Legislature(2019 - 2020)SENATE FINANCE 532

02/05/2019 09:00 AM FINANCE

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Audio Topic
09:02:05 AM Start
09:06:00 AM Presentation: Savings Accounts and Budget Reserves
09:55:03 AM Presenatation: Negotiated Labor Contracts
10:24:39 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Negotiated Labor Contracts by Kate Sheehan, TELECONFERENCED
Director of Personnel & Labor Relations
- Presentation Below Rescheduled from 2/4/2019 -
+ Savings Accounts & Budget Reserves by TELECONFERENCED
Pam Leary, Director, Treasury Division,
Department of Revenue
                 SENATE FINANCE COMMITTEE                                                                                       
                     February 5, 2019                                                                                           
                         9:02 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:02:05 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:02 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Mike Shower                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Cathy   Giessel;  Pam  Leary,   Director,  Treasury                                                                    
Division, Department  of Revenue; Kate Sheehan,  Director of                                                                    
Personnel    and    Labor     Relations,    Department    of                                                                    
Administration.                                                                                                                 
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
PRESENTATION: SAVINGS ACCOUNTS and BUDGET RESERVES                                                                              
                                                                                                                                
PRESENATATION: NEGOTIATED LABOR CONTRACTS                                                                                       
                                                                                                                                
Co-Chair Stedman  reminded attendees  to silence  their cell                                                                    
phones. He reviewed the agenda for the day.                                                                                     
                                                                                                                                
Co-Chair Stedman highlighted that  the committee had updated                                                                    
slides  from  the  previous   day's  presentation  by  Deven                                                                    
Mitchell,  Executive Director,  Alaska  Municipal Bond  Bank                                                                    
Authority,  Department   of  Revenue  (copy  on   file).  He                                                                    
explained  that there  was a  request to  add the  statutory                                                                    
dividend under  cash availability on  slide 4. He  noted the                                                                    
slide  on  page  12  provided a  further  look-back  on  the                                                                    
state's savings accounts,  the Constitutional Budget Reserve                                                                    
(CBR), and the Statutory  Budget Reserve (SBR). He explained                                                                    
that  to draw  from either  account a  vote was  needed. The                                                                    
Constitutional   Budget   Reserve  required   a   two-thirds                                                                    
majority vote, and the SBR  required a simple majority vote.                                                                    
Historical data was  added to the year 2000. Page  20 of the                                                                    
previous   presentation   was   also  updated   to   reflect                                                                    
historical  data to  the year  2000.  He did  not think  the                                                                    
slide was  difficult to read.  The committee  requested more                                                                    
readable graphs  that also  included the  PERS/TRS payments.                                                                    
He wanted to have a clear  picture of the state's total debt                                                                    
service. He indicated members should  see something in their                                                                    
inboxes shortly.                                                                                                                
                                                                                                                                
Co-Chair Stedman  recognized that Senator Cathy  Giessel had                                                                    
joined the meeting.                                                                                                             
                                                                                                                                
^PRESENTATION: SAVINGS ACCOUNTS and BUDGET RESERVES                                                                           
                                                                                                                                
9:06:00 AM                                                                                                                    
                                                                                                                                
PAM  LEARY,  DIRECTOR,   TREASURY  DIVISION,  DEPARTMENT  OF                                                                    
REVENUE,  discussed her  background. She  had started  as an                                                                    
accountant at  Price Waterhouse.  She climbed the  ranks and                                                                    
finished her career there as  a partner in the combined firm                                                                    
of Price  Waterhouse Coopers. She traveled  around and ended                                                                    
up in Juneau,  Alaska. She performed a number  of jobs until                                                                    
she returned to  her roots as an accountant  with the Alaska                                                                    
Permanent Fund  Corporation (APFC)  for a short  time before                                                                    
being recruited into the Department  of Revenue (DOR) as the                                                                    
Comptroller. In 2014, she became the director.                                                                                  
                                                                                                                                
Ms.  Leary stated  she would  give a  brief overview  of the                                                                    
Treasury Division and talk about  the state's key investment                                                                    
funds including the savings accounts.  She reported that the                                                                    
Treasury   Division    provided   debt    management,   cash                                                                    
management,  unclaimed property  management, in  addition to                                                                    
investment  and  portfolio  management services  for  the  5                                                                    
funds  she would  address in  her presentation:  the state's                                                                    
general  fund (GEFONSI),  the CBR  fund,  the Public  School                                                                    
Trust  fund,  the  Power Cost  Equalization  fund,  and  the                                                                    
retirement funds.  The division also managed  numerous other                                                                    
funds and their investments.                                                                                                    
                                                                                                                                
Ms. Leary  noted that  the division  also provided  staff to                                                                    
the  Alaska  Retirement  Management  Board  (ARMB)  and  the                                                                    
Alaska   Municipal  Bond   Bank   Authority.  The   division                                                                    
currently had  45 treasury staff.  About 80 percent  of them                                                                    
touched investments in some  capacity whether actually doing                                                                    
the  investing,  accounting  for  them,  ensuring  that  the                                                                    
state's investment policies were  in compliance, or handling                                                                    
cash management  which allowed  the state  to know  how much                                                                    
money there  was at  the beginning  or end  of each  day for                                                                    
each investment.                                                                                                                
                                                                                                                                
Ms.  Leary  noted  that  on 12/31/18  the  state  had  $38.8                                                                    
billion assets  dispersed in 45 separate  accounts that were                                                                    
managed. She indicated that 14  accounts were in the Defined                                                                    
Benefit  funds under  the ARMB.  There  were 4  participant-                                                                    
directed funds  which were  the defined  contribution plans,                                                                    
the  supplemental benefits,  and  the deferred  compensation                                                                    
funds - also  under the fiduciary of the  ARMB. The division                                                                    
had  25 funds  under the  direction of  the commissioner  of                                                                    
revenue.  There were  2 funds  for other  state fiduciaries:                                                                    
The Exxon Valdez Oil Spill  Settlement (EVOSS) fund, and the                                                                    
Alaska Mental Health  Trust. The accounts were  managed in a                                                                    
pooled   environment,   an   efficient   way   of   managing                                                                    
investments.  She   relayed  that  pools  were   similar  to                                                                    
building blocks;  the state could  invest 20 percent  of one                                                                    
pool and  30 percent  from another.  It was  an easy  way to                                                                    
allocate funds.                                                                                                                 
                                                                                                                                
Ms.  Leary continued  that  for state  assets  there were  6                                                                    
pools that funds  could invest in. She  indicated there were                                                                    
23 investment pools  for the ARMB assets and rolled  up to 6                                                                    
asset classes  that the defined benefits  plans could invest                                                                    
in.                                                                                                                             
                                                                                                                                
9:09:17 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  wondered why the state  would not have                                                                    
the APFC manage the assets listed  by Ms. Leary for the sake                                                                    
of efficiency.                                                                                                                  
                                                                                                                                
Ms.  Leary stipulated  that each  of the  managed funds  had                                                                    
specific  time horizons  and risk  challenges or  appetites.                                                                    
Certain funds required  separate allocations. She understood                                                                    
the APFC to  have only one asset allocation  which might not                                                                    
be an  appropriate asset  allocation for  some of  the funds                                                                    
managed at the state treasury.                                                                                                  
                                                                                                                                
Co-Chair  von Imhof  thought the  statistics  Ms. Leary  had                                                                    
provided were  useful. She wondered if  the department could                                                                    
provide a list of the funds  or a summary of the information                                                                    
Ms. Leary had just provided.                                                                                                    
                                                                                                                                
Co-Chair Stedman  suggested that  Ms. Leary could  come back                                                                    
to the committee with a  list of assets under management and                                                                    
their categories.                                                                                                               
                                                                                                                                
Ms. Leary agreed to provide  the information. She noted that                                                                    
the  division  website  identified  all the  funds  she  had                                                                    
mentioned and how they were structured.                                                                                         
                                                                                                                                
Senator Olson asked about the  rate of return and investment                                                                    
outcomes and  how they compared  with that of  the Permanent                                                                    
Fund.                                                                                                                           
                                                                                                                                
Ms. Leary  agreed to  provide the  information. Some  of the                                                                    
information would be presented in the current slide pack.                                                                       
                                                                                                                                
Ms.  Leary stated  that in  terms of  process, the  APFC had                                                                    
already   provided   a   presentation  to   the   committee.                                                                    
Therefore, she would  not go through a  detailed process but                                                                    
there was  a similar  function. She explained  that annually                                                                    
or as needed, for state  assets the commissioner of revenue,                                                                    
as  fiduciary,  would sit  down  with  the chief  investment                                                                    
officer as well as the  staff to determine asset allocations                                                                    
for each fund.  Consideration was given to the  type and use                                                                    
of the fund, how long the  fund was expected to be invested,                                                                    
and what type  of risk each fund could take.  She noted that                                                                    
the  division  used  Callan and  Associates  capital  market                                                                    
assumptions  to   develop  some  of  the   asset  allocation                                                                    
possibilities  discussed with  the fiduciaries.  It was  the                                                                    
same process with the ARMB.  Generally, in June of each year                                                                    
the  annual asset  allocation  was  adopted. She  reiterated                                                                    
that   asset   allocations   could   change   depending   on                                                                    
circumstances and a fiduciary's desire.                                                                                         
                                                                                                                                
