Legislature(2019 - 2020)SENATE FINANCE 532

04/18/2019 09:00 AM FINANCE

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09:04:53 AM Start
09:06:38 AM Presentation: Updated Labor Contract - Department of Administration
09:59:54 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Updated Labor Contract - Department of TELECONFERENCED
Administration
<Item Above Rescheduled from 4/16>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 18, 2019                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:04:53 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stedman called the Senate Finance Committee                                                                            
meeting to order at 9:04 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Mike Shower                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Kate  Sheehan,  Director,  Personnel  and  Labor  Relations,                                                                    
Department of Administration;  Neil Steininger, Chief Budget                                                                    
Analyst,  Office of  Management  and Budget,  Office of  the                                                                    
Governor.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
PRESENTATION: UPDATED LABOR CONTRACT - DEPARTMENT OF                                                                            
ADMINISTRATION                                                                                                                  
                                                                                                                                
Co-Chair Stedman reviewed the meeting agenda.                                                                                   
                                                                                                                                
^PRESENTATION: UPDATED LABOR CONTRACT - DEPARTMENT OF                                                                         
ADMINISTRATION                                                                                                                
                                                                                                                                
9:06:38 AM                                                                                                                    
                                                                                                                                
KATE  SHEEHAN,  DIRECTOR,  PERSONNEL  AND  LABOR  RELATIONS,                                                                    
DEPARTMENT  OF  ADMINISTRATION, discussed  the  presentation                                                                    
"Labor Contracts," (copy on file).                                                                                              
                                                                                                                                
NEIL STEININGER, CHIEF BUDGET  ANALYST, OFFICE OF MANAGEMENT                                                                    
AND BUDGET, OFFICE OF THE GOVERNOR,                                                                                             
                                                                                                                                
9:06:57 AM                                                                                                                    
                                                                                                                                
Ms. Sheehan  turned to Slide 2,  "State Personnel Overview,"                                                                    
which  had a  table.  She  noted that  the  slide was  shown                                                                    
during a presentation to the  committee in February, and the                                                                    
slide had been updated.                                                                                                         
                                                                                                                                
Ms.  Sheehan   continued  that   the  slide   reflected  the                                                                    
Management  Plan budgeted  positions and  the total  funding                                                                    
for those positions by type of funding.                                                                                         
                                                                                                                                
Co-Chair   Stedman  asked   how  many   permanent  full-time                                                                    
employees were retained by the state.                                                                                           
                                                                                                                                
Ms.  Sheehan  qualified  that  the  budgeted  PCN  would  be                                                                    
different  than how  many current  employees the  state had;                                                                    
the slide was based on the  FY 19 management plan and showed                                                                    
14,864 permanent full-time employees,  plus 598 marine union                                                                    
employees. She  added that in FY  18, the state had  a total                                                                    
of 14,546 employees.                                                                                                            
                                                                                                                                
Co-Chair Stedman asked about annual payroll.                                                                                    
                                                                                                                                
Ms. Sheehan stated that the  total payroll would be what the                                                                    
employee received in premium pay.                                                                                               
                                                                                                                                
Mr.  Steininger interjected  that the  for the  listed union                                                                    
and non-covered  employees the total was  approximately $1.1                                                                    
billion.  The post  vacancy funding  for  marine unions  was                                                                    
approximately $81  million. He said that  the actual payroll                                                                    
costs varied based on turnover.                                                                                                 
                                                                                                                                
9:09:32 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  understood that the states   obligation to                                                                    
payroll  yearly  was  listed  on the  slide  in  the   Total                                                                    
Funding  (Post-Vacancy)  column  of  the  chart and  totaled                                                                    
$1,763,948,915. He asserted that  this was the total payroll                                                                    
obligation.                                                                                                                     
Mr. Steininger  answered in the  affirmative. He  noted that                                                                    
the   figure  included   paychecks   and  health   insurance                                                                    
benefits.                                                                                                                       
                                                                                                                                
Co-Chair Stedman thought it was  helpful to explain what the                                                                    
state's  obligations   were.  He   noted  that   there  were                                                                    
different  funding  sources,  including  federal  funds.  He                                                                    
asked Mr. Steininger  to address federal funds  noted in the                                                                    
last column on the chart.                                                                                                       
                                                                                                                                
