04/05/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings|| Regulatory Commission of Alaska|| Board of Marine Pilots|| Board of Pharmacy|| Alaska Workers' Compensation Board | |
| HB32 | |
| HB150 | |
| SB52 | |
| HB121 | |
| HB152 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 32 | TELECONFERENCED | |
| *+ | HB 150 | TELECONFERENCED | |
| + | SB 52 | TELECONFERENCED | |
| *+ | HB 169 | TELECONFERENCED | |
| *+ | HB 121 | TELECONFERENCED | |
| *+ | HB 152 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 5, 2013
3:20 p.m.
MEMBERS PRESENT
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Kurt Olson, Chair
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Regulatory Commission of Alaska
Norman Rokeberg - Anchorage
Board of Marine Pilots
Hans Antonsen - Ketchikan
Alaska Workers' Compensation Board
Ronald Nalikak - Anchorage
Board of Pharmacy
Taryl Giessel - Eagle River
- CONFIRMATION(S) ADVANCED
HOUSE BILL NO. 32
"An Act providing for the issuance of one business license for
multiple lines of business; and providing for reissuance of a
business license to correct a mistake on the license."
- MOVED CSHB 32(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 150
"An Act extending the unemployment contributions for the Alaska
technical and vocational education program."
- MOVED CSHB 150(L&C) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 52(L&C)
"An Act providing that portable electronics insurance is not a
service contract; providing that a portable electronics
manufacturer's warranty or extended warranty is not regulated as
insurance; relating to portable electronics insurance;
authorizing the director of insurance to issue a limited
producer license to a portable electronics vendor for the sale
of portable electronics insurance; and relating to authorization
and training of employees and representatives of a vendor to
transact portable electronics insurance; and providing for an
effective date."
- MOVED HCS CSSB 52(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 121
"An Act relating to the examinations, board, loans, records, and
lobbying contracts of the Alaska Commercial Fishing and
Agriculture Bank; and providing for an effective date."
- MOVED HB 121 OUT OF COMMITTEE
HOUSE BILL NO. 152
"An Act requiring certain employers who terminate participation
in the defined benefit retirement plan or the defined
contribution retirement plan of the Public Employees' Retirement
System to make contributions related to past service liability
and pay termination costs; repealing a requirement that
employers who terminate participation in the defined
contribution retirement plan or the defined benefit retirement
plan of the Public Employees' Retirement System pay for a
termination cost study; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 169
"An Act relating to the authority of the Regulatory Commission
of Alaska to regulate the production and distribution of
telephone directories."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 32
SHORT TITLE: LINES OF BUSINESS ON BUSINESS LICENSE
SPONSOR(s): REPRESENTATIVE(s) COSTELLO, HUGHES
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) L&C, FIN
02/18/13 (H) L&C AT 3:15 PM BARNES 124
02/18/13 (H) Heard & Held
02/18/13 (H) MINUTE(L&C)
03/20/13 (H) L&C AT 3:45 PM BARNES 124
03/20/13 (H) Scheduled But Not Heard
04/03/13 (H) L&C AT 3:15 PM CAPITOL 106
04/03/13 (H) -- MEETING CANCELED --
04/05/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 150
SHORT TITLE: TECHNICAL/VOCATIONAL EDUCATION PROGRAM
SPONSOR(s): REPRESENTATIVE(s) NEUMAN
03/01/13 (H) READ THE FIRST TIME - REFERRALS
03/01/13 (H) L&C, FIN
04/03/13 (H) L&C AT 3:15 PM CAPITOL 106
04/03/13 (H) -- MEETING CANCELED --
04/05/13 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 52
SHORT TITLE: PORTABLE ELECTRONICS INSURANCE
SPONSOR(s): SENATOR(s) COGHILL
02/13/13 (S) READ THE FIRST TIME - REFERRALS
02/13/13 (S) L&C
02/26/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/26/13 (S) Heard & Held
02/26/13 (S) MINUTE(L&C)
03/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/21/13 (S) Moved CSSB 52(L&C) Out of Committee
03/21/13 (S) MINUTE(L&C)
03/25/13 (S) L&C RPT CS 1DP 4NR NEW TITLE
03/25/13 (S) DP: DUNLEAVY
03/25/13 (S) NR: OLSON, MICCICHE, STEDMAN, ELLIS
04/02/13 (S) TRANSMITTED TO (H)
04/02/13 (S) VERSION: CSSB 52(L&C)
04/03/13 (H) READ THE FIRST TIME - REFERRALS
04/03/13 (H) L&C
04/05/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 121
SHORT TITLE: COMMERCIAL FISHING & AGRICULTURE BANK
SPONSOR(s): REPRESENTATIVE(s) FEIGE
02/15/13 (H) READ THE FIRST TIME - REFERRALS
02/15/13 (H) L&C, FIN
04/05/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 152
SHORT TITLE: PERS TERMINATION COSTS
SPONSOR(s): REPRESENTATIVE(s) THOMPSON
03/04/13 (H) READ THE FIRST TIME - REFERRALS
03/04/13 (H) L&C, FIN
04/05/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
NORMAN ROKEBERG, Appointee
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: As appointee to the Regulatory Commission
of Alaska, testified during the confirmation hearing.
KONRAD JACKSON, Staff
Representative Kurt Olson
Chair, House Labor & Commerce Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the confirmation hearing, testified
on behalf of the House Labor & Commerce Committee, chaired by
Representative Kurt Olson, for which he is staff.
MARY SCHLOSSER, Staff
Representative Mia Costello
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Costello, joint
prime sponsor of HB 32, answered questions and outlined the
changes in the proposed committee substitute (CS), Version Y.
DON HABEGER, Director
Division of Corporations, Business & Professional Licensing
(DCBPL)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 32.
REPRESENTATIVE SHELLY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions as one of
the joint prime sponsors of HB 32.
CATHY TILTON, Staff
Representative Mark Neuman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of HB
150, Representative Mark Neuman.
REPRESENTATIVE MARK NEUMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions as sponsor
of HB 150.
KONRAD JACKSON, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the House Labor & Commerce
Committee, which Representative Kurt Olson chairs, explained the
changes in the proposed committee substitute (CS) for HB 150,
Version N.
JUDY WALGENBACH, Program Director
Amundsen Education Center/New Frontier Vo-Tech Center
Soldotna, Alaska
POSITION STATEMENT: Testified during the discussion of HB 150.
CHRIS REITAN, Superintendent
Galena School District (GSD)
Galena, Alaska
POSITION STATEMENT: Testified in support of HB 150.