9:12:51 AM                                                                                                                    
                                                                                                                                
Ms. Leary spoke to the  presentation "State of Alaska Update                                                                    
on the State's  Investment Funds" (copy on  file). She began                                                                    
with  slide  2:  "General   Fund  and  other  non-segregated                                                                    
investments Historical  Invested Assets (in  billions)." She                                                                    
explained that the GEFONSI was  created around statehood and                                                                    
held the  cash and investments  of the government  funds. As                                                                    
more  funds were  added through  the legislature,  it became                                                                    
necessary to separate the funds  into their own accounts. In                                                                    
1992  the  GEFONSI  pool  was  created  and  was  a  way  of                                                                    
investing all of  the smaller funds together  along with the                                                                    
general fund  proper. The general  fund proper was  what she                                                                    
referred to as  the state's operating account.  It was where                                                                    
all  of  the  money  came  in and  out  of  the  state.  The                                                                    
Department   of  Administration   (DOA)  in   their  finance                                                                    
division separately  accounted for each of  the funds within                                                                    
the  state accounting  system.  The  Department of  Revenue,                                                                    
Division  of Treasury,  was  responsible  for investing  the                                                                    
DEFONSI  in  calculating  and  allocating  daily  investment                                                                    
earnings to each of the funds.                                                                                                  
                                                                                                                                
Ms. Leary  continued that there  were 180  funds categorized                                                                    
as Type  I, Type  II, or  Type III. The  Type I  assets were                                                                    
those that  were given  their earnings  by statute  or other                                                                    
law. Type II  and Type III were not  generally getting their                                                                    
earnings. Type  III never received  their earnings  from the                                                                    
legislature. However, Type II  might get their earnings from                                                                    
the legislature  if it  chose to  appropriate the  monies in                                                                    
any given year.                                                                                                                 
                                                                                                                                
Ms. Leary continued to address  slide 2. She relayed that in                                                                    
2018  the state  took a  portion  of the  GEFONSI funds  and                                                                    
created a GEFONSI II fund. The  funds in the GEFONSI II were                                                                    
Type II and Type III funds  that did not get their earnings.                                                                    
There  was a  mechanism by  which the  division was  able to                                                                    
increase the target  rate of return and  risk allocation for                                                                    
assets that  did not get  their earnings.  Essentially there                                                                    
was less risk to those assets.                                                                                                  
                                                                                                                                
9:15:30 AM                                                                                                                    
                                                                                                                                
Ms. Leary  spoke to  slide 3: "General  Fund and  other non-                                                                    
segregated  investments   (GeFONSI  I  &  II)   -  Fiduciary                                                                    
oversight:  Commissioner  of   Revenue,"  which  showed  the                                                                    
statistics  of the  GEFONSI  I and  GEFONSI  II assets.  The                                                                    
investment  objective,  the  target  asset  allocation,  the                                                                    
market value, and  the returns as of December  31, 2018 were                                                                    
included on  the slide. She  pointed out that the  GEFONSI I                                                                    
had  a   short  to  intermediate  investment   horizon  with                                                                    
moderate  risk   and  had  a  target   allocation  that  had                                                                    
primarily  shorter term  fixed income  assets. She  reported                                                                    
that the GEFONSI II had  a moderately high risk appetite and                                                                    
was invested with an intermediate  horizon and longer assets                                                                    
in  the fund.  She highlighted  the pie  chart showing  some                                                                    
equity and  international equity as  part of the  GEFONSI II                                                                    
investment allocation.                                                                                                          
                                                                                                                                
She  moved  to  the  bottom  of  the  slide  listing  Callan                                                                    
projected 10  year returns.  The division  used the  10 year                                                                    
market  presumptions  that  Callan provided.  Based  on  the                                                                    
asset  allocations  being  used, the  division  developed  a                                                                    
return target  - what the  division would expect  to achieve                                                                    
on average over a 10-year period.                                                                                               
                                                                                                                                
Ms.  Leary  directed  attention to  the  market  value.  The                                                                    
combined  market value  equaled  $3.2 billion  and about  56                                                                    
percent were in  GEFONSI I and the rest were  in GEFONSI II.                                                                    
The one-year actual  return as of 12/31, which  was a 1-year                                                                    
rolling  return,  was  1.86  percent   for  GEFONSI  I.  She                                                                    
continued that  because the  GEFONSI II was  so new  she did                                                                    
not have  a corresponding return. There  were returns listed                                                                    
at the 3-month  and 6-month marks. She  highlighted that due                                                                    
to  the volatility  of the  previous few  months the  actual                                                                    
return was  lower in GEFONSI II  than GEFONSI I, and  it was                                                                    
negative over the previous 3 months ending 12/31.                                                                               
                                                                                                                                
Ms. Leary  noted in her slides  that she put the  SBR in the                                                                    
general  fund. She  was unsure  if the  committee wanted  to                                                                    
discuss the SBR  and its values. For  clarity, she explained                                                                    
that originally  and for a  short time  the SBR was  part of                                                                    
the GEFONSI  funds. It  was separated  into its  own account                                                                    
and  asset allocation  as it  grew. In  2015, it  was rolled                                                                    
back into the GEFONSI.                                                                                                          
                                                                                                                                
Co-Chair   Stedman  referenced   slide  3   and  asked   how                                                                    
international and domestic equities' were invested.                                                                             
                                                                                                                                
Ms. Leary explained  that as she had mentioned  at the start                                                                    
of the presentation the state had  pools, one of which was a                                                                    
domestic pool,  a passive index  fund managed by one  of the                                                                    
state's managers,  SSGA. In  the international  equity funds                                                                    
there was a mix of passive and active managers.                                                                                 
                                                                                                                                
Co-Chair  Stedman asked  for an  explanation of  a "passive"                                                                    
investment fund.                                                                                                                
                                                                                                                                
Ms. Leary  explained that  a passive  investment fund  was a                                                                    
fund  that  targeted the  market.  It  tried to  follow  the                                                                    
market   rather   than   taking  bets,   considered   active                                                                    
management, on different types  of investments. She provided                                                                    
an example of a passive  investment. She relayed that when a                                                                    
person looked  in a return  box there was a  benchmark. They                                                                    
were the  passive investments of  the marketplace.  When the                                                                    
division  created   an  asset   allocation,  it   created  a                                                                    
benchmark  that approximated  what the  states' assets  were                                                                    
and  what it  was  investing  its assets.  It  was what  the                                                                    
division compared itself to when it invested.                                                                                   
                                                                                                                                
9:20:30 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  drew attention  to the  lower part  of the                                                                    
slide which showed 3 month  and 6 month returns. He wondered                                                                    
if  the  returns  were  annualized  or  to-date.  Ms.  Leary                                                                    
responded that  they were for  the 3-month  period. Co-Chair                                                                    
Stedman  asked about  the actuals  of .81  percent and  1.26                                                                    
percent for 6-months.  Ms. Leary replied that  they were for                                                                    
the 6-month returns.                                                                                                            
                                                                                                                                
Co-Chair Stedman  asked if they  were annualized.  Ms. Leary                                                                    
replied,  "No."  The 1-year  actual  was  a rolling  number.                                                                    
Therefore, it  was at a  particular point in  time. Co-Chair                                                                    
Stedman added that  annualizing less than a  year of returns                                                                    
would result in distorted numbers.                                                                                              
                                                                                                                                
Ms.  Leary  asked   if  would  be  appropriate   to  have  a                                                                    
discussion about  the general fund,  since she was  still on                                                                    
slide  3   and  because  the  chairman   wanted  to  address                                                                    
liquidity. The  general fund was the  operating account that                                                                    
required  money coming  in to  pay assets.  Co-Chair Stedman                                                                    
replied, "That would be fine."                                                                                                  
                                                                                                                                
Ms. Leary  conveyed the general  fund had a balance  of just                                                                    
under $400 million. On the  division's website there was the                                                                    
ability to track  the forecast of the  expected general fund                                                                    
amount. The  general fund was  where the money flowed  in an                                                                    
out  of the  state to  pay salaries.  The division  had been                                                                    
working with  declining revenues and often  revenues came in                                                                    
at different times  than expenditures were to  be paid which                                                                    
sometimes  required  borrowing.  In the  past,  the  state's                                                                    
borrowing  sources  had  been  the  SBR  and  the  CBR.  She                                                                    
continued  that  with  the passage  of  SB  26  [Legislation                                                                    
passed  in  2016  regarding  appropriation  limits  and  the                                                                    
earnings of the Alaska Permanent  Fund] it also included the                                                                    
Earnings  Reserve   Account  (ERA)  from  APFC.   The  state                                                                    
borrowed $700  million from  the CBR,  took $350  million in                                                                    
October and $250  in December from the  ERA, and anticipated                                                                    
taking $250  million in February  and $250 million  in April                                                                    
to address the cash short falls in the current year.                                                                            
                                                                                                                                
Co-Chair Stedman  asked if the  state would be  taking about                                                                    
$1.4 billion.  Ms. Leary responded,  "$1.1 billion  from the                                                                    
ERA." Co-Chair Stedman asked if the amount was the total.                                                                       
                                                                                                                                