Mr.  Steininger explained  that  federally funded  positions                                                                    
would  be funded  by  grants or  matched  state dollars.  He                                                                    
added that Other Funding would  be grants form sources other                                                                    
than  the  federal  government.  He  noted  that  designated                                                                    
general funds  (DGF) could  include positions  funded wholly                                                                    
through receipt of fees.                                                                                                        
                                                                                                                                
Co-Chair  Stedman asked  whether  the total  less the  Other                                                                    
Funds  and  Federal  Funds  columns   left  a  $1.2  billion                                                                    
obligation for payroll.                                                                                                         
                                                                                                                                
Mr. Steininger replied in the affirmative.                                                                                      
                                                                                                                                
9:12:12 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof  asked  whether   there  was  data  for                                                                    
comparing FY 10 through the  present. She wondered about the                                                                    
growth  of the  expense.  She thought  it  was important  to                                                                    
understand  a  historical  lookback to  determine  what  the                                                                    
costs could be in the future.                                                                                                   
                                                                                                                                
Mr.  Steininger  stated that  he  could  produce a  lookback                                                                    
going back 10-years.                                                                                                            
                                                                                                                                
Co-Chair Stedman requested the  10-year lookback be provided                                                                    
to the committee.                                                                                                               
                                                                                                                                
Co-Chair  von Imhof  wanted  to see  a  graph depicting  the                                                                    
change over time as well as a table with the data.                                                                              
                                                                                                                                
9:14:08 AM                                                                                                                    
                                                                                                                                
Senator  Micciche  agreed  that  the  requested  information                                                                    
would  be interesting.  He asked  for  clarification of  the                                                                    
number  of  state  employees,  within  and  outside  of  the                                                                    
bargaining units.                                                                                                               
                                                                                                                                
Ms. Sheehan stated that Slide  2 was based on budgeted PCNs.                                                                    
The next  slide would  show the  actual number  of employees                                                                    
for  FY  18. Ms.  Sheehan  explained  that PCN  signified  a                                                                    
position  control  number.  Every   position  had  a  number                                                                    
attached to it and each employee  was placed into one of the                                                                    
numbers. She  added that  occasionally there  were vacancies                                                                    
in  the budgeted  positions; sometimes  reports were  run on                                                                    
actual  number of  employees and  sometimes on  the budgeted                                                                    
positions.                                                                                                                      
                                                                                                                                
9:15:38 AM                                                                                                                    
                                                                                                                                
Senator  Micciche asked  whether there  were more  employees                                                                    
paid by the state that were not listed on the slide.                                                                            
                                                                                                                                
Ms. Sheehan affirmed  that University was not  on the slide.                                                                    
She said that she could provide the information later.                                                                          
                                                                                                                                
Co-Chair  Stedman  thought  that the  information  could  be                                                                    
included in the previous request.                                                                                               
                                                                                                                                
Ms.  Sheehan  noted  that  Slide   2  did  not  include  the                                                                    
Legislature or Courts.                                                                                                          
                                                                                                                                
Senator  Micciche  lamented  that   the  public  was  always                                                                    
confused  during  discussions  about the  actual  number  of                                                                    
state employees.                                                                                                                
                                                                                                                                
Co-Chair  Stedman  thought  that the  requested  information                                                                    
would  be helpful  as the  legislature expected  to navigate                                                                    
tighter and tighter budget scenarios.                                                                                           
                                                                                                                                
9:17:41 AM                                                                                                                    
                                                                                                                                
Senator Bishop considered total  salary plus premium pay and                                                                    
asked whether premium pay was considered overtime pay.                                                                          
                                                                                                                                
Mr. Steininger answered in the affirmative.                                                                                     
                                                                                                                                
Senator  Bishop recalled  that  overtime, across  bargaining                                                                    
units, was  $40 million. He  wondered why there was  so much                                                                    
overtime pay.  He asked  for a  historical look  at overtime                                                                    
pay.  He requested  an explanation  of  the cost  associated                                                                    
with adding a PCN.                                                                                                              
                                                                                                                                
