Legislature(2013 - 2014)HOUSE FINANCE 519
04/08/2013 08:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB195 | |
| HB63 | |
| HB102 | |
| SB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| + | HB 63 | TELECONFERENCED | |
| + | SB 51 | TELECONFERENCED | |
| + | HB 102 | TELECONFERENCED | |
| + | SB 65 | TELECONFERENCED | |
| + | HB 134 | TELECONFERENCED | |
| *+ | HB 195 | TELECONFERENCED | |
| + | SB 95 | TELECONFERENCED | |
| + | SB 2 | TELECONFERENCED | |
| + | SB 16 | TELECONFERENCED | |
| + | SB 24 | TELECONFERENCED | |
| + | SB 37 | TELECONFERENCED | |
| + | SB 38 | TELECONFERENCED | |
| + | SB 86 | TELECONFERENCED | |
| + | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 195
"An Act relating to the compensation, allowances,
geographic differentials in pay, and leave of certain
public officials, officers, and employees not covered
by collective bargaining agreements; relating to
certain petroleum engineers and petroleum geologists
employed by the Department of Natural Resources;
relating to increased pay for certain partially exempt
employees of the state in specific circumstances;
making conforming amendments; and providing for an
effective date."
8:06:19 AM
BECKY HULTBERG, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
explained that the legislation implemented the provisions
negotiated through bargaining agreements with the general
government and supervisor's unit and applied them to the
non-covered service. The change would provide the
department consistency with the cost of living, a reduction
of leave accrual, a cap on leave amount and decreases on
the pay increment. Regarding the pay increment, she noted
that employees above an "F" step would receive a raise of
3.75 percent every other year. The reduction in the pay
increment decreased the state's long term legacy costs.
Commissioner Hultberg noted several provisions in the bill
that enhanced the department ability to recruit and retain
high-quality skilled professionals. Finally, the bill would
provide implementation of the geographic pay differential
for one of the last phases of remaining employees. The
geographic pay study was provided in 2008 and the terms
were implemented in all collective bargaining agreements,
when applicable.
8:07:58 AM
CURTIS THAYER, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, provided a sectional analysis. He noted
that the new leave accrual rates were addressed in sections
one through four.
8:08:49 AM
AT EASE
8:12:17 AM
RECONVENED
Mr. Thayer presented his sectional analysis with the
PowerPoint presentation titled "Alaska Department of
Administration Overview of HB 195 and SB 95" (copy on
file).
Mr. Thayer began with slide 2: "What are HB 195 and SB 95
About?"
· Consistency with cost of living, reduction of leave
accrual, cap on leave amount and decreases in the pay
increment
· Enhance ability to recruit and retain highly-skilled
professionals
· Implementation of Geographical Pay Differential for
last phase of remaining employees
Mr. Thayer continued with slide 3: "Overview of the Bill
Sections."
· Section 1-4: Leave Accrual and Cap
· Section 5: Petroleum Engineers/Geologists
· Section 6-8: Cost of Living Increases
· Section 9: Pay Increments
· Section 10: Partially-Exempt Salaries
· Section 11-14: Geographic Pay Differentials
Representative Costello asked if the bill addressed the
ability of the employee to transfer leave.
Mr. Thayer replied that employees with over 1000 hours
would be grandfathered in. The new cap applied to employees
with less than 1000 hours. The estimate for cashing-out
leave for employees who had accrued greater than 1000 hours
in the fiscal note was approximately $40 million.
Co-Chair Stoltze suggested that the pain would be delayed
for future budgets.
8:14:45 AM
Representative Costello asked if an employee could transfer
leave to another employee.
Mr. Thayer replied in the affirmative.
Co-Chair Stoltze asked how the leave was valued among
different pay ranges.
NICKI NEAL, DIRECTOR, DIVISION OF PERSONNEL, DEPARTMENT OF
ADMINISTRATION, responded that the value of the leave donor
was converted to the value of the recipient.
Representative Costello asked if an employee could exceed
the cap set in the bill.
Ms. Neal stated that the donated leave was treated
differently, and was not subject to the cap.
Co-Chair Stoltze explained that legislators did not accrue
leave.
8:16:29 AM
Co-Chair Austerman asked about slide 4 and the statement
that "employees with a balance that exceeds 400 hours as of
12/16/2013 are exempt from the maximum accrual limit until
such time as his/her balance equals 400 hours or less." He
asked if employees with more than 400 hours would be
strategically ratcheted down.
Ms. Neal replied that the employees with over 400 hours
would be required to use 112.5 hours per year. The hope was
that the balance would be decreased by the mandate,
although some employees would be grandfathered in.
8:17:55 AM
Mr. Thayer discussed slide 5: "Petroleum
Engineers/Geologists."