Ms.  Leary  expected  the  state  would  take  $1.1  million                                                                    
through April, leaving  a balance. She stated  that the cash                                                                    
management tools  used by the  division were derived  from a                                                                    
model using assumptions  about what the state  would pay out                                                                    
based on prior years. There  were large ticket items such as                                                                    
education expenditures. The state had  to be nimble with its                                                                    
model  because  in  some  months  it  anticipated  more  oil                                                                    
revenue than  what came  in. The division  had to  make some                                                                    
changes  and  worked  with  APFC asking  for  more  or  less                                                                    
advances depending on the needs  of the state. She indicated                                                                    
the  division's  actions were  in  keeping  with the  intent                                                                    
language  the legislature  put into  the budget.  The intent                                                                    
language required as much of the  ERA to be invested at APFC                                                                    
rather than the funds being  transferred over to the general                                                                    
fund.                                                                                                                           
                                                                                                                                
9:24:49 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  wanted  to  know  the  maximum  borrowing                                                                    
capacity for  the current year  that the general  fund might                                                                    
be subject to. Ms. Leary  stated that the amount coming from                                                                    
the ERA was $2.7 billion  total, approximately $1 billion of                                                                    
which went for the dividend fund.                                                                                               
                                                                                                                                
Co-Chair  Stedman  stated  his question  pertained  to  cash                                                                    
flow.  He  wondered, in  the  day-to-day  operations of  the                                                                    
state,  about the  source  of  cash flow  if  there was  not                                                                    
sufficient  liquidity.  Historically,  the  legislature  had                                                                    
gone to  the CBR for  short-term borrowing to pay  bills and                                                                    
make payroll.  He queried how  much the state would  have to                                                                    
borrow from  a bank  to pay  its bills if  the state  had no                                                                    
CBR, no SBR, and no access to the ERA.                                                                                          
                                                                                                                                
Ms.  Leary replied  that the  state required  an average  of                                                                    
$400  million to  pay its  bills.  The division  had a  cash                                                                    
deficiency  plan in  place which  was  an agreement  between                                                                    
DOR,  DOA,  the  Department  of   Law,  and  the  Office  of                                                                    
Management  and  Budget  (OMB)  that  dictated  what  should                                                                    
happen in times  of shortages. The state would  use the SBR,                                                                    
CBR, ERA, and smaller sub  funds from the GEFONSI. The state                                                                    
would then  approach the  legislature for  further direction                                                                    
about what  to pay or  not pay. The  state had never  had to                                                                    
resort to such lengths because  there had been other funding                                                                    
sources available.                                                                                                              
                                                                                                                                
Co-Chair Stedman wanted  to know how much cash  needed to be                                                                    
held  in  reserves.  The  legislature  had  the  ability  to                                                                    
liquidate  everything,   although  he  did  not   think  the                                                                    
legislature would  do so.  He stated there  would be  a need                                                                    
for  a  positive CBR  balance,  which  was approximately  $2                                                                    
billion. He reiterated his question  as to how much cash was                                                                    
borrowed  in any  given year  to meet  liquidity needs  from                                                                    
other  accounts  within  state coffers.  He  wanted  a  cash                                                                    
cushion dollar  amount for  operations. Ms.  Leary responded                                                                    
that the amount was $400 million.                                                                                               
                                                                                                                                
9:28:31 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:28:47 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Stedman   stated  the   committee  would   have  a                                                                    
discussion about drawing from the  CBR and the magnitude the                                                                    
finance  committee  was comfortable  with,  if  any, with  a                                                                    
balance  of about  $2 billion.  He did  not want  to make  a                                                                    
policy  call  that  placed the  treasury  department  in  an                                                                    
adverse position in liquidities.                                                                                                
                                                                                                                                
Co-Chair  von Imhof  thought the  presentation was  adequate                                                                    
but not great.  She thought there was  more information that                                                                    
should have been added. She  believed the presenter had made                                                                    
assumptions  that  the  committee  knew all  of  funds.  She                                                                    
believed the first  couple of slides should  have provided a                                                                    
framework.  She  recommended   the  presentation  should  be                                                                    
redone and  presented again to  the committee.  She believed                                                                    
more detail was  needed for the committee  to make decisions                                                                    
in the future.                                                                                                                  
                                                                                                                                
Co-Chair  Stedman  wanted  to   accelerate  the  slides.  He                                                                    
asserted the committee was concerned  with the cash position                                                                    
of the state.                                                                                                                   
                                                                                                                                
Senator  Micciche referenced  Ms.  Leary's earlier  comments                                                                    
about borrowing from the ERA.  He clarified that she did not                                                                    
mean  overdrawing   the  percent  of  market   value  (POMV)                                                                    
allowance.  Ms.  Leary  responded in  the  affirmative.  The                                                                    
state had not reached the balance of the POMV draw.                                                                             
                                                                                                                                
Co-Chair Stedman  thought there needed  to be a  finer point                                                                    
drawn  on the  subject of  borrowing from  the CBR  prior to                                                                    
drawing on other accounts.                                                                                                      
                                                                                                                                
Ms.  Leary showed  slide 4,  "Constitutional Budget  Reserve                                                                    
Fund Historical Invested Assets  (in billions." She detailed                                                                    
that in  1990 the voters  of Alaska adopted an  amendment to                                                                    
the constitution  creating the CBR.  The fund was  a savings                                                                    
fund created  to enhance budget  stability. It  consisted of                                                                    
deposits resulting  from resolutions  of disputes  about the                                                                    
amount of mineral lease bonuses  and royalties or taxes. The                                                                    
legislature  could   appropriate  from   the  CBR   to  fund                                                                    
operations  under  certain  conditions.  Use  of  the  funds                                                                    
primarily required  a 3/4 majority vote  of the legislature.                                                                    
Borrowings were allowed to  fund temporary cash deficiencies                                                                    
as well  as shortfalls  as appropriated by  the legislature.                                                                    
She reported  that the CBR must  be repaid when there  was a                                                                    
surplus in the general fund at the end of the year.                                                                             
                                                                                                                                
Ms.  Leary  continued  that  the sub-fund  of  the  CBR  was                                                                    
created  in  2000  with  the  purpose  of  targeting  higher                                                                    
returns. At  the time, it  had a higher risk  tolerance than                                                                    
the main CBR fund. She pointed  to the yellow portion of the                                                                    
graph and relayed that in 2008  it was funded to be as large                                                                    
as it  was by a  deposit of both constitutional  budget main                                                                    
funds  and about  $2.6  billion from  the  general fund.  In                                                                    
2015, it was  liquidated as required by statute  to meet the                                                                    
anticipated needs within 5 years.                                                                                               
                                                                                                                                
9:33:11 AM                                                                                                                    
                                                                                                                                
Ms. Leary displayed slide  5, "Constitutional Budget Reserve                                                                    
Fund  Fiduciary oversight:  Commissioner of  Revenue," which                                                                    
showed  the same  statistics as  for the  GeFONSI seen  on a                                                                    
previous slide. She highlighted  the target asset allocation                                                                    
of  mainly short-term  fixed income.  There was  some equity                                                                    
that was  added to  the asset  allocation shortly  after the                                                                    
sub-fund  was  moved  into the  main  fund.  Its  investment                                                                    
objective  was  an   intermediate  investment  horizon  with                                                                    
moderate risk.  The balance  on December  31, 2018  was $1.7                                                                    
billion after  moving $700  million to  the general  fund to                                                                    
pay for operating expenses. The  projected 10-year return at                                                                    
the bottom was  2.89 percent. She reported  that on December                                                                    
31,  2018 the  actual  1-year return  was  .78 percent.  She                                                                    
reported  an impact  on the  markets over  the previous  few                                                                    
months.                                                                                                                         
                                                                                                                                
Co-Chair   Stedman  conveyed   the   good   news  that   the                                                                    
legislature was  looking to draw  $600 million from  the CBR                                                                    
in the current fiscal year.  However, because of the market,                                                                    
the amount  would only be  about $250  million - down  a few                                                                    
hundred million.                                                                                                                
                                                                                                                                
Ms.  Leary  discussed  slide  6,  "Power  Cost  Equalization                                                                    
Historical  Invested Assets."  The  Power Cost  Equalization                                                                    
(PCE) fund  was created in  2000 with $100 million  from the                                                                    
CBR. The purpose of the fund  was to provide for a long-term                                                                    
stable  financing source  for higher  cost electric  service                                                                    
areas  of the  state. In  2016, there  was legislation  that                                                                    
changed  the goal  of  the  fund of  being  able  to take  7                                                                    
percent  down to  5 percent  of the  monthly average  market                                                                    
value of the  prior 3 fiscal years. The money  could be used                                                                    
to fund  various grant programs  to be given  to individuals                                                                    
and organizations to offset high electricity costs.                                                                             
                                                                                                                                
Ms.  Leary continued  to  discuss slide  6.  She noted  that                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED)  was the  agency that  oversaw the  spending of  the                                                                    
fund. The  Department of  Revenue worked  with DCCED  to let                                                                    
them  know  the  balance  of   the  fund  and  their  budget                                                                    
appropriation request.                                                                                                          
                                                                                                                                
