Legislature(2009 - 2010)BELTZ 211
03/26/2009 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
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| Start | |
| SB126 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| = | SB 126 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 26, 2009
9:02 a.m.
MEMBERS PRESENT
Senator Linda Menard, Chair
Senator Kevin Meyer, Vice Chair
Senator Hollis French
Senator Joe Paskvan
MEMBERS ABSENT
Senator Albert Kookesh
COMMITTEE CALENDAR
SENATE BILL NO. 126
"An Act amending the State Personnel Act to place in the exempt
service the chief economist and state comptroller in the
Department of Revenue and certain professional positions
concerning oil and gas within the Department of Natural
Resources; relating to reemployment of and benefits for or on
behalf of reemployed retired teachers and public employees by
providing for an effective date by amending the delayed
effective date for secs. 3, 5, 9, and 12, ch. 57, SLA 2001 and
sec. 19, ch. 50, SLA 2005; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 126
SHORT TITLE: REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
02/27/09 (S) READ THE FIRST TIME - REFERRALS
02/27/09 (S) STA, L&C, FIN
03/24/09 (S) STA AT 9:00 AM BELTZ 211
03/24/09 (S) Heard & Held
03/24/09 (S) MINUTE(STA)
WITNESS REGISTER
GINGER BLAISDELL, Director
Division of Administrative Services
Department of Revenue (DOR)
Juneau AK
POSITION STATEMENT: Presented SB 126.
JIM DUNCAN, Business Manager
Alaska State Employee Association (ASEA)
Juneau AK
POSITION STATEMENT: Spoke in opposition to SB 126.
BARB ANGAIAK, President
National Education Association (NEA) Alaska
Bethel AK
POSITION STATEMENT: Spoke in opposition to SB 126.
KEVIN BANKS, Director
Division of Oil and Gas
Department of Natural Resources (DNR)
POSITION STATEMENT: Spoke in favor of SB 126.
NICKI NEAL, Director
Personnel and Labor Relations
Department of Administration
Juneau AK
POSITION STATEMENT: Answered questions regarding SB 126.
ACTION NARRATIVE
9:02:47 AM
CHAIR LINDA MENARD called the Senate State Affairs Standing
Committee meeting to order at 9:02 a.m. Senators Paskvan, Meyer,
French, and Menard were present at the call to order.
SB 126-REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
9:03:29 AM
CHAIR MENARD announced the consideration of SB 126.
GINGER BLAISDELL, Director, Division of Administrative Services,
Department of Revenue (DOR), said SB 126 contains two distinct
personnel issues. The 2 staff positions in the DOR and the 23
positions in the Department of Natural Resources (DNR) are not
tied to the retiree-rehire provision in the bill. She was asked
in the last hearing if this is a must-have bill for the
governor. The retiree-rehire provision affects local governments
and schools, especially in rural Alaska. "The few state
employees have initiated knowledge transfer plans so that
associated staff can learn the skills needed to fill that job
one day." If that provision is not extended, there may be 124
jobs in schools, courts, local governments, and state offices
left vacant. The individuals may seem like they get additional
income, but their retirement has been earned and would be paid
whether they worked in a government position or in the private
sector. A retiree can only be offered the job if there are no
other qualified candidates. The 23 professional oil and gas
positions are at risk for high turnover as their jobs are
temporary and project-oriented. If a private company offered
these individuals similar pay but with longevity, it will be a
challenge for the state to retain them.
9:06:52 AM
MS. BLAISDELL said turnover would be unacceptable during the
state's efforts in natural gas development. There is no fiscal
impact for that. The risk of losing these professionals is not
one that the state should take. The chief economist position in
the DOR will probably remain vacant due to low pay. The person
responsible for the revenue forecast also reviews a wide variety
of fiscal systems that impact Alaska. Leaving this position
vacant will leave the state at a disadvantage in this global
economy. The state comptroller is currently filled. "We can only
hope that this person will remain even though like positions in
the private sector are paid 20 to 30 percent more. With the
position turnover rate averaging one per year, the learning
curve is reliant on lower level staff, and the state cannot grow
positively in its cash management practices." It is critical to
pass all three components of SB 126 so the state won't suffer
high turnover and high vacancy. She urged passage of the bill so
that the state can progress in developing a gas pipeline,
compete in a global economy, educate its children in rural
communities, and adequately staff the courts.
9:08:49 AM
SENATOR FRENCH said, "We're sort of caught in a funny position
where we've got these highly valuable state employees occupying
senior positions who have served for a long time, retired, and
then come back to fill the job they used to have in state
service; they're blocking the advancement of lower employees."