FRED VILLA, Associate Vice-President
Workforce Programs
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 150.
RYNNIEVA MOSS, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Senator Coghill,
prime sponsor of SB 52.
KARI NORE, Intern
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Senator Coghill,
prime sponsor of SB 52.
STEPHEN MCDANIEL
Asurion Wireless Insurance
Tallahassee, Florida
POSITION STATEMENT: Testified during the discussion of SB 52.
MICHAEL PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Representative Eric
Feige, sponsor of HB 121.
LELA KLINGERT, President
Alaska Commercial Fishing and Agriculture Bank (CFAB)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 121.
JANE W. PIERSON, Staff
Representative Steve Thompson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Representative Steve
Thompson, sponsor of HB 152.
LUCINDA MAHONEY, Chief Fiscal Officer (CFO)
Municipality of Anchorage (MOA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 152.
LUKE HOPKINS, Mayor
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 152.
SALLIE STUVEK, Director
Human Resources
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 152.
KATHIE WASSERMAN, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 152.
ACTION NARRATIVE
3:20:31 PM
VICE CHAIR LORA REINBOLD called the House Labor and Commerce
Standing Committee meeting to order at 3:20 p.m.
Representatives Josephson, Saddler, Herron, and Reinbold were
present at the call to order. Representatives Chenault and
Millett arrived as the meeting was in progress.
^Confirmation Hearings
^Regulatory Commission of Alaska
^Board of Marine Pilots
^Board of Pharmacy
^Alaska Workers' Compensation Board
CONFIRMATION HEARING(S):
Regulatory Commission of Alaska
Board of Marine Pilots
Board of Pharmacy
Alaska Workers' Compensation Board
3:21:13 PM
VICE CHAIR REINBOLD announced that the first order of business
would be confirmation hearings for the Regulatory Commission of
Alaska, Board of Marine Pilots, Board of Pharmacy, and the
Alaska Workers' Compensation Board.
3:22:04 PM
NORMAN ROKEBERG, Appointee, Regulatory Commission of Alaska
(RCA), stated that his primary goal as a member of the RCA will
be to make an immediate and lasting contribution to the RCA by
bringing his experience working in the private sector as a small
businessman in Alaska for 40 years, as a state legislator for 12
years, and his reputation and conduct as a lifelong Alaskan.
The RCA impacts each Alaskan every day of their lives with
oversight of its infrastructure, he said.
3:23:26 PM
REPRESENTATIVE JOSEPHSON recalled a bill before the legislature
that would create a small diameter gasline from the North Slope
to Nikiski that would change some of the oversight for the RCA.
He asked whether Mr. Rokeberg has a position on this.
MR. ROKEBERG answered that this project is a major issue before
the state. He currently is and will continue to be a member of
the RCA, [if confirmed] and as such is not at liberty to speak
to any issues that will come before the RCA. In fact, the RCA
has been monitoring the pending legislation, HB 4, and while he
can't speak for the commission, he offered his belief that the
RCA has a role in the oversight of all pipelines under its
current statutory regime, which will continue with the pending
bill. He said the nature of a contract carrier would represent
a new concept in Alaska; however the Federal Energy Regulatory
Commission (FERC) oversees contracts in the Lower 48.
3:25:00 PM
REPRESENTATIVE JOSEPHSON recalled as a former legislator, Mr.
Rokeberg twice sponsored legislation to create an electric
consumer's bill of rights. He asked if those bills passed.
MR. ROKEBERG answered no; however, he did introduce a consumer's
bill of rights for health insurance that passed, but not one for
utility customers.
3:25:48 PM
REPRESENTATIVE JOSEPHSON, recalling that as a legislator Mr.
Rokeberg was focused on utility regulation legislation, asked
Mr. Rokeberg to discuss his philosophy of regulation.
MR. ROKEBERG replied that the purpose of regulation is to align
private and in Alaska's case, the service providers' behavior
with the public interest. The public interest is a composite of
the economic efficiency, political accountability, and public
expectations of fairness and problem solving. In essence, he
said that is basically his understanding of regulatory
oversight. Recently, part of his daily routine has been to
become educated on RCA matters since the position of
commissioner is very demanding and complex.
3:27:00 PM
REPRESENTATIVE SADDLER inquired as to what special skills Mr.
Rokeberg will bring to the job, which gaps he will fill, or
places that he will provide complementary skills.
MR. ROKEBERG answered the current RCA is comprised of a group of
people possessing strong leadership. He characterized the
commissioners as people with sharp minds and an excellent legal
background. He offered his belief that he will bring long-term
experience in the private sector due to his business background.
He noted that he had a successful career in real estate
brokerage and development and also served 12 years in the
legislature where he focused in the House Labor & Commerce
Standing Committee on many utility issues. He said he also
chaired working groups on the Railbelt Energy Grid Authority
hearings through the Alaska Power Authority (APA) as well as on
the Integrated Regional Plan after he left the legislature.
Thus, he has kept abreast of issues and been part of the
solution. He acknowledged the legislature is currently seeking
to resolve major challenges.
3:28:44 PM
VICE CHAIR REINBOLD asked about the composition of the RCA.
MR. ROKEBERG answered that three lawyers and members of the
Alaska Bar Association serve on the RCA. He said that although
he and Commissioner Pickett are the non-lawyers on the RCA, they
both have private and public experience and a broad spectrum of
experience. He also did not mind - if the Vice Chair so chose
to do so - being called the honorific "Representative" since he
is very proud of his service in the legislature.
3:29:48 PM
REPRESENTATIVE CHENAULT commended Mr. Rokeberg for putting his
name forward as he brings a diverse background beyond the
lawyers. He said he will support him.
MR. ROKEBERG appreciated that his law-making experience versus
being an attorney brings a different perspective to his role.
He said he is pleased the governor has confidence in him and
with Representative Chenault's support.
3:31:19 PM
REPRESENTATIVE CHENAULT related that the legislature will deal
with the policy issues and the RCA can handle the RCA's issues.
MR. ROKEBERG answered that is a point well taken.
3:31:35 PM
VICE CHAIR REINBOLD thanked him for service to the legislature
and for being willing to serve [on the RCA]. As chair of the
Joint Committee on Administrative Regulation Review Committee,
Vice Chair Reinbold said she looks forward to better
understanding the process and expressed hope that some
improvements could be made.
