Legislature(1995 - 1996)
03/29/1996 08:08 AM Senate FIN
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* first hearing in first committee of referral
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+ 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 again be brought
before committee and referenced a draft committee substitute
(0-GS0049\F, Cramer, 3/29/96). ALISON ELGEE, Deputy
Commissioner, Dept. of Administration, came before committee
and provided the following review of the draft:
Secs. 1, 2, and 3 are from the original bill.
Sec. 4 was redrafted to include committee amendments to
place the Fairbanks area in the 5 percent geographic
differential and employees in Washington State at -20.
Sec. 4 (b) reflects amendment of the base salary amount
from $30.0 to $50.0.
Sec. 4(c) allows for premium pay situations for those
practicing law or medicine in rural districts 37
through 40.
Sec. 5 remains the same as in the earlier version.
Secs. 6, 7, 8, and 9 contain technical amendments to
reflect the renumbering of the geographic differential
section.
Sec. 10 contains transition provisions. It has been
amended to reflect a hold harmless period in year one,
a limited reduction of no more than 5 percent of salary
in year two, and full implementation in year three.
Ms. Elgee directed attention to a handout (copy on file in
the Senate Finance Committee master file for SB 152) and
explained that it sets forth figures under both the current
and new differential for a $60.0 employee in Fairbanks and
an employee at the same pay level in Nome.
Senator Randy Phillips questioned the repeal date of July 1,
1998, set forth in Sec. 12, suggesting that it should
reflect 1997. Ms. Elgee explained that 1997 would be
correct in the event of a one-year hold harmless and no
transition. July 1, 1998, allows for the second year of
transition per the proposed draft.
Discussion followed between Senator Rieger and Ms. Elgee
regarding operation of hold harmless provisions. In
response to a scenario presented by the Senator, Ms. Elgee
said the department would freeze the salary of an employee
who is overpaid based on the new differential. Freezing the
salary would not preclude award of merit increases or cost-
of-living adjustments. Those amounts would be calculated
against the revised salary. The employee is frozen at the
current salary, or transitioned down to the 5 percent, and
the bookkeeping entries are applied against what the new
salary would be. At the point that the adjusted salary
meets or exceeds the frozen salary, the employee would begin
to realize "some benefit from those increases."
Senator Sharp referenced Sec. 10(a)(2) and suggested that it
would appear to produce a savings, yet none is shown on the
fiscal note. Ms. Elgee agreed that there would be savings,
in FY 98, as employees turn over or relocate out of their
current geographic differential areas. It is impossible to
project what those savings might be. The fiscal note
represents application of this legislation upon full
implementation in FY 99.
Senator Sharp MOVED for adoption of the draft CSSB 152
(Finance) as a mark-up vehicle. No objection having been
raised, CSSB 152 (Finance) was ADOPTED.
Senator Zharoff voiced concern for election districts 5
through 9 and asked how the index and union differential
work. Ms. Elgee explained that the index reflects the
statutory schedule applied to non-covered employees. It has
been in place since 1972. In 1985 an extensive cost-of-
living study was conducted. As a result of that study, new
cost-of-living indices were adopted through the collective
bargaining process with unions. That union differential, in
place since 1986, applies to the bulk of unionized
employees.
Co-chairman Halford asked how many employees fall under the
statutory index. Ms. Elgee responded, "I think in the
executive branch we're talking about 1,200 people." Co-
chairman Halford voiced his understanding that approximately
15 percent of state employees would be directly impacted by
the proposed bill. The remainder would be negotiated into
the system. Ms. Elgee concurred. She added that not all
non-covered employees would be impacted because those in
Anchorage and Juneau will see no change since they do not
now receive a differential. The bill would affect
approximately 93 people in the Fairbanks area.
Senator Sharp MOVED for passage of CSSB 152 (Finance) with
individual recommendations and accompanying fiscal notes.
Senator Zharoff OBJECTED. He said that testimony indicates
arbitrary decisions were made in changing the index. He
reiterated concern for election districts 5 through 9,
saying that he was not comfortable with possible impact. He
expressed his belief that employees in those districts would
experience reductions because backup information indicates
the cost of living in those areas is much higher than what
is reflected in the proposed legislation. Co-chairman
Halford called for a show of hands on the motion for
passage. The motion CARRIED on a vote of 5 to 1, and CSSB
152 (Finance) was REPORTED OUT of committee with a zero
fiscal note from the Office of the Governor, covering all
departments. Co-chairmen Frank and Halford and Senators
Rieger and Sharp signed the committee report with a "do
pass" recommendation. Senators Donley and Phillips signed
"no recommendation." Senator Zharoff signed "do not pass."
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