen the state honoring change orders in construction projects. He said that after these long-term commitments have been honored, the legislature then, in essence, puts its stamp of approval on them. Mr. O'Connell stated it is their view that the collective bargaining relationship is no different, noting they are prohibited from bargaining beyond a three-year term. He said they think it would foster labor peace, and make the terms of a collective bargaining agreement a lot more meaningful, if, when the agreement was bargained, there was some assurance that the terms would be adhered to by all parties. He stated that, for those reasons, speaking on behalf of all the members of the General Government Bargaining Unit, they respectfully request that the committee favorably consider this bill and move it on to the House Finance Standing Committee. Number 1052 REPRESENTATIVE COWDERY asked if it was Mr. O'Connell's understanding, during the course of negotiations with the administration, that the agreements would be funded for three years. MR. O'CONNELL responded he thinks it is fairly clear from the behavior of the parties that the Administration and the union, in the past two years, have viewed the relationship as a clear three- year relationship. He said this has led to some conflict with the legislature, which he thinks has been relatively professionally handled, but this statutory change in Title 23 would stabilize that relationship even further. Number 1114 REPRESENTATIVE COWDERY asked if Mr. O'Connell thought this would be binding. Number 1121 MR. O'CONNELL stated he thought if this was passed, it would require that the administration find a way to honor all the terms of the contract, but he was not exactly sure what that would mean. He said it might mean a change in program or realignment of staffing, he was not sure. However, he said it would mean the parties would both adhere to the terms of the contract for the duration of the contract, and nobody would be "blind-sided" by a third party. Number 1158 REPRESENTATIVE COWDERY confirmed Mr. O'Connell still understood that the legislature was the final word on funding sources. Number 1165 MR. O'CONNELL replied he understood. He made an analogy to a change order on the Whittier tunnel. He said if the case could be made to the legislature that the additional expenditure was absolutely necessary, (indisc.) he had faith that the legislature would appropriate the funds to honor that change order commitment. Mr. O'Connell stated he felt the same way about this process. Number 1192 REPRESENTATIVE COWDERY noted, in the case of the Whittier tunnel, funding for contingencies was built in, but if it was outlandish or something that was extremely expensive, then it would have to come back to the legislature, if the funds were not already appropriated. Representative Cowdery said he really did not understand the comparison. Number 1216 CHAIRMAN ROKEBERG commented, given the situation the state has found itself in before, where it has had an unfortunate sharp and rapid decrease in revenues because of world oil prices, that it is clear funding has to be decreased. He questioned, were HB 225 to be enacted, would it not restrict the administration's and the legislature's ability to fund contracts in light of a substantially diminished revenue stream, and therefore, as Mr. O'Connell had indicated, require them to reduce programs and services substantially, all things being equal and assuming earnings reserve is not tapped into. Chairman Rokeberg asked Mr. O'Connell, as the leader of organized labor for the state employees, what their past policy has been and how they view those types of scenarios. Number 1286 MR. O'CONNELL responded he recognized that there was some "belt- tightening" that would have to occur because of the way the legislature and the administration viewed current revenues. He said he doesn't necessarily view them the same way but noted that was not the debate here. In his view, in the public sector, the general fund is a toothpaste tube, squeeze one place and it bulges somewhere else, but there is only so much toothpaste in the tube. He said it is a matter of priorities, and if there is a dispute about whether or not the priority was correct then so be it, but hopefully "honorable men will and women will honor a contract." Number 1378 MIKE McMULLEN, Personnel Manager, Division of Personnel, Department of Administration, testified next in Juneau. He stated the Division of Personnel also contains the Labor Relations Section which negotiates state contracts and administers those contracts. He said the state, as an employer, and the unions, certainly look for closure when they have reached agreement on a collective bargaining agreement for whatever term agreed, and they would like to be able to know with some certainty that those terms will remain in effect as negotiated. Number 1410 MR. McMULLEN stated HB 225 helps out in this regard. He noted he has been with the division of 20-plus years and he said the thing that has always puzzled him is the concept that parties can reach an agreement, each having traded something to get there, having "walked that path together for some time," and then one party says it wants some of that back, or it didn't get enough, it wants more before it will continue the walk. Mr. McMullen said that somewhat describes the problem the state and its unions face if the legislature acts to approve bits and pieces of contract in a second or third year. He said that a trade has been struck, everyone has given up something to get something else, and the legislature comes along at some later point and say it's going to change the trade so it doesn't come out equal. He commented the language of the bill saying that once the legislature has agreed to the terms of the contract those terms will be recognized for the life of the contract makes a lot of sense to them. Number 1479 MR. McMULLEN stated that does not diminish the legislature's responsibility or obligation in appropriations on a year-by-year basis. He said it does say to the parties, whether it is minor or major reductions in funding, that it is not going to pay for as many of whatever, as opposed to picking and choosing benefits and provisions of the contract to recognize. Mr. McMullen posed the example in the current contract with the General Government Bargaining Unit. As of next year, the employees are giving up Lincoln's birthday as a (indisc.) holiday. He said he believed it would not be appropriate for the legislature to take that in the third year of the contract, but not give the pay increase which was in some way included with that trade when the deal was struck. He stated, "It's that sort of changing things in midstream which is a problem ... that we'd like to see resolved, and I think this bill resolves." Mr. McMullen said that, in terms of serious reductions in funding and he noted there is a history of this in the state, the parties have the voluntary option to mutually go back and review their terms. In the 1985, 1986, 1987 crisis, they entered into letters of agreement and had employees working at 75 or 80 percent of salary to meet that crisis. He said the parties have the means to deal with significant changes, but it's mutual, negotiations occur across the bargaining table to reach that. He noted they think that is the appropriate way for it to happen; it gives the parties the say to decide, depending on the funding, if they would rather trade and keep jobs, versus a benefit like a salary increase. Number 1589 MR. McMULLEN stated, however, that is done by the employer and the employees' representative when they see the picture, rather than by the legislature stepping in and disrupting a balance that was struck. He said the Administration favors the bill and thinks it will "help calm those areas" where people are nervous about second and third years of three-year contracts being disrupted by the legislative process. Number 1617 REPRESENTATIVE JOE RYAN, noting he was playing devil's advocate, said it was up to the legislature to make appropriations and one legislature could not bind another. He gave the example of a contract funded in its first year and asked what would happen if the "next guys" did not agree. Number 1653 MR. McMULLEN responded he thought there was a good role in a difficult problem option here. If the legislature said it doesn't want to pay for all these bells and whistles for these employees, and therefore the appropriation to carry this out is reduced, then the appropriation is reduced, but the trades that went into reaching that agreement are not disrupted. Mr. McMullen said, after the lower appropriation is apparent, the parties have the option of striking different deal. He said, in most cases, with things that require an appropriation of dollars, a reduction in appropriation in one scenario means more layoffs and less people to perform the work. Mr. McMullen stated the other interest from employees is keeping their jobs, and they may want to give up salary or benefits in order to do so. Number 1761 REPRESENTATIVE RYAN described another scenario: he sees a contract proposal and does not want to buy it because it is too expensive. He asked if the bargaining unit is then forced to stay with the previous contract. Number 1773 MR. McMULLEN stated there is provision elsewhere in PERA (Public Employment Relations Act, AS 23.40.200 to 260, which HB 225 would amend) that calls for the legislature to pass a resolution advisory to the parties before the point of appropriating and approving it is reached. He stated he would really like to see that part work, but if the legislature collectively found a contract unpalatable, it tells the parties in time for them work out a new deal before the legislature adjourns. He stated there have been past situations where the legislature, in the last ten days of the session, had finally clearly said that it was not going to appropriate a contract. He said the parties had ten days to go back and strike a new deal and he noted, under some of the unions' internal processes, there was not enough time for the unions to react. Mr. McMullen commented an indication early in the session that the legislature was not going to approve a contract is helpful to the parties and sends them back to the table. Number 1830 REPRESENTATIVE HUDSON, in follow