Legislature(1995 - 1996)

1995-04-07 House Journal

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1995-04-07                     House Journal                      Page 1174
HB 304                                                                       
HOUSE BILL NO. 304 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
"An Act relating to geographic differentials for the salaries of              
certain state employees who are not members of a collective                    
bargaining unit; relating to periodic salary surveys and preparation           
of an annual pay schedule regarding certain state employees;                   
relating to certain state aid calculations based on geographic                 
differentials for state employee salaries; and providing for an                
effective date."                                                               
                                                                               
was read the first time and referred to the State Affairs, Labor &             
Commerce and Finance Committees.                                               
                                                                               
The following fiscal notes apply:                                              
                                                                               
Fiscal note, Dept. of Administration, 4/7/95                                   
Fiscal note, Office of the Governor/All Depts., 4/7/95                         
                                                                               
The Governor's transmittal letter, dated April 7, 1995, appears below:         
                                                                               
"Dear Speaker Phillips:                                                        
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am     
transmitting a bill that revises geographic pay differentials for              
executive branch partially exempt employees and classified service             
employees not covered by a collective bargaining agreement, and for            
employees of the legislature.  Upon passage of this or similar                 
legislation, I also will issue an administrative order making the same         
adjustments to executive branch exempt personnel.  The bill also               
amends statutes that  relate to certain state aid to municipalities and        
other eligible recipients that is calculated based on the geographic pay       
differentials, and changes or deletes statutory requirements regarding         
salary surveys.                                                                
                                                                               
In the mid-1980's, the state conducted a comprehensive cost-of-living          
study for the different areas of Alaska.  That study showed that the           
geographic pay differentials contained in AS39.27.020(a) did not               

1995-04-07                     House Journal                      Page 1175
HB 304                                                                       
accurately reflect the actual differences in the cost-of-living in cities      
and towns around the state.  As a result of this study, the collective         
bargaining agreements between the state and the various unions                 
representing state employees, which had differentials based on those           
in AS39.27.020(a), were changed to reflect the actual differences.             
However, because AS39.27.020(a) was not amended, state employees               
not covered by collective bargaining agreements continued to be paid           
using outdated differentials.  Some were underpaid, but more were              
overpaid, costing the state several hundred thousand dollars each year.        
Since the mid-1980's, cost-of-living differences within Alaska have            
been reduced even further.  This bill repeals AS39.27.020 and sets out         
new provisions in a proposed AS39.27.021, to make long overdue                 
changes to the geographic pay differentials.  The bill makes certain           
conforming technical amendments to statutes relating to magistrate             
salaries and to the Public Employees' Retirement System, to                    
acknowledge the repeal and the new provisions.                                 
                                                                               
The bill also provides, as did the various collective bargaining               
agreements, that no employee will have his or her salary immediately           
reduced as a result of the new differentials.  However, I am not               
proposing that incumbent employee salaries be frozen forever.  Instead,        
the salary of an employee who remains working in an area where the             
differential is lowered would not be reduced until one year after the          
effective date of the bill.                                                    
                                                                               
One significant difference between this bill and previous approaches           
to geographic pay differentials is that this bill limits, to $30,000 per       
year, the amount of an employee's gross pay that would be subject to           
a differential adjustment.  This acknowledges the basic purpose of             
geographic differentials:   compensating for higher basic living               
expenses.  This approach removes the aspect of raising overall pay             
levels through differentials.                                                  
                                                                               
Statutes relating to state aid to municipalities and other eligible            
recipients for roads, health facilities and hospitals, and volunteer fire      
departments, contain a provision increasing aid to areas with a higher         
cost of living, and tying the increases to the differentials in existing       
AS39.27.020(a).  Because many municipalities and other recipients              
have relied on the current differentials in their planning, this bill          
provides that the differentials in existing law will continue to apply for     
this purpose.                                                                  

1995-04-07                     House Journal                      Page 1176
HB 304                                                                       
The bill also requires the director of the division of personnel to            
conduct a study every five years, starting in 1999, to review                  
geographic differentials.  This requirement replaces the current               
statutory requirement that an annual survey be done both of cost-of-           
living around the state and of the relationship between state salaries         
and salaries of other employers.  In addition, the bill repeals the            
requirement that the director conduct an annual survey for purposes of         
making university employee salary recommendations to the Board of              
Regents of the University of Alaska.  Because of budgetary constraints,        
none of these annual surveys have been done.                                   
                                                                               
I urge your prompt consideration and passage of this bill.                     
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor"