Legislature(2005 - 2006)HOUSE FINANCE 519
03/07/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB218 | |
| HB408 | |
| HB485 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 324 | TELECONFERENCED | |
| += | HB 408 | TELECONFERENCED | |
| += | SB 218 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 485 | TELECONFERENCED | |
HOUSE BILL NO. 485
"An Act amending the State Personnel Act to place in
the exempt service pharmacists and physicians employed
in the Department of Health and Social Services or in
the Department of Corrections and corporate income tax
forensic auditors employed by the division of the
Department of Revenue principally responsible for the
collection and enforcement of state taxes who
specialize in apportionment analysis and tax shelters
of multistate corporate taxpayers; and providing for an
effective date."
3:00:53 PM
JANET CLARKE, ASSISTANT COMMISSIONER, DIVISION OF FINANCE
AND MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, referred to Virginia Smiley to speak to a
situation which generated the bill.
3:01:55 PM
VIRGINIA SMILEY, DIRECTOR, DIVISION OF PIONEER HOMES gave an
overview of the pharmacist duties in the Pioneer's Home.
She gave the following overview of the pharmacy and
pharmacist duties as follows:
"The six Pioneer Homes located in Ketchikan, Sitka,
Juneau, Anchorage, Palmer and Fairbanks all rely on
receiving medications for their residents from the
Division's central pharmacy located in APH.
Per state and federal law the pharmacy must be under
the oversight of licensed pharmacists. We can and do
use school of pharmacy interns and pharmacy assistants,
but three pharmacists are necessary to supervise staff,
dispense medications, comply with Medicare Part D and
Medicaid documentation, and provide clinical
consultation to physicians, residents, families, and
staff.
In the quarter ending Dec 31, 2005, the pharmacy
packaged and dispensed 353,821 individual doses of
medications. Dispensing that volume of medications
requires a full staff present and working.
We have almost a full year's history in first losing
our pharmacists to jobs that pay much higher wages and
then not being able to attract new pharmacists to apply
for the vacant positions.
The federal government is paying wages that are
competitive with the private sector, and offering
signing bonuses and forgiveness of student loans.
Nationally, the same is true in the private sector, as
shown by lucrative offers being made to pharmacists in
recruitment letters and advertising in national
publications.
For eight months of last year we had a single
pharmacist on our payroll. It was necessary for us to
sign contracts with two temp agencies, and we were able
to fill many, but not all, of the vacant shifts. We
paid the contract agencies $70 hr for their
pharmacists.
At this critical point we finally placed the pharmacist
PCN into a temporary higher paying category in order to
recruit and hire more competitively. However, the
Division of Personnel advised us we would have to seek
a more permanent solution. That is why we are here
today.
The problem is that under the present wage scale for
permanent pharmacist positions in the state system, we
are not competitive with other employers.
We are asking to have pharmacists moved into the exempt
service with other professional classifications as it
will provide the needed flexibility to be competitive
in the marketplace.
She noted that pharmacists dispensed an extremely high
number of doses of medication, but that they were not
able to attract or retain qualified pharmacists as
compared with other states. She notes that during the
following year, only one pharmacist was on contract,
requiring them to hire temporary pharmacists at over
double the salary paid to the contract employee."
3:04:19 PM
Ms. Clarke noted that eight pharmacy positions existed in
the Department of Health and Social Services: three at the
Pioneer Home, two at API, two in Medicaid, and one in
epidemiology and public health. She stated that those in
these positions were required to provide high-level
consultation services, meaning that risks were great if
these positions were not filled. She noted that in the
private sector, pharmacists were paid $55 to $65 per hour,
or up to $70 per hour for temporary employees. She proposed
that pharmacists belonged in the same exempt category as
psychiatrists, medical examiners, etc.
3:06:36 PM
LAURA LINK, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT
OF CORRECTIONS expressed that her department experienced
similar problems in recruiting and retaining qualified
pharmacists.
Responding to a question by Co-Chair Meyer, she stated that
pharmacists maintained similar educational requirements as
doctors.
3:08:26 PM
JERRY BURNETT, DIRECTOR OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF REVENUE spoke to the second part of the bill,
regarding corporate tax forensic auditors, moving them into
the exempt category.
ROBYNN WILSON, DIRECTOR OF TAX DIVISION, DEPARTMENT OF
REVENUE explained the function of auditors for the State of
Alaska. She discussed the method for determining the
taxable income of large groups of companies. She noted the
complexities involved in dealing with multi-state and
worldwide companies that did business in Alaska, as well as
the wide variety of taxpayers. She explained the goal of
determining value of property, sales, vessels, etc.
3:11:03 PM
Ms. Wilson noted her experience as an auditor hired by the
State of Alaska 11 years ago. She explained that at that
time, a number of their more experienced auditors came from
the internal revenue service. She noted that public
auditors made money by working long hours, as employees
gained experience. She pointed out that at that time the
state paid a wage competitive with the federal government.