up to Representative Ryan's questions, referred to the back-up material provided. He said, "We're talking about 23.40.212, and if you look at 23.40.215, you'll see that it - it homes in on the legislature's approval or disapproval, but it really highlights more the disapproval than it does the approval .... What we're trying to say is that this forces the legislature to really seriously look at the terms of the contract. They have an opportunity and a responsibility up front to review the entire contract and if they agree to fund any portion of it, it pretty much accedes to the terms of the whole and then, obviously, any next legislature -- and if they didn't want to bind, or feel like they could bind the next legislature, they could stipulate that. They could go right back to the company and to the unions and say, 'You know, we - we agree to the one year of this thing. Go back to the negotiations and come back with a new contract next year to a new legislature." He said he thinks that they have to find closure and approval, and that is what this bill tries to do. He said it simply tries to tell the legislature to look at all of the provisions of a contract, and if the legislature agrees it is a good contract, fund it, and then the next legislature can deal with it on their own merits. Number 1895 REPRESENTATIVE RYAN noted he brought these questions up because of possible legal and judicial scrutiny and intervention. CHAIRMAN ROKEBERG asked Mr. McMullen, in his capacity as a representative of the Administration, for the current status and history of the present contract, what has happened in the last three fiscal years, and the funding or non-funding of the contract in recent history. Number 1955 MR. McMULLEN replied, for the executive branch, exclusive of some of the public corporations and noting the state has just gone to its tenth bargaining unit with the correction officers, the state has nine in place. Four of these have an opener now, or over the next several months, and the other five all expire June 30, 1999. He said these nine represent the bulk of employees: general government, supervisors, labor trades and crafts. Noting they are now in the second year of a three-year contract with those employees, approaching the third year, he said the major economic provision is a cost of living escalator that is half of the consumer price index (CPI) from Anchorage. The first year was 1.4, the second year was 1.5, noting that was an issue last year but it was ultimately approved. He said the figures for next year will be out on February 24 from the United States Department of Labor. Mr. McMullen stated the contracts also have had an escalator provision on health care costs with caps for both employers and employees, which are running their course as well. They are currently in the middle of setting the rates for the health insurance coverage, and it looks like some understanding is going to have to be negotiated with the General Government Bargaining Unit because the "fixed benefits and fixed costs provisions the contract are running into a conflict," and that is going to have to be resolved. Number 2059 CHAIRMAN ROKEBERG commented that he believed the legislature did not approve a contract in FY 1997 and there was a year lapse. Number 2070 MR. McMULLEN said it went back further than that. Number 2078 REPRESENTATIVE KUBINA noted it was negotiated during Governor Hickel's last year in office, so whatever fiscal year Governor Knowles took over, he inherited Governor Hickel's contract. The legislature turned the contract down and did not fund it. Representative Kubina said Governor Knowles went back, came in for his second year with this contract, which the legislature did approve. Number 2090 CHAIRMAN ROKEBERG clarified that there had been a gap of one fiscal year. Number 2095 MR. McMULLEN added he thought that there had been these last minute changes in contracts, where the parties had to renegotiate in the last ten days of the legislative session, going back even as far as the Sheffield Administration. Number 2112 REPRESENTATIVE KUBINA said he thought the point, though, is that Governor absorbed those increases within his budget and did not ask for specific money this year or last year to fund those increases. He said that was his understanding of the way the Governor's budget was submitted. Number 2137 CHAIRMAN ROKEBERG noted he would be asking Mr. McMullen for some "feedback" on this and commented he thought the House Labor and Commerce Standing Committee, because of its jurisdictions, should be briefed on contracts, noting Mr. McMullen had indicated four bargaining units were currently up and open. Chairman Rokeberg asked if Mr. McMullen could provide the committee with an update on the status of the labor negotiations, and other things in this entire area, for this fiscal year and the next coming fiscal year so that the committee would have an understanding of the scoping and so forth. He noted that, since the members do not sit on the House Finance Standing Committee, sometimes they are not attuned to some the things which are happening and (indisc.) budgetary mindset here, however, it was important the committee members understand what was happening in the state's relationship with its employees, and be aware of potential problems. Chairman Rokeberg also asked if there had been any case law developed along this line in regard to the agreement to contracts and then the lack of funding, and also if there was any case law history that was used as a foundation. Number 2204 MR. McMULLEN responded that there have been two or three cases which have gone to the state supreme court regarding the legislature's authority on the appropriations question. He stated that he is not an attorney, but he thinks there is a narrow issue out there which has never been clearly put before the court, of whether the specific provision of a contract, once struck, can be rejected by lack of funding in the future year. Other than that it is well settled, the legislature has the power of appropriation, and that is inviolate. Number 2246 CHAIRMAN ROKEBERG questioned whether that was a constitutional or statutory right under the case law that has occurred. Number 2250 MR. McMULLEN responded he thought it was constitutional. REPRESENTATIVE HUDSON added that the courts have determined it. Number 2261 CHAIRMAN ROKEBERG also asked if Mr. McMullen could indicate some warning mechanisms and how those worked if there is a decrease in revenue, and how the bargaining process and the legislature would fit into that. He wondered if there were any provisions in the existing code, and asked Mr. McMullen for a "thumbnail sketch." Number 2283 MR. McMULLEN responded in the affirmative, adding that he thought Representative Hudson had referred to a different section. Number 2288 CHAIRMAN ROKEBERG asked for the particular case law as well. Number 2314 HAROLD CLEEK, Local 52, Alaska State Employees Association (ASEA), American Federation of State, County and Municipal Employees (AFSCME), came forward to testify. He noted he was a negotiator for the state, and a right-of-way agent with the Department of Transportation and Public Facilities (DOT/PF). He said he was also a member of the medical health benefits committee, a labor management committee, which advised the Commissioner of Administration on issues like employee medical health benefits, and he referred to an article in the previous evening's Juneau Empire which related that group had been quite busy for the last two to three months. Mr. Cleek stated he came to today's meeting because this was a cause near and dear to his heart, and he appreciated the Chairman's comments. Number 2365 MR. CLEEK confirmed that the union had negotiated three years with the previous administration and then were caught another year while the administration and legislature changed. He said, for the "employee in the trenches," it was very "disserting" to have three or four years go by with no consideration for shaking hands or meeting minds. He stated that if there is a meeting, and hands are shaken, as when he is doing his job, they do not know if they have a deal because somebody on that "third parties list" might change his or her mind, and they would have to start all over again. Number 2395 MR. CLEEK stated he wanted the committee to know the concern was very mutual regarding the agreements made. Mr. Cleek drew an analogy to his work as a right-of-way agent. He has to go out everyday and represent the state, negotiating federal and state projects. He talks with city managers, regular people, and some attorney, noting he has the power of recommendation, but not the final say in the field. If his administration approves what he has put together, he said he knows it is going to go through and the funding is there. At one point in his past, he was an airport leasing agent and he leased property for airports to the federal government as well as fixed base operators (FBOs), concessions and car rental agencies. He said the lease at the federal level has a clause which is very similar to HB 225; once a 10 or 20-year lease is entered into, it is subject to appropriation. He noted this is not a new concept in government, commenting, "The 'feds' have been doing it for years, maybe not on the same level as this, but it is in their lease ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 98-12, SIDE B Number 0001 CHAIRMAN ROKEBERG said, "... cause of action against the government, is that correct?" Number 0003 MR. CLEEK stated he was not an attorney, but he said his "guesstimation" was that the Chairman was correct. CHAIRMAN ROKEBERG stated, "I'm a lease guy, I know." MR. CLEEK stated, in his understanding, that was correct. Today he is representing approximately 8,000 employees, noting he thought they recently lost 719, so the number is probably a little lower than 8,000. He said he would like the committee to consider this language. He thinks it speaks to the issue, and he echoes Mr. McMullen's testimony to the committee exactly, stating, "When all is said and done, we're not diminishing, we're clarifying and ... your power is not gonna to be taken away, it - it just will be clarified. ... Once you approve that contract you have a three- year obligation subject to appropriation." From his experience with leases, that sounds like a reasonable