That must be frustrating for the ones being blocked. The 124
jobs can be compared to 124 leaks in a roof. "When do we fix the
roof? When do we ... offer the pay and benefits necessary to
attract people to fill these extremely important jobs, other
than double dippers?"
9:10:07 AM
MS. BLAISDELL said when she last looked at this situation there
were 227 waivers, and 123 of them have termed out. "Obviously
the knowledge transfer plan worked." The jobs were filled with
non-retired people. It is working. It is attrition as the
knowledge is being passed on and as other qualified candidates
become available. The knowledge transfer plan is key, and the
Division of Personnel is following up on it to make sure that
lower level positions have training.
SENATOR FRENCH said the big question is when does Alaska get out
of this loop? When does Alaska get to a place where the people
working for the state are all regular, fulltime employees who
are getting wages and benefits and are paid enough. What is the
administration's plan?
MS. BLAISDELL said the sunset on this bill is 2012.
CHAIR MENARD asked why the legislature is being asked for
another five years. She suggested a one-year sunset to make a
statement that "we want people to be able to climb the ladder
and to be able to be advanced." Did it take five years for the
state to drop from 200 to 124, or was it just last year?
MS. BLAISDELL said that was a four-year cycle from 2005 to 2009.
The Anchorage school district began with 45 retirees, and now
they only have 11. That is a positive move.
9:14:02 AM
CHAIR MENARD asked if those are with the mentor programs.
MS. BLAISDELL said she is not sure, but the school district was
able to find enough qualified candidates that it has not had to
request a waiver. She explained the waiver system. In order to
hire a retired individual there must be fewer than five
applicants that meet the minimum qualifications. The job must be
offered to a qualified, non-retired applicant. It is truly a
last choice [to hire a retired applicant]. Otherwise the
position would need to be downgraded to fit the qualifications
of other applicants, or it would be left vacant. That could be a
critical mistake. "So whether they're using a mentoring program
or whether they're using a knowledge-transfer plan or however
each school district or local government or state government is
working to fill those positions, it might be reclassing jobs so
that lower-level people can move in and maybe be reclassed
upward again. It's a choice of the employer."
9:15:43 AM
SENATOR PASKVAN said from an administration standpoint this is
an effective tool to bring in and retain the most qualified
employees. "If we have $6 million in retirement benefits that's
being paid at the same time full salaries are being paid, if we
don't allow this, we can save $6 million a year in retirement
expenditures." Returning to the defined benefit system only
costs $14 million. "If we can save $6 million in an instant by
not approving this, then the net effect is ... we can return to
a defined benefit for $8 million a year on approximately a $3
billion payroll." So if this is statistically insignificant, why
isn't $14 million statistically insignificant?
MS. BLAISDELL said if "Sally" retires, she has earned that
income - it's her earned retirement - at any tier. Tier III
people are beginning to retire. So Sally will be making, let's
say, $50,000 per year in retirement. There will still be a
vacant position and that will have to be paid. Even if Sally
works at Fred Meyer, she still gets paid that $50,000. And the
state will still pay for the state position.
SENATOR PASKVAN said it is still double dipping. The issue is
"whether you pay a full salary position and block someone from
advancing, as Senator French was questioning, and pay from the
retirement system, or if you're going to be a full-time employee
of the state, that you can't be part of the system. So if the $6
million that wants to be paid out now, if it's statistically
insignificant, then $14 million for the defined benefit is also
statistically insignificant. That's my point."
MS. BLAISDELL said $6 million and $14 million is not
insignificant. It is a small portion of the payroll, but in this
economy any money is significant. "Does it matter if the person
is receiving a retirement from an IRA and we hire them to work
for the state?" It shouldn't make a difference. Whether the
state is paying both is a personal choice for the individual.
The state would still pay both regardless of who takes the
position. The person who has retired has earned that benefit.
9:19:46 AM
SENATOR PASKVAN said the question is if a person retires and
then wants to work for the state full time, then he or she can't
stay retired.
MS. BLAISDELL said this provision would allow someone to stay
retired and work for the state. Whether there are two people or
one person, it is the same amount of money. The opportunity to
allow someone to stay retired but fill a position that otherwise
would be impossible to fill is an advantage that the state might
want to have in its back pocket. It is just how it is perceived.
CHAIR MENARD said part of the problem is that there are 16,000
state employees, and she can't believe that the state can't find
people who want these jobs that aren't retirees and allow others
to come in. She has a bias on the sunset clause. It was five
years and then another five years, and yet there are still a
significant number of people. There are many legislators who are
interested in SB 23, which addresses defined benefits. It ties
into that. She encouraged the governor to look at that.
9:22:11 AM
JIM DUNCAN, Business Manager, Alaska State Employee Association,
Juneau, said he opposes both sections of SB 126. He opposes
moving the DNR and DOR employees "from Section 9 to Section 14."
