Legislature(1995 - 1996)

04/26/1995 09:10 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         April 26, 1995                                        
                           9:10 a.m.                                           
  MEMBERS PRESENT                                                              
 Senator Lyda Green, Chairman                                                  
 Senator Loren Leman, Vice-Chairman                                            
 Senator Mike Miller                                                           
 Senator Johnny Ellis                                                          
 Senator Judy Salo                                                             
  MEMBERS ABSENT                                                               
 All members present.                                                          
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 18                                                            
 "An Act relating to an advisory vote during regional educational              
 attendance area school board elections; and providing for an                  
 effective date."                                                              
 SENATE BILL NO.  2                                                            
 "An Act relating to unemployment compensation for persons employed            
 by educational institutions in other than educational, research, or           
 principal administrative capacities."                                         
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 18 - No previous action to record.                                         
 SB 2 - No previous action to record.                                          
 WITNESS REGISTER                                                              
 Senator Zharoff                                                               
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Prime sponsor of SB 18.                                  
 David Koivuniemi, Acting Director                                             
 Division of Elections                                                         
 PO Box 110017                                                                 
 Juneau, Alaska 99811-0017                                                     
 POSITION STATEMENT:  Said that the division was not opposed to                
                      SB 18.                                                   
 Shelia Peterson, Special Assistant to the Commissioner                        
 Department of Education                                                       
 801 W. 10th Street, Suite 200                                                 
 Juneau, Alaska 99801-1894                                                     
 POSITION STATEMENT:  Supported SB 18 and SB 2.                                
 Senator Lincoln                                                               
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Prime sponsor of SB 2.                                   
 Bill Munroe                                                                   
 Classified Employees Association                                              
 Mat-Su School Borough District                                                
 2950 Mariann                                                                  
 Wasilla, Alaska 99654                                                         
 POSITION STATEMENT:  Asked for the committee's support of SB 2.               
 Scott Bidwell, Executive Board                                                
 Education Sports Staff Association (ESSA)                                     
 1918 Jack Street                                                              
 Fairbanks, Alaska 99709                                                       
 POSITION STATEMENT:  Discussed the need for unemployment.                     
 Richard Leath, Superintendent                                                 
 Bristol Bay Borough School District                                           
 POSITION STATEMENT:  Opposed SB 2.                                            
 Vernon Marshall, Executive Director                                           
 National Education Association-Alaska                                         
 114 2nd Street                                                                
 Juneau, Alaska                                                                
 POSITION STATEMENT:  Supported SB 2.                                          
 Alice Johnson, Custodian                                                      
 Box 63                                                                        
 Sterling, Alaska 99672                                                        
 POSITION STATEMENT:  Supported SB 2, but preferred retirement                 
 Justin George                                                                 
 Kenai Peninsula Education Support Association                                 
 PO Box 39301                                                                  
 Ninilchik, Alaska  99639                                                      
 POSITION STATEMENT:  Supported SB 2.                                          
 Bruce Ludwig, Business Manager                                                
 Alaska Public Employees Association                                           
 POSITION STATEMENT:  Supported SB 2.                                          
  ACTION NARRATIVE                                                             
 TAPE 95-33, SIDE A                                                            
                  SB  18 REAA ADVISORY VOTES                                 
 Number 003                                                                    
 CHAIRMAN GREEN called the Senate Health, Education and Social                 
 Services (HESS) Committee to order at 9:10 a.m. and introduced                
 SB 18  as the first order of business before the committee.                   
 SENATOR ZHAROFF, prime sponsor, explained that SB 18 is identical             
 to a bill that was introduced last year which died in the final               
 hours of the session.  SB 18 resulted from a concern from one of              
 the REAA school districts which had a problem placing an advisory             
 vote on the ballot for the election of school boards.  The Division           
 of Elections does not have a problem with that, however, there is             
 currently nothing in statute that would allow the division to place           
 that vote on the ballot.  SB 18 only affects REAAs and schools that           
 are spread out.  In the case of the REAA school district that had             
 a problem placing the advisory vote on the ballot, the district               
 wanted the voters to respond to the question of relocation of the             
 main office.  Each community would have to hold a separate election           
 and all the votes would have to be compiled.  He noted that there             
 was not much opposition to putting this on the ballot other than              
 the fact that it was not permissible under the statute.                       
