Legislature(2005 - 2006)
11/15/2006 04:24 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB4001 | |
| HB4002 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 4001
"An Act prohibiting the commissioner of administration
from drafting, adopting, filing, or publishing
regulations granting or extending employment-related
benefits for same- sex partners of unmarried state
employees; and providing for an effective date."
SCOTT J. NORDSTRAND, COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, provided members with backup material
entitled: Same-Sex Partner Benefits dated November 13, 2006
(copy on file). He reviewed the timeline presented in
Section 9 of the handout. He observed that the impetus for
the meeting was to discuss the Alaska Civil Liberties Union
(ACLU) case against the state of Alaska and Municipality of
Anchorage. He reviewed the history and facts of the case.
The case was filed in 1999 by the ACLU. The complaint
alleged that the State of Alaska and the municipality
violated the equal protection provisions of the Alaska
Constitution by not providing same sex partners with
employment related benefits. The Superior Court ruled in
favor of the state in 2001. The case was appealed by ACLU.
In 2005, the Court reversed the decision and found that the
State and Municipality of Anchorage were discriminating
against same sex partners in violation of equal protection
rights. The Court stated that the 1998 marriage amendment
created the opportunity for discrimination because
heterosexual partners were able to marry and obtain state
and municipal benefits, while same sex partners are
prohibited constitutionally from the same action.
4:29:30 PM
Commissioner Nordstrand explained that the Court did not
provide direction for a remedy, but retained jurisdiction
for briefing on a remedy. The briefing on a remedy was
completed in January 2006. The state of Alaska argued that
the legislature should meet and consider ramification of the
decision and if it is "in the will of the legislature" set
criteria to provide benefits required by the Court, pass
legislation, meet the effective date, and provide
departmental regulation for implementation; the State told
the Court that it needed until January 2007 to achieve these
goals. He observed that there was no remedy ordered by the
Supreme Court during the regular legislative session. On
June 1 2006 the Court issued their order. The Court ordered
that the State must provide benefits in compliance of the
Courts order no later January 1, 2007. The case was also
remanded for purposes of monitoring the State's compliance
with setting up a system according to deadlines for
distributing forms, and enrollment. He understood that
benefits needed to be provided by Jan. 2007. He noted that
the Department felt it had sufficient administrative
authority to provide regulations to create the criteria and
provide benefits. Drafted regulations were created based on
criteria of the University of Alaska. Public notices of
regulations were presented on September 1, 2006: written and
oral testimony was taken. On October 15, final regulations
were provided. He observed that through the administrative
process it become clear that the Court would be involved in
the process. The Court demanded that the Department's work
product be provided to it after the public comment period
and before final regulations.
4:34:18 PM
Commissioner Nordstrand explained that the Court indicated
on several occasions that the Department's regulations were
too strict and the Constitution would not allow the level of
criteria (regardless of the fact that the University had
used similar criteria). As a result, the Court issued an
order commenting on and editing the final regulations to
change time periods and adjust the criteria that must be
met. The Court ordered the State, on October 30, 2006, to
immediately incorporate the court order into its regulations
or otherwise modify the regulations.
Commissioner Nordstrand observed that it was unusual for the
Court to require regulations to be changed before they are
even in their final form. He noted that the Administrative
Act does not allow the commissioner to edit regulations that
have been issued. This problem was exacerbated by the fact
that the ACLU asked the Court to issue an emergency
regulation codifying what the Court's view of what should be
the limit of the constitutional criteria. Emergency
regulations are effective immediately. Retirement benefits
once given can not be revoked without constitutional
amendment. He expressed concerned that a new tier for
benefits for same sex partners would be created, with what
the Department felt would be an incorrectly low set of
criteria. Regulations were issued. He explained that
retirement regulations are not subject to the Administrative
Procedures Act and take effect 30 days after they are signed
by the commissioner. Regulations that are subject to the
Administrative Procedures Act have to go through the
Department of Law for consideration, then sent to the
Lieutenant Governor's Office for endorsement and filing; and
become effective thirty days afterwards. The retirement
portion of the benefits were scheduled to become effective
on November 12, 2006. The Lieutenant Governor would not sign
and file the portion that was sent to his office because he
did not believe the Commissioner had the authority to
promulgate regulations. The Lieutenant Governor concluded
that the commissioner was rewriting statutes, since
regulations were not being written to carry out statutes,
which is the norm. He observed that coverage is defined by
AS 39.30.090 as: Each eligible employee of the state, the
spouse and the unmarried children chiefly dependent on the
eligible employee for support, and each eligible employee.
