Legislature(1995 - 1996)
03/26/1996 08:10 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 152
An Act relating to geographic differentials for
the salaries of certain state employees who are
not members of a collective bargaining unit;
relating to periodic salary surveys and
preparation of an annual pay schedule regarding
certain state employees; relating to certain state
aid calculations based on geographic differentials
for state employee salaries; and providing for an
effective date.
Co-chairman Halford directed that SB 152 be brought on for
discussion. ALISON ELGEE, Deputy Commissioner, Dept. of
Administration, came before committee. She explained that
the bill contains a lower cost of living than presently
being paid state employees who are not represented by a
union or covered by collective bargaining. A relatively
small group would initially be impacted. However, union
contracts now before the Legislature contain reopener
clauses that would allow the state to negotiate a new pay
differential for union members, based on passage of the
proposed bill. Ms. Elgee next directed attention to a
handout demonstrating differences between existing and
proposed differentials. She explained that the current
differential is tied to other statutes. In developing the
proposed bill, the Governor attempted to impact only state
employees.
Sec. 1 maintains magistrates at the existing statutory
level. Ms. Elgee said the court has been conducting a
review of magistrate salaries "and does not believe this
section is any longer necessary." Co-chairman Halford asked
if the cost to the state would be raised or lowered by
removal of Sec. 1. Ms. Elgee responded that costs would be
lower if the new differential was applied to magistrates.
However, the fiscal note does not represent "any of the
court system employees." It covers only the executive
branch. The Legislature would have to indicate its desire
to apply the bill to court system employees as well.
In response to a question from Co-chairman Frank, asking how
the court system proposed to handle the differential, Ms.
Elgee termed the magistrates "a real unique little bunch."
The court is conducting salary review of "just the
magistrates." They are the only group specifically tied by
statute to the existing differential. As a practice, the
court system has followed the statutory differential for
non-covered employees as well.
Ms. Elgee explained that Sec. 2 makes clear that the revenue
sharing calculation currently tied to the existing area cost
differential would continue. That would ensure that taking
action on the proposed bill would produce no unintended
reduction of revenue sharing to municipalities. The
Governor did not want to complicate the legislation by
bringing in issues such as aid to municipalities. That
should be dealt with separately.
Sec. 3 applies specifically to the minimum payment level in
revenue sharing statutes.
Sec. 4 lays out the proposed differential. It has been ten
years since a complete cost-of-living differential study was
conducted for Alaska. The 1985 study resulted in what is
known as the "union differential." Two years ago, the
courts dictated that the state abide by existing statutory
language that requires an annual salary survey. Since there
was no funding for the survey, the department used $20.0 to
contract with the Runzheimer Group to prepare a cost-of-
living differential study. Ms. Elgee noted that the study
produced odd results. In preparing the proposed bill, the
administration used Runzheimer's work as an indication that
the cost-of-living differential across the state is coming
down but did not utilize it as the basis for the
administration's proposal. Ms. Elgee cited study figures
for cost-of-living differentials at Nome and Ketchikan as
evidence of apparent inaccuracies. In developing SB 152,
the administration utilized House districts and looked for
geographic similarities among the districts and common modes
of transportation.
Base levels (areas in which no geographic differential would
apply) are Anchorage, Juneau, the Kenai Peninsula, Matanuska
Valley, and the Fairbanks area. For coastal communities
with ferry access but no road access, the bill proposes a 5
percent differential. For interior communities on the road
system, the proposal is a 10 percent differential. The
proposed differential is 20 percent for western and
northwestern communities. The out-of-state differential has
also been modified. In the past, the differential applied
to all out-of-state workers. The bill proposes that it
apply only to Washington state, and that the state adopt an
approach similar to that used for foreign offices for other
locations. That approach is specific to information
relative to the cost of living in each location. Ms. Elgee
cited need for flexibility to deal with unique circumstances
such as salaries for state employees in Washington, D.C.,
where the cost of living is extremely high, as well as those
temporarily stationed in Louisiana pending construction of
the new state ferry.
Co-chairman Halford asked if the proposed bill would
increase pay for employees in Seattle by 20 percent. Ms.
Elgee concurred that it would increase pay for non-covered
employees, but it would reduce pay for union members
residing in Seattle by approximately 10 percent. Co-
chairman Halford voiced his understanding that the factor
change increases Seattle from 79.1 percent to 100 percent
for non-covered and 13 percent for union employees. Ms.