Mr. Steininger  offered to  get back  to the  committee with                                                                    
information.                                                                                                                    
9:19:36 AM                                                                                                                    
                                                                                                                                
Senator Hoffman  recalled legislation  for steps  and ranges                                                                    
for  employees. He  wanted  a report  showing  how much  the                                                                    
state was spending by department  above and beyond those set                                                                    
steps and ranges.                                                                                                               
                                                                                                                                
Ms.  Sheehan  asked  if   Senator  Hoffman  was  referencing                                                                    
legislation  allowing  employees  to  be  paid  above  merit                                                                    
steps.                                                                                                                          
                                                                                                                                
Senator Hoffman answered in the affirmative.                                                                                    
                                                                                                                                
9:21:11 AM                                                                                                                    
                                                                                                                                
Ms.  Sheehan  displayed  slide   3,  "Bargaining  Unit  (BU)                                                                    
Detail," which showed  a table based on  actual employees in                                                                    
FY 18  and the  percentage total  that they  made up  of the                                                                    
Executive Branch  workforce. The table was  broken down into                                                                    
those  that  were  currently  being  negotiated,  including:                                                                    
Masters,  Mates,  and  Pilots (MMP);  the  Marine  Engineers                                                                    
Beneficial Association (MEBA);  the Inlandboatmens  Union of                                                                    
the Pacific  (IBU); and the  AK Vocational  Technical Center                                                                    
Teachers  (AVTECTA).  The  four contracts  were  in  current                                                                    
negotiations;  the three  marine contracts  expired on  June                                                                    
30, 2017 and AVTECTA was  expiring June 30, 2019. She listed                                                                    
the  contracts   pending  for  action  during   the  current                                                                    
legislature:                                                                                                                    
                                                                                                                                
     Before Legislature                                                                                                       
     Confidential Employees Association  CEA                                                                                    
     Alaska State Employees Association  ASEA                                                                                   
     Teachers Education Association of Mt. Edgecumbe                                                                            
     Alaska Correctional Officers Association  ACOA                                                                             
                                                                                                                                
Ms. Sheehan listed the negotiations  that would begin in the                                                                    
Fall 2019 and Fall 2020:                                                                                                        
                                                                                                                                
     Fall 2019                                                                                                                
     Public Safety Employees Association - PSEA                                                                                 
                                                                                                                                
     Fall 2020                                                                                                                
     Alaska Public Employees Association  APEA(SU)                                                                              
     Public Employees, Local 71 - LTC                                                                                           
                                                                                                                                
Ms. Sheehan  pointed out  that the last  group was  the non-                                                                    
covered employees and that any  action to their pay plan was                                                                    
done through legislation.                                                                                                       
                                                                                                                                
9:23:35 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  asked  for  explanation  about  troopers                                                                     
contract. He recalled that the  previous year there had been                                                                    
a  request   to  adjust   troopers   salaries   to  increase                                                                    
recruitment and retention.                                                                                                      
                                                                                                                                
Ms. Sheehan affirmed that there  had been a market-based pay                                                                    
study for  troopers that determined  that the state  had not                                                                    
been paying  at market.  Based on the  study, the  state had                                                                    
increased pay by one pay range (approximately 7.5 percent).                                                                     
                                                                                                                                
Mr.  Steininger  informed  that  there  was  a  supplemental                                                                    
budget  request  of  $3.6  million to  covers  those  FY  19                                                                    
salaries. He  stated that there was  a request in the  FY 20                                                                    
budget to accommodate the salary adjustment.                                                                                    
                                                                                                                                
9:24:57 AM                                                                                                                    
                                                                                                                                
Senator Wilson  considered how the pay  increases would play                                                                    
into negotiations for troopers.                                                                                                 
                                                                                                                                
Ms. Sheehan  stated that the  pay study helped, but  the pay                                                                    
was still  behind that of  the Anchorage  Police Department.                                                                    
She said that  an additional 7.5 percent  had been bargained                                                                    
and was  pending for legislative approval.  She thought that                                                                    
the  fall negotiations  would consider  current market-based                                                                    
studies.                                                                                                                        
                                                                                                                                
Senator  Wilson  asked  about  any  other  market-based  pay                                                                    
studies that were in process.                                                                                                   
                                                                                                                                
