03/28/2019 09:00 AM House FINANCE

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