SENATE BILL NO. 66 "An Act relating to the division of labor standards and safety; relating to the division of workers' compensation; establishing the division of workers' safety and compensation; and providing for an effective date." 9:20:37 AM TAMIKA LEDBETTER, COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, explained the legislation. She read from talking points (copy on file): • This bill proposes to merge the Workers Compensation and Labor Standards and Safety Divisions. • The Division of Labor Standards and Safety is focused on preventing workplace accidents and enforcing laws related to workplace safety and wages, while the Division of Workers Compensation is focused on the efficient administration of benefits to injured workers and enforcing laws related to workers compensation requirements. • The missions of these two divisions complement each other in that one works to prevent accidents and the other works to provide an efficient system of benefits for injured workers. • The divisions have historically worked together, and this bill is expected to further increase the opportunities to remove silos and capitalize on efficiencies through a unified management structure. • The department is cognizant of the critical roles that each of these divisions have and the proposed merger does not impact any of the statutes or regulations currently administered and enforced by each division. • The merger aims to take advantage od position vacancies to explore opportunities to share duties between divisions where it makes sense, streamline processes, and cut back on unnecessary middle management supervisory functions. • As reflected in the fiscal note, the bill flattens the management structure in Labor Standards and Safety by reclassifying the Director to a Deputy Director who will focus attention on operational aspects of the new divisions inspection, consultation and enforcement functions. This will allow for a mid-level management reduction in the AKOSH component. • In addition, the fiscal note illustrates the opportunity to consolidate and share administrative duties between the two divisions where it makes sense. • Future opportunities for increased efficiency could come from office space consolidations to increase opportunity for coordination and improved service delivery for employers and workers. • This effort is not expected to happen overnight, but will be carefully developed over time. • The bill does not propose to change the functions of the Division of Labor Standards and Safety or the Division of Workers Compensation. • Its all about establishing a structure that creates maximum opportunities to share resources and get the work done more efficiently. 9:23:25 AM GREY MITCHEL, DIRECTOR, DIVISION OF WORKERS' COMPENSATION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, discussed the Sectional Analysis: BILL SUMMARY WHAT DOES THIS BILL DO?  This bill will merge the Department of Labor and Workforce Development divisions of Labor Standards and Safety and Workers' Compensation into a new Division of Workers' Safety and Compensation. The new division would administer the same programs currently administered by the two separate divisions. This bill is needed to improve fiscal management of these programs and to allow for efficiencies through management and administrative restructuring and improved coordination of service delivery. This restructuring will result in an immediate savings estimated at $238,000 per year starting in FY2020. Potential future year cost savings will have to be determined as position responsibilities and lease space needs are evaluated moving forward. Also, with office consolidations wherever possible this merger will improve program services to the public and the private sector by giving individuals one place to go versus multiple.   DETAILED SECTIONAL ANALYSIS  Section 1: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS18.20.410(b). Section 2: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS18.20.450(a). Section 3: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS18.60.055. Section 4: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS18.60.055(a). Section 5: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS18.60.235(a). Section 6: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 23.05.067(a)(1)(B). Section 7: Renames the division of labor standards and safety to the division of workers' safety and compensation in AS 23.10.075. Section 8: Amends the powers and duties of the division director under AS 23.10.080 to include intent language established in AS 23.30.001(1); this bring the legislative intent of the current division of workers' compensation into the new division of workers' safety and compensation. Section 9: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 23.30.025(a). Section 10: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 23.30.280(e)(2). Section 11: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 23.30.395(15). Section 12: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 23.30.395(17). Section 13: Renames the division of workers compensation to the division of workers' safety and compensation in AS 23.30.120(c)(14). Section 14: Renames the division of workers' compensation to the division of workers' safety and compensation in AS 39.25.158(b). Section 15: Repeals AS 23.30.002; this is the statutory reference to the current division of workers' compensation and its director, which is replaced by the division of workers' safety and compensation and its director established under section 7 of the bill. Section 16: Establishes transition provisions in the uncodified law of Alaska to allow completion of any pending actions under the merged division. 9:27:05 AM Co-Chair von Imhof OPENED public testimony. 9:27:15 AM LAURA BONNER, SELF, ANCHORAGE (via teleconference), opposed the bill, because she felt that merging the two divisions would split each divisions focus. She worried that one division director would not be enough to oversee the work of both divisions. 9:29:00 AM DON ETHERIDGE, AFL-CIO, JUNEAU, testified in opposition to the merger. He expressed concern that the merger could affect the effectiveness of the individual divisions. 9:29:42 AM Senator Olson asked whether the unions were in favor if the legislation. 9:29:57 AM Mr. Etheridge replied that unions had not come out in support or opposition of the legislation. 9:30:07 AM Senator Olson looked at Section 8, which amended the powers and duties of the division director. He wondered whether it would be beneficial to give the director additional power when overseeing the merged division. Mr. Etheridge thought that the powers would need to be expended if the merger was going to work and reiterated his concern that one person would be able to handle all the responsibility that the merger would place solely on the one position. 9:31:06 AM Co-Chair von Imhof CLOSED public testimony. 9:31:14 AM Co-Chair von Imhof invited Commissioner Ledbetter to address the concerns of the previous testifiers. 9:31:23 AM Commissioner Ledbetter replied anytime a change was initiated it could spark concern. She assured the committee that the change was being proposed in order to create efficiencies and to better serve Alaskans. She noted the merger that had occurred between the Division of Employment and Training Services and the Division of Business Partnership had proved successful. She said that the current Division Director of Workers Compensation was familiar with Labor Standards and Safety and the new Deputy Director of Labor Standards and Safety had an extensive background in safety. She said that the two working together provided additional knowledge sharing and expertise. She said that no positions would be eliminated because of the change and that the two divisions were already working together in this manner. 9:33:40 AM Senator Shower appreciated the attempt at efficiency and hoped that core competencies would be achieved. 9:34:19 AM Senator Olson wondered how the program would be more efficient without the elimination of personnel. 9:34:42 AM Commissioner Ledbetter replied said that individuals with a greater capacity were being hired. The work was being done well and would continue to be done well. 9:35:33 AM Co-Chair von Imhof noted that the fiscal note showed a savings of $283,000, although the fund source was incorrect. 9:36:02 AM Commissioner Ledbetter deferred to Mr. Mitchell. 9:36:10 AM Mr. Mitchell explained that there were several areas where efficiencies were expected. He said that the Administrative Managers over each division would be reclassified so that one was subordinate over the other; $8,000 would be saved. He said that as functions were combined opportunities would present themselves. 9:37:47 AM Senator Micciche supported the bill and believed it had the potential to deliver positive results. Co-Chair von Imhof said that updated fiscal notes would be discussed at a future hearing. SB 66 was HEARD and HELD in committee for further consideration. Co-Chair von Imhof discussed the following day's agenda.