 DAVID KOIVUNIEMI, Acting Director of the Division of Elections,               
 said that the division did not have any opposition to SB 18.                  
 SHELIA PETERSON, Special Assistant to the Commissioner of                     
 Education, said that the Department of Education does support SB
 SENATOR MILLER moved that SB 18 be moved out of committee with                
 individual recommendations.  Hearing no objections, it was so                 
        SB   2 UNEMPL'T COMP FOR SOME SCHOOL EMPLOYEES                       
 Number 068                                                                    
 CHAIRMAN GREEN introduced  SB 2  as the next order of business before         
 the committee.                                                                
 SENATOR LINCOLN, prime sponsor, explained that SB 2 attempts to               
 correct an inequity for noncertified school employees who are                 
 currently ineligible for unemployment compensation during the                 
 summer months.  She pointed out that the federal government changed           
 its law to allow these noncertified school employees to receive               
 unemployment, however, the Alaska Legislature has not done so.                
 Seasonal, local and state government, and private sector employees            
 can receive unemployment benefits during periods of unemployment.             
 Kitchen workers, school bus drivers, custodians, clerks, and                  
 teacher's aides cannot receive unemployment benefits during periods           
 of unemployment.  Furthermore, there is also inequity within the              
 jobs of some employees who perform similar jobs.  She illustrated             
 that inequity by informing the committee that school bus drivers              
 employed by a school district cannot receive unemployment while               
 drivers employed by the private sector are eligible for                       
 unemployment benefits.                                                        
 Senator Lincoln indicated that the figures regarding the cost to              
 the school district seem to be overly exaggerated.  In reality, a             
 small number of noncertified employees would apply for unemployment           
 compensation due to the small window of opportunity.  Usually,                
 these noncertified employees are not working in the summer months             
 when jobs are available.  She noted that in some cases employment             
 is not available or the person cannot obtain a job.  In order to              
 receive unemployment, these persons must actively seek employment.            
 Single parent families seem to be having the most difficulty.                 
 Senator Lincoln pointed out that the benefit is small which                   
 eliminated the possibility of an incentive not to work.  An                   
 employee earning an average of $17,000 annually would receive $172            
 per week and $24 per dependent for a maximum duration of 11 weeks.            
 The majority of the employees that SB 2 would affect would probably           
 be permanent Alaskan residents who would spend their money locally.           
 She informed the committee that in 1992, Alaska paid $25.4 million            
 in benefits to those who had worked in Alaska but drew their                  
 benefit outside.                                                              
 Number 174                                                                    
 SENATOR LEMAN inquired as to the financial affect of SB 2 on the              
 system.  SENATOR LINCOLN said that there is a zero fiscal note from           
 the Department of Education, but the figures are probably skewed.             
 SENATOR LEMAN asked if these people who are not allowed to receive            
 unemployment compensation were paying into the fund.  SENATOR                 
 LINCOLN clarified that these employees are paying into the fund,              
 but they cannot receive the benefit.                                          
 BILL MUNROE, representing the Classified Employees Association in             
 the Mat-Su Borough School District, explained that in Mat-Su the              
 school district pays a set percentage which may increase with                 
 regards to the experience level of the employee.  He urged the                
 committee to discuss the question of who is paying into the fund,             
 the employees or the school district, with the Department of Labor            
 or whomever administers the state unemployment insurance benefits.            
 Mr. Munroe informed the committee that at one time there was a                
 supplemental interim benefits program which, he recollected, was              
 discontinued due to the shortage of state revenues.  In a survey of           
 the association's members, approximately 500, all wanted the                  
 pursuit of unemployment benefits to be continued.  The members                
 believe this to be an issue of equity.  He said that internal                 
 research has determined that possibly 350 term employees may                  
 currently be eligible to apply for unemployment benefits.  He                 
 estimated that approximately 50 to 70 percent of those 350 eligible           
 employees would not apply for the benefits.  Mr. Munroe mentioned             
 an inflated estimate for the costs to the Bush for this                       
 legislation.  He discussed the attempts to achieve retirement                 
 equity for term employees which has been going on since 1979.  Last           
 year, the association realized that the goal of retirement equity             
 for term employees was not going to materialize and perhaps, the              
 unemployment insurance issue would be an achievable goal.  In                 
 conclusion, Mr. Munroe asked for the committee's support of SB 2.             
