Legislature(2015 - 2016)BARNES 124
04/04/2016 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| HB372 | |
| HB299 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 125 | TELECONFERENCED | |
| += | HB 372 | TELECONFERENCED | |
| + | HB 299 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 299-PERS PARTICIPATION: CONTRACTORS
4:46:27 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 299, "An Act excluding certain persons from
participating in the Public Employees' Retirement System of
Alaska."
4:46:44 PM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, speaking
as the sponsor of HB 299, paraphrased the sponsor statement, as
follows: [original punctuation provided]
HB 299, is being brought forward on behalf of the
501(C)3, nonprofit corporation volunteer fire
departments within the Fairbanks North Star Borough,
operating as "independent contractors". They are
currently under contract with the borough to provide
emergency response services. Each nonprofit fire
department has both full time paid employees and
trained volunteers as emergency responders. Each of
these organizations provides benefit plans for all
members. Dolan vs King County was a lawsuit between
the County and independent non-profit organizations
which provided indigent legal services to the county.
Over a period of thirty years, King County asserted
increasing budgetary and day to day authority over the
formerly independent non-profit organizations. In
doing so, it asserted more control over the groups
that provided the services. Employees of the
organizations sued the County for the state employee
benefits. They argued that the County's funding and
control over their "independent" organizations
essentially made them state employees for the purposes
of participating in the Public Employees Retirement
System (PERS) and under pertinent statutes and common
law principles, the Supreme Court agreed that
employees of the organizations were "employees" under
state law, and, as such, were entitled to be enrolled
in the PERS. HB 299 would clearly define who is
eligible for the Public Employees' Retirement System
of Alaska and give added protection to municipalities
against such liability. In times of such fiscal strife
this legislation would encourage the exploration and
utilization of cost effective measures for services
and promote independent organizations and business.
This bill emphasizes the need, however, to maintain
the proprieties of the independent relationship when
contracting for the provision of essential public
service. I would appreciate your support of HB 299.
REPRESENTATIVE WILSON added that Washington passed a similar law
to prevent further litigation.
4:49:05 PM
CHAIR OLSON asked how many fire service areas would be affected.
REPRESENTATIVE WILSON responded that Fairbanks has five and
Ketchikan has the same issue.
CHAIR OLSON indicated that the Matanuska-Susitna region may have
as well.
REPRESENTATIVE WILSON, as an aside to Representative Colver,
said Fairbanks North Star Borough has approximately 109 road
service areas. Representative Wilson pointed out [Identifier:
DOA-DRB-HB299-03-18-16] is a zero fiscal note. She paraphrased
the sectional analysis, as follows:
· Section 1 Contractors and employees of contractors are
excluded from this plan
· Section 2 "same thing"
· Section 3 adds "a person who is compensated on a
contractual or fee basis"
REPRESENTATIVE WILSON advised that Section 3 would not impact
the "university fire service area" employees, who are members of
the Public Employees' Retirement System (PERS), because the
contract with FNSB is with the University of Alaska.
REPRESENTATIVE KITO inquired as to whether individuals are
covered under another retirement plan.
REPRESENTATIVE WILSON said yes. She added that those affected
by the bill have their own medical and retirement plans;
however, they are not employees of FNSB and would not qualify
for PERS. In further response to Representative Kito, she
explained that in Washington, a nonprofit that was providing
services sued for coverage under the county system and
prevailed. Subsequently, Washington clarified its laws related
to who is a contractor and who is an employee; the purpose of HB
299 is to clarify that contractors who contract with
municipalities are separate entities, and therefore are not
eligible for membership in PERS.
4:52:38 PM
REPRESENTATIVE JOSEPHSON directed attention to the sponsor
statement and read [in part]:
In times of such fiscal strife this legislation would
encourage the exploration and utilization of cost
effective measures for services and promote
independent organizations and business.
REPRESENTATIVE JOSEPHSON asked whether HB 299 was designed to
help privatize employees who are now public employees.
REPRESENTATIVE WILSON said absolutely not.
REPRESENTATIVE HUGHES asked whether a problem related to this
issue has arisen.