and acceptable clause in a contract. He said they gave up their birthdays this year, and Lincoln's birthday goes next year, as Mr. McMullen previously mentioned. Number 0050 REPRESENTATIVE RYAN commented he gave his up a long time ago. MR. CLEEK noted those were things which had been in their contract which they gave up over the course of the three years. CHAIRMAN ROKEBERG clarified, "You gave it up but that's under the contract ...." MR. CLEEK stated, "This is under a contract issue." Number 0060 CHAIRMAN ROKEBERG stated, "I didn't want to make the distinction that this was a interim type thing where they changed the terms more recently rather than the - the contract that's in place now." Number 0069 MR. CLEEK stated the contract in place runs from 1996 to 1999, and there were "stair-stepped" concessions. To get a 1 percent pay increase the employees gave up some holidays and other things, including their birthdays and Lincoln's holiday. He said, supposedly, according to their financial folks over at OMB (Office of Management and Budget, Office of the Governor), he thought the increase was pretty much offset by the cost of these holidays, and some of the other reductions agreed to in the contract negotiations. Mr. Cleek said he sat at the bargaining table as a member of the medical health benefits committee, and he is a negotiator for the state, but he was not on the contract negotiation team. Number 0111 REPRESENTATIVE RYAN stated what he thought was the basic concern in the legislature, using the analogy, "Your wife goes shopping, and comes home with bags full of stuff and then tells you all the money she's saved, and then you tell her, try to make the mortgage payment with that money she's saved. It's a -- the governor and politics being what it is can be nice fellow, and (indisc.) good contract, but the buck comes back here 'cause we have to pay for it. So we're -- our concern is to make sure that ... we're not getting ourselves into a position where we're gonna be, you know, responsible for whatever the governor negotiates. We may not agree with that." Number 0134 MR. CLEEK stated he understood Representative Ryan's comments, noting this last year they have had to do some real adjusting in DOT/PF, including considering job-share. He said they are getting half of the CIP, so they are not making a fortune off of this; he thinks most of that increase was consumed by the medical health benefits. Mr. Cleek noted he has been working with the Department of Administration through his volunteer position on the medical health benefits committee to try to get those costs under control. Mr Cleek stated, "There's other things that ... are out there happen on an annual basis, sometimes never, such as the RIP (retirement incentive program), so there are tools that the administration uses to minimize the impacts and to live within the budgets as agreed on." He also mentioned empty positions that might not have been filled, and he noted he was speaking from his observations as an employee, not as an expert. Number 0157 MR. CLEEK reminded the committee that, even if the legislature did change the language, it would still exercise its right to appropriation, which, he said, was probably the bottom line anyway. Number 0202 CHAIRMAN ROKEBERG made a request to Mr. McMullen, in addition to the other material he would be providing, for information about the situation with health care benefits and the current ramifications. Chairman Rokeberg also pointed out that the legislature, in its appropriations for the current fiscal year, has asked a number of the employees to (indisc.) take an unpaid two-week leave this year. Number 0237 FRANK SMITH, retired state employee, former union shop steward, Alaska State Employees Association, testified next via teleconference from Barrow. He commented he was now self-employed. Mr. Smith said he had been the shop steward in Barrow when he worked for the state. He noted difficulties had come up with the funding of the ASEA contract on the last go around, and the legislature had finally been able to resolve it in a way that both the union membership and the legislature found reasonable. Before that impasse was overcome, the state employees were looking at the possibility of a strike or ever-diminishing salary benefits. He said the employees were so concerned that a number of them came to him and said they were considering retiring. Mr. Smith mentioned job stresses and noted many, many positions have gone unfilled in recent years in order to make the budgets the governor has tried to make. Mr. Smith stated the stresses brought by the indecision about the contract cause people to work less well than they might otherwise have been able to and this is an enormous stress. He said, "I just want to let you know that it's not productive when you, ... as many (indisc.) employers outside have discovered, it's not productive to drive your workers to the point where they can no longer concentrate on the business at hand." Mr. Smith commented he knew the committee appreciated that, and noted many of the members have been "working men," formerly blue collar workers, and were able to understand how the uncertainty of a contract could affect people and their families. He commented on Mr. Cleek's eloquence, and stated he believes the legislature knows that health benefits for state employees, in this case ASEA members, have diminished substantially, deductibles and co-payments have up significantly, so the employees are already experiencing a constant erosion of their purchasing power. He said HB 225 would go a long way in relieving some of those stresses he has addressed. Number 0360 REPRESENTATIVE JERRY SANDERS said he could easily understand how this uncertainty would have an effect on employees, but he asked for Mr. Smith's assistance in understanding what HB 225 would do about that uncertainty. Number 0375 MR. SMITH replied HB 225 would remove the uncertainty of the last two years of a contract. If the current one (indisc.) was funded for the first year, the membership would not be stressed by the possibility that it would not be funded in its second and third year, and they would not be looking at the prospects of a strike. He said these state workers want to do their absolute best for the public but they don't need anymore job stressors; they are already working under substantial pressures. Number 0401 REPRESENTATIVE SANDERS commented that this was not binding on anyone and does not change anything. He stated, "This is like the Indian treaties, made 'em feel just, everything was gonna be fine as long as the grass grew and the streams flowed or until somebody changed their mind. I don't see what this bill does for you." Number 0418 MR. SMITH responded, in his reading of HB 225, noting he was not an attorney, it appears to say that once this contract has been funded for its first year the legislature has some obligation to continue that level of funding through its second and third year as a three- year contract. REPRESENTATIVE SANDERS said that is the way it appears. REPRESENTATIVE HUDSON said that is the intent. MR. SMITH stated that would remove a huge amount of uncertainty. Number 0450 ROBERT MILLER, state employee, union shop steward and member, Alaska State Employees Association, came forward to testify. He noted he did not have a lot to add to the previous testimony. He said, as a shop steward, he is asked a lot of questions during contract negotiations from people on his floor, and the only thing he really had to say was that the level of stress is palpable. He stated certain questions are asked frequently, and one of them is: "Why do we have to bargain with an agency that doesn't have the power to grant what we're bargaining, and then turn around and have another group of people reject it?" His answer is the state constitution provides the legislature with absolute funding power. The next question, then, is: "Well, why aren't we negotiating with them then?" He noted he did not have an answer, but he used the husband and wife analogy. He said a couple make a purchase offer on a house and the bank agrees and the couple moves in. After the first year the husband says his wife has control of the pocketbook, and that she says they have to reduce the mortgage payment, or that they can't afford the increasing payment. The bank now has the option to tell the couple that the bank will have to evict them. Mr. Miller said it puts the membership in a position of wondering what to do. They made a deal and, to the membership, it feels like someone is backing out, although he noted legally it is not that way. He said he thinks it would foster a lot of good will, and actually enhance productivity more than the 1.5 percent per year which is in question, even if, as Representative Sanders said, it really does not change anything legally. He stated, "It's a perception thing, I guess. Does that make any sense?" Number 0557 REPRESENTATIVE COWDERY asked if Mr. Miller thought negotiations with the legislature would be better, and how would he go about doing that when most legislators have two-year terms. Number 0569 MR. MILLER responded that maybe they need to do two-year contracts, although, since negotiating costs a lot of money, there are some disadvantages to that also. He stated he was an engineer, and in his profession, but not necessarily as a state employee, he has had to negotiate with firms. He said the first thing a firm needs to provide is proof that it has the authority to give what it is agreeing to. Noting he also was not an attorney, he commented that, as he understands the Fair Labor Standards Act, it is generally considered an unfair negotiating practice to send someone to the table who does not have the authority to grant what is being negotiated. He said, however, our state constitution supersedes that. He said it is a tough problem and one everybody needs to come together to solve, because he thinks they are currently all losing. Number 0622 CHAIRMAN ROKEBERG stated he was disturbed by Mr. Miller's testimony that the level of stress in his work setting was palpable. Chairman Rokeberg asked if that was because the employees of the state were fearful that the legislature would not appropriate the funds at budget time every year, or were the employees worried about changes in the terms of the deal. Number 0648 