 Number 266                                                                    
 CHAIRMAN GREEN asked how the employees contribution is calculated             
 currently.  BILL MUNROE explained that the employee does not see              
 their contribution on their paychecks.  The district pays the                 
 contribution due to the low experience level in Mat-Su.  Mr. Munroe           
 was unsure as to the procedure in other districts.                            
 SHELIA PETERSON said that the Department of Education does support            
 SB 2.  The department is concerned about the cost to school                   
 districts.  Ms. Peterson explained that she understood that                   
 educational institutions are reimbursable entities, therefore the             
 Department of Labor would pay the unemployment insurance benefits             
 to the claimants and then bill the school districts quarterly for             
 the actual cost incurred.  The Department of Labor has estimated              
 that there are approximately 3,800 noncertified individuals in                
 Alaska.  The Department of Labor has also estimated, based on who             
 may apply for the benefits, that the school districts statewide may           
 incur approximately $2.1 million.  Ms. Peterson said that the                 
 Department of Education strongly supports SB 2, but some concerns             
 regarding the costs to the local school districts remain.                     
 SENATOR LEMAN expressed concern with the financial integrity of the           
 program in light of the information Ms. Peterson had presented from           
 the Department of Labor.  If people are not paying as much into the           
 system as is being drawn out, then there is a net draw on the                 
 SHELIA PETERSON explained that these would be reimbursable                    
 arrangements; the trust fund would pay out the benefits then the              
 Department of Labor would bill each school district for the actual            
 cost.  Therefore, the total amount of payments would be reimbursed.           
 SENATOR LEMAN inquired as to how much an employees deduction would            
 amount to over the course of the school year.  SHELIA PETERSON                
 understood that there would not be an employee deduction.  The                
 employer, the local school district, would pay the total amount.              
 SENATOR LEMAN asked if Ms. Peterson meant there is no deduction               
 from the employee or there is no additional deduction.  SHELIA                
 PETERSON reiterated that the Department of Labor had explained to             
 her that currently, there is no deduction, the employer pays the              
 CHAIRMAN GREEN said that this point could be followed up and                  
 Number 329                                                                    
 SENATOR LINCOLN understood Mr. Munroe to say that Mat-Su had  chosen          
 to pay for their employee contributions; that is not automatic.               
 SENATOR SALO indicated that Mat-Su may have chosen to pay for their           
 employee contributions due to the low usage of unemployment                   
 compensation.  She predicted that if that usage changed, the school           
 district would probably do an assessment of the employees as does             
 the private sector.                                                           
 CHAIRMAN GREEN asked if there was anyone on teleconference that was           
 still connected.                                                              
 BILL MUNROE informed the committee that Mat-Su was still on-line              
 and he wanted to make further comments regarding SB 2.  He                    
 specified that in Mat-Su there currently is no deduction from the             
 employees' paycheck, however that does not preclude that deduction            
 from occurring.  Information from the Department of Labor may be              
 crucial in determining the overall costs.  Mr. Munroe offered to              
 get information from the Department of Labor regarding the                    
 possibility of a deduction and return it to the committee.  He                
 informed the committee that his research so far has indicated that            
 everyone who is eligible for state unemployment insurance does pay            
 a deduction other than Mat-Su's employees and probably other                  
 employees across the state who are school employees.  Mr. Munroe              
 noted that Rose Smith would be faxing her written testimony.                  
 Number 352                                                                    
 SCOTT BIDWELL, Executive Board of ESSA and President of the Sports            
 Staff Caucus, pointed out that employees covered under this bill              
 used to be 12 month employees, but they were cut back 9 and 10                
 months.  Furthermore, many of the hours of these jobs have been cut           
 back from 7 1/2 hours to 7 hours.  He said that typically, the 9              
 and 10 month jobs are at the lower end of the pay scale.                      