Elgee clarified that the bill proposes a zero differential
for Washington state. She concurred that should unions,
through collective bargaining, adopt the factor, the
foregoing would be the case. Co-chairman Halford questioned
reduction of pay at Alaskan locations while increasing it
for employees in Seattle. Ms. Elgee responded, "This is
just a reflection of what we're seeing in the American
Chamber of Commerce studies on cost-of-living
differentials." It appears that the cost of living in the
Seattle area is comparable to the cost of living in
Anchorage.
Senator Rieger presented a handwritten amendment to change
the factor for Seattle to -10 percent. Co-chairman Frank
asked that the committee be provided a copy of the
Runzheimer report. Ms. Elgee agreed to do so, but stressed
that it has little value since it does not accurately
reflect community-by-community cost of living differentials
for Alaska. She said she would also make available
information developed by the American Chamber of Commerce
research group, which relates to specific communities in
Alaska.
In response to a question from Co-chairman Frank, Ms. Elgee
explained that upon passage of the proposed bill, the
administration and unions would go back to the bargaining
table to renegotiate the cost-of-living differential
applicable to union members. Each contract currently
contains its own area cost differential. With the exception
of PSEA, they all reflect the differential outlined on the
handout. Members questioned the administration's ability to
engage unions in such negotiations without giving up
something and suggested that the differential should be set
in statutes and applied to all, union and non-union alike.
Senator Donley directed attention to Senator Rieger's
amendment and noted ASMI claims that it pays its employees
in Washington state 18 percent below the rate in Alaska and
continues to obtain quality workers. He then suggested that
the reduction in the amendment should be -20 rather than -10
percent. Senator Donley further directed attention to page
3, line 3, and voiced need to change the salary portion
($30.0) to which the differential applies so that it applies
to the whole salary range.
In response to earlier comments regarding renegotiations
with unions, Ms. Elgee said that the unions are "all very
well aware of this legislation." The administration made
clear its intent to conform area cost differentials to
statutory changes. Reopeners were negotiated with that
understanding.
Co-chairman Frank referenced the $30.0 set forth at page 3,
subsection (b) and asked if the current differential is
applicable to the entire salary. Ms. Elgee responded
affirmatively, advising that bill language would modify
application to cover only "that portion of salary that we
would deem to be for the actual basic cost of living and not
the discretionary portion of any individual salary."
Senator Sharp suggested that the $30.0 appears arbitrary in
light of current low income and poverty numbers.
Co-chairman Frank raised questions concerning lack of a
differential for Fairbanks, citing the cost of heating fuel
as an example of costs higher than those in Anchorage or
Ketchikan. Ms. Elgee explained that differentials reflect a
market basket survey. She cited offsetting factors between
communities. Fairbanks is included in national chamber of
commerce surveys. Information provided by that group
indicates that the cost of living in Anchorage and Fairbanks
is "almost identical."
Senator Sharp voiced interest in reviewing the federal CPI
for Seattle compared to Anchorage and Fairbanks.
Senator Donley requested an assessment of Alaska pay for
employees residing in Washington state versus salaries paid
state workers by the state of Washington.
Discussion among members followed regarding numbers cited
for North Pole, Alaska.
Co-chairman Frank inquired regarding the dynamics associated
with achieving parity between covered and non-covered
workers when reducing differentials. Ms. Elgee pointed to a
one-year transition. At the time of passage of the
legislation, the department would notify all impacted
employees who would be frozen in current salaries for a
year. Thereafter the salaries would be reduced to the new
differential. The feeling was that a year's notice would
give people an opportunity to readjust their financial
circumstances or look for other employment. The state
cannot afford a freeze, forever, given cutbacks in operating
budget funding.
Co-chairman Frank asked why new differentials rather than
merely reopeners were not negotiated in union contracts.
Ms. Elgee said that the state has no substantive information
allowing for renegotiation. Passage of the proposed
legislation would put the administration in a position to do
so. Otherwise, absent expenditure of $300.0 to $400.0 for
an area-cost-differential study, the state has no basis.
In response to further comments from Co-chairman Frank, Ms.
Elgee said that for ten years non-covered employees have
enjoyed a differential that far exceeds that of union
employees. Unions are not interested in "continuing to lead
that particular action without modification of this
schedule." Contracts have been ratified by employees with
the reopener in place.
Senator Zharoff raised a question regarding differentials
for coastal communities with ferry service. He noted lack
of service by the TUSTUMENA from October through April and
asked that the administration review the consistency of
service for individual communities.
ADJOURNMENT
The meeting was adjourned at approximately 11:05 a.m.
| Document Name | Date/Time | Subjects |
|---|