The constitution provides for a merit system of employment.
Putting people into the exempt service erodes that system. "We
need to be very careful ... in putting people into exempt
service." There are some positions that should be there and are
required to be there by statute. It is OK to put a position into
exempt service for a specific project for a period of time. That
statute was constructed very carefully to retain the
constitutional merit system as much as possible. The DNR
positions were hired under subsection 9 of AS39.25.110. That
says that persons employed in professional capacities to make a
special inquiry as authorized by the governor may be temporarily
placed in exempt service. This bill would move the positions.
9:25:48 AM
MR. DUNCAN said there are only two reasons to do that. One
reason would be if they have exceeded the constraints of
subsection 9, and they are no longer temporary. These positions
were put in place in the first years of a former administration,
so they have been there for a number of years. Temporary doesn't
mean four or five years. The collective bargaining agreement
considers temporary positions to be less than 12 months; it
should become a permanent position after that. He has been told
that a legal opinion from the attorney general prompted the
introduction of the bill. So there is currently a violation of
the statute. The second reason to do this legislation now is
that these positions are performing duties that can be performed
in the classified service. There is no longer a special inquiry
or study. For those reasons he opposes this portion of the
legislation. Statute allows some positions to be exempt for very
good reasons, then when that short-term project is done, those
positions should be moved into classified service or disappear.
He has heard the argument that the state can't afford to pay
these people so they need to be in exempt service to receive
higher salaries.
9:28:51 AM
MR. DUNCAN said management should evaluate the state's current
pay plans. "They should be talking with those of us who
represent members in the classified service to determine how we
can adjust our pay plans and our contracts to accommodate the
needs of those positions." It should be negotiated as part of
the collective bargaining agreement. That has not been done, and
that should be the first step.
9:30:02 AM
MR. DUNCAN guesses that the study has been done and that is why
the change is being made. Exempt service people can be removed
easily from political pressure. Regarding the retiree-return
language of SB 126, he opposes it. He is a former legislator who
worked on this very statute for 24 years, and he was the
commissioner of the Department of Administration when the first
retiree-return program was enacted. The intent was to address a
short-term issue and not to continue the retiree-rehire program
into the future. Back then, there was a serious problem with
recruitment in certain job classifications.
9:32:05 AM
MR. DUNCAN said he was asked how to address that. The program
was proposed by his director. Mr. Duncan was less than
enthusiastic about it, but a serious problem needed a quick fix.
He authorized the request to introduce legislation but with the
provision that it would have a three-year sunset. It was never
intended to continue for many years. It served a purpose at that
time. It was intended as a quick fix that would be followed with
an assessment of the long-term problem with recruitment. The
state still needs to do that. There has been progress in a
couple of areas, but there have also been some steps backward.
The erosion of a good pension system in Alaska was a step
backward. It made it more difficult to recruit and retain
people. The state needs to look at adequate compensation and a
good benefit system. The retiree-return program restricts the
ability of employees to advance.
9:34:39 AM
MR. DUNCAN said his union has various classifications to advance
up the career ladder. Employees should have every opportunity to
advance. The program can be abused. It was to be a short-term
fix while the administration looked at the long term.
9:36:20 AM
BARB ANGAIAK, President, National Education Association (NEA)
Alaska, Bethel, said she started teaching in a small village in
1980. She now teaches in Bethel, which is the district that has
been the biggest beneficiary of being able to hire retirees.
This program has been used for hard-to-fill positions, but the
district also allowed almost any retiree, administrators and
teachers, to come back into service in any capacity. The
district had a very broad interpretation of what this program
allowed as every teaching position became eligible. There are
still retired people who have been rehired for positions that
were not hard to fill. Administrators were also allowed to
double dip, including the former superintendent with "no
advertisement; no process for trying to find a specific,
narrowly-defined superintendent for the school district." The
district was having a hard time trying to fill principal
positions in village schools, but it used the program for all
administrative positions.
9:40:10 AM
MS. ANGAIAK said that her current superintendent told her that
even if the program continues, he would probably not opt to
participate. It prolongs being able to recruit and train people.
The original intent was good, but it has not solved the problem.
9:40:56 AM
KEVIN BANKS, Director, Division of Oil and Gas, Department of
Natural Resources (DNR), said 23 of his employees are under
subsection 9, and that language includes "temporary or special
inquiry". It doesn't say "and". There is no bar under that
subsection to hire permanent employees. It is a semantic
question, "and not necessarily meaningful with respect to what
is actually happening on the ground here. As to the question of
whether or not these staffers are doing work that classified
employees should be doing, I'm always surprised when my words
come back out somewhere else and from someone else." But his
point is that if a person in a position is doing the work of a
classified employee, a classified employee should have that job.