MR. MILLER responded that he was not sure the average state employee understood the process in all of its detail, but he said the uncertainty about what is next as the legislative session progresses, mentioning the Supplemental Benefits System Annuity Plan (SBS) as an example, hangs over somewhat like a cloud. People wonder what they do. Mr. Miller stated he has had to call the union and ask what it means if the legislature rejects it, are the members still bound by the terms of the contract? He asked how a contract could be a one-way street. He said he doesn't know all the answers, but he thinks 1.5 percent of a 7.5 hour day comes out to 6 minutes. He said if 6 minutes of time is wasted by somebody worrying about this, then everybody loses. Number 0707 REPRESENTATIVE RYAN referred to Mr. Miller's mention of SBS, and stated he was not aware of another state that provided a retirement program and something similar to SBS. He said the packages they have provided for employees are fairly comprehensive. Number 0720 MR. MILLER agreed that it was comprehensive and a good package, noting he had not meant that by way of a complaint. Number 0736 MARY GRAHAM, state employee, union shop steward, Alaska State Employees Association, testified next on HB 225. She stated she was speaking on her own behalf as a state employee. She commented that, in addition to being an ASEA shop steward, she was an alternate to the negotiating committee for the next General Government Bargaining Unit contract. Ms. Graham referred to Mr. Miller's statement, also noting Representative Sanders' statement, and said it somewhat dovetails her comments. She stated it may not really bind the legislature, but it may put the perception out there with the union's members. She noted currently the union has negotiated three-year contracts and she commented on the expense of negotiations for all these employees statewide. Ms. Graham said she sees this as saying the legislature was really looking at that and saying it looked okay. She noted it did not mean Alaska was not going to have a disaster, which sometimes happens, but she said it was an attempt to find that level playing field, where if the legislature approves and decides to fund the contract in the first year, the union's members through their elected officials have signed a contract which says this is what they have agreed to for three years. She noted most of their contracts contain a "no- strike clause," so even if the funding does not come through, the union's bargaining chip is gone. She asked if the employees were still held by all the rest of the terms of the contract containing the concessions they made. Ms. Graham stated, "There will not be a work stoppage, which is, you know, basically as employees, and not that we're advocating that, that - that's like our only bargaining chip, and when we sign a three-year contract, basically that's what we're saying to the administration, we will agree to these terms and for three years let's have ... calmness in our relationship with each other." Number 0852 MS. GRAHAM noted the union's bargaining team negotiates with the Department of Administration through the governor, but the money comes back to the legislature, stating she did not think there was any mechanism for the union to negotiate with the legislature and she thought it was set up through the administration as a time saving measure. She noted there are 5 people at the table representing the union's 8,000 members. Ms. Graham mentioned the concern with health insurance, noting their contract has a clause which says if health insurance goes up, the members will pay up to $25 a pay period for health insurance benefits. During the last contract negotiations, when they received a 1.4 increase on one hand, they had to pay $19.50 out on the other hand. For some people that "was a zero effect," and their standard of living did not go up at all. Ms. Graham gave the example of a woman in her office in longevity, which means she cannot receive a merit increase. If this woman pays $16 more every pay period for insurance, which is a number that has been thrown about, she loses money. Number 0949 MS. GRAHAM stated again that it really does affect people. She said, "We did our trade-offs, we signed a contract [that] says we won't go on strike, and we said we'll do that for three years. Yes, the legislature gets to fund it, and if the legislature doesn't fund it, basically, we don't have any recourse." She said when that came up in the past the administration has said it could leave this position vacant, or maybe not do this or that, and the money has come through. She stated maybe she was just asking for a good faith effort to say, "Yeah, we're gonna look at it and if it's a totally bad deal, we'll let you know ... by not funding the first year, but if it's a reasonable deal we're saying a handshake's a handshake." Number 0993 REPRESENTATIVE COWDERY asked who had come up with the idea for three-year contracts. Number 1000 MS. GRAHAM responded she did not know, it seemed to be common practice and almost all the unions use three-year contracts. Number 1016 REPRESENTATIVE COWDERY noted, however, they were "out of sync" with the constitution and the fact that the legislature has to appropriate them yearly, and maybe that should be rethought. Number 1029 MS. GRAHAM stated she thought there were about 19 union contracts and was it a good use of state resources for the administration to be negotiating 19 union contracts every year. Number 1051 REPRESENTATIVE HUDSON noted he was probably the only one at that table who had ever negotiated with every one of the state of Alaska' unions. He said the administration went into multi-year considerations on the basis that it was good for the state. It received continuity of performance from its employees and control over its benefits. He stated to the committee that negotiating with public employees on a contract is somewhat of an ongoing process. He said the state gets something one year and gives up something another year. Representative Hudson stated that the state has people representing management's side of the issue and they obviously try to keep stability - the ships running, airports humming, roads maintained - all the different things the employees of the state do. Representative Hudson stated that a three-year contract will never be struck by management unless management feels the contract is in its best interest. He said the unions, in turn, sit down and try to negotiate what they think is best for their members. Number 1108 REPRESENTATIVE HUDSON referred to one of Ms. Graham's comments, noting it was one of the reasons he feels something like HB 225 is essential. Commenting on the discussion of negotiating and the legislature's involvement, he said, "Good faith really does mean something." If an administration negotiates a multi-year contract with the union, with both sides compromising to reach agreement, all he wants to see is that the legislature takes a hard look at that contract the first time around, and consider whether or not it is willing to assert that it is a good deal. Representative Hudson stated, "If they do, this legislation then says that ... it's a good faith effort on our part as well as their part." He stated he believes sincerely that a deal is a deal, and while this is not binding to the next legislature, it ratchets up the legislature's assertion and, hopefully, gives the employees of the state of Alaska some feeling there is going to be closure. He noted the difficulty, without negotiating experience, of understanding a multi-year contract with concessions on both sides. He said the legislature is not a part of the negotiating, but he wants to force it to take a hard look at that first year, and then if it agrees with the contract, he thinks that establishes some sort of good faith table. Representative Hudson said the employees deserve that. Number 1198 CHAIRMAN ROKEBERG concluded the public hearing on HB 225 for that meeting, there being no further witnesses. He requested that staff, working with the bill sponsor, obtain a legal opinion on the bill's constitutionality. Chairman Rokeberg also noted he was somewhat concerned about the language construction of the bill itself; he requested an attorney opinion of the legal foundation, and case law history. In addition, Chairman Rokeberg stated the committee would look forward to Mr. McMullen's "nut-shell" report. He noted the committee hadn't had an overview on any of the labor aspects of bargaining and so forth, which might be taken up later. He indicated HB 225 would be held for further consideration. Number 1299 CHAIRMAN ROKEBERG called a brief at ease at 4:35 p.m. The committee reconvened at 4:36 p.m. HB 323 - PERS CREDIT FOR NONCERTIFICATED EMPLOYEES Number 1303 CHAIRMAN ROKEBERG announced the committee would take up HB 323, "An Act relating to the calculation of credited service in the public employees' retirement system for noncertificated employees of school districts, regional educational attendance areas, and state boarding schools; and providing for an effective date." He noted the bill sponsor, Representative Brice, would present the bill to the committee. Number 1321 REPRESENTATIVE TOM BRICE stated he is looking to achieve a certain amount of equity amongst the people who work in our schools. He noted certified employees receive a year of service for the nine months they work during the school year, and he would like to see noncertified staff - the janitors, the receptionists, the office staff - receive that level of retirement benefit as well. Representative Brice stated for most of these people, these are their full-time jobs, and it takes 40 years of work for them to receive a 30-year retirement, and he thinks that is a little overbearing for many of the people who work in the school districts. Representative Brice stated he was not necessarily tied to the current language of HB 323; he is trying to ensure those noncertified employees can receive a 30-year retirement at 30 years. He noted he is also looking to ensure that these employees can vest within the regular length of time, rather than the 25 percent extra they currently must work to receive the same credit. Additionally, Representative Brice stated they wish to ensure actuarial soundness. It is his understanding that the people