3:32:17 PM
KONRAD JACKSON, Staff, Representative Kurt Olson, Chair, House
Labor & Commerce Standing Committee, Alaska State Legislature,
on behalf of the House Labor & Commerce Standing Committee,
referred to a draft memorandum dated April 5, 2013, from the
committee to the Chief Clerk listing the appointees and the
board or commission to which they have been appointed. He said
that all of the committee members have had an opportunity to
review the resumes and have expressed no further concerns with
the qualifications of any of the appointees. He read the
following names of the appointee's to the specified
board/commission:
Board of Marine Pilots
Hans Antonsen
Alaska Workers' Compensation Board
Ronald Nalikak
Board of Pharmacy
Taryl Giessel
Regulatory Commission of Alaska
Norman Rokeberg
MR. JACKSON reminded members that signing the reports regarding
appointments to boards and commissions in no way reflect
individual members' approval or disapproval of the appointees,
and that the nominations are merely forwarded to the full
legislature for confirmation or rejection.
VICE CHAIR REINBOLD, after first determining no one else wished
to testify, closed public testimony on the confirmation hearing.
3:34:12 PM
REPRESENTATIVE CHENAULT moved to advance the confirmations for
the aforementioned named appointees referred from the House
Labor and Commerce Standing Committee to the joint session of
the House and Senate for consideration. [He noted that each
member's signature on the committee's report in no way reflects
the member's vote during the joint floor session]. There being
no objection, the confirmations were advanced.
The committee took an at-ease from 3:34 p.m. to 3:35 p.m.
HB 32-LINES OF BUSINESS ON BUSINESS LICENSE
3:35:37 PM
VICE CHAIR REINBOLD announced that the next order of business
would be HOUSE BILL NO. 32 "An Act providing for the issuance of
one business license for multiple lines of business; and
providing for reissuance of a business license to correct a
mistake on the license."
3:35:51 PM
MARY SCHLOSSER, Staff, Representative Mia Costello, Alaska State
Legislature, speaking on behalf of one of the joint prime
sponsors of HB 32, Representative Costello, stated that under
current law a separate business license is required for each
line of business or business activity. This bill would allow
companies with multiple lines of business to obtain only one
business license for their operations. After further
consultation with the department, the sponsor agreed to changes
embodied in the proposed committee substitute, including
changing the lines of business to trade, service, profession, or
activity throughout the bill, she said.
3:36:53 PM
REPRESENTATIVE CHENAULT moved to adopt the proposed committee
substitute (CS) for HB 32, labeled 28-LS0192/Y, Martin, 3/19/13,
as the working document. There being no objection, Version Y
was before the committee.
3:37:22 PM
MS. SCHLOSSER, continuing her review of Version Y, pointed out
that on page 1, line 13, the language, "primary and secondary
trade, service, profession, or activity" was inserted. This
language, she explained, was crucial to the department to lower
the fiscal note. On page 2, line 8, a new subsection was added
to allow reissuance of a business license without additional
fees. Additionally, on page 2, line 13, the grace period for
the timeframe in which the department retains the business name
in the database was shortened from the 90-day grace period
previously considered to 30 days. This goal of the bill, she
specified, is to make it possible to license the business rather
than limit it to the line of business. She characterized this
bill as a business-friendly bill as the sponsor wants to make
Alaska friendly to business. She suggested this bill might help
Alaska's rankings in terms of business-friendly states. She
reminded members of a CNBC poll that ranked Alaska 47th out of
50 and a Forbes poll that ranked Alaska as 42nd in the nation.
VICE CHAIR REINBOLD objected for the purpose of discussion.
3:39:29 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing (DCBPL), Department of Commerce,
Community, & Economic Development (DCCED), said he appreciated
the sponsor's willingness to work through the issues.
3:40:13 PM
REPRESENTATIVE CHENAULT referred to the fiscal note and reasons
the fiscal note changed, including that the department wants to
be able to capture the old business licenses. He asked for
clarification on the specific change in the fiscal note.
MR. HABEGER responded that one of the big drivers is the amount
of data the database can handle. The original bill would have
required the department to maintain a number of lines of
business. He recalled the maximum number is about 11 lines of
business with subcategories under it. He suggested the
recording and tracking was rather burdensome and the department
anticipated increased costs to maintain the database. However,
once the requirement to track was limited to the primary and
secondary business, which is subsequently printed on the
license, it reduced the effort necessary to maintain the
database and the department could accommodate the needs of the
statute.
3:41:46 PM
REPRESENTATIVE JOSEPHSON said he supports this bill. He asked
whether the cost would be under $10,000.
MR. HABEGER answered yes. While the proposed CS will still
require some changes to the database, the division already has
the primary and secondary methodology in place to track the
information. These changes are not as cumbersome as tracking
multiple lines of business, which he has been advised include up
to 19 lines of business. He concluded that using the tracking
currently in place will reduce the cost to implement the bill.
3:42:40 PM
REPRESENTATIVE SHELLY HUGHES, Alaska State Legislature, as a
prime joint sponsor of HB 32, offered her support for HB 32.
She said that it is important to streamline the process such
that one business name and one business license makes sense, in
particular for the small business owner who has limited margins.
Hence, if the state can help by allowing them to put their money
into expanding their businesses rather than paying license fees,
then this is a good thing.
3:43:53 PM
VICE CHAIR REINBOLD, after first determining no one else wished
to testify, closed public testimony on HB 32.
VICE CHAIR REINBOLD removed her objection.
3:44:10 PM
REPRESENTATIVE CHENAULT moved to report the proposed committee
substitute (CS) for HB 32, labeled 28-LS0192\Y, Martin, 3/19/13,
out of committee with individual recommendations and the
accompanying fiscal note and letter of intent. There being no
objection, CSHB 32(L&C) was reported from the House Labor and
Commerce Standing Committee.
The committee took an at-ease from 3:44 p.m. to 3:46 p.m.
HB 150-TECHNICAL/VOCATIONAL EDUCATION PROGRAM
3:46:35 PM
VICE CHAIR REINBOLD announced that the next order of business
would be HOUSE BILL NO. 150 "An Act extending the unemployment
contributions for the Alaska technical and vocational education
program."