The Lieutenant Governor concluded that the Court asked the
State to insert and define same sex partner, which would
effectively amend statute. The Department of Law concluded
that the court order provided the necessary authority. He
noted that AS 39.20.090 does not give the commissioner
authority to promulgate regulations necessary to carry out
the statute. The Department of Law has noted this absence on
other occasions. The Lieutenant Governor questioned the
commissioner's ability to make policy calls, which should
reside with the Legislature.
4:41:02 PM
Commissioner Nordstrand noted he issued emergency
regulations to delay implementation, in order to assure that
another Tier was not created. Meanwhile the Court demanded
that the Department of Law file regulations that comport
with the Court's edits. The ACLU did not except the working
draft and has filed to require the State to turn in
regulations to the Court that are "ready to go", which would
allow regulations to be implemented immediately.
4:43:06 PM
REPRESENTATIVE JOHN COGHILL observed that HB 4001 is an
attempt to address a situation where the court is
intermingling with the regulation process. He opined that in
order to delay action until the next legislative session,
the Legislature must provide the Administration with a
directive. House Bill 4001 would prohibit the Department
from drafting regulations granting or extending employment
benefits for same sex partners of unmarried state employees,
except those passed by statute. He stressed the need to
protect the integrity of the state and legislative
institution. The court orders have in his view over reached
the policy question. He observed that the order for review
was issued in June 2006, and required implementation before
the Legislature could meet in regular session. He
acknowledged that the retroactivity session might not be
necessary with emergency regulations. He observed that there
is national debate on the issue and that other courts have
allowed legislatures to make policy decisions.
4:48:17 PM
Representative Kelly asked if there was information on the
time allowed other states. Representative Coghill referred
to Vermont and noted that the issue was directed to the
legislature without a timeline.
4:48:56 PM
Representative Kerttula asked for more information regarding
the Department of Law's response to the Court.
CRAIG TILLERY, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW,
observed that the Department of Law provided a briefing to
the Alaska Supreme Court.
4:50:47 PM
VIRGINIA RAGLE, ASSISTANT ATTORNEY GENERAL, LABOR AND STATE
AFFAIRS, DEPARTMENT OF LAW, provided information regarding
steps agreed to by the Department in regards to the Superior
Court. A pre-deadline statement identifying the deadlines
was proposed to the Superior Court (Section 5 of the handout
provided to the Committee). The Superior Court, at a
hearing on August 9, 2006, ordered the State to provide a
copy of proposed regulations before commissioner proposed
them to the general public. The general public was notified
of the regulations on September 1, 2006. The Department has
complied with the order to comply with the pre-deadline
statement.
Representative Kerttula noted that legislators get notice of
all regulations and that some did comment on the proposed
regulations. Ms. Ragle acknowledged that legislators
received a copy of the proposed regulation and that some
commented.
Representative Kerttula referred to an opinion by the Alaska
Legal Services [by Dan Wayne to Senator Green dated November
15, 2006] (copy on file) and questioned if there were
constitutional concerns regarding HB 4001. Mr. Tillery
observed that HB 4001 retroactively prohibits the
commissioner of Administration from a number of acts that
have already occurred. He suggested that the legislation
would be unconstitutional based on the Supreme Court's
decision. He agreed with the Legislative Legal Services'
opinion that the Supreme Court's most likely option were to
take over the system if it were not found to be
unconstitutional.
4:55:17 PM
Co-Chair Meyer asked if there would be a fiscal note from
Department of Law. Mr. Tillery anticipated that funds would
be needed for litigation.
4:55:55 PM
Representative Kerttula observed that there were significant
difference between the Municipality of Anchorage's affidavit
and the draft regulations.