Ms. Leary reviewed slide 7, "Power Cost Equalization Fund                                                                       
Fiduciary oversight: Commissioner  of Revenue," which showed                                                                    
A table  with an embedded pie  chart. She noted the  list of                                                                    
statistics and  the target asset allocation.  There was more                                                                    
equity the  fund was  invested in  because of  its long-term                                                                    
investment  horizon. It  could  afford to  have higher  risk                                                                    
investments that  would withstand  the volatility  of equity                                                                    
markets  over  time. The  projected  10-year  return at  the                                                                    
bottom of the  slide was 6.2 percent  using Callan's 10-year                                                                    
market assumption rates.                                                                                                        
                                                                                                                                
Ms. Leary pointed  out that in looking at  the 1-year actual                                                                    
as of  December 31, 2018  there was a negative  5.63 percent                                                                    
return compared  to June  which was  a positive  7.5 percent                                                                    
return.  She stressed  that  the  timeframes being  reviewed                                                                    
mattered.  The  benchmarks  showed that  the  entire  market                                                                    
showed the effects of volatility in the market place.                                                                           
                                                                                                                                
9:37:40 AM                                                                                                                    
                                                                                                                                
Ms. Leary moved to slide  8, "Public School Trust Historical                                                                    
Invested Assets  (in millions)," which showed  a line graph.                                                                    
The  Public  School  Trust  was   established  in  1978  and                                                                    
replaced  the  territorial  era  Public  School  Land  Grant                                                                    
created by  congress in 1915.  There was a  permanent school                                                                    
trust created  prior to  1978. The  Public School  Trust was                                                                    
created  by  transfer  of  those  assets.  Since  then,  the                                                                    
additional revenue  that came in  was from earnings  as well                                                                    
as  one-half of  1 percent  of the  income from  state lands                                                                    
including royalty interests.                                                                                                    
                                                                                                                                
Ms. Leary  continued that in  the prior year the  passage of                                                                    
HB  213 [Legislation  passed in  2018  regarding the  Public                                                                    
School  Trust  Fund and  an  education  raffle] changed  the                                                                    
structure  of  the  trust  fund.  It used  to  be  a  2-fund                                                                    
structure with  a principle fund  and an interest  or income                                                                    
fund. The  corpus of  the Public School  Trust had  an asset                                                                    
allocation  that had  some equity  in it  and provided  both                                                                    
interest  and dividends  into the  income  fund. The  income                                                                    
fund  was  then used  to  offset  some  of the  K-12  Public                                                                    
Education  funding.  The fund  was  to  be used  for  public                                                                    
school.                                                                                                                         
                                                                                                                                
Ms.  Leary  continued to  discuss  the  Public School  Trust                                                                    
Fund. After  the passage  of HB  213 it  was managed  as one                                                                    
fund and  was structured as  an endowment fund or  a percent                                                                    
of market  value (POMV) fund.  There was a spending  rule in                                                                    
the legislation that not more  than 5 percent of the average                                                                    
market value for the 5  years preceding the last fiscal year                                                                    
could be spent.                                                                                                                 
                                                                                                                                
Senator Olson asked if it had been  a wise move to go to one                                                                    
fund  as  opposed to  having  two  separate funds  with  the                                                                    
corpus in one fund and the  investment in another - a result                                                                    
of the passage of HB 213.                                                                                                       
                                                                                                                                
Ms.  Leary responded  that the  previous fund  structure was                                                                    
considered to be "old school."  The new structure was a more                                                                    
modern   endowment-type  fund.   It   allowed  for   riskier                                                                    
investments  and would  result in  an accelerated  growth of                                                                    
the  fund. The  former structure  targeted income  producing                                                                    
investments and resulted in less growth of the fund.                                                                            
                                                                                                                                
Senator  Olson wondered  if Ms.  Leary was  in favor  of the                                                                    
change. Ms. Leary responded in the affirmative.                                                                                 
                                                                                                                                
Ms.  Leary spoke  to slide  9, "Public  School Trust  Fund -                                                                    
Fiduciary oversight:  Commissioner of Revenue."  She pointed                                                                    
out that  the fund had  a long-term investment  horizon with                                                                    
high risk.  It also had  a significant amount of  equity and                                                                    
an investment  similar to  the PCE  Fund. She  reported that                                                                    
the   projected  10-year   return  was   6.2  percent.   The                                                                    
difference between the principle  fund and what it currently                                                                    
looked  like  was a  shift  from  fixed income  assets  into                                                                    
equity markets.  She highlighted that the  1-year actual was                                                                    
negative 5.66 percent. As of  December 31, 2018 and June 30,                                                                    
2018  the  1-year  return  would  have  been  a  positive  6                                                                    
percent.                                                                                                                        
                                                                                                                                
9:41:44 AM                                                                                                                    
                                                                                                                                
Ms. Leary  displayed slide 10, "Public  Employees Retirement                                                                    
System  &  Teachers  Retirement System  Historical  Invested                                                                    
Assets     Pension  and Health  Defined  Benefit  Plans  (in                                                                    
billions)," which showed the  historical invested assets for                                                                    
the  defined   benefit  plans  for  the   Public  Employees'                                                                    
Retirement  System  (PERS)   and  the  Teachers'  Retirement                                                                    
System  (TRS). The  Alaska Retirement  Management Board  was                                                                    
the fiduciary  of the  funds and was  a 9-person  board that                                                                    
met  about 5  times  per year.  She  detailed that  treasury                                                                    
staff  were staff  to the  ARMB and  the pension  plans were                                                                    
administered  by the  Division  of  Retirement and  Benefits                                                                    
within DOA. The asset allocated  was set annually during the                                                                    
June meeting.                                                                                                                   
                                                                                                                                
Ms. Leary  reviewed slide  11, "Public  Employees Retirement                                                                    
System  & Teachers  Retirement  System Fiduciary  oversight:                                                                    
Alaska   Retirement    Management   Board"    which   showed                                                                    
statistics. She  noted that the target  allocation had seven                                                                    
different  classifications for  assets. There  were numerous                                                                    
pools that rolled  up into the asset  allocations. There was                                                                    
a  significant difference  for the  funds than  the treasury                                                                    
funds that the department  managed. There were more illiquid                                                                    
funds  that  were managed  because  there  was a  long  time                                                                    
horizon.  Some  of the  more  illiquid  funds included  real                                                                    
assets  such  as real  estate,  farmland,  timber, and  some                                                                    
private  equity  and  absolute   return.  She  reviewed  the                                                                    
balance  of the  four funds  as  of December  31, 2018.  The                                                                    
defined benefit and health trust  for PERS was a $16 billion                                                                    
return. She relayed that the  return for the teachers' plans                                                                    
was 7.9 billion.  She had September 2018  returns which were                                                                    
final  return numbers.  The 1-year  actual  return was  9.39                                                                    
percent as of September 30,2018  and was very similar to the                                                                    
teachers' plan.  She noted that  the state had  history over                                                                    
the  34 years  that  the department  had  been tracking  the                                                                    
information. The  returns had a  nominal rate of  about 9.15                                                                    
percent  over the  34-year period  which related  to a  6.52                                                                    
percent  real rate  of return.  It was  a nominal  rate plus                                                                    
inflation which was the real buying power of the fund.                                                                          
                                                                                                                                
9:44:41 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  noted that the committee  would invite the                                                                    
ARMB back  to Senate  Finance along  with Callan  to provide                                                                    
more detail.                                                                                                                    
                                                                                                                                
Co-Chair von Imhof  compared slide 11 to slide  9 noting the                                                                    
PERS  and  TRS  funds.  She  noted  a  long-term  investment                                                                    
horizon and  a moderate  risk for  PERS and  TRS and  a high                                                                    
risk  long-term investment  horizon. She  was curious  about                                                                    
the moderate  risk for PERS  and TRS  on slide 11  which was                                                                    
much more diversified, had an  investment return of slightly                                                                    
more even though it was a  moderate risk. The high risk with                                                                    
what  Callan projected  of a  lower return  of 6.2  was much                                                                    
less  diversified and  had tougher  returns.  She asked  Ms.                                                                    
Leary  if she  would  change the  Public  School Trust  Fund                                                                    
target allocation and potential return  target to be more in                                                                    
line with the PERS and TRS investments.                                                                                         
                                                                                                                                
Ms.  Leary explained  that the  investment  objective had  a                                                                    
significant amount  of subjectivity  as to whether  risk was                                                                    
moderate  or high.  It was  the fiduciary  of the  fund that                                                                    
would determine the  fund's risk appetite. It  was felt that                                                                    
the  longevity  of the  Public  School  Trust Fund  made  it                                                                    
possible  to  have  a  high-risk  tolerance.  Although,  the                                                                    
assets that were available to  the fiduciary of the fund did                                                                    
not include those that were  available to the ARMB fund. For                                                                    
a  high risk  category, the  asset allocation  shown on  the                                                                    
slide  meant more  movement  into  international equity  and                                                                    
domestic equity. For  the retirement plans on  slide 11, the                                                                    
moderate risk  level indicated the  ARMB wanted  to moderate                                                                    
how much  risk was  being taken  while developing  the asset                                                                    
allocation  of each  fund. There  were many  ways to  target                                                                    
returns.  How and  what the  fiduciary chose  to invest  the                                                                    
funds was an outcome of their assessment and analysis.                                                                          
                                                                                                                                
