Legislature(2001 - 2002)
04/18/2002 01:35 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR & COMMERCE COMMITTEE
April 18, 2002
1:35 pm
MEMBERS PRESENT
Senator Ben Stevens, Chair
Senator Alan Austerman
Senator Loren Leman
Senator John Torgerson
Senator Bettye Davis
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 320(TRA)
"An Act prohibiting discrimination in insurance rates based on
credit rating or credit scoring; and providing for an effective
date."
HEARD AND HELD
SENATE BILL NO. 252
"An Act renaming the Alaska Human Resource Investment Council as
the Alaska Workforce Investment Board and relating to its
membership; repealing the termination date of the state training
and employment program; relating to employment and training
activities; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 320 - See Transportation minutes dated 2/28/02 and Labor and
Commerce minutes dated 3/5/02 and 3/26/02.
SB 252 - See Labor and Commerce minutes dated 2/14/02.
WITNESS REGISTER
Mr. Kurt Olson
Staff to Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 320 for sponsor.
Mr. David McCarter, Consumer
857 Faultline
Fairbanks AK 99705Mr.
POSITION STATEMENT: Opposed SB 320.
Mr. David Valdez
658 Fairbanks St.
Fairbanks AK 99709
POSITION STATEMENT: Opposed SB 320.
Mr. Steven Conn, Executive Director
Alaska Public Interest Research Group (AKPIRG)
507 E St #213
Anchorage AK 99501
POSITION STATEMENT: Opposed SB 320.
Mr. Mark Niehaus
Progressive Insurance
No Address Provided
POSITION STATEMENT: Supported CS SB 320.
Mr. John Furuness
AARP
National Association of Retired Federal Employees (NARFE)
1285 Fritz Cove Rd.
Juneau AK 99801
POSITION STATEMENT: Opposed SB 320.
Ms. Sarah McNair Grove, Property Casualty Actuary
Division of Insurance
Department of Community and Economic Development
POB 110805
Juneau AK 99811-0805
POSITION STATEMENT: Commented on SB 320.
Mr. Michael Harrold, Northwest Manager
National Association of Independent Insurers (NAII)
9611 Rainier Ave. S.
Seattle WA 98118
POSITION STATEMENT: Commented on SB 320.
Mr. Michael Lessmeier
State Farm Insurance
3000 Vintage Blvd, Ste 100
Juneau AK 99801
POSITION STATEMENT: Commented on SB 320.
Ms. Pat Davidson
Division of Legislative Audit
POB 113300
Juneau AK 99811
POSITION STATEMENT: Commented on SB 252.
Ms. Rebecca Gamez, Deputy Commissioner
Department of Labor and Workforce Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Commented on SB 252.
Ms. Mary Jackson
Staff to Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 252.
Ms. Eden Larson
No address provided
POSITION STATEMENT: Commented on SB 252.
Mr. Michael Shiffer, Program Coordinator
Workforce Investment Office
Department of Labor & Workforce
Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Commented on SB 252.
Mr. Mike Andrews
Alaska Works Partnership, Inc.
19839 S. Amalga
Eagle River AK
POSITION STATEMENT: Commented on SB 252.
ACTION NARRATIVE
TAPE 02-22, SIDE A
Number 001
SB 320-MOTOR VEHICLE INSURANCE & REPAIRS
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 1:35 pm and announced SB 320 to be up for
consideration.
CHAIRMAN TORGERSON moved to adopt the proposed committee
substitute, LS1462\B. There were no objections and it was so
ordered.
MR. KURT OLSON, Staff to Senator Torgerson, explained that the CS
differs significantly from the previous version of this bill,
which was one paragraph long and prohibited the use of credit
scoring for personal insurance. The CS allows it under certain
circumstances. Section 1 deals primarily with the restriction on
the use of credit history and credit scoring and outlines the
duties and the responsibilities of the insurers who are going to
be using it. Section 2 deals with filings the insurance companies
have to make to the Division of Insurance. Probably the most
important part of the section is the fact that it would require
the insurance companies to give the scoring model to the Division
of Insurance. This is what actually makes the credit rating
program work and up until this time, they haven't had access to
the model. This will allow the Division to determine whether or
not there's anything that might have an adverse impact on the
consumers in Alaska that are buying insurance. Section 3 is a
sunset provision and takes effect July 2006. The final section is
the effective date, January 1, 2003.
MR. DAVID MCCARTER, consumer from Fairbanks, said he was
testifying due to credit scoring and because there is no
recourse. He said that he thought his insurance rates would go
down when he hadn't had any tickets or accidents. But with
Atlanta Casualty, his rate on a 2001 Buick Regal - for him and
his wife - for a 2001 Ford F250 pickup was $2,400 for
comprehensive, collision and liability. Now it's going to go up
to $4,400 because of his credit score, which according to his
mortgage company is 620, 650 and 680, with a combined score of
about 640. This is bad economics, because it's going to make him
not want to buy any more vehicles. Furthermore the new bill says
that the guy just needs to get oral permission, so he could lie.
There's no proof. "This bill has no teeth whatsoever…"
MR. MCCARTER said they are not protecting the consumer and that
credit fraud is a number one crime in the U.S. right now.
SENATOR DAVIS said he was acting like they were already passing
this bill out of committee and all they are doing is having a
hearing to debate the issue.
MR. DAVID VALDEZ, Fairbanks resident, said this bill would have
an adverse impact on the working poor, minorities and people from
the villages who can't establish credit. He said they should
change Article 1 to an Act that allows rate discrimination based
on credit ratings or credit scoring.
CHAIRMAN STEVENS encouraged the public to stay on line to hear
what transpires in committee before they make a judgment on the
final product.
MR. STEVE CONN, Executive Director, Alaska Public Interest
Research Group, agreed with the previous testifier. He was
shocked to see the committee substitute.