3:46:42 PM
CATHY TILTON, Staff, Representative Mark Neuman, Alaska State
Legislature, speaking on behalf of the sponsor, Representative
Neuman, explained that HB 150 relates to the Alaska Technical
and Vocational Education Program (TVEP), which was created in
2000 under AS 23.15.840 and sunsets on June 30, 2014. This bill
will extend the sunset date. The TVEP was created to provide
financial assistance and support facilities throughout the state
for technical and educational programs for industry-specific
training. In 2008, a bill passed that updated the TVEP by
creating a vocational education account comprised of funds
collected from unemployment insurance contributions at a rate of
.15 percent. These funds are then allocated according to the
statute, which is illustrated in a flow chart in members'
packets entitled, "State of Alaska Tax Flow Chart". In 2008,
the unemployment rate in Alaska was 50 percent above the
national average. Figures recently released by the state
Department of Labor & Workforce Development (DLWD), relate that
the unemployment rate in Alaska for December 2012 was at 6.6
percent, while the national average was at 8.1 percent. In
fact, Alaska has maintained a lower than national average rate
for 46 months, which is a good indicator that the technical and
vocational training programs work. From 2006-2011, 63 percent
of youth who graduated from Alaska's high schools attended some
college. In part, the TVEP program works since it allows youth
to train in their local communities and also live and work where
they were raised. In 2012, DLWD tracked nearly 18,000 training
program students as they moved into the work force. The
department discovered that 67 percent of the students who
completed the program had salaries and employment in the fourth
quarter. Additionally, these participants earned 29 percent
more during that time [as compared to those not in the program].
3:49:16 PM
MS. TILTON pointed out Alaska's workforce is an aging workforce.
As the baby boomers retire a lack of skilled workers and
tradesmen exist to meet the growing demand for replacements. In
2008, 9.9 percent of construction workers and 11.8 percent of
mining and logging workers were between the ages of 55-65. As
this group retires the state will need skilled tradesmen to fill
their spots. The Anchorage Daily News (ADN) on March 21, 2013,
reported that the U.S. is not producing enough qualified workers
to meet the needs of the mining and energy sectors, which is
another reason to continue with these vocational education
training programs.
REPRESENTATIVE MARK NEUMAN, Alaska State Legislature, speaking
as the sponsor of HB 150, stated that this is a great program
with federal funds for vocational education programs. He asked
members for their support.
3:50:45 PM
REPRESENTATIVE SADDLER moved to adopt the proposed committee
substitute (CS) for HB 150, labeled 28-LS0599\N, Mischel,
4/4/13, as the working document.
VICE CHAIR REINBOLD objected for the purpose of discussion.
3:51:11 PM
REPRESENTATIVE SADDLER asked the sponsor to identify the most
effective vocational education training program.
REPRESENTATIVE NEUMAN replied it would depend on the university
or job skills a student would like to pursue. He related that
this program funds a multitude of vocational education programs,
such as nursing, mining, heavy equipment, construction,
electricity, and almost every trade.
3:51:50 PM
VICE CHAIR REINBOLD referred to the fiscal note and asked for
clarification.
REPRESENTATIVE NEUMAN directed attention to the explanation
attached to the $5.4 million fiscal note. He then explained the
fiscal note is an estimate since the state is unsure of the
amount of the program's funding.
VICE CHAIR REINBOLD asked whether the fiscal note represents
growth or if the program has been steady.
REPRESENTATIVE NEUMAN answered that the program has been fairly
steady. Unfortunately, as less people are working, less money
goes into this program. He explained the program increased from
approximately .10-.15 percent six years ago once the core of the
fund had grown to a point where additional funds could be
distributed for vocational education without affecting the core.
3:53:35 PM
REPRESENTATIVE CHENAULT commented that he supports workforce
development and vocational education training. He wondered if
some of the funds should be spent in K-12 or if additional
funding should be applied to the K-12 sector. He expressed an
interest in having high school students consider vocational
education as an option rather than waiting until students are of
college age. He said he likes the bill, but he thinks the state
needs to do more in the education system at an earlier time to
promote vocational education.
VICE CHAIR REINBOLD stated she previously lived in a country
that promoted vocational education and it was fascinating to see
kids choose a college path or vocational path in 9th grade.
3:54:46 PM
REPRESENTATIVE CHENAULT asked for an explanation of the changes
in the proposed committee substitute (CS) for HB 150, Version N.
KONRAD JACKSON, Staff, Representative Kurt Olson, Alaska State
Legislature, on behalf of the House Labor & Commerce Standing
Committee, Representative Kurt Olson, Chair, explained the
changes in Version N. Referring to page 1 line 6, he pointed
out that the immediate effective date would change from 2014 to
2024 to help prevent any lapse in funding for the funding.
REPRESENTATIVE NEUMAN interjected that he wanted to address
HB 150 this year to avoid any lapse in funding.
VICE CHAIR REINBOLD removed her objection. [No further
objection was stated and the committee treated Version N as
before it.]
3:56:12 PM
JUDY WALGENBACH, Program Director, Amundsen Education Center/New
Frontier Vo-Tech Center, began by thanking the members for the
TVEP funding, which allowed expansion of the programs. For
instance, now there is a professional medical coding program on
the peninsula, which is a national certification. The average
salary students receive ranges from $13-$15 per hour with
benefits. She then pointed out that the Alaska Commission on
Post-Secondary Education just approved an Internet Technology
network technician program which will allow the center to
attract more students from the village. The center also
provides support to assist students as they transition in from
the villages to the program; the center hopes to obtain more
residential housing for students. She indicated the center has
been assisting students seeking new careers. A new facility was
donated to Amundsen Education Center this fall and TVEP enabled
the center to have adequate teaching staff as it expands its
program. She reported the TVEP grant has been a great benefit
to the organization and the center appreciated being awarded a
grant to cover operating expenses.
VICE CHAIR REINBOLD remarked that she understood that the number
of medical codes will increase from 10,000 to over 100,000 under
the [new proposed] federal law.
3:58:17 PM
CHRIS REITAN, Superintendent, Galena School District (GSD),
spoke in support of HB 150. He explained that the GSD uses the
TVEP funding to build a bridge program, primarily for rural
Alaska Native students, for long-term post-secondary training
opportunities. The GSD has a high school boarding school where
students are engaged in one of the career and technical
education programs. Further, students can transition into a
post-secondary program. For example, the TVEP funds support the
GSD's aviation program and students can transition and obtain
their private pilot's license and instrumentation certification
in Galena, and then move on to more advanced training at the
university level. Additionally, students can work toward
cosmetology certification, primarily at the high school level to
obtain hours and then transition into Galena's fifth year post-
secondary program. These TVEP funds have been hugely important
to Galena, in terms of building programs that high school
students can use to begin working towards certification. Upon
graduation students can move into post-secondary certification
programs, which are relatively short-term programs [due to the
vocational technical training they receive in Galena]. He said
GSD is in full support of HB 150. He offered his belief that
this funding has created a great model in Galena to offer post-
secondary education and training to high school students, which
allows them to move on to final certification upon graduation.