3:12:18 PM
Ms. Wilson then explained how circumstances had changed in
several ways: 1) large public accounting firms had
condensed, decreasing supply of employees; 2) the manner of
business had changed, with a new focus on selling tax
structures; 3) accounting rules had developed out of recent
corporate upsets, increasing the wages for auditors in the
private sector. She pointed out that the state of Alaska
had maintained an even wage, while wages in the public and
federal sectors had increased. She stated that in recent
years, the number of state auditors decreased from ten to
two, a number too small to complete the workload.
3:14:00 PM
She noted that the department had tried several recruitment
methods for auditors. She discussed methods seeking
auditors from the University of Alaska that had as yet been
unsuccessful, and noted that even if it had succeeded; they
did not have the ability to train new auditors. She
concluded that salary was the problem in recruitment, and
proposed that the bill would help to attract experienced
auditors by establishing three exempt positions that could
compete with the private market.
3:15:43 PM
Responding to a question by Co-Chair Meyer, Ms. Wilson
noted the curiosity over whether new auditors might be
needed in developing the new PPD tax.
Responding to a further question, she noted that the
educational requirements for auditors would include a
Masters Degree or Certified Public Accountant certificate.
Representative Joule asked for clarification on the exempt
status. Mr. Burnett explained that an exempt position was
not covered by the personnel rules adopted by the Personnel
Board and not subject to the salary schedule of other
employees, enabling salaries to be paid by a different
method.
Representative Joule asked whether exempt positions were
only appointed, such as government officials. Mr. Burnett
explained that certain positions in Department of Revenue
were exempt, not due to political appointment, but rather to
skills sets.
3:18:41 PM
Representative Stoltze asked what aspect of the
classification status solved the salary problems.
Mr. Burnett clarified that the issue at hand was one of
salary, and not classification. He noted that they were
currently unable to pay beyond the classification limit of
range. He stated that the department was not able to pay
the level of salary expected by an experienced CPA, which
could exceed $100 thousand.
Responding to another question by Representative Stoltze,
Ms. Wilson noted that a salary survey focused on the Level
3, revealed a large salary disparity at the higher level,
higher than the disparity on levels 1 and 2. She explained
that even moving an auditor up by one or two ranges could
not provide a competitive salary within the market. She
concluded that this was the reason for the need for a
category.
3:21:30 PM
Representative Kerttula commented that exempt employees
were easier to terminate. She wondered if this would
present a problem with the coming oil taxes. She asked
whether it was possible to simply negotiate higher salaries
in the collective bargaining process.
Mr. Burnett conceded there might be some possibility of
negotiating a higher salary within classified service. He
pointed out that the terms of the negotiation would need to
be approved by the legislature, which he proposed would be
an inefficient method of hiring.
Representative Kertulla commented that it might be worth
that method considering the importance of the upcoming jobs.
Representative Kelly asked if it was standard for these
types of positions to be exempt in the private sector. Mr.
Burnet clarified that the types of jobs in the private
sector were structured differently. He surmised that
auditors might not be terminated for political reasons.
Representative Hawker noted his own experience during his
tenure at the Legislature of auditors being terminated for
political reasons.
3:24:26 PM
JIM DUNCAN, BUSINESS MANAGER, ALASKA STATE EMPLOYEES
ASSOCIATION testified. He concurred that both pharmacists
and auditors were difficult to recruit and required a higher
salary, but disagreed with creating an exempt position to
solve the problem, pointing out that other types of
positions were difficult to fill. He reminded the Committee
that the merit system of employment was established by the
Alaska State Constitution, with those elected or appointed
being exempt from the system. He expressed concern over
changing the system through this bill, and observed that the
issue at hand was salary rates and not policy.
3:27:43 PM
Mr. Duncan proposed that in exempt service there would be
political pressure. He gave the example of an auditor being
placed under pressure by a large corporation to slow an
audit by means of the exempt system. He further pointed out
that as the State considered changing its corporate tax
structure, it might not be wise timing to move those in
charge of collecting tax and auditing corporations into
exempt status where they might be subjected to political
pressure. He referred to recent occurrences in Department
of Natural Resources.
3:28:51 PM
Mr. Duncan commented that the classified system was not at
issue, but rather the pay structure within the system. He
reminded the Committee that the pay plan was mandatory,
subject to bargaining, enabling the Administration to change
the pay plan due to an inability to attract employees. He
stated that he was currently composing a letter to the
Administration proposing that ranges 28, 29 and 30 be added
to the pay scale in order to solve the problem. He
suggested that the classified service ought to afford the
same salary as in exempt service. He encouraged the
Administration to examine the ability for movement to other
pay scales through internal/external comparisons and market
based studies.
3:30:34 PM
He suggested that currently they were comparing
inappropriate job classes, and that other comparisons should
be made to perhaps create a new job class family for these
forensic auditors.