It is absolutely worthless in terms of the original
motivation of Senator Cowdery and it's in fact anti
consumer. All of the so-called rights in this bill are
already guaranteed by federal law. The way this bill
simply deals with the subject is that it mixes credit
scoring and credit history and, of course, they're not
the same. Section 1 still gives the insurance company,
upon the refusal of the consumer, the right to allow it
to use credit scoring, but the absolute right to reject
that consumer as a customer. This the problem we
confronted with the original bill and the reason for
the ban was several-fold. The credit histories are
known throughout the country, which are the material
used by these mysterious credit scores to be in error,
in bad error and if you correct them, they leave the
errors in place. This does nothing for people like
Senator Cowdery's daughter who had a unique and serious
event that effected her credit history or victims of
identity theft or emergency situations. This does
nothing. This bill effectively says that the insurance
companies can do what they want…
MR. MARK NIEHAUS, Progressive Insurance, said he would not repeat
his previous testimony. He thought the CS was far superior to the
original bill and that about two-thirds of their policy holders
in Alaska, about 15,000, are getting significantly lower rates
due to the use of credit as part of the rating formula they are
using today. If that ability were to go away, those people would
get big rate increases and they are trying to prevent that from
happening.
Section 1, paragraph (b) requires an adverse notice action to be
sent, which is fine, but the second sentence says the notice must
state the significant factors of credit history that resulted in
the adverse action and provide information on how credit scores
can be improved. Mr. Niehaus said his company already does that
on request, but that the cost of the reports is significant and
most don't want it. Their adverse action notice says that it is
free of charge and provides an 800 number to call to get it.
MR. NIEHAUS suggested modifying the second sentence to something
like the notice must state "that consumers may obtain upon
request a free report containing the significant factors of the
credit history" as opposed to mandating that it be give to every
consumer.
His second recommendation concerned page 4, section 2, (c)(1),
the absence of credit. His concern was an increase in no-hits, if
they were automatically giving them a better rate. As insurers,
they have no way of determining accuracy or completeness of the
information.
MR. NIEHAUS said, "The requirement that they can't use the
absence of credit history to calculate a rate doesn't make any
sense in a world where we're using credit as part of the rate."
He could not implement that if he wanted to and he thought the
committee might be saying that they want no-hits to be treated as
having average credit or - he just wasn't sure. He said that no-
hits are a very small percentage, less than 5%, of their
business. They have significant data showing that they have
dramatically higher loss costs. He suggested using an approach
that was used in Washington to simply require that the filing
justify actuarially the handling of the charges associated with
credit no-hits. He also suggested using the effective date of
January 1, 2003 to give them time for implementation.
SENATOR DAVIS asked if they serve Washington and what do they do
there.
MR. NIEHAUS replied that they serve Washington and are currently
using credit. The bill he mentioned has passed, but it hadn't
taken effect yet. It allows insurers to continue to use credit;
it just has to be filed with the Department of Insurance and
approved and justified actuarially. There are some other
limitations on information within the credit reports that can be
used.
SENATOR DAVIS asked if they are doing business in any state where
they are not allowed to use credit.
MR. NIEHAUS replied yes - in Hawaii and California.
SENATOR DAVIS asked if they are still doing business in those
states.
MR. NIEHAUS replied yes and that it's not a statutory prohibition
in California, but it's a regulatory requirement.
However, there are a lot of people that are paying
rates that are a lot higher than they would have
otherwise been if they would have been able to use
credit…In the state of Alaska we have been using credit
for a number of years now and to take it away…It's one
thing if you've never had it, but to take it away now,
the only way we could accomplish that - the result
would be about two-thirds of the people who get a rate
increase. There's no way around that.
SENATOR DAVIS asked if they had ever had to remove credit as a
factor in rates.
MR. NIEHAUS replied no.
SENATOR LEMAN said that section 2 adds a new section on how to
rate and it says an insurer may not use a methodology that
incorporates gender, race, nationality or religion. He understood
that for automobile coverage it's common to use gender.
MR. NIEHAUS replied that he would be happy to have that deleted.
"They don't want us to treat the credit of a woman any
differently from that of a man. A credit score is a credit
score…We already use gender ratings anyway…"
CHAIRMAN STEVENS said the language came from Washington State
that prohibits certain types of credit history from being used.
MR. KURT OLSON said the intent was to specifically outline that
credit scoring couldn't be factored in with race and gender.
CHAIRMAN STEVENS said that the majority of the issues that are
brought up now are related to the use of the credit history, not
to the use of how the credit scoring is used in the rate making.
"This was an attempt to say if you're going to use the credit
history, you've got to treat all credit histories exactly the
same."
MR. OLSON indicated that was right.
CHAIRMAN STEVENS asked how many years they were using credit
scoring in Alaska.
2:05 pm
MR. NIEHAUS replied approximately four years.
CHAIRMAN STEVENS asked if they had approval from the Division of
Investments.
MR. NIEHAUS replied yes.
CHAIRMAN STEVENS asked if any other state had used credit scoring
and then removed the ability to use it.
MR. NIEHAUS replied none that he was aware of.
CHAIRMAN STEVENS asked him to explain how two-thirds of Alaskan
customers' rates would be affected.
MR. NIEHAUS replied that almost all rates would be affected.
About two-thirds of their customers would see higher rates,
hypothetically, if they were required to completely remove credit
from the underwriting process.
CHAIRMAN STEVENS asked, "Why would everybody's rates go up if you
eliminated this?"
MR. NIEHAUS replied, "It's a zero sum game. The total amount of
premium we would collect would be unchanged."
He said that about 30% of folks would get rate decreases and
about two-thirds would get rate increases. "The sum of all those
changes would be zero."
MR. JOHN FURUNESS, AARP Capitol City Task Force, said he is also
the legislative representative for the local chapter of National
Association of Retired Federal Employees (NARFE). He hadn't had a
chance to study the revised bill, but they just don't think that
credit ratings should be used to determine auto insurance rates.
MS. SARAH MCNAIR GROVE, Division of Insurance, said:
We support the legislature's efforts to place
parameters on the use of credit information in
insurance rating and underwriting. Now that the
discussion has turned from a prohibition of the use of
credit information to identifying what the appropriate
parameters should be, we would like to offer just a
couple of comments on the committee substitute.
Some of the issues that the Division hears from
consumers relate to credit problems that seem to be
beyond the control of the consumer. As they have
identified, it really is the use of credit history that
seems to be an issue - not complaints about how it's
actually used in the rate-making process, but should it
be used at all. For example, some of the issues we hear
about are medical bills that are caused by a serious
injury or sickness that can result in poor credit
through no fault of the consumer, themselves. Some of
the other issues we hear about are denying coverage
because of the number of hits on your credit report.
Part of the insurance industry and the increased use of
credit information has created the number of hits on
the reports, so it seems like there needs to be some
way to alleviate that effect when it is being used.