9:47:38 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski thought  it  did not  make sense  that                                                                    
PERS and TRS investments with  moderate risk and a long-term                                                                    
investment  horizon  showed an  8.2  percent  return over  5                                                                    
years.  Whereas, the  high  risk  investments showed  lesser                                                                    
returns for the  PCE Fund and the Public  School Trust Fund.                                                                    
The stock  market was  booming, and  the Permanent  Fund was                                                                    
returning over 8 percent in the same period.                                                                                    
                                                                                                                                
Ms.  Leary  believed  the higher  earnings  targets  were  a                                                                    
result  of some  of the  illiquid assets  that the  ARMB had                                                                    
access to  in terms  of its  investments. The  Public School                                                                    
Trust Fund did  not currently have a pool in  which it could                                                                    
participate.  There were  limited  pools  managed for  state                                                                    
assets.  There  were  higher  returns   coming  out  of  the                                                                    
illiquid markets.  She thought it  would be more  obvious if                                                                    
the state had Callan and  Associates show their breakdown of                                                                    
each of  the assets,  their rates of  return, and  what they                                                                    
contributed to the funds.                                                                                                       
                                                                                                                                
Co-Chair  Stedman invited  Ms. Leary  to return  and have  a                                                                    
discussion with  more concentration on the  general fund. He                                                                    
asked  for more  information on  the state's  cash flow.  He                                                                    
asked for  a 5-year cash analysis  month-by-month. He wanted                                                                    
to  know when  borrowing  took place,  the  amount that  was                                                                    
borrowed,  and when  it was  paid back.  It would  provide a                                                                    
picture of  the annual cash  borrowing needs of  the general                                                                    
fund and help in  the legislature's future deliberations. He                                                                    
wanted members  to give some  thought to the ability  of the                                                                    
treasury to borrow from the  Permanent Fund while there were                                                                    
funds available.  He understood the potential  need for help                                                                    
from the Permanent  Fund. He did not think  the state should                                                                    
rely on  the ERA for  daily cash  flow needs. He  thought it                                                                    
would  lead the  legislature to  eventually liquidating  the                                                                    
CBR.  He restated  his request  for a  5-year look  back. He                                                                    
thought  the legislature  was  on a  slippery  slope by  not                                                                    
addressing  the state's  fiscal  issues and  looking to  the                                                                    
Permanent  Fund. He  did not  want  the state  to reach  the                                                                    
point  of having  to  look  to the  Permanent  Fund to  make                                                                    
payroll.                                                                                                                        
                                                                                                                                
9:52:04 AM                                                                                                                    
                                                                                                                                
Senator Micciche  looked at  the net  position from  2000 to                                                                    
2007. There  were times  when the state  had nearly  zero in                                                                    
the ERA. The state plodded along  with $2 billion in the CBR                                                                    
for years. He  thought the spending was  similar towards the                                                                    
end of  the period. He was  curious if the state  was coming                                                                    
back to  some normalcy after  the years of high  revenue. He                                                                    
was interested in how the  division managed the net position                                                                    
of  paying the  state's bills  at  the time.  The total  net                                                                    
position  in the  state's  savings at  times  was around  $2                                                                    
billion and the state was  spending similarly to what it was                                                                    
currently  spending. He  realized that  some of  the revenue                                                                    
ended up  being far  more positive. He  was curious  how the                                                                    
treasury managed cash flow in  the past. He relayed that the                                                                    
state's net position was much higher because of the ERA.                                                                        
                                                                                                                                
Co-Chair Stedman recalled that  the legislature used the CBR                                                                    
without any hiccups in previous  times. He expressed concern                                                                    
with  liquidating  the  state's  cash  and  looking  to  the                                                                    
Permanent  Fund  to  bail  it out  rather  than  making  the                                                                    
necessary  and hard  decisions.  He believed  the state  was                                                                    
presently on  an unsustainable  trajectory. Ms.  Leary would                                                                    
bring the  information to the committee  to help legislators                                                                    
make needed decisions.                                                                                                          
                                                                                                                                
^PRESENATATION: NEGOTIATED LABOR CONTRACTS                                                                                    
                                                                                                                                
9:55:03 AM                                                                                                                    
                                                                                                                                
KATE  SHEEHAN, DIRECTOR  OF PERSONNEL  AND LABOR  RELATIONS,                                                                    
DEPARTMENT OF ADMINISTRATION,  discussed her background. She                                                                    
had  started   as  a  Labor   Relations  Analyst   in  2004.                                                                    
Subsequently,  she moved  to  the Department  of  Law for  a                                                                    
brief stint as  an assistant attorney general.  In 2007, she                                                                    
returned  to serve  as deputy  director of  labor relations.                                                                    
After seven  years she  was appointed as  a director  of the                                                                    
division in May 2017.                                                                                                           
                                                                                                                                
Ms. Sheehan  discussed the presentation,  "Alaska Department                                                                    
of Administration 2018 Labor Contracts"  (copy on file). She                                                                    
indicated it  provided a background  on negotiations  and an                                                                    
update on the state's 11 collective bargaining agreements.                                                                      
                                                                                                                                
Ms.  Sheehan turned  to slide  2, "Framework."  She reported                                                                    
that  negotiations were  governed by  the Public  Employment                                                                    
Relations  Act (PERA)  AS  23.40.070-23.40.250. The  statute                                                                    
provided  the ground  work from  which the  state bargained.                                                                    
The state  was required to  bargain wages, hours,  and other                                                                    
terms  and conditions  of employments.  There  was case  law                                                                    
that described the terms and conditions in greater detail.                                                                      
                                                                                                                                
Ms.  Sheehan  relayed  that  the  state  had  11  collective                                                                    
bargaining  units. The  contracts set  forth when  the state                                                                    
could begin bargaining.  Contracts were not to  be more than                                                                    
3 years in  duration. Sometimes the contracts  were for less                                                                    
than  3  years. Depending  on  the  contract the  department                                                                    
began negotiations  in the fall.  The state was  required to                                                                    
submit  the  monetary  terms  to   the  legislature  by  the                                                                    
sixtieth day  of the session  generally in  mid-March. After                                                                    
the  sixtieth   day  they  could  still   be  submitted  and                                                                    
considered by the legislature.  However, the legislature was                                                                    
not  required  to  consider  them if  they  were  after  the                                                                    
sixtieth  day. In  the past,  as long  as there  has been  a                                                                    
budget in play,  either the operating budget  or the capital                                                                    
budget, they  had been included.  The department's  goal and                                                                    
the  requirement was  to submit  the monetary  terms by  the                                                                    
60th day of session.                                                                                                            
                                                                                                                                
Ms.  Sheehan   reiterated  that  the  state   had  mandatory                                                                    
subjects of bargaining. There  were also permissive subjects                                                                    
of bargaining  such as classification  that the  state could                                                                    
bargain but was not required to.                                                                                                
                                                                                                                                
Ms. Sheehan continued that if  either side found the demands                                                                    
too  unfavorable they  could maintain  the  status quo.  She                                                                    
indicated  that  when  a  contract  expired  until  reaching                                                                    
impasse the  state continued with  the terms of  the expired                                                                    
contract. She  would be getting  slides that show  the state                                                                    
had  several  expired  collective bargaining  agreements  of                                                                    
which the  state was not  at impasse and continued  with the                                                                    
status quo.                                                                                                                     
                                                                                                                                
Ms. Sheehan  conveyed that  once the  state was  at impasse,                                                                    
there were  a couple  of options for  both sides.  The state                                                                    
had 3 classes  of employees: class 1, class 2,  and class 3.                                                                    
Class 1 employees were  troopers, correctional officers, and                                                                    
nurses. They were not allowed to  go on strike. If the state                                                                    
reached impasse  with them, the  statute required  that both                                                                    
parties went to binding interest arbitration.                                                                                   
                                                                                                                                
Ms.  Sheehan reported  that class  2 employees  could go  on                                                                    
strike.  However,  the state  could  seek  an injunction  to                                                                    
bring  employees  back  to  work. The  courts  look  at  the                                                                    
health, safety,  and welfare to  make a  determination. Most                                                                    
of the state's class 2  employees were Alaska Marine Highway                                                                    
vessel   employees.  The   state  also   had  a   couple  of                                                                    
information  technology  professionals  in  the  field.  The                                                                    
remaining employees were  in the class 3  category and could                                                                    
go on strike.                                                                                                                   
                                                                                                                                
Ms. Sheehan  conveyed that when  impasse was  reached either                                                                    
by  mutual agreement  or the  Alaska  Labor Relation  Agency                                                                    
agreed  that  impasse was  reached,  employees  could go  on                                                                    
strike assuming  the contract had  expired, or  the employer                                                                    
(the state) could implement its last best offer.                                                                                
                                                                                                                                
Ms. Sheehan  turned to slide  3, "State  Personnel Overview"                                                                    
which  showed  a  broad  overview  of  the  funding  of  the                                                                    
bargaining  units. The  slide was  put together  by OMB  and                                                                    
provided the  funding sources. The  accounts and  costs were                                                                    
based on  the fiscal  year 19  management plan  for budgeted                                                                    
position control numbers (PCN).                                                                                                 
                                                                                                                                
