Legislature(1993 - 1994)
04/06/1993 08:06 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 57
An Act relating to employment contributions and to
extending the pilot project for the state training and
employment program; and providing for an effective
date.
Co-chair Pearce directed that SB 57 be brought on for
discussion and noted a TELECONFERENCE link to Fairbanks.
She referenced backup in members' files, pointing
specifically to fiscal notes showing other than general
funds, position papers from the Dept. of Community and
Regional Affairs and the Dept. of Labor, a sectional
analysis, a sponsor statement, legal opinion, Fairbanks'
Native Association history, and a number of overviews.
JUDY KNIGHT, Director, Employment Security Division, Dept.
of Labor, came before committee. She explained that the
proposed bill would extend the STEP program for three years.
Employment Security collects and accounts for STEP revenues
along with unemployment insurance taxes from employers and
employees. STEP revenues are 1/10 of one percent of the
employee contributions that would have accrued to the
unemployment insurance trust fund to provide unemployment
benefits to Alaskan workers.
The STEP program was originally enacted in 1989 for a two-
year period. In 1991 it was extended for an additional two
years. It is scheduled to sunset June 30, 1993. When the
STEP concept was originally proposed, it recognized that the
state work force was in need of additional training to
remain competitive. Use of revenues from the unemployment
trust fund was determined to be an appropriate source of
funds, given the three purposes set forth in the original
legislation (Ch 95, SLA 1989):
1. Help prevent future claims against unemployment
benefits.
2. Foster new jobs by encouraging businesses to
locate in Alaska due to the availability of a
skilled labor force.
3. Increase training opportunities to workers
severely impacted by fluctuations in the state
economy or technological changes in the work-
place.
Ms. Knight acknowledged a commitment to employers who bear
the majority of the cost of unemployment insurance and want
to see this cost reduced. Employment and training programs
have thus been targeted and evaluated based on trust fund
savings.
In accordance with Sec. 7 of the STEP Act, last spring the
department solicited comments, recommendations, and
priorities from agencies, groups, and individuals.
Regulations were then promulgated to ensure that training
funded with STEP revenues would result in a savings to the
UI trust fund. Included in target groups to be served are
individuals presently claiming unemployment insurance
benefits (including women and minorities), persons enrolled
in the unemployed parent program (JOBS program under AFDC),
persons responsible for court-ordered child support
payments, and those who lack skills or whose skills have
been outdated.
Ms. Knight made reference to amendments to the legislation,
advised that the administration does not support the
amendments, and urged the committee to pass the original
bill. Co-chair Pearce said that amendments had not been
presented to the committee. Ms. Knight advised that a
packet of amendments had earlier been provided to the
department. Co-chair Pearce said they were not included
within members' files since they had not been offered by
anyone. Senator Kelly voiced need to hear from the
department if the amendments are offered.
Ms. Knight stressed need for Alaskan workers to obtain
better skills. Thousands of unemployed Alaskans do not have
the wherewithal to return to work. Human resources are an
important factor in economic development.
End, SFC-93, #51, Side 1
Begin, SFC-93, #51, Side 2
In response to a question from Co-chair Frank asking how
STEP moneys are expended, Ms. Knight explained that the
Dept. of Labor collects STEP revenues from unemployment
insurance payments. The department then contracts or enters
into a reimbursable services agreement with the Dept. of
Community and Regional Affairs which is responsible for
delivery of services and training. Funding is divided among
the three service delivery areas established under the Job
Training Partnership Act. The mechanism for JTPA was
utilized in an attempt to minimize overhead administrative
costs.
MARK MICKELSON, JTPA/SDA Program Manager, Dept. of Community
and Regional Affairs, next came before committee. He
explained that the federal JTPA is administered by the
department and passed along to three entities:
1. The Anchorage/Mat-Su private industry council.
2. Fairbanks private industry council.
3. The statewide private industry council, located
within
the department, that serves the balance of
the state.
The intent with the STEP program was to piggyback
administrative functions with JTPA which was already in
place. The STEP program fills an important niche in overall
program strategy in that it does not generally focus on
people with multiple barrier, severe dysfunction in terms of
the labor force. That focus is subsidized by Title 2A and
2B of JTPA.
In response to further inquiries from Co-chair Frank, Judy
Knight explained that the job training council, a 21-member
board appointed by the Governor, determines how funding will
be apportioned.
Mr. Mickelson voiced support for the STEP program,
describing it as an important contributor to the overall
effort of work force preparation.