Including some of these kinds of prohibitions on the
pieces of information that can be used on a credit
report, I think, would go a long way towards addressing
some of the consumer issues we have heard about.
I just have one other suggestion on the bill, itself,
and that is that the definition of 'adverse action,'
while it's fine, is defined by the federal Fair Credit
Reporting Act and it might be good to put specifically
what we mean in Alaska law rather than relying on
federal legislation.
SENATOR AUSTERMAN asked if she heard the Progressive Insurance
position saying if credit rating is eliminated altogether, that
the rates would change and, if she would have any say on how
those rate changes would take place.
MS. GROVE replied:
Every rate filing or every change in rates must be
filed with the Division of Insurance and we look at
them and review them to be sure they comply with Alaska
law. So a change could not be made without our
approval.
SENATOR AUSTERMAN asked if she anticipated approving the rate
change they are suggesting taking place if there is no credit
rating.
MS. GROVE replied that she would have to look at the reasons and
support for that and couldn't say yes or no at this point.
MR. MICHAEL HARROLD, Northwest Manager, National Association of
Independent Insurers, said:
I think this is a workable and good compromise bill,
but certainly contains aspects that I would prefer not
be in law. We truly believe that the way our companies
have used credit is to help better price their product
and that they use it to write more business, not less.
They have been giving discounts to consumers who are
less of a risk than other consumers. So I certainly
would not support some of the restrictions that are in
the bill, but I would simply point out again that it's
a compromise that I think we could live with and that
it does simply more than require some type of notice or
disclosure to be given. The fact that it says an
insurer cannot deny personal insurance in whole or in
part on the absence of credit history. It does take
into account the no-hits that Mr. Niehaus was speaking
about. It takes them into account both in regard to
underwriting as well as coming up with a rate.
MR. HARROLD said he disagreed with their treatment of no-hits,
because they have been actuarially proven to be the most
expensive to insure. He passed the committee a chart to
illustrate that fact. He added that it included "thin files"
which is a file with little credit. People who have the worst
credit scores have losses that are well over the amount of a one
to one ratio. It's even more so for the no-hits or thin files.
That's why insurers use that as a tool.
CHAIRMAN STEVENS asked if there were percentages that he had from
his pool of insurers and what percentage had good credit and what
percent had average and high risk credit.
MR. HARROLD replied that insurers could probably have that
information. Individual companies compete in the market place by
choosing where they are going to have their break points.
CHAIRMAN STEVENS asked what is the percentage of consumers who
are going to be affected by this. How many consumers have a good
or average credit rating.
MR. HARROLD replied that he hears from his companies that the
overwhelming majority of consumers have good to excellent credit.
That's why they have testimony saying the majority of them would
have increased rates if they couldn't use credit for a rating
tool.
CHAIRMAN STEVENS asked if this tool was removed and every company
had to file for rate changes, how many of their companies would
participate in that. "Would anyone pull out of the market?"
MR. HARROLD replied that it's possible. "Alaska has not been a
lucrative market from the loss perspective."
CHAIRMAN STEVENS asked how many would leave if the Division of
Insurance didn't approve their rate changes.
MR. HARROLD replied, "Perhaps more would leave or you would have
consumers that are simply paying rates that aren't fair."
CHAIRMAN STEVENS asked if he had 700 companies writing insurance
in this state, what would be the effect on those consumers who
are still looking for insurance.
MR. HARROLD replied, "The less companies you have, the less
availability you have, but all 600 of those companies do not
write in Alaska."
SENATOR AUSTERMAN said one of the concerns he has with using
credit is that, for example, it took his daughter six months to
get something off of her credit rating that she didn't know
anything about. It took him, personally, over one year when he
lost his credit card and had a bill for $3,800, which came back
three years later when it wasn't paid. It took him a year after
that to get rid of it with the credit agencies. He was concerned
about that type of example and how many people don't understand
the whole process of credit rating for insurance and the effects
it has on their rates.
MR. HARROLD responded that specifically there is a provision in
this bill that states if there is incorrect or disputed
information, they could submit that and the insurer has to go
back to the inception of the policy period and rewrite or
reunderwrite and recalculate the premium.
So, something positive could come out of getting it
checked. A more general comment would be that the use
of credit information is just permeating society and it
isn't just insurance. I would say the best job that any
consumer advocate can do is to encourage people to look
at their credit information. If someone has an adverse
action taken against them, underneath this bill they
would be able to get their consumer report free under
the Fair Credit Reporting Act, but I think everybody,
whether you're looking for auto insurance or
homeowner's insurance or you're looking at a mortgage
or buying a car, it simply permeates our life here at
the beginning of the 21 Century and I can't imagine
that we would be willing to stop using the information,
because it has so many other benefits.
SENATOR AUSTERMAN asked for the year that it took him to get the
error off his bill, would they have given him insurance until it
was corrected.
MR. HARROLD replied the way the bill reads, he didn't think it
would go back through the years, but it says to the inception of
the current policy term. He also thought that the Fair Credit
Reporting Act also requires that if somebody says that they have
incorrect data in their report, that they have 30 days to
determine whether or not that is correct. If the credit bureau
has not made that determination within 30 days, then it goes to
the consumer's advantage.
MR. MICHAEL LESSMEIER, State Farm Insurance Co., said they have
approximately 24% of the automobile insurance premium and
approximately 34 - 35% of the homeowners insurance premium
written in Alaska. He said that they have found from all the
testimony up to today that credit is an accurate predictor of
loss. The representative from the Division of Insurance testified
that the correlation between this tool and risk of loss was high.
It has also proven to be a high correlation in their experience.
This is a tool just like many other tools used for
predicting future loss. The second point that I would
make to the committee is that the use of credit in
insurance has not presented a significant problem in
Alaska. I don't know if this testimony was presented to
your committee, but it certainly was presented to the
House Labor and Commerce Committee. The representative
from the Division of Insurance was asked about
complaints about the use of this tool. I recall that
her testimony was that there may have been a few and
she was then asked if there had been any complaints
that had been found to be valid about the use of this
tool and I think she said that there was still an
instance under investigation.
TAPE 02-22, SIDE B
MR. LESSMEIER didn't think it was a significant problem in the
State of Alaska. His third point was that this is a tool that is
used differently by different insurers.