 Uncertificated workers do not receive an employers retirement                 
 credit, as do teachers, nor do they receive unemployment.  Mr.                
 Bidwell indicated that these jobs had been cut because they were              
 the easiest jobs to cut.  He echoed the sentiment that the                    
 predicted costs for unemployment were inflated; most people in his            
 area have other jobs to go to during the interim.  In conclusion,             
 Mr. Bidwell reiterated that unemployment was being sought since               
 retirement for these positions seems to be unattainable.                      
 RICHARD LEATH, Superintendent of Schools for the Bristol Bay                  
 Borough, was opposed to SB 2.  Another unfunded mandate is not                
 needed, especially in this time of budget restraints.  He                     
 emphasized that he is attempting to save all the jobs possible in             
 his district.  He explained that there is a possibility that jobs             
 may have to be eliminated in order to pay the unemployment.                   
 Currently, employees under classified contracts are given contracts           
 in May and expect a job in the following Fall.  This is not a good            
 bill for Bristol Bay at this time.  He noted that Bristol Bay like            
 Mat-Su pays all the unemployment; this is not a major factor                  
 because the incident rate in so low.                                          
 SENATOR SALO asked Mr. Leath if he could assess his employees                 
 through an unemployment tax, if this legislation passes.  RICHARD             
 LEATH replied yes, he preferred not to have to do that.  SENATOR              
 SALO pointed out that if Bristol Bay did have to assess their                 
 employees, then the financial impact Mr. Leath was concerned about            
 would be decreased.  Mr. Leath agreed.                                        
 Number 419                                                                    
 VERNON MARSHALL, Executive Director of NEA-AK, supported SB 2.  He            
 discussed the inequity in the treatment of noncertified employees             
 of school districts in comparison to the treatment of other state             
 employees in local and state government as well as within school              
 districts.  In the early 1970s, the federal government made the               
 unemployment program available to school districts.  All school               
 employees within a school district were eligible for unemployment             
 during the break between two academic years as well as during the             
 break between two successive semesters.  He noted that in 1972 or             
 1973, practically every state denied benefits to school employees.            
 Mr. Marshall emphasized that the economic conditions since 1972               
 have changed in Alaska and across the country.  Perhaps, the trends           
 of 1972 should be reviewed now.  He discussed the previously                  
 mentioned bus driver example in which school employed drivers are             
 not treated the same as privatized drivers.  This inequity creates            
 a moral issue within the district.  Mr. Marshall mentioned a 1992             
 actuarial study by the Unemployment System in which ways to deal              
 with unemployment from the perspective of the employee and employer           
 are discussed.  The economic impact of unemployment could be dealt            
 with through the reimbursement of the unemployment trust fund for             
 actual use or the application of a tax or a combination of both.              
 The actuarial study pointed out that the unemployment program is an           
 insurance program not a social program.                                       
 Systems would review the use of the program and set up a receipt              
 system in order to deal with the use that employees experience                
 relative to the system itself.  Mr. Marshall noted that was dealt             
 with through the cost benefit rates in the calculation of the ratio           
 of benefits paid out in comparison to the money coming in.  That              
 cost can be passed on to the employee.  He expressed concern with             
 the calculation because the Department of Labor has primarily                 
 focused on calculating the cost of unemployment based on seasonal             
 work most of which occurs in the winter.  In this case, a seasonal            
 winter rate is being applied to summer.  Many of those who may                
 qualify for unemployment will not be eligible for the benefit or              
 they would have job opportunities for the summer.                             