Senator Rieger asked if the above-listed councils contract
with other entities to provide direct training. Mr.
Mickelson said that the state merely administers the
program. Training is provided by non-state private-sector
businesses, nonprofits, the Alaska Vocational Technical
Center in Seward, joint apprenticeship programs, etc. These
direct service providers are more familiar with industry
requirements and the skills that need to be developed.
Grant award is through competitive procurement.
Representatives of private industry councils sit on the
proposal review committee that makes final selections.
Further discussion followed regarding paper handling and
reporting responsibilities at various levels within the
program. In response to comments by Co-chair Frank, Mr.
Mickelson said that the private industry council provides
planning, oversight, and guidance to administrative staff.
JANE DEMMERT and JOHN REGITANO next came before committee on
behalf of the Fairbanks Native Association. Mrs. Demmert
noted that the Fairbanks Native Association is unique in its
30-year history of service in Fairbanks. While it was
originally established to serve the Native community, many
services have been extended and expanded to serve all
ethnicities in Fairbanks. Services include education,
social services, services to elders, alcohol and addiction
prevention and treatment to adults and adolescents, and
employment counseling, training, and placement.
The employment services component was established during the
pipeline construction days and has provided services with
public funds since that time.
Mrs. Demmert noted that the Association is not a tribal
entity. It is not eligible for tribal job training funding
as are some regional nonprofits. The Association focus is
upon provision of services to residents of the Fairbanks
North Star Borough. One becomes eligible for services after
residing in the Fairbanks area 30 days.
Mrs. Demmert next spoke to allegations that the Fairbanks
Native Association prefers not to go through the competitive
process to apply for funding. That is not the case. The
purpose of this appearance before committee is to suggest
that a competitive process which would enable organizations
such as the Fairbanks Native Association to be a part of the
STEP program would serve the state very well. Mrs. Demmert
directed attention to the Association's position paper on SB
57.
Mr. Regitano spoke to needed adjustments in the bill to
better serve the large demand for employment assistance
among minority populations in the Fairbanks North Star
Borough. The timing of awards is now sporadic and does not
allow FNA and other organizations seeking employment
assistance money to apply for and obtain funding on a year-
round basis to provide a continuum of service to clients.
A further problem is the screening process for STEP
applicants. That process is long and so detailed that it
discourages many from seeking employment assistance.
The requirement that STEP applicants must have contributed
to the unemployment insurance fund within the last three
years is prohibitive and eliminates any people. During the
past year, two out of three individuals "who came through
the door" were not eligible and had to be denied service.
Mr. Regitano stressed need for flexibility and adjustment of
eligibility criteria to cover a broader range of people.
Some mechanism should be built into SB 57 to directly tie
funding cycles to the state fiscal year. Mr. Regitano
acknowledged that the current unscheduled cycle serves some
programs but not FNA. He again voiced need for adjustments
providing FNA equal access to funding.
Mr. Regitano noted that FNA competition for funding would
not interrupt the flow of moneys to PIC (private industry
council). Dept. of Community and Regional Affairs figures
for FY 92 indicate $552.0 in unused STEP moneys.
Co-chair Frank inquired concerning the success rate for FNA
programs. He asked that representatives elaborate on other
federal funds for the FNA employment program and indicate
how a competitive mechanism could be implemented in the
legislation. Mr. Regitano proposed a competitive process at
the Dept. of Community and Regional Affairs similar to that
utilized by the Dept. of Health and Social Services where
RFPs issue in April or May for funding to be made available
July 1. Following application, review, and award by June
30, organizations would then know what amounts they would be
receiving.
In further discussion with Co-chair Frank, Mr. Regitano
expressed a preference for award to be made at the 21-member
state JTPA council level.
Speaking to the success rate of FNA programs, Jane Demmert
advised that long-term follow-up of clients placed in jobs
indicates 69% have remained in permanent employment. That
is a significant turn around. Those individuals are no
longer on state welfare rolls, and they are contributing to
the state economy.
Addressing the question of alternative funding, Mrs. Demmert
explained that FNA is not eligible for categorical funds
provided to Indian tribes. FNA is thus not eligible for
specific JTPA funding.
Co-chair Frank asked if FNA programs duplicate similar
programs offered by the private industry council or other
entities. Mrs. Demmert said that 75% of the clients served
by FNA are Native and other minorities. The reverse is true
of the Fairbanks private industry council. Approximately
30% of those clients are Native or other minorities. Need,
demand, and response is such that the two programs serve
different client groups and hopefully meet the employment
needs of the entire community of Fairbanks.