who represent these employees are more than willing to pay their share to ensure that their retirement system remains actuarially sound and they are not considered a burden to anyone else. Sponsor Statement for HB 323: Alaska has many noncertified employees in our schools who work nine, ten or eleven months out of the year along with their certificated counterparts. These noncertificated employees however are not allowed to receive the full year toward retirement as their counterparts. This bill addresses the inequity in State law and PERS system by placing noncertificated school district employees who work a comparable amount of days in the same category of certificated employees. This bill will allow those noncertificated school district employees to receive the same amount of credit toward retirement as those certificated employees who work the same amount of time and receive a full year of credit toward retirement. Number 1490 CHAIRMAN ROKEBERG noted the presence of someone from the Division of Retirements and Benefits to answer technical questions. Number 1500 REPRESENTATIVE COWDERY asked if this was intended to be retroactive. Number 1508 REPRESENTATIVE BRICE answered in the negative, giving the scenario of a ten-year employee currently receiving nine months of credit per year. He stated, at the effective date, the employee would begin accruing a year of service for the nine months worked, versus the nine months of service previously received. Number 1557 REPRESENTATIVE COWDERY asked what union organization would be most affected by HB 323. Number 1565 REPRESENTATIVE BRICE answered it would be the Education Support Staff Association, a subsection of NEA-Alaska. REPRESENTATIVE COWDERY noted, "In Anchorage, there's, I think, labor ..." REPRESENTATIVE BRICE responded, "It would expand to those ...." Number 1601 REPRESENTATIVE COWDERY clarified the ones he knew of, the janitors and such, were mostly out of the laborers' union, and he wondered if that was the dominant organization which would be affected. Number 1623 REPRESENTATIVE BRICE clarified that the laborers' union would not be the dominant organization affected statewide. He noted in his district it would be the Educational Support Staff Association. Number 1628 CHAIRMAN ROKEBERG asked if Municipality of Anchorage's school district employees would be covered by HB 323 in terms of their involvement in PERS (Public Employees' Retirement System). Number 1641 REPRESENTATIVE RYAN directed a question to Bill Church with the Division of Retirements and Benefits. Representative Ryan said it was his understanding, under the PERS system, that there was a fixed benefit and a fixed contribution by the employee, and the employer's contribution was variable. Number 1675 BILL CHURCH, Retirement Supervisor, Division of Retirement and Benefits, Department of Administration, stated Representative Ryan was correct. Number 1689 REPRESENTATIVE RYAN commented that the employee contribution would have to be calculated here, plus the corresponding employer's contribution, in this case the local school districts, and they would have to make a contribution which would be sizable enough to offset the three months of lost credit. He asked if any figures were available. Number 1716 MR. CHURCH replied that there has been enough time to look at it overall, and to look at the consolidated rate - how it would affect all employers, not just school districts, but municipalities, cities, et cetera. In general, it would increase the consolidated rate 5.58 percent, noting the Division of Retirement and Benefits has outlined this on the second page of the fiscal note. Mr. Church said if they were to look at the bill and say school districts were going to be affected by HB 323, that would increase substantially, and he noted the division has not had enough time to take an in-depth look. Number 1760 REPRESENTATIVE RYAN stated his reason for asking was because, if he was correct, this is all predicated upon actuarial assumptions (indisc.) soundness of the fund. He noted those change from time to time, and he recalled the first time he got into this, in 1992, when there was supposed to be a steady increase in state employment for 20 years and they were going to get 14.5 percent on their money. He stated there has a been a (indisc.) check since then and the assumptions have changed, and asked what they were operating on nowadays, as far as assumptions for the PERS fund. Number 1805 GUY BELL, Director, Division of Retirement and Benefits, Department of Administration, stated he believed the investment return assumption is 8.5 percent per year, noting that is the primary assumption which has been somewhat variable over time. He said the actuaries look at three different employee growth scenarios in the entire system: 1, 2 and 3 percent and they look at the consolidated rate as based on some extrapolations from those (indisc.) that the retirement board (indisc.). Number 1841 REPRESENTATIVE RYAN mentioned the soundness of the fund, noting it should be funded to 120 percent, or a factor over 100 percent, to insure that the employees who were receiving benefits did not draw the fund down low, and he asked if Mr. Bell could explain that point. Number 1871 MR. BELL said he would try to answer Representative Ryan's question and Mr. Church could correct him if necessary. He stated the way the actuaries try to develop their projections, they try to come up with an approximately 98 percent funding ratio. He said that is the ideal; over time there will be changes, and because past liability is paid off over a period of time they are never actually theoretically going to reach 100 percent. Mr. Bell stated they are basically at that point right now in the PERS system, and slightly above, by the actuaries' last calculation. Number 1912 CHAIRMAN ROKEBERG invited Mr. Bell to give his testimony, with questions following. Number 1925 MR. BELL stated much of his testimony had already been covered in the previous question and answer section. He stated, as HB 323 is currently written, the cost of the legislation would basically affect all employers in the PERS system. The employee rate is fixed in statute at 6.75 percent, and the variable rate, the adjustment to the rate, is the rate paid by the employer, whether it is the state of Alaska, a municipality, or a school district. Mr. Bell commented their actuaries have indicated that the consolidated rate, looking prospectively at the cost change associated with this legislation to employers would be .58 percent. He noted that is a small percentage but it translates to about $7.5 million per year for this group of this employees. He stated they have submitted a fiscal note which briefly documents how they reached that number. There has been some discussion of alternate ways to approach this, but he said, as the bill is currently written, it would affect every employer, not just school districts. Number 2045 REPRESENTATIVE HUDSON commented Mr. Bell had said, as currently written, this $7 million dollars would essentially fall on political subdivisions and the state of Alaska as an employer, or, he questioned, would it all be political subdivisions? MR. BELL replied in the affirmative. Number 2060 REPRESENTATIVE HUDSON stated, then, in order to attribute a portion of these costs to employees as a new benefit, noting normally benefit improvements are combination of both the employees' contributions and the employer's contribution, they would have to go back into the statutes and modify the fixed rate of employee contributions to accommodate that. Number 2098 MR. BELL stated that was correct and he would go one additional step to indicate the fixed rate for a certain group of employees, because only a certain group of employees would be affected. Number 2126 REPRESENTATIVE COWDERY asked if HB 323 was passed with its effective date of July 1998 where the necessary funding would come from. He asked if it was in the Governor's proposed budget. Number 2147 MR. BELL responded the money would need to be appropriated. Number 2159 CHAIRMAN ROKEBERG commented, "The new legislation line item ...." Number 2174 REPRESENTATIVE HUDSON asked if the Administration has taken a position on HB 323. Number 2185 MR. BELL responded that the Administration has not. Number 2190 REPRESENTATIVE BRICE addressed Representative Cowdery's point, noting, first of all, they are in the process of looking at language to ensure they are not talking about the whole PERS system, making sure that those who are going to receive the benefit bear the cost. He commented that his original intent was that any increase in cost to the PERS system was going to be paid by those participating in the PERS system. Number 2257 CHAIRMAN ROKEBERG commented, "Employees rather than employers (indisc.) ...." Number 2259 REPRESENTATIVE BRICE responded that maybe it would even be some mixture. He noted no state employees would be participating, and said, regarding the $7.5 million fiscal note, "I assume what we're talking about with that is that it applies to all state employees ... because ... what we're talking about is - is ... expanding throughout the system, or maybe I'm - I misunderstood what you were saying." Number 2322 MR. BELL referred to page 2 of the fiscal note, stating they had broken the fiscal note down between what the state costs would be, the state costs including the University of Alaska, and the political subdivision costs. He said it was strictly pro rata, based on the salary payments of, as written, the distribution between the state, university and political subdivisions, and he noted the salary information came straight out of their payroll information system. CHAIRMAN ROKEBERG asked if there were further questions, noting there were a number of people who wished to testify. Number 2377 REPRESENTATIVE COWDERY added that this would impact all less than 12-month per year employees. MR. CHURCH state he believed the term would be seasonal. Number 2395 MR. BELL added, "Only for school districts." REPRESENTATIVE COWDERY replied, "Yeah, I understand, I know, it wouldn't (indisc.) the temporary staff or anything like that." Number 2411 REPRESENTATIVE RYAN noted, on the front page of the fiscal note, $215,000 was included to hire a contractor to update the system. He asked for some insights, noting it seemed like adding an extra line item or column, and he could not understand why it would take $215,000 to update a database. TAPE 98-13, SIDE A Number 0009 REPRESENTATIVE SANDERS questioned whether HB 323 would have to go to the House Finance Standing Committee, commenting it had a fiscal note. Number 0023 CHAIRMAN ROKEBERG confirmed that if HB 323 moved forward it would, without question, be going to Finance. Number 0052 MR. CHURCH stated, in reply to Representative Ryan's previous question, that the division currently has two automated systems: an existing computer system, and it is in the process of developing a combined retirement system. He said both of these systems would have to be updated because of when the new system is anticipated to be on line. Mr. Church stated they asked their programming staff to come up with an estimate of the time needed to create the mechanisms necessary to calculate and take care of the service credit, mentioning granting credit, calculating future service, and noting they have a projection system (indisc.