I think it's really important for you to understand
that we in Alaska have a marketplace that is a
competitive marketplace. It is also important that you
understand that as it is used differently by different
insurers and that how it's being used in rating today
requires the approval of the Division of Insurance. To
my knowledge there are very few companies that are
using credit today for rating purposes. State Farm does
not use credit for rating purposes, but if it is used
for rating purposes, it must first be approved by the
Division of Insurance that has the responsibility of
insuring that the use of this tool does not result in a
rate that is excessive. I think that is important.
A final point that I would make is that there are many
tools that already exist in the law that would allow
the Division of Insurance to address issues of credit.
The first one of course is to the extent that it's
being used in rating, that use has already been
approved by the Division of Insurance. To the extent
that it's being used in underwriting, if it results in
unfair discrimination, the Division of Insurance
already has the ability to investigate that to take
significant action through the amendments to the Unfair
Trade Practices Act that this legislature passed two
years ago, Senator Donley's amendment. So, there are
significant tools in the law right now to prevent the
misuse of this tool.
MR. LESSMEIER thought the issue before them was if they could use
this tool to identify those that present higher risk of future
loss and shouldn't they be able to do that.
Isn't that better for the consumer as a whole? Isn't it
better for people to be able to pay an insurance
premium that is more in accord with the risk of loss
that they present? Isn't that better policy? We say it
is…
CHAIRMAN STEVENS asked him what other tools he uses in basing a
customer's rates.
MR. LESSMEIER replied that as he understands it, the rates are
based on frequency and severity of loss. When someone comes in to
State Farm, they are asked about their loss experience, accidents
and tickets for automobiles. Their underwriting tool looks at
loss history, which has an aspect of credit. They do not use it
to determine what rate they will pay, but who to accept and where
to place them.
CHAIRMAN STEVENS asked how they handle a good ratepayer who
hasn't had any losses and all of a sudden has bad credit for some
reason that doesn't have to do with automobiles.
MR. LESSMEIER replied that they don't look at the data other than
at the very beginning when they determine whether to write or not
write.
CHAIRMAN STEVENS asked if they have ever gone back to rerate and
if he knew of anyone who did.
MR. LESSMEIER replied that they had not used this tool in Alaska
to do that.
CHAIRMAN STEVENS asked if he knew of any companies who write in
Alaska that do a credit history with a renewal.
MR. LESSMEIER replied that he didn't know about other companies,
but his didn't.
CHAIRMAN STEVENS asked if Mr. Harrold knew of any companies that
did that in Alaska.
MR. HARROLD replied that he imagined some companies would use it
as a tool.
Different companies treat it differently. Some
companies do not once they get them through the door
they don't look at it upon renewal. Other companies may
look every year and try to reshuffle the deck so to
say.
MR. LESSMEIER finished saying that they looked at 800,000
records, created a formula, and applied it to a control group of
500,000 and followed that control group for two years. They found
that formula was very predictive of future loss and they then
applied it to over one million new cases and found the same
thing. As a tool for them it is very predictable and helps them
in their goal of making sure that people pay a rate that is
commensurate with the risk that they present. He thought it was
important that the legislature does not place unnecessary
restrictions on use of this important tool.
In response to some testimony there were two changes that deal
with the issue of what happens to someone who doesn't have an
accurate credit history. At State Farm Insurance the number of
people who complain about having an inaccurate credit history is
infinitesimally small. A good change is allowing the use of the
credit model to be presented to the Division of Insurance under
confidentiality giving them the tools they need to prevent any
misuse of it.
SENATOR LEMAN moved on page 1, line 11, after "state" to insert
"that consumers may obtain on request".
SENATOR DAVIS objected for purposes of explanation.
SENATOR LEMAN explained that the concern was that there is a
substantial cost to doing this and many people probably won't
necessarily want it. The amendment just says that when somebody
asks for it, they have a right to get it.
SENATOR DAVIS asked if it was an opt in/opt out situation. She
withdrew her objection.
SENATOR AUSTERMAN asked if they would be given the option in the
letter of adverse action.
SENATOR LEMAN explained that there would be directions in the
letter to call an 800 number or return a post card - something
like that and they would send it to them.
SENATOR DAVIS said she understood what it did, but felt that it
needed to be discussed more. She asked if they were going to be
sent a letter of adverse action, why the reason couldn't be
stated in the one letter. "Everybody would get it."
SENATOR LEMAN withdrew his amendment.
CHAIRMAN STEVENS said that he would hold SB 320 at the sponsor's
request.
SENATOR DAVIS said Mr. Niehaus from Progressive Insurance said
they would not be withdrawing credit rating in the state of
Washington and this bill says that it does.
MR. NIEHAUS explained that Senator Davis is under the impression
that the bill passed in Washington disallows credit and he stated
that the bill requires that the credit be filed with the office
of the Insurance Commissioner and approved by them and it does
specifically allow the use of credit saying, "Credit history
shall not be used to determine personal insurance premiums or
eligibility for coverage unless the insurance scoring models are
filed with the commissioner."
CHAIRMAN STEVENS said he understood that the difference with
Washington State is that it prohibits certain types of credit.
SENATOR DAVIS added that it would have to be filed [and
approved].
CHAIRMAN STEVENS said he appreciated everyone's comments and held
the bill.
SB 252-EMPLOYMENT AND TRAINING PROGRAM/BOARD
CHAIRMAN STEVENS announced SB 252 to be up for consideration.
MS. PAT DAVIDSON, Legislative Auditor, said they had just
completed an audit on the State Training and Employment Program.
There were a number of purposes for the audit - to review the
administration of the STEP by the Alaska Human Resource
Investment Council (ERIC) to determine the compliance of the STEP
with state laws, to assess the impact of the STEP on the solvency
of the unemployment compensation fund and to calculate the
employer and the calculation of the employers' insurance tax
rates and to provide some detail expenditure information with
regard to the STEP. Their conclusions are that the STEP was
generally being administered in accordance with statutes with
five main exceptions.