Senator Kerttula inquired concerning FNA overhead. Mr.
Regitano answered that the currently approved rate is 19.3%.
Delivery is thus at 81%. The STEP program, however, is
capped at 15%.
Discussion followed between Mr. Regitano and Senator
Kerttula regarding the cross referencing of services.
Senator Kelly inquired concerning FNA's annual budget. Mr.
Regitano advised that the most recent audit evidenced $5.1
million. The STEP program is merely one piece of a total
service system. It is an important piece in that FNA works
on a multiple department basis, offering community service,
family intervention, education, and the largest (80%) drug
and alcohol prevention and rehabilitation programs.
Employment is a key component of these services. Mr.
Regitano observed that clients who receive assistance
through other FNA services but who are subsequently unable
to find work, are often readmitted to assistance programs.
Senator Kelly voiced his understanding that the STEP program
is currently successful. FNA is requesting a change in
funding source, criteria, screening, etc. He then asked why
that should be done when the program is working well. Mr.
Regitano acknowledged that the program is working for "a
certain group." He then voiced his opinion that it is
"missing a large group of people." Further, there is
available funding that could be used to serve those
individuals. FNA is only asking for changes in order to be
able to compete.
In response to an additional question by Senator Kelly, Co-
chair Frank noted that FNA seeks to serve the long-term
unemployed as well as short-term. Senator Kelly suggested
that STEP is not designed to do that. Mr. Regitano advised
that those who have been out of work for a longer period are
not being served. He noted that minority population
unemployment in Fairbanks is double that of the majority.
Co-chairman Frank acknowledged a teleconference link to
Fairbanks and directed that testimony from the
teleconference site commence.
NEAL PLATEAU, (683-2698) Alascan, Inc., first testified. He
voiced support for the STEP program, saying that it has been
of great benefit in enabling the company to employ new
techniques that allow Alascan to lower the cost of its
product. Without STEP, Alascan would not be able to keep
its employees working full time. The program is working
well as it is. It should not be changed. Alaska needs
manufacturing and other industry. Under STEP, more
businesses can utilize funds for special training than if
certain amounts of funding are dedicated to a particular
group.
BOB SWOPE next spoke in support of continued funding through
FY 96. He explained that as a non-Native client of
Fairbanks Native Association services he benefited from
FNA's job referral program.
End, SFC-93, #51, Side 2
Begin, SFC-93, #53, Side 1
It represents a proactive rather than reactive response to
problems associated with getting a younger generation of
Native men and women trained and employed in the work force.
There is an overwhelming savings from reduction of the
number of individuals on unemployment rolls and social
service programs that far outweighs the cost of the STEP
program. Mr. Swope asked that regardless of whether funding
issues through grants or competitive proposals, the
committee ensure that the level remains the same or
increases.
NELLIE HENSLEY, Program Director, Fairbanks Native
Association employment program, next testified. She
explained that over the past two years the program has
served over 1,000 clients. That number reflects the FNA
STEP program, a federal program, and a small JTPA project.
If these clients had not been served, they would qualify for
AFDC or other welfare programs for economically
disadvantaged individuals. Of the 1,000, FNA placed 301
individuals in jobs, and 69% have retained their employment
and are contributing to the unemployment insurance system.
The FNA program is needed. It provides services to a
population that is not being served through present
employment and training programs available in Fairbanks.
There is need for both the STEP program and changes to
enhance the program.
HOLLY BURNS voiced support for the program. (Unclear
transmission and noises in the committee room make Ms.
Burns' brief teleconference testimony difficult to
understand.)
TED WICKEN next spoke in support of the program. He
explained that it made a great difference in his life.
After having worked construction for many years, he is now
undergoing training through STEP so he can continue to
support his family.
JAMES WRIGHT next spoke via teleconference from Fairbanks.
He advised that he is an Alaska Native, originally from
Ruby, who is presently undergoing FNA training in cadastral
surveying. Mr. Wright urged continued support for the
program.
MADELINE WILLIAMS advised that she is a Native from Huslia
and a client at FNA. She voiced support for FNA training
and urged that support continue.
LINDA PEARSON, Counselor, Hutchinson Career Center,
Fairbanks North Star Borough School District, next
testified. She explained that the career center has
traditionally prepared students for the job market. Ms.