--coughing) need to be changed (indisc.--coughing) many different components to their computer systems that would have to be upgraded, then multiplied by two because of the double systems. Number 0140 REPRESENTATIVE SANDERS asked if these employees would receive credit for 1.25 years if they worked longer than 9 months or took another job for the other 3 months. Number 0180 MR. CHURCH answered it was only possible to accrue one year of service in any given year, whether school year or calendar year. Number 0197 REPRESENTATIVE BRICE noted, "We sort of alluded to it to a certain extent earlier about, or in earlier discussions, about moving these employees out ... out of the PERS system and into the TRS (Teachers' Retirement System) system. Say you were to put these noncertified employees within the TRS system, what kind of impact is that gonna have -- ... without any discrepancy amongst retirement benefits? Number 0261 MR. CHURCH answered that the potential of creating a school employee retirement system had been discussed, noting some states have their systems structured that way. Whether an individual is certificated or noncertificated, they are under one retirement system, and benefits are structured under that. He said in order to be able to answer the financial questions - where that would go, what benefits would be structured under it - the division would have to have some guidelines on anticipated benefit structure, if they anticipated changing the benefit formula. Mr. Church stated currently in TRS, the division basically has a set rate of 12 percent across the board to all employers, and he noted that would probably change, given the nature of what would be going on. He asked if they were going to be interested in affording the same types of benefits to this new group under this retirement program. Mr. Church said he thought there were a lot of questions to be answered before it would be possible to ask the division's actuaries for estimates of costs, contribution rates, and impacts on employees and employers. Number 0388 REPRESENTATIVE BRICE responded that they would contact Mr. Church later and begin working on it. Number 0395 CHAIRMAN ROKEBERG stated he would like to have all the testimony at this meeting, and he requested witnesses testifying via teleconference to limit their testimony to three minutes. Number 0444 THEODORE SIMMONS, President, Lower Kuskokwim Educational Support Personnel Association, NEA-Alaska, testified via teleconference from Bethel. He stated HB 323 would affect the association's approximately over 350 permanent seasonal employees, who work less than 12 months but over 180 days. He said the majority of these employees are not covered under the employer's health benefits, but, in fairness, the association is looking to bring it into alignment with the administrators, the teachers, and the board members who all currently receive a year's credit in the PERS retirement system for the school year's service. Mr. Simmons encouraged the committee's support of HB 323. Number 0557 DAVID GIBBS, employee, Delta/Greely School District, Rural Education Attendance Area (REAA) 15, testified next via teleconference from Delta Junction. He commented he was "custodian/courier-type person" going between the three schools each day. Mr. Gibbs noted he has been working for the school district since 1981. He said they didn't get into the PERS retirement system until 1989, and had to fight for that. Mr. Gibbs said vesting takes about five years, but for them it takes much longer because they only receive nine months credit. He noted that, for the teachers and other employees of the state, the nine months they work counts for a whole year. He asked the committee to please consider this for the employees' retirement, commenting that sometimes they feel they are second-rate because they don't receive the same benefits teachers receive, although they support the teachers, the schools and the administration. He said, "Without us, they wouldn't be able to do all of their jobs. But we do support them, that's why they call us support personnel, and we support every facet of the school." Mr. Gibbs stated they are unemployed and received no pay in the summer, and are ineligible for unemployment because they are considered still employed, but they don't make the same money as teachers who are on a regular salary. Mr. Gibbs stated they are paid hourly and they work the same number of days teachers do, plus a few extra. He asked the committee to move HB 323, and thanked Representative Brice for introducing it. Number 0736 JACKI NELSON-LIZARDI, President, Delta/Greely Educational Support Personnel Association, NEA-Alaska, testified next via teleconference from Delta Junction. She read from a prepared statement: In asking for your support of HB 323, noncertificated permanent school employees are seeking a move toward equity with other education, state, and seasonal employees. You, as legislators, are afforded this benefit for a 121 day work year, as are your legislative aides and other legislative employees. City and borough elected officials receive a full year's credit in PERS unless otherwise compensated, when, by their choice, they take the option to waive out of PERS. School board members who meet an average of two to three times a month receive a full year's retirement under PERS. We work approximately 180 days plus and do not receive a full year's credit in PERS. Other seasonal employees across the state, such as those employed by the highway department, fish and game, forestry, do not receive a full year's credit under PERS, but they are otherwise compensated by being eligible for unemployment benefits when they are not working. We are not even allowed to collect unemployment. Even the most aggressive job seekers amongst us cannot find employers who pay more than minimum wage to hire us, no matter how qualified, for a two to three month period in the summer. Number 0820 Privately contracted school employees, such as bus drivers, work less hour per day, as a rule, but the exact same work year, and though not in PERS, they too are eligible for unemployment compensation, while we are not. Prior to about 1992, many more noncertificated school employees were 12-month employees, and were thereby eligible for a year-for-year's credit in PERS. With districts receiving less and less funding for education year after year, they have sought to recoup financially by slashing our hours, benefits and work years, et cetera. I began 19 years ago as a 9-month school employee and my work year has been methodically eroded to a bare 8 months for my efforts. As education continues to be inadequately funded, we see more and more districts with your support looking to the RIP to alleviated their financial stress by having more and more employees of longevity, certificated and noncertificated, retiring. These are usually the folks at the top of the salary schedule, so the savings can be tremendous. What some people don't realize is that, unlike certificated employees, it can cost the districts more to pay our three years then they save by offering us the RIP, because they have to pay PERS for a full 12-month year for each of the three years, whether we work 12 months or not, and it's usually not. Number 0907 Noncertificated employees have been penalized long enough. When there are budget crunches in school districts, we are selected as the first to be hit. We have a history of being discriminated against in the areas of benefits, unemployment compensation, job security, contracting out, the right to bargain, and this, retirement credit in PERS. We are not asking for charity, but simply a benefit afforded other education, state and seasonal employees. After working in the same school job for 19 years, I currently only have just over 7 and a 1/2 years retirement credit in PERS. I had to wait until I was permitted to bargain in 1989, before I even got into PERS. Noncertificated school employees with 20 to 30 years in their jobs can't afford to retire unless they brought PERS credit with them from a previous employer. I am almost 50 years old, and after 19 years have only 7 plus years of retirement credit. You do the math. I figure that I may not even live long enough to see retirement. I am a professional, as are my co-workers and members. We only ask that you treat us as professionals with equal rights under the law. Please don't continue this inequity. Let this legislature be known as a body of fairness and foresight, not one that chooses to continue the inequities of the past. Please do pass HB 323. Thank you for your time. Number 0994 CHAIRMAN ROKEBERG thanked Ms. Nelson-Lizardi for her testimony and noted that legislative staff members do not accrue a full year's credit for an 121-day session, they only receive credit for the period worked. Number 1015 JAN WRIGLEY testified next via teleconference from Delta Junction, noting she was a teacher's aide for a school district there. Ms. Wrigley stated, "I am asking for all of your support of HB 323. It is very frustrating to me to see others receiving a full year's credit in PERS and they are only seasonal workers. Teachers receive a full year in TRS, ... but do not work a full year. Why am I receiving less? I'm a teacher's aide and have worked for 13 years in the same position in