4:57:17 PM
Commissioner Nordstrand clarified that the Department's
regulations are similar to University of Alaska's. The
Municipality of Anchorage's adopted an affidavit for same
sex benefit petitions (Section 8). The Municipality of
Anchorage (Municipality) was also required by the Court to
adopt a plan of action. The Municipality adopted an
affidavit that parties would have to swear to in order to be
eligible for same sex domestic partnership benefits. The
affidavit requires the domestic partners to reside together
in the same primary residence and that they intend to
continue to do so. There is no time limit in the affidavit,
while the Department of Law's regulation contains a 12 month
time limit. The Municipality's affidavit would also require
that there be a relationship that they intend would be
permanent; and that the parties be financially
interdependent. The criteria [under the affidavit] would be
lenient.
5:01:12 PM
In response to a question by Co-Chair Meyer, Commissioner
Nordstrand reiterated that the Court ruled that the
criterion under the University was too narrowly crafted,
constitutionally. He pointed out that the University's
criteria had been in place for ten years, without a legal
challenge. He concluded that it would not make sense to have
the criteria vary widely. He noted that the Municipality was
challenged to identify criteria and proposed the affidavit,
which was deemed acceptable to the ACLU. The ACLU has
indicated that they would like the State to adopt the
Municipality's criterion. He concluded that the Court's
order represents the middle ground [between the
Municipality's affidavit and the Department of Law's
proposed regulations]. For example, the judge changed the
requirement that 5 of 8 criteria be meet to 3 out of 8. The
judge amended the requirement that partners reside together
for 12 months to 6 months. The judge extracted the word
"exclusive" from the requirement that the relationship be
exclusive. He observed that the judge made joint custody of
a child a "super category"; if there is joint custody of a
child, no need for other criteria must be met. The judge
also required family medical leave benefits for same sex
partners, which was never part of the complaint. There is
also a provision to provide to the same sex partner the last
paycheck and personal leave accumulation for a deceased
employee, unless there is other provision.
5:05:08 PM
Co-Chair Meyer asked what the cost differences between the
three plans: Municipality of Anchorage's, the [state plan
modeled after] University's and the compromised offered by
the judge. Commissioner Nordstrand did not have a cost
estimate difference. Advisors indicated that, on the average
systems that make these changes, for just same sex partner
benefits would be approximately one-half of a percent
difference to the system. The state of Alaska covers
approximately 44,000 employees with 45,000 dependents under
their combined plans. In FY 06, self insurance costs,
excluding the Union Health Trust, for current state
employees and retirees was $340 million. They have not been
able to calculate a retirement cost. He commented on the
criteria being significant in terms of who is eligible which
impacts costs. He pointed out that it "clearly is a lot
easier to get the benefit at the lower level" and observed
that more people would qualify under the municipal benefit
criteria than under the State's plan.
5:08:23 PM
Representative Kerttula referred to the "exclusivity"
requirement. She noted that the Court recognized that being
the sole domestic partner and shared obligations including
the joint responsibility for basic living expenses and
health care were used because the State could not define
"exclusivity". Commissioner Nordstrand acknowledged that
"exclusive" was not overtly defined for the Court by the
State, but emphasized that other terms such as "primary
residence" were defined, even though it had not been defined
by the University. The State took the University language
regarding exclusivity and did not think it onerous to
require that there be an exclusive relationship. The State
held the view that the intent was to benefit exclusive
relationships. He noted the level of scrutiny by the Court
*and the need to "prove up" that administrative regulations
were constitutional at the outset, even though they are
generally deemed to be constitutional unless found
constitutionally infirmed.
Commissioner Nordstrand explained that the regulation was
adopted on October 13, 2006, for purposes of the retirement
plan; it would have been effective on November 12, 2006, but
for the Commissioner's emergency regulation [to suspend
implementation]. The Commissioner's suspension ended on
November 22, 2006, in order to allow the legislature to act.
The regulation process continues and packets have been
mailed to all unmarried state employees and retirees. Over
14,000 packets have been sent at a cost of $35,000. The
intent is to meet the Court's deadline and, at the same
time, allow the Legislature to have input on "the best
criteria".