REPRESENTATIVE WILSON answered that "being proactive is much
better and much more affordable."
REPRESENTATIVE COLVER questioned how contracts with firefighters
are established.
REPRESENTATIVE WILSON explained that there is a mill rate for
each fire service area, which is separate of the contract
between FNSB for emergency medical services (EMS) that are paid
by the number of ambulance calls made.
REPRESENTATIVE COLVER surmised EMS is provided by the private
sector or a 501(c) 3 nonprofit entity that is not housed in a
FNSB fire department facility.
REPRESENTATIVE WILSON clarified that EMS is part of the fire
department; the fire service protection is based on a mill rate
and EMS is a different area paid by a contract with FNSB. The
ambulances, and volunteer and paid responders, are housed in the
fire station.
4:55:29 PM
REPRESENTATIVE COLVER concluded that EMS coverage is not by a
service area, but is area-wide. He asked about the chain of
command.
REPRESENTATIVE WILSON said the staff is directed by the fire
chief and an EMS (indisc.). In further response to
Representative Colver, she affirmed that the contractual
relationship is just between FNSB and the fire service area.
REPRESENTATIVE COLVER questioned whether previous part-time
employees have asked to be covered by PERS.
REPRESENTATIVE WILSON said no. The employees are covered by
their own plans and work fulltime or part-time for the fire
service area.
REPRESENTATIVE COLVER recalled that in the Matanuska-Susitna
(Mat-Su) Borough, EMS staff is hired by the borough; however, in
order to avoid paying benefits and retirement, employees were
kept on part-time status, and this led to a legal action against
the Mat-Su Borough over employees' right to PERS. He cautioned
that "this area of this PERS with the fire department and the
EMS employees is a very expensive proposition for, for
government."
REPRESENTATIVE WILSON restated that the proposed legislation
addresses independent contractors, and none of these [employees]
are employees of FNSB. The Mat-Su Borough hired people on a
part-time status, but these [individuals] are hired by the fire
service areas as independent contractors.
4:58:48 PM
MITCH FLYNN, Fire Chief, Steese Volunteer Fire Department
(SVFD), informed the committee SVFD is a 501(c)3 nonprofit
organization in Fairbanks, and an independent contractor with
the Fairbanks North Star Borough (FNSB) that provides fire and
EMS services within a service area on an annual basis.
Recently, FNSB revealed problems with SVFD's contracts that may
pose a financial liability risk to fire service and EMS service
area taxpayers. Although improvements to its contracts have
been made, SVFR remains concerned about a possible claim from a
current or past employee who may sue for PERS benefits. The
purpose of HB 299 is to eliminate the aforementioned threat to
PERS, and is not to prevent the fulfillment of current
contracts, or to remove employees currently receiving PERS
benefits from the system. Mr. Flynn said there are six
nonprofit fire departments statewide which contract with
municipal governments to provide fire and EMS services. The
Steese Volunteer Fire Department has its own medical and
retirement benefits programs and members do not intend or expect
to participate in PERS. He asked the committee to support HB
299 in order to protect PERS and those employees who are
rightfully entitled to PERS membership.
REPRESENTATIVE COLVER asked whether it is problematic for
municipalities to contract with nonprofits or others, and seek
an exclusion from PERS.
5:02:37 PM
KATHY LEA, Chief Pension Officer, Division of Retirement and
Benefits, Department of Administration, said it is common for
municipalities to contract-out for certain aspects of their
work; however, from the perspective of PERS, it is important for
independent contractors to remain independent from the control
of the municipality related to finances, behavior, or physical
arrangement. If not, the independent contractor is no longer
independent, and can be considered an employee.
REPRESENTATIVE COLVER inquired as to the hours an employee is
required to work to be entitled to PERS.
5:03:49 PM
MS. LEA said the threshold for part-time service is a minimum of
15 hours regularly scheduled every week, and fulltime service
requires at least 30 hours of work regularly scheduled every
week.
5:04:21 PM
CHAIR OLSON announced that public testimony would remain open.
[HB 299 was held over.]