 Number 502                                                                    
 Mr. Marshall pointed out that the benefit would be small.  In 1994,           
 a person who earned $17,000 annually would receive $172 per week in           
 unemployment as well as $24 per dependent.  The maximum duration of           
 that benefit would probably not exceed 10 or 11 weeks.  He                    
 indicated that it would be difficult to live on $172 in Alaska in             
 the summer.  Therefore, if a person has the choice of a job and               
 unemployment, the job seems to be the obvious choice because it               
 would pay more than $172 per week.  Mr. Marshall informed the                 
 committee that as high as 26 percent of Alaska's unemployment                 
 benefits have been paid to out-of-state workers.  If unemployment             
 is allowed for noncertified employees in the summer, these dollars            
 would remain in the local communities.                                        
 Mr. Marshall appreciated that the committee had considered SB 2 and           
 hoped that SB 2 would receive a good vote.  Why are noncertified              
 school employees who are off in the summer different than seasonal            
 employees who are off in the winter?  He felt that it was unfair              
 for noncertified employees to be denied the unemployment benefit.             
 He encouraged the committee to pass SB 2 out of committee and keep            
 the issue alive.                                                              
 Number 538                                                                    
 SENATOR LEMAN discussed the testimony previous to Mr. Marshall's in           
 which two options regarding balancing the budget if SB 2 is passed.           
 The testimony indicated that passage of SB 2 would result in school           
 districts having to either decrease the number of employees or tax            
 the employees.  Decreasing the number of employees results in few             
 people working while a tax on employees would result in a reduced             
 salary.  Senator Leman felt that Mr. Marshall's support of SB 2 in            
 essence supported a mechanism that would reduce the number of                 
 employees or reduce the compensation to the employees or both.                
 What other solution is there?                                                 
 VERNON MARSHALL reiterated that the actual cost of SB 2 to a                  
 specific district is difficult to calculate.  He asserted that he             
 did not want to weaken the unemployment program of Alaska.                    
 Exercising a tax on employees could cover the assumptions regarding           
 participation of the program, and adjustments can be made.  The               
 benefit cost rate could decrease and result in a decrease in the              
 employee tax or the rate could increase.  He emphasized that he was           
 not advocating the reduction of people working for a school                   
 district in order to provide this benefit.  Mr. Marshall said that            
 there are other avenues that would provide the unemployment benefit           
 and cover the cost.  That could be determined on an annual basis              
 through the actuarial assumptions of the system.  The cost benefit            
 rate is determined by prior year participation.                               
 SENATOR LEMAN inquired as to what the other avenues Mr. Marshall              
 mentioned would be.  VERNON MARSHALL stated that a tax would result           
 in the reduction of take home pay.  SENATOR LEMAN interjected that            
 an increase in the tax on a salary is the same as a decrease in               
 that salary.  MR. MARSHALL explained that the employee has gained             
 the opportunity to participate in an insurance program that covers            
 unemployment.  The people that SB 2 speaks to are unemployed.  We             
 all buy benefits for the future through taxes, for example, the               
 social security tax.  Mr. Marshall reiterated that there are                  
 options such as the reimbursement of the fund, employee tax, or a             
 combination of both.                                                          
 Number 585                                                                    
 SENATOR LEMAN asserted that the reimbursement of the fund must come           
 from somewhere.  Some people falsely assume that the reimbursement            
 comes from another source that just appears.  Senator Leman                   
 explained that the other source is the employee, the employer, or             
 the guardians of the treasury.                                                
 SENATOR LINCOLN stated that she would not move SB 2 along if it               
 means that employees are going to be cut; that is not her objective           
 in introducing SB 2.  She clarified that the major factor is the              
 number of persons who are actually going to apply for the benefit.            
 She reiterated that the numbers are very high estimates.                      
 TAPE 95-33, SIDE B                                                            
 Number 594                                                                    
 SENATOR LINCOLN informed the committee that the prediction that               
 between 30 and 40 percent of noncertified employees are going to              
 apply for unemployment benefits is too high.  She did not believe             
 that a huge amount of people would apply for the $172 per week                
 benefit.  A combination of taxation of the employees as well as               
 having the school districts participate could be an option.                   
 Senator Lincoln cautioned the committee in its review of the                  
 inflated numbers from the Department of Labor.  More realistic                
 figures need to be determined for summer employment and                       
 specifically, for noncertified employees of the schools.                      
 ALICE JOHNSON, Custodian at the Sterling School, supported SB 2.              
 She discussed the problems faced in obtaining employment in the               
 summer; many of the jobs are filled by college students.                      