5:11:33 PM
Representative Kelly referred to the current unfunded
liability, which the Commissioner estimated at just under
$10 billion dollars. Commissioner Nordstrand observed that
the actuary concluded that the state had $6.9 billion
dollars in unfunded liability at the end of FY 05. Every
five years, the actuaries prove up their assumptions against
reality. When the FY 05 assumptions were "proved up" the
unfunded liability increased to $8.6 billion. He observed
that the State has chosen not to pay the actuary calculated
rate for the past or current year, which is the rate
necessary to prevent the unfunded liability from increasing.
He estimated that the unfunded liability could be as much as
a billion more and is heading toward $10 billion dollars.
Representative Kelly voiced concern over the projected
increases with regards to the difference of the actuaries
and reality in the recent past.
5:14:56 PM
Representative Stoltze noted concern with the fiscal issues.
He added concern for the entire retirement system. He asked
if folks could be added [to the retirement benefit system]
retroactivity. Commissioner Nordstrand affirmed and
explained that the addition of same sex partners could
increase the liability. He concluded that in light of the
constitutional mandate, that it might be possible to deny
benefits to all spouses, but not to a particular subset of
spouse, but stressed that it would not be feasible to do so.
Representative Stoltze asked if the Commissioner's estimate
of a billion dollars in extra costs was conservative.
Commissioner Nordstrand explained that his estimate was
based on the state's own health plan, which could be
increased by a half percent. He added that an argument could
be made that for parity the benefit should be expanded to
heterosexual unmarried partners, which could further
increase the cost. The city and Borough of Juneau offers
benefits to heterosexual partners, which is used by two and
a half percent of their membership.
5:18:25 PM
Co-Chair Meyer observed that there would be no fiscal impact
to the Department of Administration. Commissioner Nordstrand
replied that the note from the Department would be zero.
Representative Holm questioned how the State would sustain
the benefit system as the price and production of oil
declines and how it might affect future employees.
5:21:39 PM
Commissioner Nordstrand noted that he was a member of the
Alaska Retirement Board (ARM), and stressed that one of the
biggest issues facing the Board is the unfunded liability
and how it would be covered. There are not many good
solutions. He observed that retirees and current state
employees have a vested right to a certain level of
retirement benefits, including health benefits. The Supreme
Court has ruled that health benefits cannot be diminished
any more than pension benefits; they can be changed, but the
net affect has to be "a wash". Right now the State is
providing benefits for over 50,000 people. The benefit side
cannot be changed, but the state can attempt to better
manage the plan. Under a positive enrollment, the State
implemented a requirement to "prove" their dependents,
through such means as marriage licenses. The process
resulted in a savings of $14 million per year, out of a plan
that spends $340 million. The Department continues to
address prescription drugs; a third party administrator
change resulted in a $3.3 million per year savings, which is
one percent of the expense of the plan. There has been some
success. Due to cost saving measures next year's rate
increase would be zero. For the active plan, these same
measures resulted in a raise of only two percent increase.
The benefit side is not going to change; the Department can
only manage the unfunded liability because the longer it is
not paid, the more it will cost to pay. He observed if the
State could put up a half a billion dollars more than the
actuary requires it would save money in the form of
interest.
5:25:07 PM
STEPHEN JACQUIER, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in support for benefits for same sex benefits. He
noted that he and his partner have been state employees,
with two children and meet all eight of the criteria. He
claimed that same sex partners has been targeted and treated
unfairly. He maintained that employees with same sex
partners have paid in to the system and deserve fair
treatment. He stressed the unfairness of the legislation
(Written testimony on file).
5:31:45 PM
MICHAEL MCLEOUD-BALL, (TESTIFIED VIA TELECONFERENC),
EXECUTIVE DIRECTOR, AMERICAN CIVIL LIBERTIES, ANCHORAGE,
observed that the ACLU agreed with much of the information
provided by the Commissioner, especially in regards to the
timeline and legal proceedings leading up to the current
situation. He concluded that Special Session arose from
Lieutenant Governor's assertion that the statutory authority
did not exist for the regulations that Commissioner
Nordstrand was attempting to promulgate. He maintained that
statutory authority was not really an issue. He viewed the
legislation advanced by the Governor as unnecessary. He
pointed out that any statute that mimicked the regulations,
which the Court found to be inadequate, would be deemed to
be just as unconstitutional. The intent is to create a
benefit system that conforms to the constitutional mandate
as defined by the Court. The Court ruled that the status quo
is unconstitutional. He acknowledged that the Legislature
should be involved in the policy issues regarding how the
issue could be resolved, but pointed out that the
Legislature has not acted.
