04/30/2025 03:15 PM House LABOR & COMMERCE

        HB 193-UNEMPLOYMENT BENEFITS; PAID PARENT LEAVE                                                                     
                                                                                                                                
4:39:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be  HOUSE BILL  NO. 193,  "An  Act establishing  a paid  parental                                                               
leave  program; relating  to unemployment  benefits; relating  to                                                               
the collection of child support  obligations; and relating to the                                                               
duties of the Department of Labor and Workforce Development."                                                                   
                                                                                                                                
4:40:17 PM                                                                                                                    
                                                                                                                                
LENNON  WELLER,  Economist,  Department   of  Labor  &  Workforce                                                               
Development  (DOLWD), introduced  himself for  the public  record                                                               
and stated he  was available for questions  regarding the funding                                                               
mechanism for HB 193.                                                                                                           
                                                                                                                                
4:40:48 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease at 4:40 p.m.                                                                                 
                                                                                                                                
4:41:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS [set HB 193 aside to be taken up later.]                                                                        
                                                                                                                                
        HB 193-UNEMPLOYMENT BENEFITS; PAID PARENT LEAVE                                                                     
                                                                                                                                
4:55:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be [a return to] HOUSE BILL  NO. 193, "An Act establishing a paid                                                               
parental  leave  program;   relating  to  unemployment  benefits;                                                               
relating  to the  collection of  child  support obligations;  and                                                               
relating to the  duties of the Department of  Labor and Workforce                                                               
Development."                                                                                                                   
                                                                                                                                
4:56:16 PM                                                                                                                    
                                                                                                                                
PALOMA  HARBOUR, Director,  Division of  Employment and  Training                                                               
Services,   Department of Labor  & Workforce  Development (DLWD),                                                               
as co-presenter, introduced herself for the public record.                                                                      
                                                                                                                                
4:56:25 PM                                                                                                                    
                                                                                                                                
LENNON WELLER, Economist 3,  Division of Administrative Services,                                                               
Department  of  Labor  & Workforce  Development,  co-presented  a                                                               
document,  titled  "HB  193 Alaska  Unemployment  Insurance  (UI)                                                               
Trust  Fund Analysis"  [included in  the committee  packet].   He                                                               
introduced himself for the public record.                                                                                       
                                                                                                                                
MS. HARBOUR  began on page  4 of the document,  drawing committee                                                               
members' attention to a line  graph representative of the current                                                               
health  of the  UI trust  fund.   She noted  that the  line graph                                                               
shows the balance of the fund  as recently as November of 2024 of                                                               
over $736 million.   She reported that the  target solvency level                                                               
was approximately $550 million as  of September 2024, noting that                                                               
there is a significant balance  in the trust fund above statutory                                                               
targets.                                                                                                                        
                                                                                                                                
MS.  HARBOUR   moved  to  page  5,   drawing  committee  members'                                                               
attention  to   four  line  graphs  representing   baseline  cost                                                               
scenarios  and  the  resulting  reserve  ratios.    She  reminded                                                               
committee members  that the  target reserve  ratio was  between 3                                                               
and  3.3  percent.    She  explained  that  the  dark  blue  line                                                               
represented  the growth  of  the reserve  ratio  with no  changes                                                               
between calendar year  2025 and 2030, noting that  the trust fund                                                               
would likely  grow to $1  billion within  the next five  to eight                                                               
years.   She explained that  the orange line implements  only the                                                               
maximum  weekly benefit  increase  proposed under  HB  193.   She                                                               
noted  that the  fund would  continue to  grow in  this scenario.                                                               
She  explained that  the  green line  was  representative of  the                                                               
benefit cost  increase and additionally  diverts 0.15  percent of                                                               
wages  from  the employees'  trust  fund  to the  parental  leave                                                               
program  proposed by  HB  193.   She noted  that  the fund  would                                                               
continue  to grow  in  this  scenario.   She  explained that  the                                                               
purple line was representative of  the benefit rate increase, the                                                               
employee  diversion of  0.15 percent  and an  additional employer                                                               
contribution  diversion  of 0.25  percent  to  the paid  parental                                                               
leave   program,  and   an  additional   reduction  of   employer                                                               
contribution to  the UI trust fund  by 0.25 percent -  an overall                                                               
change of  the minimum tax  rate from  1 percent to  0.5 percent.                                                               
She noted  that under the  fourth scenario, the fund  would begin                                                               
to decrease and  that it would reach the target  reserve ratio by                                                               
2037, assuming no major recession.                                                                                              
                                                                                                                                