Ms. Sheehan  stated that the  focus aside from  troopers was                                                                    
nurses.  There   had  been  issues  recruiting   nurses  for                                                                    
correctional   facilities.   Psychiatric  and   correctional                                                                    
nurses had  been moved up  one pay range,  approximately 7.5                                                                    
percent. Phase  2 of the  study had just been  completed and                                                                    
had  included   psychiatric  nurses,   correctional  nurses,                                                                    
certified  nurses'  aides,   psychiatric  nurse  aides,  and                                                                    
resident nurses. The study had  not yet been implemented and                                                                    
was only recently completed.                                                                                                    
                                                                                                                                
9:27:28 AM                                                                                                                    
Senator Olson considered the trooper  pay increase and noted                                                                    
that  the Village  Public Safety  Officers  (VPSO) were  not                                                                    
included.                                                                                                                       
                                                                                                                                
Ms. Sheehan stated that the VPSOs  were not part of the PSEA                                                                    
and  the state  did  not bargain  their  contract. The  VPSO                                                                    
contracts    were   bargained    by   the    Department   of                                                                    
Administration.                                                                                                                 
                                                                                                                                
Senator Olson assumed  that the VPSO had not  received a pay                                                                    
increase.  He wanted  to  draw attention  to  the issue.  He                                                                    
wondered  what  was occurring  the  Department  of Law  with                                                                    
prosecuting attorney pay ranges.                                                                                                
                                                                                                                                
Ms. Sheehan  replied that  she did not  know. She  agreed to                                                                    
research the issue and get back to the committee.                                                                               
                                                                                                                                
9:28:55 AM                                                                                                                    
                                                                                                                                
Co-Chair von Imhof referenced the  nursing salary study. She                                                                    
asked whether salary versus benefits  had been considered as                                                                    
well   as  the   total  financial   package  and   the  work                                                                    
environment.  She  thought  some individuals  valued  salary                                                                    
over benefits and vice versa.  She thought that the value of                                                                    
the job  was holistic  and wondered  what would  attract and                                                                    
retain quality workers for a long period of time.                                                                               
                                                                                                                                
Ms. Sheehan  responded that, particularly  with correctional                                                                    
nurses, the  issue was one  of environment over  salary. She                                                                    
noted that  when conducting the  market pay  study, salaries                                                                    
were the priority, but she  agreed that benefits played into                                                                    
whether employees stayed in nursing positions.                                                                                  
                                                                                                                                
9:31:26 AM                                                                                                                    
                                                                                                                                
Ms. Sheehan showed Slide 4,  " Summary of Bargaining," which                                                                    
showed a table of the 5 pending contract negotiations:                                                                          
                                                                                                                                
     ASEA  General Govt Unit 2019-2022                                                                                      
     7,510 Employees                                                                                                            
     3 percent COLA Effective 7/1/2019                                                                                          
     1 percent COLA Effective 7/1/2020                                                                                          
     1 percent COLA Effective 7/1/2021                                                                                          
                                                                                                                                
     Heath trust contributions                                                                                                
     $1539 first year                                                                                                           
     $1555 following 2 years                                                                                                    
     Work rules regarding management rights                                                                                   
                                                                                                                                
     ACOA 2019-2021                                                                                                         
     877 Employees                                                                                                              
     0 percent first year                                                                                                       
     4.5 percent Effective 7/1/2019                                                                                             
     3 percent Effective 7/1/2020                                                                                               
                                                                                                                                
     Employee contributions to economy plan                                                                                   
                                                                                                                                
     Confidential Employees 2019-2021                                                                                         
     184 Employees                                                                                                              
     No COLA                                                                                                                    
                                                                                                                                
     Employee contributions to economy plan                                                                                   
                                                                                                                                
     40-hour workweek Effective 7/1/2019                                                                                      
                                                                                                                                
     State Troopers                                                                                                         
     7.5 percent COLA Effective upon legislative approval                                                                       
                                                                                                                                
     Teacher Association of Mt. Edgecumbe 2015-2017                                                                         
     3 percent Effective 7/1/2019                                                                                               
     3 percent Effective 7/1/2020                                                                                               
     3 percent Effective 7/1/2021                                                                                               
     Tentative agreement reached November 16, 2018. New                                                                         
     contract set to begin July 1, 2019.                                                                                        
                                                                                                                                