Mr. McLeod-Ball observed that the Legislature was made aware
of the implication of the original Supreme Court decision of
October 2005. The Supreme Court made an active decision not
to immediately impose its will upon the policy discussions,
but to allow their decision to stand. Parties were asked to
submit briefs as to the appropriate manner in which
implement a remedy. The plaintiffs and Administration agreed
with the concept that it should be addressed by the
Legislature. The plaintiffs and Administration disagreed
with the amount of time that should be given to address the
issue. The plaintiffs felt that the Legislature should be
given till the end of May, while the Administration felt
they should have until the end of the year. He thought that
the Court was aware of the situation and hoped that the
Legislature would address the situation in the regular
session. He observed that there was no interest in advancing
legislation to address that issue. There was an attempt to
amend the Constitution in an effort to over turn the Court's
decision, but the effort did not reach fruition due to
inadequate support. In that context, the Supreme Court
issued their order of June 1, 2006, which required the State
and City to come up with a plan that would implement a
remedy by January 1, 2007. The Court did not outline the
remedy.
5:39:17 PM
Mr. McLeoud-Ball observed that the City and State were
requested to submit plans in the form of a pre-deadline
st
statement for implementation of benefits by January 1. The
State suggested in their pre-deadline statement that it had
authority to adopt regulations to implement a remedy. The
pre-deadline statement included provisions for a rule making
process and public comment, which would be in place by
st
January 1, 2007. He observed that Superior Court Judge
Stephanie Joannides recognized that the Court does not have
authority to write the regulations. The Court's role is to
guide the parties and explain the constitutionality of the
proposed regulations. He maintained that Judge Joannides has
been good at saying what would comport with the Supreme
Court's mandate and interpretation of the Equal Protection
Clause. He observed that the less restrictive regulations,
referred to by Commissioner Nordstrand, were not mandated by
Judge Joannides. The Court felt that the State's final
regulations, which contained the five out of eight criteria
and a 12 month waiting period, were unconstitutional and
responded by providing guidelines for what would be
constitutional. The order indicated that the State could
adopt the guidelines provided or some other form 0f remedy
that comports with the Constitution. The Commissioner
submitted revised regulations, which mimicked the
suggestions of the Court. After the revised regulations were
submitted, the Court reiterated to the State that the
regulations could be submitted in some other form that also
comports with the Constitution and the State declined to do
so. He argued that the Court did not mandate that a
particular form of regulations be adopted.
5:43:18 PM
Representative Kerttula concluded that the State laid out a
regulatory path of implementation in its pre-deadline
statement. She summarized that the Court's order was clear
that, while these were the Court's suggestions in order to
comply with the constitutional requirements, the State could
also look at alternatives as long as they were
constitutional. Mr. McLeoud-Ball agreed and stated that
these directions were given in open court and in some of the
Court's written orders.
Representative Kerttula observed that the State has asked
for a "stay" of the proceedings. Mr. McLeoud-Ball affirmed
and explained that the stay was requested and granted in
part by Judged Joannides. There are a number of things
pending both at the lower court and Supreme Court levels: a
petition for review filed with the Supreme Court, draft
emergency regulations, less restrictive regulations that
have been submitted to Judge Joannides, and the ACLU's
motion to compel. He explained that the ACLU's motion to
compel would assure that all the procedures that are
predicated for adoption of the emergency regulations, if the
Court orders them to be adopted, have taken place.
Representative Kerttula asked if the judge was being overly
active in terms of ordering the State's role. Mr. McLeoud-
Ball did not think the Court was being overly active. He
stressed that reasonable minds can disagree on almost any
issue, but felt Judge Joannides has "leaned over backward"
to make sure that the Administration, in its rule making
capacity, has every opportunity to come into compliance with
the Constitution. He admitted the struggle and that there
are significant differences in terms of policy. He
reiterated that the judge has been clear that she does not
have the authority to write the regulations, but observed
that she is under an obligation by the Supreme Court to have
benefits in place by January 1, 2007, which comport with the
Constitution as described and determined by the Supreme
Court in their October 5, 2006 decision.