Co-Chair Stedman  asked Ms. Sheehan  to define  any acronyms                                                                    
she used on the slides.                                                                                                         
                                                                                                                                
Ms. Sheehan concurred.                                                                                                          
                                                                                                                                
Co-Chair von Imhof stated it  was easier when cents were not                                                                    
included in  monetary data tables.  She also  encouraged Ms.                                                                    
Sheehan to justify to her right in the number tables.                                                                           
                                                                                                                                
10:00:28 AM                                                                                                                   
                                                                                                                                
Ms.  Sheehan  displayed  slide   4,  "Bargaining  Unit  (BU)                                                                    
Detail," which  provided bargaining detail  information. The                                                                    
slide was  arranged in order  of what was  being negotiated.                                                                    
She noted that the  Alaska Correctional Officers Association                                                                    
(ACOA)  were class  1 employees.  Their contract  expired in                                                                    
June 30, 2018. A few weeks  prior the state went to interest                                                                    
arbitration with the Correctional  Officers Union. The state                                                                    
expected a  decision from the  arbitrator on March  10, 2019                                                                    
at which  point the  state would be  required to  submit the                                                                    
monetary terms for the arbitration award.                                                                                       
                                                                                                                                
Ms.  Sheehan  reported  that   the  Alaska  State  Employees                                                                    
Association  (ASEA)  was  the  largest  union  and  included                                                                    
nurses, engineers, paralegals,  and office assistants. Their                                                                    
contract expired June 20, 2019.  The state reached agreement                                                                    
under  the  prior  administration   and  the  terms  of  the                                                                    
agreements were  submitted to  the legislature.  They agreed                                                                    
to  cost of  living adjustments  of 3  percent in  the first                                                                    
year and  effective in  June 2019, 1  percent in  the second                                                                    
year, and 1 percent in the  third year. There were also some                                                                    
employer contributions into their health trust.                                                                                 
                                                                                                                                
Ms. Sheehan continued to discuss  slide 4. She reported that                                                                    
the  contract for  the  Alaska  Vocational Technical  Center                                                                    
(AVTEC)  Teachers Association  representing the  instructors                                                                    
at AVTEC expired  on June 30, 2019. The  department was just                                                                    
beginning negotiations. She  explained that the Confidential                                                                    
Employees  Association encompassed  her staff,  the division                                                                    
of personnel,  the human resources  staff, the  agencies, as                                                                    
well as some  of the finance staff within  the Alaska Marine                                                                    
Highway Dispatchers.  Their contract  also expired  June 30,                                                                    
2019.   An   agreement   was   reached   under   the   prior                                                                    
administration. The  agreement called for no  cost of living                                                                    
adjustments but moving them to a  40 hour work week. It also                                                                    
included  an  employee  contribution  to  health  care.  She                                                                    
detailed that for many years  if an employee had the economy                                                                    
plan and Alaska  Care did not have  an employee contribution                                                                    
the state started bargaining employee contributions.                                                                            
                                                                                                                                
Ms.  Sheehan addressed  the Inland  Boatmen's' Union  (IBU),                                                                    
the  Marine  Engineers  Beneficial Association  (MEBA),  and                                                                    
Masters,  Mates, and  Pilots  (MMP);  three contracts  which                                                                    
expired June  30, 2017. The  state had been  in negotiations                                                                    
with the units  since the fall of 2016.  The state continued                                                                    
to meet with them in their less busy season in the fall.                                                                        
                                                                                                                                
Ms.  Sheehan  reported  the final  contract  the  state  was                                                                    
currently   negotiating   was    the   Teachers'   Education                                                                    
Association of Mount Edgecumbe.  Their contract expired June                                                                    
30,  2018. The  state  had reached  an  agreement under  the                                                                    
prior  administration and  the terms  had been  submitted to                                                                    
the legislature.  They received a cost  of living adjustment                                                                    
of 3 percent  the first year, 3 percent in  the second year,                                                                    
and  3 percent  in the  third  year. The  reason that  their                                                                    
percentage  was   higher  than  others  was   because  their                                                                    
comparators was  the Sitka School District  which was paying                                                                    
higher.  The state  also looked  at some  of the  negotiated                                                                    
wage  increases which  were  significantly  lower than  some                                                                    
other state employees.                                                                                                          
                                                                                                                                
10:04:22 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  asked if  they agreed  to take  on any                                                                    
additional  burdens such  as health  insurance. Ms.  Sheehan                                                                    
answered in the affirmative.  The state bargained for health                                                                    
insurance the  same as any  other union  which was up  to 12                                                                    
percent  the first  year and  15 percent  in the  second and                                                                    
third year.                                                                                                                     
                                                                                                                                
Co-Chair Stedman  asked if the committee  should assume that                                                                    
the  increases  would  be  in   the  coming  budget  on  the                                                                    
thirteenth. Ms. Sheehan answered in the affirmative.                                                                            
                                                                                                                                
Senator  Micciche asked  which employees  were missing  from                                                                    
the  slide. Ms.  Sheehan stated  that University  employees,                                                                    
legislative   employees,  and   court  employees   were  not                                                                    
included.  The  slide  was  limited   to  employees  of  the                                                                    
executive branch.                                                                                                               
                                                                                                                                
Ms.  Sheehan addressed  the contract  for the  Public Safety                                                                    
Employees  Association  (PSEA).  Their contract  expired  on                                                                    
June 30,  2020 and  negotiations would  begin in  the coming                                                                    
fall.  However, the  state negotiated  with them  in October                                                                    
and  November.  She  reminded  members  of  the  legislative                                                                    
intent language to open up  negotiations for troopers due to                                                                    
recruitment and retention issues.  She reported that DOA did                                                                    
a   couple  of   things  with   them.  The   state  took   a                                                                    
classification action  looking at  a market-based  pay study                                                                    
to  determine that  the  state  was paying  too  low in  its                                                                    
trooper class  series. The  state increased  all of  them by                                                                    
one range.  The series included trooper  recruits, troopers,                                                                    
corporals, and sergeants.  The division also took  a look at                                                                    
the  command staff  in the  supervisory union  and increased                                                                    
their ranges.  In addition to  the classification  action, a                                                                    
cost  of  living adjustment  of  7.5  percent was  bargained                                                                    
through a  letter of agreement.  The terms of the  letter of                                                                    
agreement  had  already been  sent  to  the legislature  for                                                                    
funding and approval.                                                                                                           
                                                                                                                                
Senator Wilson  asked if there  was a review in  changes for                                                                    
nurses at the Alaska Psychiatric Institute (API).                                                                               
                                                                                                                                
Ms.  Sheehan  responded positively.  The  state  also did  a                                                                    
market-based pay  study to  look at  nurses which  was still                                                                    
ongoing.  The state  increased  the  ranges for  psychiatric                                                                    
nurses at  API and a  few at the Department  of Corrections.                                                                    
The  state  also  increased   the  ranges  for  correctional                                                                    
nurses.   As   a   result,    under   the   personnel   act,                                                                    
classification required  internal alignment - like  pay, for                                                                    
like work.  The state was looking  at all nurses as  part of                                                                    
the  study   including  the   psychiatric  nurses   and  the                                                                    
correctional nurses.                                                                                                            
                                                                                                                                
Ms. Sheehan addressed the final  2 units - the Alaska Public                                                                    
Employees  Association  (APEA)  which  was  the  supervisors                                                                    
union,  and  labor  trades  and  crafts.  Both  unions  were                                                                    
currently  under  contract  and  the terms  were  sent  last                                                                    
session. Both  unions agreed to  a 40-hour work week  and no                                                                    
cost of living adjustments.                                                                                                     
                                                                                                                                
Senator  Micciche  thought it  would  be  nice to  have  the                                                                    
status of each unit on a slide.                                                                                                 
                                                                                                                                
Co-Chair Stedman could  have the presenter come  back with a                                                                    
modified slide.                                                                                                                 
                                                                                                                                
Ms. Sheehan agreed to provide the information.                                                                                  
                                                                                                                                
10:08:37 AM                                                                                                                   
                                                                                                                                
Senator Bishop  thought it would  also be helpful to  have a                                                                    
slide showing the previous contract  for comparison with the                                                                    
new contract.                                                                                                                   
                                                                                                                                
Senator Shower asked  Ms. Sheehan to speak  to the timetable                                                                    
of negotiations.                                                                                                                
                                                                                                                                
Ms.  Sheehan  stated  there  was  no  timeframe.  The  state                                                                    
bargained until  it reached  impasse. Following  an impasse,                                                                    
an interest  arbitration, a strike, or  an implementation of                                                                    
last best  offer might occur. Some  negotiations were taking                                                                    
a  long time.  The state  had  not been  bargaining Cost  of                                                                    
Living Adjustments  (COLA) for  a while until  recently with                                                                    
some  of  the   unions.  It  had  been   a  sticking  point.                                                                    
Bargaining  and employee  contributions  were  new for  many                                                                    
employees   which   had   also  been   a   sticking   point.                                                                    
Negotiations with the  marine highway unions it  had taken a                                                                    
significant amount of time.                                                                                                     
                                                                                                                                
Senator  Wielechowski  asked if  the  state  was asking  for                                                                    
employer contributions  for health care. He  asked about the                                                                    
contribution percentage. He had heard  12 to 15 percent with                                                                    
the  average  health care  plan  costing  about $20,000  per                                                                    
year. He asked if he was accurate.                                                                                              
                                                                                                                                