9:34:20 AM                                                                                                                    
                                                                                                                                
Senator Wilson asked whether there were other groups that                                                                       
were looking at going to 40 hours per week outside of the                                                                       
confidential employees.                                                                                                         
                                                                                                                                
Ms. Sheehan reported that in 2018 the Supervisors Union and                                                                     
Labors, Trades, and Crafts moved to a 40-hour workweek.                                                                         
                                                                                                                                
9:35:00 AM                                                                                                                    
                                                                                                                                
Co-Chair von Imhof asked whether all the contracts were                                                                         
public information.                                                                                                             
                                                                                                                                
Ms. Sheehan answered in the affirmative. She noted that all                                                                     
the contracts were on the State of Alaska Division of                                                                           
Personnel website.                                                                                                              
                                                                                                                                
Ms. Sheehan  added that the  teachers at Mt.  Edgecumbe were                                                                    
contributing toward heath insurance.                                                                                            
                                                                                                                                
9:36:10 AM                                                                                                                    
                                                                                                                                
Mr. Steininger  referenced Slide 5, "FY20  Budgetary Impacts                                                                    
of Bargaining  Unit Agreements,"  which showed both  the new                                                                    
contracts and  the out-year cost of  contracts negotiated in                                                                    
prior years:                                                                                                                    
                                                                                                                                
     New Contracts                                                                                                          
     CEA - $1.2 million                                                                                                         
     ASEA - $30.2 million                                                                                                       
     ACOA - $4.2 million                                                                                                        
     TEAME   $73 thousand                                                                                                       
                                                                                                                                
Co-Chair Stedman asked for a definition of acronyms.                                                                            
                                                                                                                                
Mr.  Steininger  explained  that CEA  was  the  Confidential                                                                    
Employees  Association,   GGU  or   ASEA  was   the  General                                                                    
Government Unit  or Alaska State Employee  Association, ACOA                                                                    
was the Alaska Correctional  Officers Association, and TEAME                                                                    
was the Mt. Edgecumbe teachers.                                                                                                 
                                                                                                                                
Co-Chair Stedman  reminded that committee hearings  were for                                                                    
the public, and it was important to define terms.                                                                               
                                                                                                                                
Mr. Steininger continued, listing the ongoing contracts:                                                                        
                                                                                                                                
     Ongoing Contracts                                                                                                      
     LTC  Labor, Trades, and Crafts - $3 million                                                                                
     PSEA    Public Safety Employees Association - $9                                                                           
     million                                                                                                                    
     SU  Supervisory Union - $1.7 million                                                                                       
                                                                                                                                
Mr. Steininger relayed  that the estimates were  based on FY                                                                    
2019 management plan position counts.                                                                                           
                                                                                                                                
9:38:49 AM                                                                                                                    
                                                                                                                                
Mr.  Steininger  reviewed Slide  6,  "Out  Year Estimates                                                                       
Salary Adjustments":                                                                                                            
                                                                                                                                
     • Estimates based on FY2019 Management Plan position                                                                       
        counts.                                                                                                                 
                                                                                                                                
   • Does not account for changes in state workforce.                                                                           
                                                                                                                                
        o Amounts will be recalculated in development of                                                                        
          FY21 budget.                                                                                                          
                                                                                                                                
Mr. Steininger  qualified that the  numbers on the  table on                                                                    
the slide  were estimates  based on  the FY  2019 management                                                                    
plan  for  decision  making  purposes.  He  noted  that  the                                                                    
numbers did  not account for  changes in state  workforce or                                                                    
salaries.                                                                                                                       
                                                                                                                                
9:40:02 AM                                                                                                                    
                                                                                                                                
Senator Bishop commented that  the salary adjustment figures                                                                    
were helpful when crafting budget subcommittee closeouts.                                                                       
                                                                                                                                
9:40:36 AM                                                                                                                    
                                                                                                                                
Co-Chair   Stedman   observed    that   the   slide   showed                                                                    
approximately  $25  million  over  the next  two  years  for                                                                    
bargaining agreements.                                                                                                          
                                                                                                                                