Pearson attested to the fact that a number of adult minority
clients have taken classes and thereafter secured jobs. She
voiced support for FNA's employment program. It provides a
one-stop-shopping type service to a unique clientele (75%
minority), with a personal touch. In addition to job
development, education, work experience, and day-labor
placement, counselors teach clients how to get and keep a
job. Clients explore their interests and assets. They work
on application and resume development and practice
interviewing in order to improve interview skills. It is
the personal touch that reaches discouraged individuals who
might not otherwise seek help from job service or the
private industry council. It is valuable in that it puts to
work individuals who might not otherwise have an
opportunity. Speaking from a national perspective, Ms.
Pearson said that job readiness skills are as important as
actual job training.
KENNY HOKE, member, Fairbanks Private Industry Council, next
spoke to committee. He voiced private-sector support as
well as support for FNA's competitive bid approach. He
suggested that that approach could be more readily addressed
through regulatory rather than statutory change. He urged
support of SB 57 without the amendments.
In response to a question from Co-chairman Frank, Mr. Hoke
suggested that proposed changes should address funds that
lapsed to the general fund. Unused unemployment insurance
funds from the previous year should be held in a special
account and issued via competitive bid.
DAVID DEAN, executive director, Fairbanks Private Industry
Council, next testified. He referred to earlier comments by
Mr. Regitano that two out of three individuals coming to FNA
are not eligible for the STEP program. That analysis is
based upon a designated grant to FNA. It does not represent
the statistics of the Fairbanks Private Industry Council.
Council statistics indicate that far more are eligible for
the program.
Addressing comments regarding STEP funding cycles, Mr. Dean
said funding is based upon actual allocation arrival at
private industry councils. There is no delay in advertising
for proposals or award of contracts.
Mr. Dean noted that the long-term unemployed are served
under Title 2 of JTPA. Councils administer those programs.
Long-term unemployed individuals would certainly meet the
economically disadvantaged criteria. The council is
currently serving approximately 30% minority clients in a
city with a minority population of less than 20%.
The Fairbanks Private Industry Council has cooperative
agreements with the Fairbanks Native Association and the
Tanana Chiefs Conference, and clients are referred by both
agencies.
Mr. Dean next read a letter of support for SB 57, without
amendments, from the chairman of the Fairbanks Private
Industry Council. In response to an inquiry from Senator
Kelly, Mr. Dean advised that a copy of the March 31, 1993,
correspondence was faxed to each Senator's office.
CHRISTINA HILL, member, FNA, next spoke in support of the
bill. She explained that she is a public employee who
employs approximately 23 Native staff members. She urged
continuation of funding for FNA services and requested that
the legislature consider expansion of funding sources,
noting that agencies that directly serve the Native
community and other minority communities should be able to
compete for funding.
EDNA MATTHEW, employment specialist, Fairbanks Native
Association, next testified, requesting continued funding of
FNA STEP programs. There are presently 262 clients being
served by three counselors at FNA. Each client is provided
orientation regarding the association's programs and
services. They then progress through intake and work skill
assessment. Clients are provided a job readiness class and
learn resume skills prior to referral to jobs or additional
training. FNA services are not duplicating similar
programs. Although minorities may only be 20% of the
Fairbanks population, they are disproportionately
represented in the unemployed sector. FNA's employment
program serves a need that must be met in Fairbanks.
HARRY FIELDS next voiced support for the STEP program on
behalf of the private industry council. (Teleconference
testimony is unclear and difficult to discern.)
JULIE WILSON next testified. She explained that she is an
instructor at the Fairbanks Native Association. She then
voiced support for continued funding of the FNA employment
program through STEP moneys. Ms. Wilson said that she works
specifically with adult basic education, academic assessment
of clients, and job readiness workshops. FNA services do
not duplicate other programs in the Fairbanks area.
Co-chair Pearce called for additional testimony on the bill.
None was forthcoming. Upon conclusion of the
teleconference, Co-chair Pearce directed that SB 57 be HELD
in committee pending arrival of Mayor Jim Sampson from
Fairbanks.
[See page 22 for further comments on this legislation.]
SENATE BILL NO. 57
An Act relating to employment contributions and to
extending the pilot project for the state training and
employment program; and providing for an effective
date.
JIM SAMPSON, Mayor, Fairbanks North Star Borough, came
before committee in support of SB 57. He said that a good
public policy argument could be made for investment in long-
term programs allowing unemployed individuals to develop
skills needed in the current job market. He voiced his
belief that FNA should be allowed to compete for funding and
stressed need for earlier receipt of STEP moneys. The mayor
concurred in previous testimony regarding need to provide
programs for the long-term unemployed.
Co-chair Pearce directed that SB 57 be placed in a
subcommittee under Senator Kelly.
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