5:00:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  emphasized that the legislators  had the ability                                                               
to  reduce taxes  and  create a  parental  leave program  without                                                               
endangering the trust fund.                                                                                                     
                                                                                                                                
5:00:38 PM                                                                                                                    
                                                                                                                                
MS.  HARBOUR,  in  response to  a  question  from  Representative                                                               
Saddler, stated that currently in  statute, there was a 1 percent                                                               
minimum  employer  contribution  to  the  UI  trust  fund.    She                                                               
explained that she  was asked to model 0.25  percent reduction to                                                               
the paid parental leave program  and an additional 0.25 reduction                                                               
of the employer tax rate.                                                                                                       
                                                                                                                                
5:01:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  reiterated  that  the  legislature  could  both                                                               
reduce the  employer tax rate  and fund a parental  leave program                                                               
without endangering the trust fund.                                                                                             
                                                                                                                                
5:01:43 PM                                                                                                                    
                                                                                                                                
MS.  HARBOUR   moved  to  page  6,   drawing  committee  members'                                                               
attention  to  four  line   graphs  representing  recession  cost                                                               
scenarios and the  resulting reserve ratios.  She  noted that the                                                               
different colors  of the lines  correspond to the  same scenarios                                                               
outlined in  the previous  slide.   She stated  that in  all four                                                               
scenarios, the  trust fund could withstand  an extreme recession,                                                               
beyond anything that Alaska has experienced, historically.                                                                      
                                                                                                                                
5:02:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  noted that  if such a  model were  adopted, DLWD                                                               
would retain the  ability to change the  contribution rate should                                                               
the solvency necessitate it.                                                                                                    
                                                                                                                                
5:03:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  if the  presentation presumed  the                                                               
same duration of benefits laid out in the proposed legislation.                                                                 
                                                                                                                                
MS. HARBOUR  replied that scenarios  are oriented  around revenue                                                               
to the trust  fund.  She noted  that there was less  focus on the                                                               
paid parental leave benefit program in her presentation.                                                                        
                                                                                                                                
REPRESENTATIVE   SADDLER   asked   for  confirmation   that   the                                                               
presentation  illustrated  how  much   money  could  be  diverted                                                               
elsewhere and still leave the fund solvent.                                                                                     
                                                                                                                                
MS. HARBOUR confirmed that that was correct.                                                                                    
                                                                                                                                
MS.  HARBOUR,   in  response  to  an   additional  question  from                                                               
Representative Saddler,  stated that the write-up  speaks to some                                                               
money figures associated with the line  graphs.  She spoke to the                                                               
last  scenario,  noting that  it  includes  diversions from  both                                                               
employer and  employee contributions.   She stated that  it would                                                               
generate approximately  $15 million in revenue  from the employee                                                               
contributions and  approximately $25 million in  revenue from the                                                               
employer contributions to  the paid parental leave  program.  She                                                               
further reported that the fourth  scenario would also result in a                                                               
tax cut for employers of approximately $25 million.                                                                             
                                                                                                                                
5:05:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  facilitated a brief discussion  on amendments to                                                               
the proposed legislation.                                                                                                       
                                                                                                                                
5:07:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COULOMBE stated  that the  presentation from  the                                                               
Alaska Children's  Trust (ACT) during  the last  hearing reported                                                               
that there was not enough  money for the program envisioned under                                                               
HB 193.   She asked whether that presentation  was incorrect with                                                               
its numbers.                                                                                                                    
                                                                                                                                
CO-CHAIR   HALL   offered   her  understanding   that   the   ACT                                                               
presentation  included paid  parental leave,  paid family  leave,                                                               
and paid  family and  medical leave.   She stated  her preference                                                               
for  limiting  the proposed  legislation  to  only paid  parental                                                               
leave and later expanding the program should it be successful.                                                                  
                                                                                                                                