Ms. Sheehan stated that the  employer contribution to Alaska                                                                    
Care  was $1,555  per employee  per month.  She thought  the                                                                    
employees contribution was about 8 percent.                                                                                     
                                                                                                                                
Co-Chair  Stedman asked  Ms.  Sheehan to  come  back to  the                                                                    
committee with the information.                                                                                                 
                                                                                                                                
Ms.  Sheehan turned  to slide  5,  "Summary of  Bargaining,"                                                                    
which  showed  the  2 units  bargained  under  the  previous                                                                    
administration  and  the  other units  that  were  currently                                                                    
under agreement.  She noted that  the state did  not bargain                                                                    
any COLAs with  the Supervisory Unit but moved  to a 40-hour                                                                    
work week.  The Supervisory Unit had  employee contributions                                                                    
to the economy plan of 12 to 15 percent.                                                                                        
                                                                                                                                
Ms. Sheehan reported  that with the Labor  Trades and Crafts                                                                    
unit  the  state moved  the  unit  to  a 40-hour  work  week                                                                    
without a COLA  adjustment. The unit was in  a health trust.                                                                    
Therefore, the state did  not bargain employee contributions                                                                    
for  the  health  trust.  It  only  bargained  the  employer                                                                    
contribution. In  a later slide  it would show how  much the                                                                    
state bargained.                                                                                                                
                                                                                                                                
Ms.  Sheehan   relayed  that  the  state   entered  into  an                                                                    
agreement  with  the   Alaska  State  Employees  Association                                                                    
Confidential  Employees unit  in the  previous November  and                                                                    
was pending  legislative approval. The  unit was moved  to a                                                                    
40-hour work week without a COLA.                                                                                               
                                                                                                                                
10:12:15 AM                                                                                                                   
                                                                                                                                
Ms. Sheehan  discussed slide 6,  "Sample Historical  COLAs &                                                                    
Anchorage CPI Comparison," which  showed historical COLAs in                                                                    
comparison  to the  Consumer Price  Index  (CPI). She  noted                                                                    
that the  Mt. Edgecombe teachers  were at about  14 percent,                                                                    
significantly lower  than others. Some of  the higher totals                                                                    
stemmed from groups that had  access to interest arbitration                                                                    
or class 1 employees such  as public safety and correctional                                                                    
officers.                                                                                                                       
                                                                                                                                
Co-Chair  von Imhof  thought the  slide was  interesting and                                                                    
wondered  about including  the entire  benefit package  that                                                                    
employees obtained through bargaining compared to the CPI.                                                                      
                                                                                                                                
Ms. Sheehan  noted that  not all unions  had merit  steps or                                                                    
pay  increments such  as  the 3  marine  highway units.  The                                                                    
teachers  unit   and  AVTEC  did  things   differently.  She                                                                    
explained that  employees that received merit  steps and pay                                                                    
increases received merit steps of  about 3.5 percent for the                                                                    
first  5 years,  COLAs, and  pay increases  of 3.25  percent                                                                    
every other year.                                                                                                               
                                                                                                                                
Co-Chair  Stedman asked  for Ms.  Sheehan  to formulate  the                                                                    
data  for   an  entire  benefit  package   and  provide  the                                                                    
information to the committee. Ms. Sheehan responded, "Yes."                                                                     
                                                                                                                                
Senator  Shower asked  to see  data regarding  pay increases                                                                    
and inflation.                                                                                                                  
                                                                                                                                
Co-Chair Stedman  asked for more of  a historical viewpoint.                                                                    
Ms. Sheehan agreed to provide the information.                                                                                  
                                                                                                                                
Ms.  Sheehan reviewed  slide  7,  "Benefits." She  indicated                                                                    
that benefits were  part of a total  employment package. She                                                                    
thought the state had done  studies through the Institute of                                                                    
Social and  Economic Research (ISER) over  time showing that                                                                    
much of the entry level  pay was below market. However, when                                                                    
benefits were  included, the state  was at or  above market.                                                                    
The   state   had   started  bargaining   employee   premium                                                                    
contributions.  She believed  the only  unions that  did not                                                                    
impose  the cost  was  the Inland  Boatman's  Union and  the                                                                    
Marine Engineers  Beneficial Union. The state  was currently                                                                    
in negotiations with both units.  The state also implemented                                                                    
the employee  contributions for partially exempt  and exempt                                                                    
employees.                                                                                                                      
                                                                                                                                
Ms. Sheen  continued to address  slide 7. She  reported that                                                                    
for health  trusts the philosophy  of the state had  been to                                                                    
contribute  at a  rate that  neither  over-funded or  under-                                                                    
funded. The  following slide would  show what the  state was                                                                    
contributing to  the health trusts.  The state had  4 health                                                                    
trusts including  Masters, Mates, and Pilots;  Public Safety                                                                    
Employees Association;  Labors, Trades, and Crafts;  and the                                                                    
Alaska State Employees Association.                                                                                             
                                                                                                                                
10:16:13 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof  asked if Ms. Sheehan  saw the financials                                                                    
of  the health  trusts to  determine whether  the state  was                                                                    
over or under  funding. She wondered if the state  had a way                                                                    
of  seeing   how  well  the  trusts   were  bargaining  with                                                                    
healthcare providers.                                                                                                           
                                                                                                                                
Ms.  Sheehan stated  that  under  the collective  bargaining                                                                    
agreement,   the  division   had   the   right  to   request                                                                    
information. The  state's consultants performed  an analysis                                                                    
to determine the  amount to pay the  health trusts. However,                                                                    
it was  difficult with the  Masters, Mates, and  Pilots unit                                                                    
because  of  their plan  being  a  multi-employer plan.  The                                                                    
information could be obtained.                                                                                                  
                                                                                                                                
Co-Chair Stedman  asked if Ms.  Sheehan had figures  to show                                                                    
how  many  MMP were  state  residents.  Ms. Sheehan  thought                                                                    
about 70 percent were residents.                                                                                                
                                                                                                                                
Co-Chair  von Imhof  asked if  the  health trusts  financial                                                                    
information was available to  legislators. Ms. Sheehan would                                                                    
get back to the committee with an answer.                                                                                       
                                                                                                                                
Ms.  Sheehan considered  slide 8,  "State's Contribution  to                                                                    
Health Trust/Health  Insurance" which showed  the AlaskaCare                                                                    
employee  contribution at  $1,555 per  employee, per  month.                                                                    
The  health  trusts  were   slightly  different.  The  state                                                                    
bargained  the rates  based on  the recommendation  from its                                                                    
consultant.  She  pointed  to  ASEA. The  state  was  paying                                                                    
$1,432  per   employee  per  month  -   slightly  less  than                                                                    
AlaskaCare. The  amount went  up to  $1,530 then  to $1,555.                                                                    
She  noted that  for  MMP  the state  only  paid $1,346  per                                                                    
employee, per  year which  was the same  rate the  state had                                                                    
been paying  since the contract expired.  She continued that                                                                    
the   Public  Employees   Association's  contract   language                                                                    
required  the state  to  bargain  the employer  contribution                                                                    
every year.  The state's actuary  was looking at  the number                                                                    
every fall to determine the appropriate rate.                                                                                   
                                                                                                                                
Ms.  Sheehan  noted  that she  included  the  following  few                                                                    
slides that showed  the bargaining unit summary  for each of                                                                    
the state's  11 unions.  It provided more  information about                                                                    
each unit.                                                                                                                      
                                                                                                                                
Co-Chair Stedman  invited Ms. Sheehan  to walk  through each                                                                    
of the slides.                                                                                                                  
                                                                                                                                
Ms.  Sheehan reviewed  slide 10,  "Bargaining Unit  Summary:                                                                    
Alaska Correctional Officers Association":                                                                                      
                                                                                                                                
     ACOA Bargaining Unit                                                                                                       
                                                                                                                                
     Total Bargaining Unit Members 877                                                                                          
     Average age of all members: 41                                                                                             
     Average years of service: 8.52                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $5,743.67                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $68,924.04                                                                                                                 
     Total overtime for all members: $6,981,712.87                                                                              
     Total FY18 gross pay for all members: $68,282,408.15                                                                       
                                                                                                                                
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan reported  that the total gross  pay figures were                                                                    
actual numbers based on the  previous fiscal year's payroll.                                                                    
It  was not  necessarily what  was budgeted.  The bargaining                                                                    
members were actual rather than budgeted PCNs.                                                                                  
                                                                                                                                
Ms. Sheehan displayed slide 11, "Bargaining Unit Summary:                                                                       
Alaska Public Employees Association (SU)": and reported it                                                                      
was the second largest union.                                                                                                   
                                                                                                                                
     Represents the Supervisory Bargaining Unit (SU)                                                                            
                                                                                                                                
     Total Bargaining Unit Members 2,101                                                                                        
     Average age of all members: 48                                                                                             
     Average years of service: 13.70                                                                                            
     Average monthly pay for permanent full-time member:                                                                        
     $7,336.76                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $88,041.12                                                                                                                 
     Total overtime for all members: $1,221882.78                                                                               
     Total FY18 gross pay for all members: $186,962,060.84                                                                      
                                                                                                                                