· Removes exclusion of positions in Division of
Geological and Geophysical Surveys (DGGS)
· Only 1 position - DGGS, Energy Section Manager
(currently SU Geologist V) - vacant since March 17,
2012.
o Position requires complete understanding of
petroleum systems analysis and exploration that
is obtained primarily through industry experience
o Industry salaries are approximately 50 percent
higher than current authorized salary (data from
Assoc of Petroleum Geologists 2011 Survey)
o Two national searches failed - No qualified
applicants after 45 days of recruitment and
advertising in national trade publications
· Amendment applicable to DNR, DGGS only
8:18:59 AM
Mr. Thayer detailed slide 6: "Cost of Living Increases."
Sections 6-8
· Effective 7/1/13 - 1 percent
· Effective 7/1/14 - 1 percent
· Effective 7/1/15 - 2.5 percent
· Consistent with terms of recently negotiated
collective bargaining agreements
· Applies to noncovered classified and partially
exempt (PX) and many exempt employees of the
executive branch, employees of the legislature
(AS 24.10.011 and AS 24.10.210), and the judicial
branch
8:19:32 AM
Mr. Thayer discussed slide 7: "Pay Increments."
Section 9
· Effective 7/1/15 the percentage between pay
increments (J and above) will decrease from 3.75
percent to 3.25 percent
· Consistent with terms of recently negotiated
collective bargaining agreements
· Applies to noncovered classified and PX employees
- also applies to many exempt employees through
polity
· Applies to legislative branch if a policy has
been adopted (AS 39.27.011(j))
8:19:59 AM
Mr. Thayer discussed slide 8: "Partially Exempt Salaries."
Section 10
· Partially Exempt (PX) positions are subject to
classification and pay plans which limits
flexibility
· State often not competitive for top talent - need
some flexibility for mission critical positions
· Governor or designee on case-by-case basis:
o serves critical governmental interest of
state
o employee possesses exceptional
qualifications
o recruitment difficulties exist; or
o necessary to compete with labor market
· Applies to executive branch Partially Exempt (PX)
employees only
8:21:03 AM
Representative Costello asked about an employee's range and
step when initially hired by the state.
Mr. Thayer replied that the state was permitted to hire an
A through F step, but the governor was allowed, on a case-
by-case basis, to go beyond the F step for an exceptional
candidate, or when recruitment difficulties were faced.
Representative Kawasaki asked about how frequently the
partially-exempt salaries were used. He asked if the
legislature would review the issue.
Mr. Thayer replied that he had faced two instances
addressing partially-exempt salaries in the last 18 months.
The tool allowed for ease when hiring an attractive
candidate for a difficult position.
8:22:31 AM
Representative Gara wondered about section 3 and the use of
10 days of personal leave. He asked if a person was in a
specialty position and was seen as indispensable, would
they be allowed to take time off.
Mr. Thayer replied that provisions existed to waive the
mandatory usage with permission of the director or
immediate supervisor.
Representative Gara asked if a person was not able to use
the leave, would they lose it.
Mr. Thayer replied that a person would not lose the leave
if they had written permission. He clarified that if the
supervisor stated that they were not eligible to use the
leave then the waiver for mandatory usage would be
employed.
8:24:17 AM
Co-Chair Austerman asked how many state employees were in
the 10 year service.
Mr. Thayer replied that during negotiations the supervisory
unit (SU) displayed 1100 employees with over 1000 hours. He
noted that SU had one third of their 8200 employees with
more than 1000 hours. Only four legislative employees had
over 1000 hours. The 1000 hour cap was negotiated with the
unions as a break-even point.
8:26:01 AM
Mr. Thayer discussed slide 9 "Geographical Pay
Differentials." He noted that a report was produced by the
McDowell Group in Fall of 2008. The report was completed in
2009 and addressed geographical pay differentials. The
group used South Central Anchorage as the base and
implemented the geographical differential for other unions.
Anchorage was shown at zero percent above the base, while
Fairbanks was at 3, Juneau and Sitka at 5, and rural Alaska
would extend from 37 to 60 percent. He stated that the
executive branch saw 483 employees receive an increase, 122
with frozen pay, and 727 without change. For the
legislative branch, 145 employees would see an increase, 24
with frozen pay, and 204 without change.
8:27:32 AM
Representative Kawasaki recalled that the 2008 McDowell
study was controversial for Fairbanks, as it omitted the
cost component for energy. He asked when the survey would
be updated.
Mr. Thayer replied that the department planned to have the
study done every five years pending an appropriation from
the legislature.
Representative Kawasaki asked about the potential absence
of an appropriation from the legislature.
Mr. Thayer replied that the study would be maintained until
the department had an updated survey.
Co-Chair Stoltze explained that money would not be spent
unless appropriated by the legislature.
Representative Gara stated that OCS found it difficult to
attract social workers to Bethel. He asked how the 50
percent salary adjustment for Bethel compared to the
present figures.
Ms. Neal replied that the geographical differential for
Bethel was approximately 29.12 percent.