5:47:01 PM
BARBARA BELKNAP, EXECUTIVE PRESIDENT, JUNEAU CHAPTER,
NATIONAL ORGANIZATION FOR WOMEN, JUNEAU, urged the House to
reject the Administration's refusal to adhere to the
Constitution and let the Alaska Supreme Court's ruling and
recommendations of regulations and implementation for same
sex benefits stand. She observed that South Africa has
announced recognition of same sex marriage and unions,
recognizing that they could not ignore discrimination based
on sexual preference while they have attached discrimination
based on race. She noted that, while many states have
offered or passed amendments stating that marriage is
between a man and a woman, cities and private entities offer
benefits to same sex couples. She maintained that one of the
last bastions of discrimination in the work place is slowly
being eradicated across the country. She noted that Martin
Luther King Jr. stated that "injustice anywhere is a threat
justice everywhere". She observed that Alaska's State
Constitution clearly affords justice: "all persons are equal
and entitled to equal rights, opportunities, and protection
under the law." The Constitution does not provide that any
class of people can have their rights denied by a vote of
the people. She maintained that the judicial branch is not
legislating from the bench, but is doing its job in
enforcing the Constitution.
5:49:44 PM
LIN DAVIS, PLAINTIF, JUNEAU, observed that she has worked
for the state of Alaska for ten years. She noted that she is
a plaintiff in the case. She has been with her partner for
eighteen and a half years. She is 64 years old and her
partner is 54 years old. She would like to see her partner
receive the same benefits as other spouses. She explained
her personal need for coverage. She voiced concern that she
would not receive the same kind of dedication from the State
that she has provided in her state service. She maintained
that much of the anti-gay sentiment is political and an
undemocratic use of fear. She urged that the Committee move
"boldly" forward.
5:54:55 PM
MARSHA BUCK, PARENTS, FAMILY AND FRIENDS OF GAYS (PFLAG),
JUNEAU, urged the Committee members to look at the big
picture. She maintained that many Alaskans would be hurt if
same sex partner benefits are not implemented by January 1,
2007. She asserted that people are actually born with their
sexual orientation. She urged a "no" vote on HB 4001 and HB
4002.
5:57:42 PM
CINDY BOESSER, JUNEAU, read a letter from her eleven year
old son, Ben Krall. The letter urged that benefits be given
to all the people of Alaska for the work done. He asserted
that "it does not matter if you like them or not; it doesn't
matter whether you think how they are is okay; it doesn't
even matter if you think you can afford it or not, that is
not the point; it is just about what you owe them for the
work they do". He spoke in support of the Court's action and
thought that the worker's should be given their benefits.
6:00:41 PM
Ms. Boesser spoke against HB 4001 and HB 4002. She
maintained that equal benefits for all state of Alaska
employees should be provided as Alaska's courts and
Constitution agree. She emphasized that the issue of denying
marriage rights is not the issue at hand. She felt that
problem centered on prejudice and invited members to
substitute a group they liked in the place in question to
see if they have the same reaction. She stated that the will
of the people is not always the best way to go and suggested
that white spouses of black state employees would not
receive benefits in southern states if it were up to a vote
of the people. "When prejudice exists it is essential for
courts to remind us that we live in a constitutional society
not clearly one run by majorities." She argued that expense
should not be the deciding factor. She echoed her son's
statements that "When you ask someone to do a job in this
country, you are expected to pay the same amount to anyone
who does the job for you." She maintained that benefits are
a huge part of the compensation for labor and should be
equal. She referred to prejudice in the high school exists
and noted that if students were give the right to decide
that they might prevent students with a different sexual
orientation from having an education. She urged the
Committee to reject the proposed legislation.
6:04:38 PM
Co-Chair Meyer noted that HB 4001 would be held in order to
allow time for a fiscal note from the Department of
Administration.
HB 4001 was HELD in Committee for further consideration.
6:06:20 PM
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