REPRESENTATIVE SADDLER remarked that he was part of a trip that
the Community and Regional Affairs Standing Committee took last
year to Galena. He said he was very impressed by the auto shop
and aviation technology program. He offered his support for the
bill, in part, to assist Galena in its continued efforts.
4:01:07 PM
FRED VILLA, Associate Vice-President, Workforce Programs,
University of Alaska Fairbanks (UAF), stated that UAF has over
200 workforce development programs in three areas, including
pre-college programs to connect youth with career pathways; the
certificate degree and occupational endorsement; as well as
professional development of students across the state with
priority areas for economic and community development, career
pathways, and high demand jobs. He related that the UAF program
uses the TVEP money as one-time funds to keep technology
current, startup funds for programs that meet the immediate
needs of employers in the regions and across the state through
grants or other resources until sustainable sources of funding
are found. The office implements the program using a
comparative process with the university campuses that aligns
with the state priorities as identified by the Workforce
Investment Board and use the TVEP's rules and guidelines to
develop proposals. Then the proposals are vetted through the
provost and the chief academic officers of each university to
ensure the program meets the campus priorities. The UAF's
review committee includes representatives from each university
and the Department of Labor & Workforce Development (DLWD). He
characterized this effort as one that uses the state perspective
to help prevent duplication of programs.
4:03:38 PM
MR. VILLA offered his belief that all of the educational
training programs are associated with industry standards and
criteria or certificates. For example, in the pre-college area,
the robotics program has gone statewide and is almost viral at
this point. The robotics program helps introduce kids to the
fun and creativity of robotics, but may also generate interest
in more students becoming engineers. The dual credit tech-prep
program and the professional development journeyman
apprenticeship program allows credit for prior learning for
associate degrees by using experience students obtained during
the journeyman training. He pointed out that high demand areas
are programs in health, mining, and a mining core drilling
program - which is an apprenticeship program. The new mine
training offered in Juneau and in the oil and gas sectors are
process technology provided in partnership with the Pipeline
Training Center. He offered his belief that this funding has
been critical funding and wisely used by the university. He
thanked members for their time.
VICE CHAIR REINBOLD remarked that the robotics programs have
just started at the high school in her district. She said she
also loves the science, technology, engineering, and math (STEM)
program, as well. She said after listening to the testimony on
workforce development, she believes the philosophy and training
is aligned with the needs of Alaskans.
VICE CHAIR REINBOLD, after first determining no one else wished
to testify, closed public testimony on HB 150.
4:05:54 PM
REPRESENTATIVE SADDLER moved the proposed committee substitute
(CS) for HB 150, labeled 28-LS0599\N, Mischel, 4/14/13, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 150(L&C) was
reported from the House Labor and Commerce Standing Committee.
The committee took a brief at-ease.
SB 52-PORTABLE ELECTRONICS INSURANCE
4:08:27 PM
VICE CHAIR REINBOLD announced that the next order of business
would be the CS FOR SENATE BILL NO. 52(L&C) "An Act providing
that portable electronics insurance is not a service contract;
providing that a portable electronics manufacturer's warranty or
extended warranty is not regulated as insurance; relating to
portable electronics insurance; authorizing the director of
insurance to issue a limited producer license to a portable
electronics vendor for the sale of portable electronics
insurance; and relating to authorization and training of
employees and representatives of a vendor to transact portable
electronics insurance; and providing for an effective date."
4:08:40 PM
RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State
Legislature, informed the committee that Senator Coghill's
staff, Kari Nore, is a student from Gonzaga University serving
as an intern through the University of Alaska Southeast (UAS).
Ms. Nore drafted and researched the bill, prepared documents,
and has been presenting the bill to committees.
KARI NORE, Intern, Senator John Coghill, Alaska State
Legislature, introduced herself.
4:09:29 PM
REPRESENTATIVE CHENAULT moved to adopt the proposed House
committee substitute (CS) for SB 52, labeled 28-LS0461\O,
Bailey, 4/5/13 as the working document.
VICE CHAIR REINBOLD objected for purpose of discussion.
4:09:49 PM
MS. NORE stated that this bill would establish portable
electronic insurance under AS 21. This bill would attempt to
bring structure to the electronics insurance market and protect
consumers by adding portable electronic insurance not included
under a service contract, but regulated through the Division of
Insurance. Section 2 would add a new subsection, AS
21.03.021(g), to clarify that Title 21 does not apply to a
portable electronics manufacturer's warranty or extended
warranty. Section 3 would add a citation to reflect the
addition of the portable electronic insurance that is outlined
in Section 4. Section 4 would add a new paragraph (8) [to AS
21.27.150(a)] to allow the state's director, Division of
Insurance (DOI), to issue a portable electronics limited
producer license to a vendor that sells or offers portable
electronics insurance. The license would cover the vendor and
employees for all locations in the state where the vendor sells
the products. The employees do not have to be licensed so long
as they are not solely compensated based on the sale of
insurance. The vendor would have a training program and will
maintain a registry, she said.
4:11:09 PM
MS. NORE related that Section 5 would define portable
electronics insurance, list the materials that must be presented
to the consumer in writing, define the procedure for
modification of the terms of the insurance, define the
procedures to terminate the insurance, and list the types of
devices that will be covered under portable electronics
insurance. Section 6 would provide an effective date of January
1, 2014, to allow the DOI time to complete installation of a new
software program for data entry. This will prevent the bill
from having a fiscal impact, she said.
4:12:18 PM
REPRESENTATIVE SADDLER, referring to Section 3, asked for
clarification as to whether the employees who are not solely
compensated have to be licensed.
MS. NORE referred to page 5, line 29, which read:
(i) the employees or authorized
representatives are not compensated based primarily on
the number of customers enrolled for coverage;
however, an employee or authorized representative may
receive compensation for activities under the license
that is incidental to the employee's or authorized
representative's overall compensation;
MS. NORE explained that the employees will receive salaries, and
the vendor can offer a bonus if they choose to do so. Thus,
this bill does not mandate it.
4:13:32 PM
REPRESENTATIVE SADDLER asked if an employees are commissioned,
the salaries are not compensated based primarily on the number
of customers enrolled for coverage. He asked whether this is
solely for salaried employees or if it would also apply to
commission sales.
MS. NORE related her understanding that this bill would apply to
salaried employees.
REPRESENTATIVE SADDLER remarked it would be easier to manage.