8:29:12 AM
Representative Edgmon asked why Nome would be categorized
in the 37 percent above-base category.
Mr. Thayer replied that he would contact the McDowell group
for an answer. He stated that the study included
information about housing, utilities, food and
transportation. He assumed that home prices affected the
percentage for Nome.
Representative Edgmon stated that the price of fuel in
Dillingham was much higher than that in Nome. He noted that
the cost of fuel was a significant piece of the rural
communities' cost of living.
8:30:32 AM
Co-Chair Stoltze understood that a lack of action on the
proposed legislation might lead to a detrimental fiscal
impact for the state. He requested elaboration on the issue
of accrued leave.
Mr. Thayer replied that the value of leave was a key point
in union negotiations. He stated the total leave value was
$164 million for all state employees. He stated that 10
employees with the greatest leave balances had
approximately 35 thousand hours of leave banked. The
department sought to find a cap for the leave to temper the
liability. He stated that the bill would cut the liability
by more than two thirds. He stated that the department
worked with the unions to decrease the leave accruals.
Mr. Thayer noted that the paid time off incorporated an
employee's sick leave. He pointed out that the 1000 hours
represented approximately six months' worth of leave. He
admitted that the leave amount was negotiated by the
unions. He stated that the union's leave was valued at the
union's current earnings. He noted that Alaska was the only
state in the nation lacking a cap on leave.
8:34:25 AM
Co-Chair Stoltze noted that a new type of unfunded
liability might result if the cap was not instituted.
Mr. Thayer agreed. He pointed out that the Department of
Administration (DOA) requested money from various
departments to pay for cashed-in leave. The hope was that
the caps combined with employee retirements would lead to a
decrease in the state's liability.
Co-Chair Stoltze asked if a senior engineer with the
Department of Transportation and Public Facilities (DOT/PF)
with a large amount of leave would compromise the state's
ability to hire social workers at lower entry levels.
Mr. Thayer agreed that some employees had banked up to 4000
hours of leave. He added that DOA must better explain
options other than banking leave, such as deferred
compensation, since the cashed-in leave presented a tax
liability for the employee.
8:36:46 AM
Representative Gara asked if a person who had accrued large
amounts of leave must relinquish it.
Co-Chair Stoltze noted that the bill was without
retroactive provisions.
Representative Gara understood that an employee accrued
approximately 5 weeks of leave per year.
Mr. Thayer replied that accrual rates would remain the
same. He clarified that the state did not have sick leave.
He stated that the cap applied to those employees with less
than 1000 hours of leave. The mandatory usage applied to
all employees upon passage of the legislation.
Representative Gara asked how much leave a new employee
would earn in three years.
Mr. Thayer moved to slide 4 and noted that the new scale
allowed for a slight reduction in leave.
8:39:22 AM
Representative Costello asked about the overall fiscal
impact of the bill.
Mr. Thayer offered to provide the calculations for the
committee.
Co-Chair Stoltze requested categorization of the potential
savings or mitigated losses.
Mr. Thayer replied that calculation were compiled for one
of the unions, and finding showed that leave owed to
employees with more than 1000 hours was $1.6 million. With
the 1000 hour cap, the liability would be $400 thousand.
8:41:28 AM
Representative Costello appreciated the department's offer
to educate employees.
Mr. Thayer replied that the proposed education would
benefit both the state and the employee.
Representative Kawasaki asked about section 10 and
partially-exempt salaries. He wondered if a person might
try to negotiate directly with the governor under this
term.
Mr. Thayer replied that the department would attempt to
attract people into state service for a particular
position. Only when a commissioner or director had a
difficult time filling a position, would they go to the
governor's office to ask for such a variance. The process
to achieve the variance would be long and rigorous.
8:43:45 AM
Representative Kawasaki asked about section 5 and DGGS. He
recalled that one position was more difficult to fill. He
asked if every DGGS Geologist 4 would encounter the same
challenges upon vacancy.
Mr. Thayer replied that the need was applicable to only one
position.
Vice-Chair Neuman asked about section 10 and the issues of
employee retire-rehire. He asked if an employee must
provide written proof that another applicant was not
capable of performing the tasks in the job.
Ms. Neal stated that the retire-rehire program sunset two
years ago. If position recruitment were present, the
employee could reenter a position and waive the retirement
contribution.
8:45:44 AM
Representative Edgmon MOVED Amendment 1. He stated that the
conceptual amendment would bring judges and justices into
the bill with a cap of $100 thousand. The change would
affect 23 positions throughout the state. He understood
that current law allowed judges and justices a geographical
pay differential, which was limited to $7 thousand.
Co-Chair Stoltze requested a written amendment.
Representative Edgmon apologized that the written amendment
was not in the hands of committee members.
8:47:56 AM
AT EASE
8:48:34 AM
RECONVENED
HB 195 was HEARD and HELD in committee for further
consideration.