 Unemployment insurance is needed in the summer months.  She                   
 preferred retirement.  She said that private business provides this           
 insurance and government should not exempt themselves from it.                
 JUSTIN GEORGE, Kenai Peninsula Educational Support Association,               
 said that the association supported SB 2.  He reiterated the                  
 inequity in state seasonal employees being eligible for                       
 unemployment while school district employees are not.  Borough,               
 assembly members, and school board members receive year for year              
 retirement which school district employees do not.  Since                     
 retirement equity seems not to be debatable anymore, the                      
 association supports unemployment benefits.                                   
 Mr. George informed the committee that due to recent budget cuts,             
 some of the 12 month positions have been reduced to 10 month                  
 positions.  Those employees should be eligible for unemployment               
 benefits this year, but the next year is uncertain.  He echoed Ms.            
 Johnson's concerns regarding the problems in finding work in the              
 summer.  Furthermore, finding work can be difficult due to the                
 short amount of time these employees are off.  Many people do find            
 work and Mr. George felt that only a small number of people would             
 apply for the benefit and the impact would be minimal.  The benefit           
 is needed.                                                                    
 Number 557                                                                    
 BRUCE LUDWIG, Business Manager for the Alaska Public Employees                
 Association - Alaska Federation of Teachers, supported SB 2.  He              
 expressed confusion regarding who contributes the .07 percent tax             
 and who does not.  There is no question from his members that they            
 would be willing to pay that .07 percent in order to receive the              
 SENATOR MILLER recommended that the Department of Labor be present            
 at the next hearing of this legislation.  He emphasized that the              
 employer pays much more into the system than the employee.  Senator           
 Miller informed everyone that in his business, his employees pay              
 .07 percent while he, the employer, pays 3.2 percent.  Therefore,             
 there would be a cost to the districts.  An employer pays for every           
 employee during the entire time they work; the employer pays 3.2              
 percent on the gross amount.  The Department of Labor would be                
 helpful in clarifying this confusion.                                         
 SENATOR LEMAN clarified that the .07 percent is really 0.7 percent.           
 He said that percent the employee pays and the employer pays could            
 be close to 3.7 percent.                                                      
 SENATOR MILLER agreed, but noted that the percentage varies with              
 respect to the industry.                                                      
 CHAIRMAN GREEN expressed interest in reviewing the records of when            
 unemployment for noncertified employees was previously in place.              
 SENATOR SALO explained that when unemployment was previously in               
 place, it applied to both certified as well as classified.                    
 Therefore, the statistics may be difficult to determine with                  
 relevance to this bill.                                                       
 CHAIRMAN GREEN noted that perhaps, unemployment was originally set            
 up with respect to long-term employment and therefore, the                    
 actuarial data was collected with that in mind.  Perhaps, seasonal            
 work and planned absence of two to three months was not planned in            
 the original unemployment program.  That would prove difficult in             
 obtaining accurate information regarding unemployment for seasonal            
 BRUCE LUDWIG suggested that there are number of persons who take              
 advantage of unemployment who are seasonally employed.                        
 CHAIRMAN GREEN reiterated the difficulty in finding applicable data           
 for this situation.  She indicated the need to talk to her                    
 SENATOR SALO pointed out that a factor limiting the number of                 
 people participating in unemployment would be the restriction that            
 a person must be unemployed for a specified length of time before             
 a person can apply for the benefit.  VERNON MARSHALL explained that           
 there is a week long waiting period with the anticipation that the            
 person would be unemployed for an extended time.                              
 SENATOR SALO felt that those who would apply for unemployment would           
 be those that are struggling to make ends meet and need this                  
 benefit.  She recalled that when she taught and unemployment was              
 available, most did not apply because of the waiting period and the           
 paperwork involved.                                                           
 BRUCE LUDWIG interjected that an individual who has applied for               
 unemployment must be actively available for employment at the time            
 which could deter some from applying.                                         
 CHAIRMAN GREEN held SB 2 in order to gather more information.                 
 There being no further business before the committee, the meeting             
 adjourned at 10:05 a.m.                                                       

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