The first one is that STEP served only a portion of
those that were eligible. We had found that there was
no systematic marketing of the STEP program to all
those that were eligible for the program. Secondly, we
found that federal and possibly state training funds
were being displaced by STEP. Basically, STEP was
created to assist clients that failed to meet the
federal or other programs and that it was intended to
be the employment training program of last resort. We
found that in the Municipality of Anchorage employment
coordinators used STEP funds when clients were
potentially eligible for the federal program, that STEP
grantees were not being required to ascertain if the
trainees were eligible for the federal programs when
recruiting, that STEP funds were used even when the
federal funding had not been exhausted - for example,
the Municipality of Anchorage carried forward over
$650,000 in federal adult and dislocated worker funding
and the balance of the state carried approximately $2
million of that same type of federal funds - and that
STEP funds may be displacing private funding through
union training programs. While employment coordinators
are pleased with the partnership between the unions and
the STEP funds, we question whether STEP funds are
being used to supplant private union training funds.
The third major exception was that there was a
requirement to reimburse the Department for such things
as tools, work-related clothing, safety gear or others
and this was not being actively enforced. We found that
the statutory program elements that define the STEP
program do not include a category called "employment
assistance." However, a lot of the funds were being
spent under that categorization. We found that
administrative costs exceeded the maximums defined in
statute.
In FY01, the Federal Employment Training Program was
substantially changed, the old one being JDPA, the Job
Training Partnership Act. The new federal program was a
Workforce Investment Act and referred to as WIA. The
new federal program is more inclusive and more people
are eligible for this program. Additionally, the new
federal program allows for funding of industry specific
training and, therefore, the purpose and need for STEP
needs to be reevaluated so again it's in the position
where it's the training funds of last resort - that you
maximize the use of those federal funds first. We found
that as a result of the funding mechanism for STEP and
the Alaska technical vocational education programs that
the financial benefits accruing back into the UI fund
do not exceed their cost. The difference is borne by
employers through increased UI taxes. It should be
pointed out that while all Alaskans are eligible for
the STEP program, not all employers will shoulder the
burden of the net costs of the STEP and the ATVE
programs.
We found that the STEP program does provide a direct,
though not precisely measurable, benefit to the UI fund
through either reduced UI benefit payments or larger
wage base. The ATVE program doesn't have that direct
measurable benefit.
In our opinion the STEP program should be reauthorized.
Our recommendation was for four years. The new Federal
Employment Training Program addresses many of the
reasons STEP was originally created and, therefore,
STEP needs to be realigned to fill the missing gaps. In
this report, we made seven recommendations to the
Department and they include:
-The need for additional outreach to those that are
actually eligible for the STEP program.
-To improve the monitoring of STEP grantees
-That legislation that directs the unexpended,
unobligated balance of the STEP funds to lapse into the
UI fund
-To actively monitor that admin costs to not exceed 15%
of total STEP expenditures
-That UI accounting costs that are charged to STEP and
ATVE are done in an equitable and supported manner
-That the programmatic data be collected and reported
in a manner that demonstrates legal compliance with the
statutes
-And that labor and staff work together to ensure that
STEP does not replace federal, private or other public
training funds.
MS. REBECCA GAMEZ, Deputy Commissioner, Department of Labor and
Workforce Development, said she wanted to comment after she had a
chance to read the amendments.
SENATOR LEMAN asked why they changed the name to ERIC.
MS. GAMEZ replied that under the Workforce Investment Act that
replaces the Job Training Partnership Act on the federal level
the name change - Alaska Workforce Board - falls in line with the
local workforce board name. "It's kind of a naming protocol, if
you will."
SENATOR TORGERSON stated that he wouldn't move amendment #1,
labeled GS2052\A.2, because the report said there was some
concern about money going to the union training programs. He
didn't have enough information to do a total ban on it. They are
asking for reports to come back to the legislature next year to
see if they have adjusted.
SENATOR TORGERSON offered amendment A.4:
22-GS2052\A.4
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 1, line 2, following "membership;":
Insert "providing that lapsing employment assistance and
training program account funds may be appropriated to the Alaska
technical and vocational education program;"
Page 15, following line 9:
Insert a new bill section to read:
"* Sec. 11. AS 23.15.625 is amended to read:
Sec. 23.15.625. Employment assistance and training
program account. The employment assistance and training
program account is established in the general fund. The
commissioner of administration shall separately account for
money collected under AS 23.15.630 that the department
deposits in the general fund. The annual estimated balance
in the account may be appropriated by the legislature to the
department to implement AS 23.15.620 - 23.15.660. The
[LEGISLATURE MAY APPROPRIATE THE] lapsing balance of the
employment assistance and training program account may be
appropriated to the Alaska technical and vocational
education program established in AS 23.15.820 - 23.15.850
[UNEMPLOYMENT COMPENSATION FUND ESTABLISHED IN
AS 23.20.130]."
Renumber the following bill sections accordingly.
Page 28, line 20:
Delete "sec. 52"
Insert "sec. 53"
SENATOR DAVIS objected for purposes of explanation.
SENATOR TORGERSON explained that the auditor suggested that there
are currently about $2 million left of unobligated funds in the
STEP and, "We created this program to train people, not to sit
around in the bank for these guys. I didn't want it to go back to
the UI trust because we're actually formally intercepting this
money, the one tenth of one percent, and putting it back in there
and taking it out again, so I would suggest this lapse into the
Alaska Training and Vocational Educational Program, which is
currently in a grant mode for one more year and then it will go
into a new vocational education program. He asked his staff, Ms.
Mary Jackson, to explain that.
MS. MARY JACKSON, Staff to Senator Torgerson, said he was correct
that this would lapse directly into the ATVE program. The
Department is currently promulgating regulations for the program
and it should be in place shortly.
CHAIRMAN STEVENS asked if there were any objections to amendment
#2. There were none and it was adopted.
SENATOR TORGERSON moved amendment #3, GS2052\A.4:
22-GS2052\A.4
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 1, line 2, following "membership;":
Insert "providing that lapsing employment assistance and
training program account funds may be appropriated to the Alaska
technical and vocational education program;"
Page 15, following line 9:
Insert a new bill section to read:
"* Sec. 11. AS 23.15.625 is amended to read:
Sec. 23.15.625. Employment assistance and training
program account. The employment assistance and training
program account is established in the general fund. The
commissioner of administration shall separately account for
money collected under AS 23.15.630 that the department
deposits in the general fund. The annual estimated balance
in the account may be appropriated by the legislature to the
department to implement AS 23.15.620 - 23.15.660. The
[LEGISLATURE MAY APPROPRIATE THE] lapsing balance of the
employment assistance and training program account may be
appropriated to the Alaska technical and vocational
education program established in AS 23.15.820 - 23.15.850
[UNEMPLOYMENT COMPENSATION FUND ESTABLISHED IN
AS 23.20.130]."