4:13:53 PM
MS. NORE explained that on page 2, line 2, of CSSB 52(L&C)
portable electronics was included as tangible personal property;
however, through discussions, the sponsor decided this was
unnecessary since portable electronics were already considered
as personal property. Therefore, Version O does not include the
language "including portable electronics" on page 2, lines 2 and
8.
4:14:57 PM
MS. NORE pointed out that originally the language on page 10,
line 10, of CSSB 52(L&C) read: "a service contract governed by
AS 21.03.021(e);" which was found to be confusing. Thus, the
language was reworded in Version O to read: "(i) A service
contract described in AS 21.03.021 (e);" in order to clarify it.
VICE CHAIR REINBOLD removed her objection. [No further
objection was stated and the committee treated Version O as
before it.]
4:15:46 PM
STEPHEN MCDANIEL, Asurion Wireless Insurance Services [Asurion],
said he is available to answer questions. He stated that
Asurion is a provider of this portable electronics insurance and
works with wireless carriers to provide this protection program
to customers. He stated he is here in support of the bill.
4:16:34 PM
REPRESENTATIVE SADDLER asked whether he could describe the most
common losses.
MR. MCDANIEL answered he was unsure, but probably damage to the
device from dropping it, which is from his personal experience.
He said the program would cover physical damage, loss, and theft
of the devices.
VICE CHAIR REINBOLD, after first determining no one else wished
to testify, closed public testimony on SB 52.
4:17:45 PM
REPRESENTATIVE CHENAULT moved to report the proposed House
committee substitute (CS) for CSSB 52(L&C), labeled 28-LS0461\O,
Bailey, 4/5/13, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
HCS CSSB 52(L&C) was reported from the House Labor and Commerce
Standing Committee.
The committee took an at-ease from 4:18 p.m. to 4:21 p.m.
HB 121-COMMERCIAL FISHING & AGRICULTURE BANK
4:21:03 PM
VICE CHAIR REINBOLD announced that the next order of business
would be HOUSE BILL NO. 121, "An Act relating to the
examinations, board, loans, records, and lobbying contracts of
the Alaska Commercial Fishing and Agriculture Bank; and
providing for an effective date."
4:21:08 PM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, speaking on behalf of the sponsor of HB 121,
Representative Feige, stated that HB 121 pertains to the
Commercial Fishing and Agriculture Bank (CFAB), which he
characterized as a great success. The program was started 21
years ago with an initial investment of $32 million from the
state, with the provision that the state would be reimbursed for
the money put into the bank. The statutes initially created by
the enabling legislation made the CFAB independent of all the
other banking rules. Thus a specific set of statutes regulates
one bank, which is a private bank, operating as a cooperative;
however, the CFAB does not fall under existing banking laws.
The CFAB's board desires to change the operation slightly so it
can better serve its members and customers, he related.
4:22:34 PM
REPRESENTATIVE MILLETT said she has a potential conflict since
one of her family members is a fisherman.
REPRESENTATIVE SADDLER objected.
4:22:56 PM
MR. PASCHALL offered to provide a sectional analysis of the
bill. Section 1 would adjust the lending power of the bank by
eliminating the borrowing limits on certain types of loans. It
also would remove the residency requirement for certain types of
capital loans if the facility is located within the state as
well as expand the types of loans that may be given to
nonmembers. Section 1 would also make loans available for
certain tourism operations and for operations dedicated to the
development or exploitation of natural resources. Section 2
would add commercial agriculture to the current provision
thereby allowing loans to nonmembers for commercial fisheries in
certain areas. Section 3 would change the dollar limitation on
loans to nonmembers from $25,000 to $50,000. Section 4 would
increase the debt to capital ratio from 8 percent to 25 percent.
Section 5 is conforming language pertaining to bank examinations
added in Section 7, and it also would correct a typographical
error in statue. Section 6 would allow the bank to make
available a list of those eligible to serve on the board of
directors of the loan to those members eligible to vote.
Section 7 would provide that the Department of Commerce,
Community, and Economic Development (DCCED) shall audit the bank
at least once every 36 months, which is a standard practice in
the industry. Section 8 would repeal AS 44.81.020(f), which
sets director compensation, and AS 44.99.030(a)(2), which
prohibits lobbying by the bank. Section 9 would delay the audit
established in Section 7 until one year after the effective
date. Finally, Section 10 would establish an immediate
effective date.
4:25:01 PM
REPRESENTATIVE JOSEPHSON, referring to pages 3 and 4, he asked
whether the CFAB has $35 million in assets.
MR. PASCHALL deferred to the bank to answer. He said there was
an initial investment by the state, which was $32 million and
was repaid to the state by the bank through its earnings through
the repurchase of stock in the bank.
4:26:21 PM
REPRESENTATIVE JOSEPHSON asked how stiff the competition for
available funds is today, without HB 121.
LELA KLINGERT, President/CEO, Alaska Commercial Fishing and
Agriculture Bank (CFAB), answered that she was unsure whether he
was referring to competition in the industry for loans.
REPRESENTATIVE JOSEPHSON asked whether the CFAB issues a finite
amount of loans.
MS. KLINGERT related that the $35 million previously mentioned
equals the total loan volume or the amount of loans that are
outstanding. She explained that CFAB borrows from CoBank, which
is a national cooperative bank headquartered in Denver. For
every loan CFAB makes, CoBank will advance funds. For example,
for every $100 in loans that CFAB issues, CoBank would advance
$80, and the remainder would come from CFAB's capital.
4:28:03 PM
REPRESENTATIVE JOSEPHSON asked how much capital CFAB has that is
not outstanding.
MS. KLINGERT answered approximately $20 million.
4:28:15 PM
REPRESENTATIVE JOSEPHSON asked how much competition exists for
the $20 million in CFAB loans and whether sufficient applicants
for the loans are simply not available.
MS. KLINGERT answered that the entire amount of the $35 million
has been lent, which represents CFAB's $20 million plus the $15
million from CoBank. She explained that through that process,
CFAB could lend another $70 million using CFAB's capital as
leverage. She was unsure of the specific competition in
question and whether he was referring to competition with other
banks.
REPRESENTATIVE JOSEPHSON offered that he is curious why CFAB
would extend loans to corporations and individuals who are not
Alaskans. If there is not much interest in loans in Alaska,
that would answer his question, he said.
MS. KLINGERT replied that the demand is not in extending loans
to nonresidents. First, that portion of CFAB loans is limited.
In fact, loans would not be opened to all nonresidents for any
reason since loans would be limited only to those with a
facility located in Alaska, such as a fishing lodge or if a
party wanted to acquire the lodge structure. She explained that
CFAB's typical borrower may be one that is not attractive to
commercial banks, and thus CFAB would create alternative
financing.