That is the constitutional direction, and a merit system is
needed. There are concerns that the constitutional imperative
not be eroded, and he agrees. But these positions cannot be done
by classified employees. These people are doing work that is
certainly not at the level that he would hope a classified-level
employee would be expected to do. They are "the point of the
spear" for the division in conducting business with the oil
companies. They form the leadership team. They are not
implementing policy, they are making it, so they are legally and
importantly hired under subsection 9.
9:44:10 AM
MR. BANKS said the question is why he wants to make them part of
"14". It will demonstrate to these staff that they need not be
concerned that in performing their functions they are "not
subject to some rule that could be interpreted as Mr. Duncan
would have us do." By hiring a commercial analyst as a
commercial analyst or a petroleum geophysicist as a petroleum
geophysicist, because of the skills they bring to the job and
because of the requirements of that position, they can be
assured that they will be retained even when they give
unpalatable advice. It is a commitment to these employees that
they can take uncomfortable stands under pressure regarding the
industry. "Under '9' perhaps there is more potential for ... a
kind of loophole that I think Mr. Duncan should be concerned
about, but under '14' and by identifying very particular
positions within the division we can avoid that."
9:46:03 AM
SENATOR FRENCH said he has an enormous amount of respect for the
work of Mr. Banks and his staff, but he takes issue with the
interpretation of the word "special" in subsection 9. "I take
the word 'special' to mean not regular, and therefore I believe
that 'special' carries a strong connotation of temporary."
Exploiting that word to capture long-term employees is not
appropriate. Maybe he is agreeing with Mr. Banks that the
employees "should be pushed down into subsection 14," but he
wanted to express his views on the definition of "special".
9:47:11 AM
CHAIR MENARD suggested separating the provisions into two bills.
SENATOR PASKVAN said that is worthy of consideration.
SENATOR FRENCH said the committee doesn't have the power to
split the bill in two; it can only delete sections. "We can't
suddenly create a new bill."
CHAIR MENARD suggested a one-year sunset.
SENATOR MEYER asked if anyone oversees the retiree rehires to
make sure the program isn't abused. One position is a custodian
in Ketchikan, and there surely must be qualified people that
could fill that position as well as for the administrative
assistant, executive secretary, and student service director
positions on the list.
NICKI NEAL, Director, Personnel and Labor Relations, Department
of Administration, said the executive branch oversees it, and
she personally approves the appointments of retiree rehires in
the classified service of the executive branch. There first must
be a 30-day open recruitment. If there are fewer than five
qualified applicants, she will entertain a request to appoint a
retiree, but she needs to be shown why any other qualified
applicant cannot learn to perform the duties by the end of the
probationary period. Since 2005, there have been two instances
where there was another applicant that met the qualifications
when she allowed the hiring of the retiree. It was demonstrated
that the other applicant couldn't learn the duties within the
probationary period. There were only two cases after HB 161,
which put strict sideboards on the program. It is very, very
rare that there are other applicants in the pool.
SENATOR MEYER said there is technical expertise needed for the
positions in Kevin Banks' office where others would not be
qualified, so he can see why this option is very important and
likely necessary. But he is afraid it may be abused. A one-year
extension might be a good compromise.
9:52:44 AM
MS. NEAL said one year will give time for planning. In terms of
what the administration is doing to increase recruitment and
retention, the DOA will be issuing an intent-to-award. "We did a
request for proposal for a state-wide salary survey. For many,
many years we've internally aligned for the purposes of setting
salaries in the classified service." In some areas the state has
fallen well below the market. She expects that the salary survey
will be complete by next fall, and DOA will prepare to seek any
funding necessary to implement the survey results.
SENATOR FRENCH said he looked at the jobs that are filled by
retirees. Alaska has a 10 percent unemployment rate. There
should be Alaskans who would be interested in filling those
positions, including administrative assistant I, mechanic,
correctional superintendent I, food service, and others. How
aggressively does the state recruit for these positions once
they have been filled? Are there ads being run? They have crummy
benefits, in his opinion, but decent salaries. He suggested
inserting language that requires advertising these jobs on an
ongoing basis. It would give the labor representatives some
comfort. That is one way to find out if there are people
interested in these jobs. It would be uncomfortable for the
employee to know that his or her job is being advertised, "but
that's the point." The point is to phase this out.
CHAIR MENARD asked for language.
SENATOR FRENCH said he would need legal help.
SENATOR MEYER suggested creating a committee substitute.
SENATOR FRENCH said he will probably prepare an amendment.
SB 126 was held over.
9:57:08 AM
The meeting was adjourned at 9:57 a.m.
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