Mr. Duncan stated that he did not believe the bill would
serve the State's problems well and would erode the merit
system. He addressed the issue of pharmacists, noting that
federally funded positions were required to be subject to a
merit based pay system, and asked how these requirements
would be satisfied or if federal funding would be lost.
3:33:23 PM
Mr. Duncan also noted that pharmacists' positions were
established, and pointed out that our constitution prevented
repairing a contract by passing a statute. He pointed out
that the pharmacists were covered by the current collective
bargaining agreement. He proposed that the statute would
violate the contract provision. He stated that although the
Union did not wish to enter into a debate, they would
certainly demand enforcement of their current contract.
3:35:35 PM
Mr. Duncan expressed his confusion over the description for
the position of forensic tax auditor. He noted the theory
that a description would be written after hiring the type of
individual needed for the job and proposed that the process
should work in a different manner. He stated his belief
that a forensic tax auditor was a Revenue Auditor 4 and read
from the description of that position: "work with multiple
and complex accounting methods and systems, generate
significant revenue from the collection of taxes, apply a
wide diverse body of authorities dealing with apportionment
issues, determine correct unitary group, apportionable
income, be aware of state statute and federal regulations".
He concluded that the new positions duplicated a position,
which occurred within the classified service. He suggested
that a new pay plan be discussed with the Union, and that a
job description be developed, prior to a hiring process. In
summary, he stated his belief that the proposed process was
flawed, ignoring the mandatory bargaining agreement of the
state and perhaps other representing unions. Mr. Duncan
also surmised that the proposed legislation would place
these revenue auditors at will and subject to pressures by
those corporations they audit. He observed that while a new
revenue system was being considered, they were also
considering placing those overseeing the taxes in an "at
will" position subject to political pressure. He urged care
in considering this legislation.
3:38:49 PM
Representative Hawker asked whether Mr. Duncan had
discussed these issues with the Administration. Mr. Duncan
stated that the Union had not been briefed in advance by the
Administration, but that they now intended to follow up with
discussion. In response to a follow up by Representative
Hawker, Mr. Duncan expressed his belief in the possibility
for productive discussion and the implementation of an
improved pay plan. He emphasized that his proposal would
not open the discussion of changing pay plans for other
positions.
3:40:24 PM
Representative Kelly asked if such a circumstance had
occurred before. Mr. Duncan referred to a list of positions
that had been added to the exempt service. He noted however
that these jobs were formerly in commissions, for example
the Mental Health Trust, when employees were actually laid
off and then rehired into exempt service. He urged caution,
since there were other jobs where pay scales were not
adequate.
Representative Kelly asked if the system proposed was
flexible enough to allow for downward changes. Mr. Duncan
responded that although the union would not advocate for
lower pay, there had been determinations for positions to be
classified downward in the past.
3:42:54 PM
Clarifying an issue for Representative Kelly, Mr. Duncan
commented that the pharmacist shortage had been solved on a
temporary basis. Representative Kelly asked whether this
would be a method to carry forward until the next round of
bargaining to solve the current problem. Mr. Duncan
conceded that this was possible. He pointed out, however,
that since the proposed legislation would not take effect
until July, and a new pay period could be in place by that
time.
3:43:59 PM
Co-Chair Meyer expressed the intention to HOLD the bill in
Committee, and a desire to view Mr. Duncan's letter to the
Administration. He suggested that there be a representative
from the Administrative present at the next hearing of the
bill.
MILA COSGROVE, DIRECTOR, DIVISION OF PERSONNEL, DEPARTMENT
OF ADMINISTRATION clarified that there were three types of
employees: 1) Classified, fully subject to the merit
system, including the classifications and pay plan; 2)
Partially Exempt, not subject to all rules, but subject to
classification and pay plan; and 3) Exempt, which were not
subject to classification or pay plan, but still possibly
subject to collective bargaining, such as employees of the
Marine Highway System.
3:46:25 PM
Ms. Cosgrove noted that while some exempt positions were "at
will", such as Commissioners and high level policy makers,
other exempt employees were held at a higher bar for
dismissal from state service. She pointed out that these
state employees were treated fairly and equitably with
management rights and not easily dismissed.
3:47:26 PM
Ms. Cosgrove also emphasized that wages for pharmacists and
other such professionals were very volatile at the current
time. She suggested that these wages were well beyond what
could be negotiated under the current classification plan,
which relies upon the concept of internal alignment. She
explained that all job classes must bear some relationship
to one another. She followed that revenue auditor positions
would have to increase to remain in relation to the
increased wages for top-level auditors. She also pointed out
that the state was considering a market based pay plan, but
stressed that internal alignment would still apply. She
concluded that the market based pay plan would not solve the
problem of pharmacists and auditors at the highest level.
She expressed a desire to reply in more detail at the next
meeting.
3:49:15 PM
Co-Chair Meyer stated that HB 485 would be HELD in Committee
for further consideration.
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