Mr.  Steininger  affirmed  that  for FY  20,  there  was  an                                                                    
expectation of  $25 million when the  three bargaining units                                                                    
were  added together.  In FY  21, there  was an  increase of                                                                    
about $6.8 million for ASEA,  $75,000 in FY 20-21 for TEAME,                                                                    
and  additional 3  percent  for  ACOA in  FY  20-21 at  $4.4                                                                    
million.                                                                                                                        
                                                                                                                                
Co-Chair  Stedman thought  it would  be helpful  include the                                                                    
information  on   the  slide  with  the   requested  10-year                                                                    
lookback  that   Mr.  Steininger   would  be   bringing  the                                                                    
committee.  He  thought  the  information  would  provide  a                                                                    
helpful snapshot of economic trends.                                                                                            
                                                                                                                                
9:42:16 AM                                                                                                                    
                                                                                                                                
Co-Chair von  Imhof looked  at the UGF  listed on  the slide                                                                    
while  contemplating a  spending  cap.  She understood  that                                                                    
according  to Slide  6, in  FY2021 the  state would  need to                                                                    
make headroom  for an additional  $2.6 million for  ASEA and                                                                    
$4.1 million for ACOA.                                                                                                          
                                                                                                                                
Mr. Steininger  stated that  Co-Chair von  Imhof interpreted                                                                    
the  information correctly.  He  said  that the  information                                                                    
could be provided by department.                                                                                                
                                                                                                                                
Co-Chair  Stedman   felt  that  the  information   would  be                                                                    
helpful.                                                                                                                        
                                                                                                                                
9:43:56 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof wanted  to  make  sure that  the  slide                                                                    
reflected  the total  number for  all bargaining  units. She                                                                    
noted  that the  spending  cap  legislation currently  being                                                                    
considered by the  legislature had a 5-year  lookback at the                                                                    
rate  of  CPI.  She  wondered about  the  growth  rates  and                                                                    
worried  that salaries  and benefits  could crown  out other                                                                    
expenditures.                                                                                                                   
                                                                                                                                
Mr. Steininger  stated that the  table only  included salary                                                                    
adjustments  for the  three bargaining  units that  had out-                                                                    
year  salary  adjustments.  He changes  would  be  made  for                                                                    
health insurance  that were more difficult  to estimate into                                                                    
the out-years and were not  included in the table. Some were                                                                    
based on  the total  cost of the  health insurance  plan and                                                                    
some were a fixed amount.                                                                                                       
                                                                                                                                
Co-Chair Stedman  stated that the  committee would  have the                                                                    
Legislative   Finance   Division   (LFD)   reach   out   and                                                                    
synchronize with OMB to  compare updated projection numbers.                                                                    
He noted that  LFD would be presenting to  the committee the                                                                    
following week, and he hoped  for a much clarity as possible                                                                    
moving forward int eh budget process.                                                                                           
                                                                                                                                
9:46:27 AM                                                                                                                    
                                                                                                                                
Ms. Sheehan showed Slide 7, "APPENDIX."                                                                                         
                                                                                                                                
Mr. Sheehan highlighted Slide 8,  " 2019 AlaskaCare Employee                                                                    
Plan  Premiums," which  showed a  table created  based on  a                                                                    
question from  a previous  committee hearing.  She explained                                                                    
that the  employees under AlaskaCare,  negotiators bargained                                                                    
the employer  contribution to the  health trust but  not the                                                                    
employee  contribution.  The   actuaries  had  determined  a                                                                    
specific premium for each plan  based on the total estimated                                                                    
cost and the  different value of the plan.  She relayed that                                                                    
she did  not have  health benefits in  her division  and was                                                                    
limited in her knowledge.                                                                                                       
                                                                                                                                
9:47:37 AM                                                                                                                    
                                                                                                                                
Co-Chair von  Imhof understood that the  monthly premium for                                                                    
the Consumer  Directed Health Plan  Employee and  Family was                                                                    
$68 monthly.                                                                                                                    
                                                                                                                                
Ms. Sheehan replied in the affirmative.                                                                                         
                                                                                                                                
