HOUSE BILL NO. 48 "An Act removing from the exempt service of the state persons who are employed in a professional capacity to make a temporary or special inquiry, study, or examination as authorized by the governor and including those persons in the partially exempt service of the state." 9:10:18 AM Co-Chair Wilson reviewed that public testimony had been opened and closed earlier in the week. She reported that one amendment had been brought to her office. Co-Chair Wilson MOVED to ADOPT Amendment 1, 31-LS0346\M.1 (Wayne, 3/25/19) (copy on file): Page 1, line 4, following "state": Insert "; repealing the authority of the governor or a designee of the governor to authorize higher pay than is otherwise allowable for certain partially exempt employees in the executive branch; and providing for an effective date" Page 1, line 9: Delete "is" Insert "and AS 39.27.011(k)are" Page 1, following line 9: Insert new bill sections to read: "*Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY: LIMITED EFFECT OF REPEAL. The repeal of AS 39.27.011(k) by sec. 2 of this Act applies to employment contracts entered into on or after the effective date of sec. 2 of this Act. *Sec. 4. This Act takes effect immediately under AS O1.10.070(c)." Representative Josephson OBJECTED for discussion. REMOND HENDERSON, STAFF, REPRESENTATIVE TAMMIE WILSON, explained that HB 48 moved temporary positions established under AS 39.25.110(9) from exempt service where there were no salary limits, to partially exempt service where there was an established pay plan. He noted it was a step in the right direction; however, there was a subsection (k) under AS 39.27.011 where the pay plan for state employees was established, that allowed the governor or a designee of the governor on a case-by-case basis to hire an employee at a higher pay than Step F. Although, under HB 48, there would be more transparency when the positions were filled, there would be very few salary limitations. Mr. Henderson elaborated that written justification was required to hire employees at a higher step; however, it only required the approval of the governor or governor's designee. The amendment would delete subsection (k), which would limit the amount paid to newly hired temporary employees. He clarified that the change would apply only to employment contracts entered into after the effective date that AS 39.27.110(9) was repealed. He relayed the change would not impact the salary of existing employees or individuals hired prior to the bill's effective date. Representative Josephson asked for an example of an employee in the last 20 years that the bill and amendment would have limited in pay and by moving them to partially exempt status [if it had been law at the time]. Mr. Henderson asked if the question was whether there had been an attempt to move someone from exempt service to partially exempt service. Representative Josephson clarified he was trying to get a sense of the who the target was. Co-Chair Wilson underscored they were not talking about any specific individual. She explained that the bill increased transparency. She detailed that currently the Office of Management and Budget (OMB) underneath the Office of the Governor could sign off on their justification. She wanted to make sure a new hire did not begin with a salary of $300,000. The amendment would cap the salary for new hires. For example, if a person was replacing someone who had been in the position for 20 years, the new person would not receive the outgoing person's salary. 9:14:22 AM Representative Josephson remarked he was not trying to identify a specific person. He was asking about the title or description of the staff person or employee. He asked if it was possible to ensure that a future governor could hire someone like Keith Meyer [former president of the Alaska Gasline Development Corporation]. Mr. Henderson responded that if the governor were to hire someone like Mr. Meyer, there were a number of avenues to take. The governor could hire through the exempt service where there were no hiring limitations. He explained that the bill was primarily designed to address temporary employees. He assumed the example by Representative Josephson would apply to a position that was more permanent in nature. Representative Josephson WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment 1 was ADOPTED. 9:15:17 AM AT EASE 9:16:16 AM RECONVENED Representative Carpenter asked to hear from the administration on how it would be impacted by the bill. KATE SHEEHAN, DIRECTOR, DIVISION OF PERSONNEL SERVICES, DEPARTMENT OF ADMINISTRATION, asked Representative Carpenter to repeat the question. Representative Carpenter complied. He asked if the change limited the administration's ability to hire the technical or subject matter expertise it needed. Ms. Sheehan asked if Representative Carpenter was referring to the amendment or the bill. Co-Chair Wilson clarified the amendment had passed. Ms. Sheehan replied that amending the statute to remove the "special k" [subsection (k)] exception would still allow the administration to hire someone at an advanced step placement. She detailed that the pay schedule included steps A through F and pay increments beginning with J and above. The subsection (k) exception had allowed the administration to hire someone at a pay increment level. She clarified that the administration would still have the ability to bring someone in above step A through step F. Representative Carpenter stated that without understanding who had been hired in the past, it was difficult for him to determine what the bill's impact would be. He was trying to determine what the administration would no longer have the ability to do if the bill was implemented. Ms. Sheehan replied that the [section (k)] exception had been used, but she did not know how frequently. Currently the exception only pertained to partially exempt employees. She clarified that exempt employees could still be brought in at any salary deemed appropriate. Partially exempt employees included directors and deputy commissioners; the category was exempt from some, but not all, of the personnel rules. She explained that for partially exempt employees, the bill would restrict the administration to following the personnel rules, which allow for advanced step placement for exceptional qualifications or recruitment difficulties. She did not know the number of employees that had been brought in under the exception. 9:19:58 AM Representative Tilton stated her understanding from Mr. Henderson's testimony that existing partially exempt employees would be grandfathered in under the current system and that the bill would only apply to future hires. Mr. Henderson replied in the affirmative. Representative Josephson asked for verification that the executive branch would still have the ability to hire someone at its discretion on contract. He noted the person would not be eligible for benefits because they would be on contract. Mr. Henderson responded affirmatively. Co-Chair Wilson asked staff to review the fiscal note. Mr. Henderson addressed the zero fiscal note from DOA. He assumed the note was zero because the department did not anticipate any costs associated with implementing the bill. He also assumed the department had not put forth any cost savings because it could not yet project what the savings would be. He relayed there would be some cost savings as people left positions and new people were hired [at lower salaries]. 9:21:36 AM Vice-Chair Johnston MOVED to REPORT HB 48(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, HB 48(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published zero fiscal note: FN1 (ADM). 9:22:07 AM AT EASE 9:22:45 AM RECONVENED