4:30:28 PM
REPRESENTATIVE CHENAULT answered that CFAB loans may not be as
attractive as ones from regular commercial lenders. He asked
whether CFAB lends at a higher rate than a normal lender or if
CFAB has options on setting interest rates on loans.
MS. KLINGERT answered that the interest rates other banks charge
varies. She offered her belief that from a competitive
standpoint, if CFAB contemplated a loan that a commercial bank
wanted to make, the commercial bank would likely be in a better
position to offer a lower rate than CFAB.
REPRESENTATIVE CHENAULT surmised that is CFAB's opportunity to
take into consideration the applicant's credit worthiness and
ability to repay the loan.
MS. KLINGERT stated her agreement.
4:31:49 PM
REPRESENTATIVE JOSEPHSON asked whether CFAB has made loans to
smaller businesses, fishing enterprises such as Trident
Seafoods, large mining companies, or larger corporations.
MS. KLINGERT answered that CFAB is typically not a place that a
large operation such as Trident Seafoods or a large mine would
seek financing, but in theory CFAB could issue that type of
loan. However, CFAB's size limits its dealings with larger
companies, which would tend to concentrate the risk in one type
of loan and not be wise.
VICE CHAIR REINBOLD, after first determining no one else wished
to testify, closed public testimony on HB 121.
4:33:16 PM
REPRESENTATIVE CHENAULT moved to report HB 121 out of committee
with individual recommendations and the accompanying fiscal
note. There being no objection, HB 121 was reported from the
House Labor and Commerce Standing Committee.
The committee took an at-ease from 4:33 p.m. to 4:36 p.m.
HB 152-PERS TERMINATION COSTS
4:36:18 PM
VICE CHAIR REINBOLD announced that the final order of business
would be HOUSE BILL NO. 152, "An Act requiring certain employers
who terminate participation in the defined benefit retirement
plan or the defined contribution retirement plan of the Public
Employees' Retirement System to make contributions related to
past service liability and pay termination costs; repealing a
requirement that employers who terminate participation in the
defined contribution retirement plan or the defined benefit
retirement plan of the Public Employees' Retirement System pay
for a termination cost study; and providing for an effective
date."
4:36:33 PM
JANE PIERSON, Staff, Representative Steve Thompson, Alaska State
Legislature, speaking on behalf of the sponsor of HB 152,
Representative Thompson, said the state's termination studies,
laws, and regulations make it difficult and more expensive for
municipal employers to deliver their programs and services by
requiring an employer that terminates participation of a
department group or other classification of employee to pay a
series of actuarially-determined costs. The municipalities are
working toward modernizing and standardizing job classifications
and although that may result in fewer job classifications, it
may not necessarily result in fewer employees. Current law
unnecessarily requires termination studies and costs for such
actions. The municipalities really need the operational
flexibility to effectively manage and deliver programs and
services while continuing to contribute toward paying off their
debts associated with the Public Employees' Retirement System
(PERS). Paying off the unfunded PERS liability is predicated
upon a stable and reasonably growing system-wide salary base.
System-wide salaries for defined contributions and defined
benefits have increased by $325 million or 18.6 percent over the
base salary floor, which was established in 2008 by Senate Bill
125 in the 25th legislature. As a result, contributions for the
unfunded liability have increased at a rate greater than the
actuarially assumed annual growth rate of 4 percent. This bill
would maintain the PERS contribution floor while employers must
pay whichever is greater, 22 percent of their current combined
defined benefit and defined contribution salary base or an
amount based on their total payroll for the period ending June
30, 2008.
4:39:28 PM
MS. PIERSON said HB 152 would replace the requirement for
termination studies with formula driven partial termination
cost, as follows: 20 percent flexibility for employers whose
total payroll is greater than $5,000,000, which is 93 percent of
employers in FY 12; 50 percent flexibility for employers whose
total payroll is between $1-$5 million, which was 6 percent of
employers in FY 12; and the study would not be applicable for
employers whose total payroll is less than $1,000,000, which was
1 percent of employers in FY 12. Using the data that is readily
available, the amount by which an employer's terminated salaries
are calculated to exceed the 20-50 percent threshold would be
applied to the current past service contribution rate, which is
currently 24.19 percent, and would then be paid annually until
the unfunded PERS liability is paid off.
4:40:24 PM
MS. PIERSON provided a brief sectional analysis of the bill.
Section 1 would retain the minimum requirement for employers to
make contributions based on 22 percent of the greater of their
current salary base or the salary base as of 6/30/2008
regardless of termination participation from the defined benefit
plan. Section 2 would place the requirement for termination
costs studies performed by the actuary with termination costs
determined via formula as follows: partial termination
thresholds, based on 20 percent for employers whose total
payroll is greater than $5,000,000 and 50 percent for employers
whose total payroll is greater than $1-5 million; [termination
costs] are not applicable for employers whose total payroll is
under $1 million. Section 2 would establish a rolling-tier
period for which costs from partial terminations would be
determined, it use readily available data, and establishes the
formula for determining termination costs. Thus any terminated
salary beyond the threshold of 20-50 percent would be applied to
the current past service contribution rate and be paid annually
until the past service liability is paid in full. The formula
is simple and does not require any consultant fee. She
explained it would be an amount by which an employer's salary
base exceeds its salary base from two years prior by 20-50
percent, depending on the current salary base level multiplied
by the past service contribution rate multiplied by the total
years to pay down the total unfunded liability. For example,
$100,000 multiplied by 24 would equal $24,000 annually
multiplied by 30 years would equal $720,000, she said.
4:42:18 PM
MS. PIERSON related that Sections 3, 4, and 5 correlate to
Section 2, but pertain to the defined contribution plan.
Section 6 would repeal language requiring a termination study
for an employer that requests termination from the plan
altogether, but such an employer would still be subject to the
base floor. This would also annul the regulation that covers
the calculation of termination cost studies. Sections 8 and 9
would add applicability retroactively to allow employers to
discontinue any payments after the effective date of the act in
which an employer would not have had to pay if a new formula
were in place after June 30, 2008. The last section, Section
10, would add the effective date.
4:43:07 PM
REPRESENTATIVE JOSEPHSON asked for clarification on the amount
of the fiscal note.
MS. PIERSON answered that the fiscal impact is $6,772,000 for FY
14 and continues to FY 19 in the amount of $7,462,000. She
acknowledged this bill has quite a hefty fiscal note.