Co-Chair  von  Imhof surmised  that  the  employee paid  3.5                                                                    
percent of the monthly cost.                                                                                                    
                                                                                                                                
Ms. Sheehan shared  that the only thing  the state bargained                                                                    
was  the  employee contribution  to  the  economy plan;  the                                                                    
standard plan  had always had  an employee  contribution and                                                                    
had never been bargained.                                                                                                       
                                                                                                                                
Co-Chair von  Imhof recalled  that several  bargaining units                                                                    
had  their  own trust  accounts  and  that negotiators  only                                                                    
bargain what the state paid into the accounts per employee.                                                                     
                                                                                                                                
Ms. Sheehan answered in the affirmative.                                                                                        
                                                                                                                                
Co-Chair  von  Imhof  asked  for a  chart  showing  all  the                                                                    
different bargaining  units, and their trusts,  and what had                                                                    
been bargained per  person, per year, and  then a comparison                                                                    
with what was paid under AlaskaCare.                                                                                            
                                                                                                                                
Ms. Sheehan agreed to provide the information.                                                                                  
                                                                                                                                
9:49:13 AM                                                                                                                    
                                                                                                                                
Ms.  Sheehan  advanced to  Slide  9,  "Resident Versus  Non-                                                                    
Resident  Receiving COLD,"  which  showed a  chart that  was                                                                    
also a result  of a question raised in  a previous committee                                                                    
meeting. She explained that the  cost of living differential                                                                    
(COLD) was to care for  the difference in pay between Alaska                                                                    
and  Seattle.  She  pointed   out  that  approximately  86.5                                                                    
percent  of the  IBU received  the differential  as part  of                                                                    
their hourly  rate, 67 percent  of Marine Engineers,  and 73                                                                    
percent of  Masters, Mates, and  Pilots. She  concluded that                                                                    
about 82 percent of the  current vessel employees resided in                                                                    
the state  and received  a cost  of living  differential for                                                                    
doing so.                                                                                                                       
                                                                                                                                
Co-Chair Stedman asked  for an explanation for  the COLD. He                                                                    
wondered why the differential was  paid for employees living                                                                    
in the state.                                                                                                                   
                                                                                                                                
Ms.   Sheehan  stated   that  most   employees  received   a                                                                    
geographic  differential  because   there  were  communities                                                                    
within the  state that cost  more to live  in.  There  was a                                                                    
separate statute  for marine vessel employees  that provided                                                                    
that,  vessel  employees  should  live in  the  state  while                                                                    
recognizing  that it  cost more  to live  in Alaska  than in                                                                    
Seattle;  the   rates  within  each   collective  bargaining                                                                    
agreement were bargained based on the statute.                                                                                  
                                                                                                                                
Co-Chair Stedman  wondered about  the dollar amount  for the                                                                    
COLD received by employees.                                                                                                     
                                                                                                                                
Ms. Sheehan  noted that  the amount  varied by  position and                                                                    
was bargained  into the hourly  wage of some  employees. She                                                                    
offered that other units had a  flat amount.  She offered to                                                                    
provide the information later.                                                                                                  
                                                                                                                                
Co-Chair Stedman thought that  in the current AMHS financial                                                                    
climate, the  numerics on the  overall percentages  would be                                                                    
helpful to the discussion.                                                                                                      
                                                                                                                                
9:53:02 AM                                                                                                                    
                                                                                                                                
Co-Chair  von Imhof  asked how  often  there was  a cost  of                                                                    
living comparison  between Seattle and Alaska.  She recalled                                                                    
that the  cost of housing  in Seattle was  skyrocketing. She                                                                    
asked whether there  was a periodic cost  of living analysis                                                                    
for  Seattle and  Alaska. She  thought maybe  the state  had                                                                    
reached  a point  where the  cost  of living  in Alaska  was                                                                    
close enough to Seattle that COLD was no longer necessary.                                                                      
                                                                                                                                
Ms. Sheehan stated  that the last study  commissioned was in                                                                    
2008,  and the  study was  done by  the McDowell  Group. She                                                                    
expanded that  statute states  that a  study should  be done                                                                    
every 5  years, with an appropriation  from the legislature,                                                                    
the legislature had las appropriated for the study in 2008.                                                                     
                                                                                                                                