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
10:20:07 AM                                                                                                                   
                                                                                                                                
Ms. Sheehan looked at the state's largest bargaining unit                                                                       
on slide 12: "Bargaining Unit Summary: Alaska State                                                                             
Employees Association":                                                                                                         
                                                                                                                                
     Represents the General Government Unit (GGU)                                                                               
                                                                                                                                
     Total Bargaining Unit Members 8,051                                                                                        
     Average age of all members: 43                                                                                             
     Average years of service: 8.10                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $5,081.36                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $60,976.32                                                                                                                 
     Total overtime for all members: $20,862,611.30                                                                             
     Total FY18 gross pay for all members: $433,257,257.84                                                                      
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan turned to slide 13, "Bargaining Unit Summary:                                                                       
Alaska Vocational Technical Teachers Association":                                                                              
                                                                                                                                
     AVTECA Bargaining Unit                                                                                                     
                                                                                                                                
     Total Bargaining Unit Members 31                                                                                           
     Average age of all members: 53                                                                                             
     Average years of service: 8.95                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $6,691.43                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $80,297.16                                                                                                                 
    Total FY18 gross pay for all members: $2,458,201.88                                                                         
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan displayed slide 14, "Bargaining Unit Summary:                                                                       
Confidential Employees Association":                                                                                            
                                                                                                                                
     Represents the Confidential Unit (KK)                                                                                      
                                                                                                                                
     Total Bargaining Unit Members 198                                                                                          
     Average age of all members: 43                                                                                             
     Average years of service: 9.58                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $5,342.96                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $64,115.52                                                                                                                 
     Total overtime for all members: $65,049.74                                                                                 
     Total FY18 gross pay for all members: $11,657,912.31                                                                       
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan stated that the unit encompassed the human                                                                          
resources staff. She clarified that the supervisors and the                                                                     
confidential employees were defined in regulation.                                                                              
                                                                                                                                
Ms. Sheehan showed slide 15, "Bargaining Unit Summary:                                                                          
Inland boatmen's Union of the Pacific":                                                                                         
                                                                                                                                
     IBU Bargaining Unit                                                                                                        
                                                                                                                                
     Total Bargaining Unit Members 430                                                                                          
     Average age of all members: 48                                                                                             
     Average years of service: 8.44                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $4,717.16                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $56,605.92                                                                                                                 
     Total overtime for all members: $4,110,224.78                                                                              
     Total FY18 gross pay for all members: $28,260,252.60                                                                       
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan discussed slide 16, "Bargaining Unit Summary:                                                                       
Labor Trades and Crafts":                                                                                                       
                                                                                                                                
     LTC Bargaining Unit                                                                                                        
                                                                                                                                
     Total Bargaining Unit Members 1654                                                                                         
     Average age of all members: 46                                                                                             
     Average years of service: 8.88                                                                                             
     Average monthly pay for permanent full-time member:                                                                        
     $4,711.50                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $56,538.00                                                                                                                 
     Total overtime for all members: $10,857,000.08                                                                             
     Total FY18 gross pay for all members: $93,048,693.95                                                                       
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan reviewed slide 17, "Bargaining Unit Summary:                                                                        
Marine Engineers' Beneficial Association":                                                                                      
                                                                                                                                
     MEBA Bargaining Unit                                                                                                       
                                                                                                                                
     Total Bargaining Unit Members 86                                                                                           
     Average age of all members: 48                                                                                             
     Average years of service: --                                                                                               
     Average monthly pay for permanent full-time member:                                                                        
     $7,092.65                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $85,111.80                                                                                                                 
     Total overtime for all members: $498,954.57                                                                                
    Total FY18 gross pay for all members: $9,364,620.23                                                                         
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan considered slide 18, "Bargaining Unit Summary:                                                                      
Masters, Mates & Pilots":                                                                                                       
                                                                                                                                
     MMP Bargaining Unit                                                                                                        
                                                                                                                                
     Total Bargaining Unit Members 86                                                                                           
     Average age of all members: 44                                                                                             
     Average years of service: 12.81                                                                                            
     Average monthly pay for permanent full-time member:                                                                        
     $7,283.34                                                                                                                  
     Average yearly pay for permanent full-time member:                                                                         
     $87,400.08                                                                                                                 
     Total overtime for all members: $1,053,104.76                                                                              
     Total FY18 gross pay for all members: $10,401,300.66                                                                       
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Co-Chair Stedman noted that MMP  had longer years of service                                                                    
- an  average of  about 8  or 9  years. He  asked if  he was                                                                    
correct. Ms.  Sheehan noted that MMP's  were highly skilled.                                                                    
It took them several years to  get piloted for some of their                                                                    
routes  and  it was  true  they  stayed in  their  positions                                                                    
longer.                                                                                                                         
                                                                                                                                
Ms. Sheehan  looked at slide  19, "Bargaining  Unit Summary:                                                                    
Public Safety Employees Association":                                                                                           
                                                                                                                                
     PSEA Bargaining Unit                                                                                                       
                                                                                                                                
     Total Bargaining Unit Members                                                                                              
     384 (AA) 73 (AP)                                                                                                           
     Average age of all members: 41 (AA) 37 (AP)                                                                                
     Average years of service: 11.49 (AA) 8.68(AP)                                                                              
     Average  monthly pay  for  permanent full-time  member:                                                                    
     $8,199.47 (AA) $6,814.25 (AP)                                                                                              
     Average  yearly  pay  for permanent  full-time  member:                                                                    
     $98,393.64 (AA) $81,771.00 (AP)                                                                                            
     Total  overtime  for  all members:  $3,774,603.87  (AA)                                                                    
     $863,317.60(AP)                                                                                                            
     Total FY18  gross pay  for all  members: $43,883,313.24                                                                    
     (AA) $7,181,730.66 (AP)                                                                                                    
     * Includes  premium pays, excludes  benefits AA    DPS;                                                                    
     AP  DOTPF                                                                                                                  
                                                                                                                                
Ms. Sheehan noted  that the 7.5 percent COLA  was pending in                                                                    
the legislature and applied only to troopers.                                                                                   
                                                                                                                                
Ms.  Sheehan  showed  slide 20,  "Bargaining  Unit  Summary:                                                                    
Teachers Association of Mt. Edgecumbe":                                                                                         
                                                                                                                                
     TEAME Bargaining Unit                                                                                                      
                                                                                                                                
     Total Bargaining Unit Members 29                                                                                           
     Average age of all members: 43                                                                                             
     Average years of service: 9.66                                                                                             
     Average  monthly pay  for  permanent full-time  member:                                                                    
     $5,653.41                                                                                                                  
     Average  yearly  pay  for permanent  full-time  member:                                                                    
     $67,840.92                                                                                                                 
    Total FY18 gross pay for all members: $2,090,555.42                                                                         
     * Includes premium pays, excludes benefits                                                                                 
                                                                                                                                
Ms. Sheehan  turned to slide 21,  "Striking," which provided                                                                    
information   about  the   3   strike   classes  and   their                                                                    
definitions.                                                                                                                    
                                                                                                                                
Ms.  Sheehan advanced  to slide  22, "Rejection  of Monetary                                                                    
Terms: CBA Terms,"  which showed what happened  if the union                                                                    
failed  to  ratify  the terms  of  a  collective  bargaining                                                                    
agreement  or the  legislature did  not approve  a contract.                                                                    
She reported  that most of  the contracts required  that the                                                                    
state immediately reenter into negotiations.                                                                                    
                                                                                                                                
Co-Chair  Stedman asked  Ms. Sheehan  to  review the  60-day                                                                    
rule. Ms.  Sheehan explained that  under statute,  the state                                                                    
was   required  to   submit  the   monetary  terms   to  the                                                                    
legislature by the 60th day  of session. If the state agreed                                                                    
to it outside  of session, it had to be  submitted within 10                                                                    
days  of  the   beginning  of  session.  For   most  of  the                                                                    
collective  bargaining agreements,  the state  was still  in                                                                    
the process  of bargaining. If  DOA submitted it  later than                                                                    
the  60th day,  the  legislature would  not  be required  to                                                                    
consider it, but it could.                                                                                                      
                                                                                                                                
Co-Chair  Stedman  asked if  the  legislature  had ever  not                                                                    
funded   an  agreement.   Ms.   Sheehan   answered  in   the                                                                    
affirmative.  Co-Chair  Stedman  asked her  to  provide  the                                                                    
committee with  a history on  the issue. Ms.  Sheehan agreed                                                                    
to bring back the information.                                                                                                  
                                                                                                                                
Co-Chair Stedman commented  that he could not  recall in his                                                                    
tenure  the  legislature  not funding  it.  He  thanked  the                                                                    
presenter. He thought  the years of service  and average age                                                                    
was fairly  close throughout all  the bargaining  units. The                                                                    
median  age was  40,  and  the average  number  of years  of                                                                    
service was between 8 and 9 years.                                                                                              
                                                                                                                                
Co-Chair Stedman  discussed the  schedule for  the following                                                                    
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:24:39 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:24 a.m.                                                                                         

Document Name Date/Time Subjects
020519 DOA Labor Contracts Presentation SFin.pdf SFIN 2/5/2019 9:00:00 AM
Labor Contracts