our school district. I am just now vested in PERS. I began working here when I was 24 years old, I am now 38 and have only 5 years into a retirement system. That is not right. I am not even eligible for unemployment, and it is difficult, almost impossible, to find decent employment for the 2 1/2 summer months that school is out. I put in 180 days working per year, and sometimes more. I feel that it is only fair that I receive a full year, I'm only asking for the same, no more no less, than others. Please pass HB 323 out of committee. Thank you for your time." Number 1090 VIRGINIA BUCHER testified next via teleconference from Homer. She said she thought, after listening to the testimony from Delta Junction, that it had pretty much all been said. She noted the previous year she had been laid off in May because of budget cuts and was able to apply for unemployment. She said her unemployment checks equaled what she would have made from a summer job down there taken away from one of the high school students, noting that was about the best she could have done. Ms. Bucher also stated that retirement is usually based on the top three years. If an employee works longer than 25 years - if they have to put in 28 years instead of 25 - their salaries are higher, and their retirement will be based on a higher salary than if they had retired at 25 years. Ms. Bucher reiterated her support for the testimony from Delta Junction. Number 1154 CYNTHIA FARRENS testified next via teleconference from Homer. Ms. Farrens stated, "I take great pleasure in being a public servant. I've been a public employee in the state of Alaska since 1982. I've worked for the court system, the Department of Administration, and I consider myself a professional working within the Kenai Peninsula Borough School District. I really feel it is unfair and discriminatory not to consider the support staff under the same standard as the teaching staff within a school district. We work the same hours, sometimes longer; our hours extend before the school starts and go beyond school gets out, but we don't get the benefits that we should be entitled to. I would happily pay my share of retirement benefits to PERS to get those years' credits that I'm eligible for, and I do hope that you support this bill and pass it out of committee, so it can be heard by the House." Number 1222 DIANA PISTRO testified next via teleconference from Kodiak. She stated she works at the middle school and was representing the classified employees of Kodiak Island and villages. She stated she agreed with Ms. Nelson-Lizardi from Delta; they work nine months, only receive credit for that, and are not allowed to collect unemployment. Ms. Pistro said she understood assembly board members serving two to four days out of a month receive a full year in their PERS retirement, as do borough board members. Ms. Pistro said, "I also understand that [if] this bill goes through that there's really no cost increase, because they'll just turn around and do it the same way that they do it with the teachers and administration." Ms. Pistro commented she was definitely in favor of passing this bill and thanked Representative Brice for introducing it. Number 1276 SANDY PEVAN, President, Classified Employees' Association, Matanuska-Susitna Borough School District, NEA-Alaska, testified next via teleconference from the Matanuska-Susitna (Mat-Su) Legislative Information Office. She stated she was representing 550 noncertified educational employees, and noted statewide they were basically in the same vein. Ms. Pevan stated that classified employees feel they have been inequitably treated and would like to have some changes made. In example, Ms. Pevan noted she has worked in the Mat-Su Borough School District for 19 years and 14 years paid-up in her retirement system. She said she is 52 years old and will have to work until she is 65 to retire, noting her health is good so that is not currently a big issue. However, Ms. Pevan said the reality is that classified employees work side by side with teachers on a daily basis. She stated, "We do the same job, working with teachers, they're receiving a year's credit for the same job. There is a large inequity within this retirement system. We are willing to pay a fair share, we want to keep the system sound, but we would like this issue addressed, and passed out of your committee, with your support, into finance committee. Thank you." Number 1360 CHAIRMAN ROKEBERG, hearing no further witnesses via teleconference, stated the committee would return to testimony from the committee chambers in Juneau. He apologized for the departure of his colleagues on the committee, noting the hour and scheduling conflicts. Number 1390 SHARON CARTNER, President, Education Support Staff Association, NEA-Alaska, representing over 600 members in Fairbanks, came forward to testify. She stated, "I thank you and the members of the committee, even though they're not here." Ms. Cartner thanked Representative Brice being patient and introducing this bill. She it has been a bill they have tried to push through, she thinks, in the eight years. She noted it is very close to her because she is one the nine-month employees for the district. Ms. Cartner stated probably half of the 600 members of the Education Support Staff Association in Fairbanks she represents are at least 9 or 10-month employees, and she said it gets very "disserting" that they put in as much time as everyone else does and yet cannot get the retirement credit. She stated she has been in the district for 17 years, and probably has less than 14 years in retirement. She noted to reach the 20 years, she would have to put in a lot more time, stating, "I really don't plan on working until I'm over 60 so that probably won't happen, unless there's a change in this law." Ms. Cartner noted that the only people in her district who are currently officially laid off are the teachers' aides (TAs), and they are not guaranteed their jobs back in the fall. She said the rest of the employees are told they are educational employees, therefore guaranteed a job, but yet they are not being paid in the summer and cannot draw unemployment. She said she really has a problem with that. Number 1472 MS. CARTNER stated, "I would like to have people explain to me, why the inequity, and come up with a good solution, because our people sit there and - and they see that they're working the same amount of hours side-by-side with certified staff, and yet they don't get the same benefits. And I really think that the state needs to look at this, I think that the members are willing to pay their part to support this, ... right now we don't have that option, we cannot pay for the months that we're not working. I think a lot of the members would be willing to pay for that, or to increase the amount of money that goes toward the PERS program. Also, I think the individual unions could probably bargain [with] the district to pick up part of that. That's all (indisc.) negotiations, I don't see why that can't be split, it's split right now so I can't see that we couldn't work on something like that so that we could bring this up to an equitable situation." Number 1512 MS. CARTNER stated, "The members of our union are very conscientious, hardworking people. They work for the school district because they love children and that's where they want to be. They usually give a lot more time than the seven and a half, or ... not anyone in our district works eight hours, it's usually seven, anything over five hours is full-time, and they work seven, seven and a half hours. They are there a lot longer than that, they do not get paid for it, we are not allowed 'comp time' and we do not get overtime. So if a child is left at the school, usually one of the staff has to stay and take care of this child until the parent shows up. That's a given. We were told last year that because they are working certain hours that, by law, they can be compensated for the extra time that they worked, but, up until this point they haven't been, and this has always been a big issue. So what I'm asking is that we adjust this situation, and that the state look at it very hard, and if they want to keep the good employees that they have and give them something to work toward, that this what they're going to need to do, because otherwise they're not going to keep the employees -- (indisc.) be looking for other jobs, and a lot of 'em are just really nice people and hard workers, and I thank you for your time." Number 1590 KAREN MAHURIN, President, Kenai Peninsula Educational Support Association, NEA-Alaska, came forward to testify. She thanked the Chairman and Representative Brice and said she was disappointed the rest of the committee was not there, noting she felt her testimony would answer many of the questions she heard Representative Ryan, Representative Sanders and Representative Cowdery bring up earlier. She stated, "I also feel that this bill is so important to us and to our members that I have spent a lot of money, as has Mrs. Cartner, to fly down here to testify in person. So I really am disappointed. And as Mrs. Cartner said, when we have children who aren't picked up at school, it doesn't matter what time it is. I have been there as late as midnight before ... I called the police to come for children, so we do go above and beyond, and - and I'm a little concerned, and I appreciate you letting me voice that." Number 1625 CHAIRMAN ROKEBERG assured Ms. Mahurin her testimony would be part of the official record, and he noted she was actually speaking to all 60 members of the legislature. Number 1640 MS. MAHURIN continued, "I am an elementary school secretary and I am president of the Kenai Peninsula Educational Support Association (KPESA), but I speak to you not only on the behalf of the members of KPESA but also on behalf of all the support employees in Alaska. It doesn't matter if we are NEA-Alaska, AFT (American Federation of Teachers), TOTEM (TOTEM Association of Educational Support Personnel), AFSCME (American Federation of State, County and Municipal Employees), any of us who are school support employees that are covered by PERS are the ones that this bill would be affected by. I realize that many times when someone testifies before you, they begin with emotional, heart-wrenching reasons of why you should vote for this