Co-Chair   Stedman  asked   for  Ms.   Sheehan  to   provide                                                                    
information on  the cost of  such a study for  the committee                                                                    
to consider. He was curious  whether the numbers had changed                                                                    
over the last decade.                                                                                                           
                                                                                                                                
Ms. Sheehan recalled that the study cost $398,000 in 2008.                                                                      
                                                                                                                                
9:55:54 AM                                                                                                                    
                                                                                                                                
Ms. Sheehan turned to Slide 10, " Rejection of Monetary                                                                         
Terms:CBA Terms":                                                                                                               
                                                                                                                                
     ASEA: Re-enter negotiations for 10 days; if no                                                                             
     agreement, Class 2 and Class 3 employees may take a                                                                        
     strike vote                                                                                                                
                                                                                                                                
     APEA: Not required to enter negotiations; impasse                                                                          
     exits and members may call for a strike vote                                                                               
                                                                                                                                
     CEA: Must re-enter negotiations upon demand by either                                                                      
     party; negotiations last for 10 days but may be                                                                            
     extended by mutual agreement; if no agreement, impasse                                                                     
     exists and members may call for a strike vote                                                                              
                                                                                                                                
     IBU: Must re-enter negotiations within five days                                                                           
                                                                                                                                
     MEBA: Must re-enter negotiations immediately                                                                               
                                                                                                                                
     MMP: Must re-enter negotiations immediately                                                                                
                                                                                                                                
    PSEA: Upon written request, immediately negotiate a                                                                         
     mutually satisfactory supplemental agreement                                                                               
                                                                                                                                
     ACOA: Must re-enter negotiations immediately                                                                               
                                                                                                                                
     LTC:  Impasse exists and parties agree to pursue                                                                           
     reasonable efforts to obtain a mutually satisfactory                                                                       
     resolution                                                                                                                 
                                                                                                                                
    AVTECTA: Impasse exists and parties agree to pursue                                                                         
   reasonable efforts to obtain a mutually satisfactory                                                                         
     resolution                                                                                                                 
                                                                                                                                
     TEAME: Must re-enter negotiations immediately                                                                              
                                                                                                                                
     Note: No definition of immediately is provided for                                                                         
     in the collective bargaining agreements.                                                                                   
                                                                                                                                
Ms. Sheehan noted that renegotiations would be entered into                                                                     
if contracts were not funded.                                                                                                   
                                                                                                                                
Co-Chair Stedman could not recall a time when the                                                                               
legislature had not funded the negotiated agreements.                                                                           
                                                                                                                                
Ms. Sheehan had found that LTC  were not funded in 1986, the                                                                    
PSEA had  not been  funded in  1994, and  in 2009,  the ACOA                                                                    
interest  arbitration award  was  not funded  one year,  but                                                                    
then was funded the following year.                                                                                             
                                                                                                                                
Co-Chair Stedman  noted that  the issue in  2009 had  been a                                                                    
political anomaly.                                                                                                              
                                                                                                                                
9:57:31 AM                                                                                                                    
                                                                                                                                
Ms. Sheehan  referenced Slide 11, "  Sample Historical COLAs                                                                    
&  Anchorage   CPI  Comparison,"   which  showed   what  was                                                                    
bargained back  to the mid-1980s.  She noted that  the slide                                                                    
showed  only  the cost  of  living  allowances and  did  not                                                                    
account for merit steps or pay increments.                                                                                      
                                                                                                                                
Co-Chair  Stedman thought  some  of the  data  on the  slide                                                                    
could  be rolled  into the  ten-year look-back  requested by                                                                    
the  committee.  He thought  that  trend  analysis would  be                                                                    
helpful in grappling with the rates of change.                                                                                  
                                                                                                                                
Co-Chair  Stedman  thanked  OMB   and  the  departments  for                                                                    
working together to put the presentation together.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
9:59:54 AM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 9:59 a.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
041819 DOA Final Senate Finance Presentation 4-18-19 (002).pdf SFIN 4/18/2019 9:00:00 AM
Labor Contracts
041819 Copy of SalAdj CRs by Fund Source 4.18 (002).xlsx SFIN 4/18/2019 9:00:00 AM
Labor Contracts