Renumber the following bill sections accordingly.
Page 28, line 20:
Delete "sec. 52"
Insert "sec. 53"
Page 28, line 22:
Delete "secs. 1 - 45"
Insert "secs. 1 - 46"
Page 29, line 13:
Delete "Section 49(a)"
Insert "Section 50(a)"
Page 29, line 14:
Delete "sec. 51"
Insert "sec. 52"
MS. JACKSON explained that the intent of this amendment is to
rectify the problem that was identified by the audit concerning
the 15% limitation on administrative expenses. There are two
conflicting statutes and this clarified the intent, which is that
it be 15% of program expenses.
CHAIRMAN STEVENS asked if there were any objections to amendment
#3. There were none and it was adopted.
SENATOR TORGERSON moved amendment #4, GS2052\A.3:
22-GS2052\A.3
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 1, line 2, following "membership;":
Insert "relating to repayment on promissory notes for work-
related items paid for by grant programs;"
Page 15, following line 9:
Insert a new bill section to read:
"* Sec. 11. AS 23.15.640(c) is amended to read:
(c) The department shall [, TO THE EXTENT ECONOMICALLY
FEASIBLE FOR THE INDIVIDUAL,] require an individual who
participated in a program that was funded at least in part
by a grant under AS 23.15.651 and that included as a program
element the provision of necessary tools, work-related
clothing, safety gear, or other necessities to obtain or
retain employment under (a)(6) of this section to reimburse
the department for the portion of the grant that was spent
on an element listed in (a)(6) of this section. Repayment
shall begin no later than six months after the individual
completes or leaves the state training and employment
program and may not be less than $25 each calendar month.
The department shall separately account for receipts under
this subsection. The annual estimated receipts may be used
by the legislature to make appropriations to the department
to the employment assistance and training program account
(AS 23.15.625) for grants under AS 23.15.651. The
department shall institute collection procedures on
outstanding promissory notes for amounts due under this
subsection. Collection procedures must include obtaining a
judgment for default on a promissory note. The department
shall seek satisfaction of the judgment from an individual's
permanent fund dividend to the extent possible under
AS 43.23.065 until the judgment has been satisfied. The
department shall implement this subsection by regulation."
Renumber the following bill sections accordingly.
Page 28, line 20:
Delete "sec. 52"
Insert "sec. 53"
Page 28, line 22:
Delete "secs. 1 - 45"
Insert "secs. 1 - 46"
Page 29, line 13:
Delete "Section 49(a)"
Insert "Section 50(a)"
Page 29, line 14:
Delete "sec. 51"
Insert "sec. 52"
MS. JACKSON explained that this was also identified as an issue
in the audit. The program provides for the STEP monies to be used
for individuals to purchase tools, for example. It has always
been if you purchase these tools and you get a job, you're
supposed to reimburse the program. The audit found there was no
mechanism in place to make that take effect. This amendment
specifies procedures for that reimbursement to be accommodated.
SENATOR AUSTERMAN asked how much that would offset the actual
money.
SENATOR TORGERSON said he understands that they hadn't collected
any yet. He said there could be a cost for collections; he was
sure it would take another employee.
CHAIRMAN STEVEN asked if anyone objected to amendment #4. There
were none and amendment #4 was adopted.
MS. EDEN LARSON said the issue that concerns the builders and
contractors is the funding of the union training programs to the
exclusion of open shop construction train programs.
SENATOR TORGERSON responded that he doesn't have enough
information to act on that and it's a concern of the auditors.
MS. LARSON said in the interim the language that's currently in
this bill prohibits people training in the construction trades
that are non-union from applying for grants under the STEP. For
another year they would be concerned about that.
CHAIRMAN STEVENS said the intent today was to adopt the
amendments and circulate the new CS and then bring it up again at
a later date.
MS. LARSON said she would save her comments until she could see
the CS.
SENATOR TORGERSON moved amendment #5, GS2052\A.6:
22-GS2052\A.6
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 1, line 2:
Delete "repealing"
Insert "extending"
Page 27, lines 24 and 25:
Delete all material and insert:
"* Sec. 46. The uncodified law of the State of Alaska enacted
in sec. 6, ch. 116, SLA 1996, as amended by sec. 9, ch. 85, SLA
1998, is amended to read:
Sec. 6. AS 23.16.620, 23.15.625, 23.15.630, 23.15.635,
23.15.640, 23.15.645, 23.15.651, and 23.15.660 are repealed
June 30, 2003 [2002]."
Page 29, following line 12:
Insert new bill sections to read:
"* Sec. 51. The uncodified law of the State of Alaska is
amended by adding a new section to read:
RETROACTIVITY OF SEC. 46. If sec. 46 of this Act takes
effect after June 29, 2002, sec. 46 of this Act is retroactive to
June 29, 2002.
* Sec. 52. Section 46 of this Act takes effect June 29,
2002."
Renumber the following bill sections accordingly.
Page 29, line 14:
Delete "sec. 51"
Insert "secs. 52 and 53"
He explained that this repeals the sunset clause and puts a one-
year extension in. He added that the next amendment is requesting
all the reports to come back, which is how they are trying to
handle the auditor's issue so it didn't have to drag on for
years.
CHAIRMAN STEVENS asked if there were any objections to adopting
amendment #5. There were no objections and it was adopted.
CHAIRMAN TORGERSON moved amendment #6, GS2052\A.7:
22-GS2052\A.7
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 27, following line 25:
Insert a new bill section to read:
"* Sec. 47. The uncodified law of the State of Alaska is
amended by adding a new section to read:
REPORT TO THE LEGISLATURE. The Department of Labor and
Workforce Development shall present a written report to the
legislature on the state training and resources program within 10
days of the beginning of the First Regular Session of the Twenty-
Third Alaska State Legislature. The report must include
(1) an outreach plan for the state training and
resources program;
(2) a certification verification plan;
(3) the department's recommendations on allowable
nonadministrative costs for program expenses;
(4) a data collection and reporting plan;
(5) the status of the governor's discretionary fund
for statewide activities established as part of the 1999 Alaska
Human Resource Investment Council action plan;
(6) facts supporting the need for the state training
and resources program;
(7) the department's recommendations on including
reimbursable employers in the state training and resources
program, and excluding current and former employees of
reimbursable employers from the program; and
(8) an analysis of the reasons for decreased public
training institution funding in relation to the increase in union
training program funding."