4:44:20 PM
REPRESENTATIVE JOSEPHSON asked whether the fiscal note is
indefinite until the terminated employees are deceased.
MS. PIERSON answered that it would be indefinite until PERS and
the Teachers Retirement System (TRS) of $11 billion in unfunded
liability is paid off.
4:44:53 PM
REPRESENTATIVE JOSEPHSON asked whether this would add to the $11
billion.
MS. PIERSON clarified that it would not add to the $11 billion
but rather would be a shift away from municipalities to the
state.
REPRESENTATIVE JOSEPHSON asked whether some municipalities have
instituted plans to stay on top of these obligations while
others have not.
MS. PIERSON related her understanding that every municipality is
now required to adhere to same standards, but some have not been
able to pay their portion of the unfunded liability.
4:45:38 PM
REPRESENTATIVE JOSEPHSON noted that he filed a bill that would
increase revenue sharing to municipalities; however, he
expressed concern. He recalled that in 2008 or 2010 the
legislature devised a plan that was curative and supposed to
solve this problem.
MS. PIERSON replied that in 2008, the state discovered the
actuarial figures were not accurate. At the time a base rate
was put on all municipalities and termination studies were
required when an employee is terminated. However, she recalled
a scenario in which the Municipality of Anchorage (MOA)
transferred its weatherization department to another [municipal]
agency and although no employees were actually terminated, the
MOA still had to pay termination costs and studies.
4:47:15 PM
LUCINDA MAHONEY, Chief Fiscal Officer (CFO), Municipality of
Anchorage (MOA), stated at the time termination studies were
implemented in 2008, there was a concern that employers might
contract out municipal positions to avoid the 22 percent PERS
cost, thus shrinking the PERS base needed to pay off the
unfunded liability. As Ms. Pierson indicated this has not
happened, she said. In fact, since 2008, on a system-wide
basis, the salaries have increased by $325 million, which is at
a rate which is higher than what the actuary uses in determining
and calculating the unfunded liability. In essence, the fear
that initiated the change in statute in 2008 has not
materialized. As the CFO of the largest city in Alaska, it is
important the MOA has flexibility to manage its workforce. For
example, the MOA may not receive a state or federal grant, and
if so, may need to lay off employees when the federal grant is
not received. Additionally, the MOA may transfer employees
within job classifications and a job classification may no
longer be used, which would also trigger a termination study;
however, the MOA has been standardizing many of its job
classifications, which may not result in fewer employees, but
may result in fewer classifications. Therefore, the
aforementioned could trigger a termination study and cause the
MOA to unnecessarily pay into the program. She asked members to
consider this bill since municipalities, such as the MOA and
very small cities, are being punished for creating efficiencies
to modernize the workforce.
4:51:12 PM
REPRESENTATIVE JOSEPHSON questioned whether this legislation
would be necessary, if the administration had not introduced
Administrative Order (AO) 37 in early February.
MS. MAHONEY answered that the bill has no effect on AO 37.
REPRESENTATIVE JOSEPHSON questioned whether the MOA would still
need to cover some of the prior PERS if some of the MOA
municipal workforce is privatized as the MOA will not have the
salary base.
MS. MAHONEY answered that if the MOA were to privatize any
portion of workforce, the bill would look to the sliding scale
proposed. For example, the MOA would consider the average two
years' worth of salaries and if the change is greater than 20
percent, the MOA would pay for that component of the PERS
termination study and would pay the liability until 2030. In
brief, this bill recognizes the goal of municipalities to
continue to contribute to help bring down the unfunded
liability. However, the MOA has suggested a sharing of the cost
depending on triggers and the size of the community.
4:53:20 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough (FNSB),
offered the FNSB's support for HB 152. He acknowledged that the
unfunded liability needs to be paid off and agrees to fairly
sharing these obligations. However, in considering the PERS
termination aspect based on the number of employees, the salary
floor is important. He pointed out that the salary has
increased about 19 percent and the termination study, law, and
regulations have created unintended consequences, which
adversely impact municipalities with regard to managing their
workforce. He offered his belief that this bill, with its
sliding scale, would be a fair and equitable method to continue
to pay the FNSB's portion of the debt as it has done each year.
He reiterated support for HB 152.
4:54:57 PM
SALLIE STUVEK, Director, Human Resources, Fairbanks North Star
Borough (FNSB), stated that HB 152 is a positive bill that
addresses serious concerns with the existing statutes relating
to the triggering of termination studies. Management of
municipal employees is dynamic and fluctuates based on service
needs. She said that flexibility is necessary, based on
programs and services that are offered. For example, the FNSB
might need to hire additional librarians based on public demand,
but may need fewer lifeguards this year. This type of
flexibility is critical for efficient delivery of services. She
offered her belief that tying the need for a termination study
to the base salary makes more sense than tying it to the
classification, department, or division. As Ms. Mahoney
testified earlier, the FNSB shares concern about the lack of
flexibility. She thanked members for consideration of HB 152.
4:56:14 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), stated the AML is in support of HB 152. She emphasized
the main thing is to get this topic on the table. She reminded
the committee that the AML represents all 162 municipalities in
the state who feel the repercussions from this statutory
structure. Accordingly, the biggest outcome is municipalities
cannot manage their personnel. For example, [termination costs]
affect small municipalities, such that if a municipality has
four employees and the population decreases or finances are
reduced and one person is placed in layoff status, it will
trigger a termination study. Under AS 39.35, this means the
municipality must pay termination costs over the long term until
the liability is paid off. This could take up to 25 years and
represents a huge expense for a small community. For this
reason, the state needs to find a solution to work with the
municipalities to resolve this issue. She acknowledged this may
not be easy, since the unfunded liability represents an $11
billion shortfall; however, the termination study provision
adversely impacts all communities and prevents them from
managing their personnel. In fact, some municipalities have
decided not to lay off employees since they can't afford the
outcome, which seems backwards. She remarked that it has taken
her many years to get to the point of fully understanding this
issue since it is complicated.
4:58:30 PM
REPRESENTATIVE JOSEPHSON understood this bill raises two issues.
First, it raises the issue of the cost of termination studies
and second, it raises the issue of the even greater cost of
funding vested liability for those employees not on payroll.
MS. WASSERMAN answered yes. In further response, she said the
obligation is not based on the individual, but on the position
that no longer exists. For example, this first came to the
AML's attention when a municipal fire chief position was changed
to an emergency medical services director, but the person was
retained by the municipality, yet the change triggered a
termination study since the position was dissolved.
[HB 152 was held over.]
5:00:21 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:00 p.m.