bill. I am very hopeful that if I can tell you the facts as I see them you will weigh this carefully and make the right decision." Number 1669 MS. MAHURIN stated, "When I began work in the Kenai Peninsula Borough School District in 1981, I received unemployment benefits during the summer months I did not work, as the state considered all school support employees as seasonal workers, and thus eligible for unemployment. When President Reagan eliminated unemployment for support employees in 1984, the state of Alaska continued to pick up the unemployment bill under SIBS (AS 23.20.354, State Interim Benefits) and we received those benefits until '86-'87. In 1987, I believe, the state of Alaska made the determination that school support employees were indeed full-time, year-round permanent employees and thus stopped our eligibility for unemployment benefit. However, we are still considered part-time workers under PERS." Number 1699 MS. MAHURIN continued, "My point, sir: If the state of Alaska considers us as year-round employees, why then don't they give us a full year's credit of retirement for the school year worked. As others have said, I have worked 17 years and I have 14.5 years of retirement credit, as I am a 10-month employee. I understand there are seasonal workers who work for the state, they do receive partial year's retirement credit, but they also receive unemployment benefits. I also understand that there are less than full-time people who do receive a full year's retirement credit. These people are elected officials such as school board members, city council members, borough assembly members. I truly do not understand the logic of allowing them a full year's credit in the same retirement system I am in when they only attend two or three meetings a month and I work 160 hours a month. Under the new three-tier retirement, where employees need to qualify a formula of 85, I can't help but think that of course the state would save money, our school employees who must meet the qualifications of age plus service, given that they only give partial years service credit, will die ... on the job of old age and PERS will be able to save that money. Even though we are part of PERS, school support employees are a different type of employee group than other state workers and must be treated accordingly." Number 1757 MS. MAHURIN explained, "Here is what is happening in other states: Pennsylvania, school employees receive a full year credit for working the 9 month[s], actually 180 days; North Carolina, education support employees who work for thirty hours per week or more pay into the retirement system just like full-time teachers and administrators, 10 months equals 1 year of service. In the state of Washington, an ESP (Education Support Personnel) employee who has worked a minimum of 70 hours a month for 9 months will receive 1 full year of retirement credit. In Nevada, where we receive a - a year of credit on retirement, in other words, 9 months, 4 hours, counts as a year in PERS. Michigan, 180 days at more than 4 hours equals 1 year. New Jersey, 10 month employees are credited with 1 year of service, that's both teachers and ESP, in the retirement plan. In Vermont, the standard for school districts is employees of a school district, who work not less than 30 hours a week for the school year, and for not less than a total of 1,040 hours per year qualify for a full year's retirement credit. In Florida, 10 months equals 1 year. In Ohio, we receive a year's credit after working a 120 days." Number 1810 "In all honesty, and I know that I have somewhat chastised this 'commission,' but last spring this legislature honored me with a resolution after I was named the National Education Association Education Support Person of the Year. And I was very honored to receive your resolution, but more importantly, Mr. Chair, I - I valued your recognition of the work that I do every day in my school. I am not alone, I truly feel blessed to work with such caring, dedicated employees, employees who put kids and parents first. I urge you to look at the facts and to make this situation right. The law as it reads now penalizes quality employees for caring enough about kids to work in schools. Several different ideas have been tossed around here today. We are amenable to a - a amendment, if that is necessary. We would encourage you to look under the TRS, we ask us to look at us as a subgroup under PERS, and there again, this has been stated all day, we are not asking other PERS employees to pick up ... our costs. We seek only fairness in the law, and that means paying our fair share. Thank you for the opportunity to testify." Number 1862 CHAIRMAN ROKEBERG asked Ms. Mahurin is she would provide a copy of her statement to the committee. Number 1880 JOHN CYR, President, NEA-Alaska, came forward to testify. He noted the committee was in possession of NEA Alaska's position paper, and commenting on the lateness of the hour, said he would not go into it in detail. Mr. Cyr commented that the committee has heard the rational, logical arguments about why this should happen, and he hopes that it will take testimony at a later time if they have amendments, noting he would like to spend time with the committee at that point. Mr. Cyr stated, "(Indisc.) have school employees out there are earning 120 bucks week gross, 130, 140 bucks a week and trying to raise families, and what we're doing is making it almost impossible for them to retire on the amount of time that they work. I think that this system that we have now is punishing the people who can least afford to save for their future, in the worst way. ... I have to believe that this committee and this legislature can find a better way to deal with employees who work with kids, than we have now - whether we use this bill as a vehicle or whether we rewrite it in the future - there's gotta be a better way to do this. I refuse to believe that people of goodwill can't come up with something to help the people who help kids. With that, thank you." NEA Alaska's position paper read: NEA-Alaska supports House Bill 323. NEA-Alaska seeks legislation to cause equitable treatment between teachers and school employees. After twenty years of service in an Alaska school district a teacher receives twenty years of credit for purposes of retirement. In contrast a school secretary, a janitor, or school bus driver working the same 20 years receives on 15 years of service credit. For a support employee working a nine month school term it takes 40 years to get 30 years of retirement service credit. It takes the same employee 6.8 years to vest in the retirement system instead of five. Legislative changes last year have made it harder for school support staff members to vest in order to qualify for health insurance at retirement. A newly employed school support employee working on a nine month contract must work 13.3 years instead of the 10 year requirement. It's not difficult to understand why retirement incentives have not been made available to school support employees. For a school district to RIP a nine month employee, the district must pay a twelve month retirement credit and the savings that would accrue are lost in the purchasing of the extra year. To provide a three year incentive, a school district would have to purchase four work years. Meanwhile a support employee has limited opportunities to seek summer employment in many communities in Alaska. In particular jobs that allow the employee to add to their PERS time during the summer months are non-existent. We seek a degree of equity. We realize the importance of the work provided by support staff who work shoulder to shoulder with teachers and administrators. The pressures associated with the job are similar for support staff as they are for teachers. Increasing student enrollment causes increased worked demands on support staff. They work to do more with less each year. The stress of work is as prevalent with them as with teachers. In 1997 Alaska schools hired the highest number of new teachers ever. We do not have statistics on support staff turn-over. Support staff generally represents a more stable workforce within schools and communities. But if teacher turn-over statistics are any indicator of possible support turn-over, we face a developing hiring crisis. Alaska must initiate efforts now to attract and retain teachers and support staff so that we can maintain excellent schools for children. HB 323 is the right step in establishing a degree of equity with other employees and elected officials of school districts. School board members who participate in PERS receive a year's credit for attendance and work related to their duties as members of the board. It is only fair to provide for school support employees who work more hours for the school. School employees have heard others argue that they are treated no differently than seasonal workers. School support employees are treated different in ways other than retirement and those listed above. For example, seasonal workers are entitled to unemployment benefits during non-work time. School support staff are specifically excluded from unemployment benefits during non-work time. In additions school support employees have seen benefits and hours reduced. In the public sector, they have become among the lowest paid. They too are required to make ends meet. The retirement system that school employees currently have punishes those who can least afford to save for their future. We urge the Legislature to pass House Bill 323. Number 1940 CHAIRMAN ROKEBERG asked Representative Brice what his intentions were. Number 1954 REPRESENTATIVE BRICE noted the absence of a quorum, and stated he would like to take approximately a week to work on the bill, possibly bringing it back before the committee if the calendar permitted. Number 1963 CHAIRMAN ROKEBERG commented on the very large fiscal note, "an unfunded mandate, if you will, from the legislature, and consider that." Number 1970 REPRESENTATIVE BRICE stated that was exactly what they wanted to work on, commenting he had received the fiscal note approximately three hours previously. Number 1976 CHAIRMAN ROKEBERG indicated HB 323 would be held over. ADJOURNMENT Number 1981 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 5:31 p.m.

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