Renumber the following bill sections accordingly.
Page 28, line 20:
Delete "sec. 52"
Insert "sec. 53"
Page 29, line 13:
Delete "Section 49(a)"
Insert "Section 50(a)"
Page 29, line 14:
Delete "sec. 51"
Insert "sec. 52"
He explained that this is the laundry list of things that came
out of the audit report and says that we want to have a report 10
days after the beginning of the first session of the 23rd Alaska
Legislature and the report must include all of this. He didn't
have a report ready to address the union concern with the private
money and this is where he anticipated inserting that language.
MS. JACKSON pointed out a technical amendment on lines 16 and 18.
It should not say "training and resources", but "training and
employment".
SENATOR TORGERSON moved an amendment to the amendment to delete
"resources" on lines 16 and 18 and insert "employment". There
were no objections and it was adopted.
CHAIRMAN STEVENS asked if there were any objections to adopting
amendment #6 amended. There were no objections and it was so
ordered.
SENATOR TORGERSON moved amendment #7, GS2052\A.1:
22-GS2052\A.1
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 3, lines 30 - 31:
Delete "The commissioner of administration is a nonvoting
member of the board."
Page 4, lines 2 - 3:
Delete ", and the commissioner of administration under (b)
of this section"
Page 4, lines 9 - 10:
Delete "and the commissioner of administration under
AS 23.15.550(b)"
Page 5, line 4:
Delete " or (b),"
SENATOR TORGERSON said he has had many discussions with Mr.
Andrews about the size of this group. "It's a herd of turtles
that they're so damn big that they can't get anything done. I
don't want to add to that."
He didn't see any advantage to having the commissioner of
Administration as another part of this.
CHAIRMAN STEVENS asked if there were any commissioners on it now.
SENATOR TORGERSON replied that there are, the Commissioner of the
Department of Labor and Department of Community and Economic
Development.
CHAIRMAN STEVENS asked if there were any objections to amendment
#7. There were none and it was adopted.
SENATOR TORGERSON moved amendment #8, GS2052\A.8:
22-GS2052\A.8
Craver
10/1/02
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR TORGERSON
TO: SB 252
Page 5, lines 16 - 17:
Delete "[NOT MORE THAN THREE TIMES IN A CALENDAR YEAR]"
Insert "not more than three times in a calendar year"
He explained that the Governor's bill took out the requirement
that they couldn't meet more than three times a year and although
he wanted to limit it to two, he thought they could just leave
the language that's already in statute - three times per year.
CHAIRMAN STEVENS asked if there were any objections to amendment
#8. There were none and it was adopted. He asked Ms. Gamez if she
had enough time to read the amendments and she indicated she was
ready to testify now.
MS. GAMEZ said it was helpful to delay her testimony for the
amendments. She was surprised that a few of the amendments went
against the recommendations they both agreed on.
On amendment #2, recognizing that amendment #1 has some
work that Senator Torgerson would like to take care of,
both the legislative audit report and the Department
concurred that the lapsed money should go back into the
UI trust funds. I think that that is more appropriate
for the lapsing. There have been some problems with
expenditures of STEP monies. Part of it was an
appropriations problem and part of it was with one of
the local workforce boards in terms of expending funds.
So that has been a challenge.
On amendment #3, we, too, would like to clarify the
15%. I did have an opportunity to talk with Ms. Jackson
about this and if the language said Program Awards as
opposed to expenses, we would be in the position of
defining what is programmatic and what isn't
programmatic expenses. For example, on something that
the audit counted as an administrative cost it is
necessary for us to have a STEP program in this state
and I would argue that that would be programmatic cost.
Because without that function in the data collection
piece, we wouldn't be able to have a program. So I
would argue that that's not administrative, that that
would be a programmatic, but I think we could probably
work those differences out now that we're hammering out
the disagreement in those two statutes.
MS. GAMEZ said if there were a three-year funding period that
would be in line with the federal WIA funds, it would be easier
for them to agree with this.
Business statistics show that there are a certain
amount of administrative costs regardless of program
expenditures to a certain degree. Some of the sub-
grantee adjustments affect expenditures and those can
occur after the year-end. So, the accurate year-end
expenditures aren't always known until the process is
completed.
Moving to amendment #4 that was adopted on the
repayment of promissory notes, the point was brought up
by one of the committee members here that there may be
costs to the department to collect those funds. The
STEP program is not a loan program. We do, however,
have signed promissory notes for people who have
received monies for tools or boots or other items that
they may need. Collections will also represent an
increased cost to the department for record keeping,
tracking and accounting.
TAPE 02-23, SIDE B
MS. GAMEZ said that amendment #5 caused them concern because
it's very difficult to think ahead if you have such a short
period of time in which to make changes.
On amendment #6 she was glad that Ms. Jackson caught the typo,
because they would have to start calling it the STREP program and
it would truly be unpopular with certain folks at the table.
We are working on an outreach plan and I would like to
make the comment that we have a certification
verification plan for classroom training only and that
is a recommendation that we have. When I was reading
over Ms. Jackson's overview to Senator Torgerson, I
think there was a typo and I would like the opportunity
to talk with Ms. Jackson after the hearing because we
already insure that there's authorization of training
ACPE and the department will require certification of
all classroom training…
She said it would be helpful to see a comprehensive package with
the CS and hoped she would be invited to staff discussions
regarding the department's concerns before a CS is adopted.
SENATOR AUSTERMAN asked her if she had concerns about the
amendments, why didn't she speak up before they were adopted.
MS. GAMEZ said she didn't realize she was in a position to
disagree with the amendments until they were on the table.
SENATOR TORGERSON said he wouldn't deviate a whole lot from what
they have, but he wants to make it work. He wouldn't have gone
with the sunset if it weren't for the reporting requirements.
CHAIRMAN STEVENS said he had a concern on page 47, which is a
summary of the type of vendors or clients served, and asked her
for a short definition of the six categories.
MS. GAMEZ said she would like to invite Mike Shiffer who is more
technically versed in those things.