5:08:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  offered his  belief  that  ACT was  correct  in                                                               
stating that  an employee-only contribution  of 0.15  percent was                                                               
likely  insufficient to  provide for  the parental  leave program                                                               
long-term.                                                                                                                      
                                                                                                                                
5:08:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR HALL spoke to an  amendment in the drafting process that                                                               
envisioned  different  increments  of   paid  parental  leave  at                                                               
varying  degrees of  compensation to  allow more  flexibility for                                                               
families in planning paid parental leave.                                                                                       
                                                                                                                                
CO-CHAIR FIELDS  remarked that the amendment  Co-Chair Hall spoke                                                               
to was in  response to the presentation from ACT,  noting that 50                                                               
percent wage replacement was not feasible for everyone.                                                                         
                                                                                                                                
5:09:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  there was any  modeling to                                                               
predict  how many  people  would take  advantage  of the  program                                                               
proposed under HB 193.                                                                                                          
                                                                                                                                
CO-CHAIR FIELDS deferred to Mr. Weller.                                                                                         
                                                                                                                                
5:10:28 PM                                                                                                                    
                                                                                                                                
MR.  WELLER noted  that it  was difficult  to pinpoint  the exact                                                               
cost of  the program  with no historical  experience.   He stated                                                               
that Alaska  experienced around 9,000  births [in 2023],  and the                                                               
maximal cost  of the  program could be  a couple  hundred million                                                               
dollars.    He  stated that,  historically,  individuals  collect                                                               
about  10  weeks of  parental  leave  on  average, and  that  the                                                               
current  average weekly  UI benefit  collected was  approximately                                                               
$240.   He estimated that there  would be 1,500 to  2,000 initial                                                               
claims in a calendar year,  which was representative of an uptake                                                               
of 10 percent.   He spoke to other states,  noting that wages are                                                               
typically taxed at  a rate of 1 percent and  the costs of similar                                                               
programs in  other states are high.   He spoke about  a potential                                                               
range  of costs,  suggesting that  it could  start at  $8 to  $10                                                               
million.                                                                                                                        
                                                                                                                                
5:14:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS spoke to the  importance of adjustment mechanisms                                                               
and tracking the uptake of the proposed program under HB 193.                                                                   
                                                                                                                                
REPRESENTATIVE SADDLER  noted that  HB 193  could be  very costly                                                               
for Alaska.  He requested more hard data.                                                                                       
                                                                                                                                
5:15:32 PM                                                                                                                    
                                                                                                                                
MR.  WELLER   replied  that,   due  to   confidentiality  issues,                                                               
conjuring hard  data on  the subject would  be difficult,  but he                                                               
would follow up with more information when available.                                                                           
                                                                                                                                
REPRESENTATIVE  SADDLER requested  information from  other states                                                               
that have passed similar legislation.                                                                                           
                                                                                                                                
5:16:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS offered his belief  that the earned benefit would                                                               
work as a first in a system  that could be tapped out, like other                                                               
states with  similar legislation.   He asked  Ms. Harbour  if his                                                               
interpretation was correct.                                                                                                     
                                                                                                                                
5:17:30 PM                                                                                                                    
                                                                                                                                
MS.  HARBOUR  noted that  there  was  statutory language  in  the                                                               
workers'  compensation  benefit  guaranty  fund  that  states  if                                                               
benefit claims exceeded revenue funds,  then claims would be paid                                                               
in  a  "first  in,  first  out" manner  as  soon  as  funds  were                                                               
sufficiently available.   She  commented that  she was  unsure if                                                               
that type of language would be beneficial under HB 193.                                                                         
                                                                                                                                
5:18:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER stressed the  importance of real data when                                                               
discussing and modifying the proposed  legislation.  He suggested                                                               
delaying the pay of benefits  for one year after implementing the                                                               
revenue-collecting mechanisms of HB 193.                                                                                        
                                                                                                                                
CO-CHAIR  FIELDS   offered  his  agreement   with  Representative                                                               
Saddler.  He set an amendment deadline.                                                                                         
                                                                                                                                
[HB 193 was held over.]