MR. MIKE SHIFFER, Program Coordinator, Workforce Investment
Office, responded that examples of a private training institution
would be a charter college; the unions would be like the
operating engineers who run a training program. Public training
institutions would be things like the Alaska Vocational Technical
School in Seward; Native organizations would be training programs
such as the one run out of the Bristol Bay Native Association. He
was drawing a blank on "other" kinds of training programs, but
client reimbursements would be expenses paid directly back to an
institute directly on behalf of a participant.
CHAIRMAN STEVENS said he was confused about the difference
between a private training institution and a public training
institution.
MR. SHIFFER explained that a public training institution would be
things that the legislature appropriates directly to the
University of Alaska and the Alaska Vocational Technical Center.
CHAIRMAN STEVENS asked what the process was for the distribution
of the money on an annual basis.
MR. SHIFFER replied that in general the funds are distributed in
two methods. The first is through direct client services - an
individual comes in and is identified for services and goes to
school - and the other option is through grant funds. Grants are
announced and let out and training providers compete for the
funds and provide training programs.
CHAIRMAN STEVENS said he was concerned with the number of clients
served and asked why the numbers have changed from public and
private losses to gains with the unions. He asked if the funding
mechanism inserting the money into the program has changed in
correspondence with the change to the number of people that are
receiving the benefit.
MR. SHIFFER replied no. They rely on information received from
research and analysis and there is a great deal of effort being
focused on the areas of construction, the trades and things like
that. They target the funds towards those areas where they see
the most opportunity for creating employment opportunities for
folks. Currently, those tend to rest with training programs that
happen to parallel with union type training programs.
SENATOR TORGERSON asked what the fund balance was right now of
the STEP program.
MR. SHIFFER replied that he didn't know that right now.
SENATOR TORGERSON asked if he told him it was over $2 million,
could he tell him why.
MR. SHIFFER replied that a number of things contribute to that.
First of all, when the appropriations were occurring,
Ms. Gamez referred to that at one point where we were
sort of chasing our tails. Each appropriation would
occur and the amount that was available from the fund
would exceed the appropriation and so we saw ourselves
chasing after money that was increasing faster than we
were using it.
Another issue is that there has been several changes in
terms of how services were delivered and that resulted
in one of the local areas not expending the funds as
greatly as they had done in the past. And other funds
came into the state that were unexpected and in the
form of an unusually large award for dislocated workers
and for funds that related to foreign worker
certification. Those large amount of funds that came
into the program have served people who potentially
could have been eligible for services here.
SENATOR TORGESON asked what they were going to do with that
money.
It upsets me that it's not out in the street and that
we're not training people. We went in there a couple of
years ago and took $4 million out of there. Now you've
got $2 million again. If you're not going to use the
damn money, let's do away with the program. Put it in
the ATV program. That's where I'm coming from on this…
MR. SHIFFER replied that they have an opportunity to utilize
those funds by looking at the way they're distributing the funds
by focusing on the opportunities for spending the STEP funds as a
last resort. "We'd be happy to work with you on clarifying how
that goes."
SENATOR TORGERSON replied, "Don't work with me. Work with the
University…or work with others out there who are wondering why
they can't get into this pot of money."
SENATOR AUSTERMAN said he wanted to see a good description of how
the grant program works - who sets it up, etc. - that might be
helpful in figuring out exactly why there are institutions that
want to train people, but can't get the funds.
MR. SHIFFER said he would be happy to provide that information.
MR. MIKE ANDREWS, Alaska Works Partnership, Inc., said they are a
statewide construction job training organization that's formed in
partnership with Alaska's construction trade unions and sponsors
a statewide apprenticeship program that is not a union program.
They have a lot of experience across the board with some of these
issues. He thanked Senator Torgerson for withdrawing the one
amendment until more information came forward in terms of why
there is a discrepancy between union and non union training
programs. He thought they could give them some reasoning behind
that.
MR. ANDREWS supported continuing the STEP program and said he
used to work as director of the Alaska Human Resource Investment
Council and worked very closely with the Senate Majority and
Senator Torgerson on a lot of these issues of how to make a very
hard-to-understand workforce development system in this state,
particularly that is mostly federally funded, work well for
Alaskans. "How do we align job training with the University of
Alaska, with AVTEC, with Alaska Technical Center and also with
private sector training that occurs in the state."
With this kind of background, Mr. Andrews said he thought he had
some things he could add and he would like to come back and add
them. One of the problems that needs to be looked at is that STEP
has been a pilot program for 10 years. It's reauthorized every
two years and in 1997, when they did the major reform, they
aligned STEP performance with the Job Training Partnership Act
and other performance measures that the majority wanted to see in
their performance based budgeting. Now there's quite an extensive
performance report on all these programs. They can look at the
performance of STEP, which is a high performing program, in terms
of short-term less-expensive training that put people to work and
keeps them employed.
One of the problems they have reached with reauthorization is
that STEP has always had a two-year timeline.
Federal programs allow two or more years for a rollover
for the ability to monitor and spend funds. STEP has
always fought this battle of getting reauthorized and
then trying to basically lurch out there again as a
pilot, be a low priority on someone's table, because
it's a pilot and try to function as well. We have
worked hard, the state, the legislature, and people
involved to cap administrative cost, to bring those
costs down from 20% to 15% and to really understand
what line items go into a program and what would go
into actual admin. I would say just in general that's a
good move to cap that, but that does also make it
harder for some of the public institutions that have
indirect cost fees that have administrative fees set
who can't reach that barrier. They cannot necessarily
apply for training because of that cap. I'm not saying
remove that cap, but that may be one of the reasons why
we're seeing more of the grants go out to private
sector training vendors. For example, the union
apprenticeship training programs are private sector
programs funded by labor and management and they are
one of the programs that has received more recently. To
compete for that on the open market, announce bids,
etc. One of the reasons I think is the actual nature of
STEP being reauthorized on a two-year basis and then
between that, there's all kinds of things added on in
terms of performance and measuring and other things
that people want to see done that add a cost to the
system. I think what we really need to focus in on is,
are we putting Alaskans to work? Are we increasing
Alaska hire as a result of STEP? Are they getting more
income in their pockets and are they paying less
unemployment with this? Let's all work together so that
we can have the best workforce in Alaska….
CHAIRMAN STEVENS thanked him for his testimony and adjourned the
meeting at 3:30 pm.
| Document Name | Date/Time | Subjects |
|---|