Legislature(2009 - 2010)BUTROVICH 205
03/31/2009 01:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Governor's Appointments | |
| SB170 | |
| SB60 | |
| SB149 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 149 | TELECONFERENCED | |
| += | SB 60 | TELECONFERENCED | |
| *+ | SB 170 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 170-UNEMPLOYMENT AMENDMENTS: FED STIMULUS
1:13:09 PM
CHAIR PASKVAN announced the consideration of SB 170.
SENATOR DAVIS joined the committee.
SENATOR ELLIS, sponsor of SB 170, thanked the Alaska State
Chamber of Commerce and the National Federation of Independent
Business (NFIB) for their work on making this bill as beneficial
as possible.
He explained that the bill represents a small change in the UI
eligibility standards in the State of Alaska even though the
state has modernized its UI system already. This is one minor
change that would bring great benefits to some unemployed people
and has no strings attached.
He explained that current eligibility is based on meeting
minimum earnings in the first four of the five previously
completed quarters. SB 170 gives workers who do not meet that
qualification the option of recalculating using their earnings
from the last four completed quarters. This would benefit about
1,300 people who would otherwise become eligible for UI payments
three months later by eliminating the three-month lag time. If
this policy had been in place in 2008 it would have provided $8
million in benefits. The really good news, too, is that the
federal stimulus dollars fully fund this minor change bringing
in $17 million for job training as well as enhancing the UI
trust fund. If some money is deposited in the UI trust fund,
there would be no impact to business taxes. That is why the NFIB
and the State Chamber think this is a good opportunity.
The Department of Labor and Workforce Development (DOLWD) and
Representative Hawker's office are taking the lead on the exact
amount. The department has not taken a position on the bill, but
has been very helpful and professional in representing the Palin
administration.
Representative Hawker thinks between $3 million and $5 million
needs to go into the UI trust fund that currently is more than
solvent with a $350 million balance.
1:17:28 PM
He said that these are one-time dollars and that Alaska is
already experiencing the highest unemployment in a generation;
it may feel the effects of the national and world-wide recession
even more later this year. Alaska is also preparing for the
largest infrastructure project in U.S. history with the gasline.
There is a perfect confluence of events that gives Alaska a
perfect opportunity to use federal dollars allocated to Alaska
for a targeted and timely expansion of job training. This is a
reasonable act to take and has a net gain on two or three
levels.
He said this bill comes out of the intent of the legislative
leaders of both bodies and both parties to closely examine all
available stimulus dollars and accept only those that make sense
for Alaska in the long term.
1:19:04 PM
MAX HENSLEY, staff to Senator Ellis, said the bill is one
section; it gives unemployed workers the option if they do not
qualify for unemployment insurance based on their earnings to
recalculate them using the most recent four completed calendar
quarters rather than the first four quarters of their last five.
It takes effect on January 1, 2010. He informed them that the
DOLWD generally calculates unemployment insurance benefits on a
calendar year rather than a fiscal year basis.
He said a number of states are concerned that the unemployment
insurance modernization, which actually totals about $7 billion
in incentive money from the federal stimulus package, would
require significant expansions to eligibility requirements, but
the federal stimulus makes the pot of money that is allocated to
each state dependent on two sets of criteria. The first third of
the money is available to states that offer the alternative base
period, which Alaska currently does not and SB 170 will provide.
The second two-thirds of the stimulus money is based on a state
offering UI benefits to unemployed workers who are members of at
least two of the following four categories: part time workers,
workers who are enrolled in training programs, workers who leave
their jobs for compelling family reasons and additional benefits
for workers with dependents.
1:21:15 PM
Alaska already meets the final two categories; if we make the
change to become eligible for the initial one-third of the
money, we will get the full pot of money without any further
changes. The reason this is a big issue in other states is that
they would have to make all the changes at once and those could
be substantial for some.
1:21:50 PM
MR. HENSLEY said another concern is that usually an expansion of
benefits expands employer/employee contributions to the trust
fund, but Alaska's UI trust fund is one of the healthiest in the
nation with a balance of about $350 million in 2008. The
additional monies in the stimulus package are more than enough
to cover this small addition in liability.
1:22:24 PM
A third major question that people have asked is whether this
change would expose the state to a permanent and ongoing
liability. It has been found that nothing in the stimulus
provides that states can't change their laws back at some point
in the future, but it can't be explicitly temporary or
sunsetted. A letter from the federal Department of Labor
certified that there are "no claw back provisions."
1:23:04 PM
The additional money beyond what is needed to shore up the UI
trust fund could be used for increased administration and job
training, although the department feels it doesn't need to
increase administration.
He noted also that this is a one-time grant, and after the money
goes into the UI trust fund it can be appropriated by the state
without an end date, unlike many other stimulus funds which must
be spent over the next year or two. The state could choose to
space this money out more widely, and no state match is
required.
MR. HENSLEY said the funds have already been appropriated by the
federal government and funds we do not accept will be sent to
another state to either benefit their job training or their
unemployed workers.
1:24:59 PM
SENATOR THOMAS asked him to review the criteria again on what
would be new.
MR. HENSLEY said there are two pots of money within Alaska's
portion of the UI modernization incentive. The first third is
contingent on the acceptance of the alternative base period,
which it outlined in this bill. The second two-thirds is
contingent on the state offering UI benefits to at least two of
the four categories: part time workers, extended benefits to
workers who are enrolled in training programs, workers who leave
their jobs for compelling personal reasons, and the expanded
benefits for workers who have dependents. Alaska meets the final
two criteria and would not need to change its statutes to
receive the second two-thirds of the money. However we cannot
receive the second two-thirds unless we receive the first third.
SENATOR THOMAS asked if the department would testify or be
available for questions.
1:27:45 PM
PAULA SCAVARA, Special Assistant/Legislative Liaison to the
Department of Transportation and Public Facilities (DOTPF), said
she brought a couple of department people to answer questions,
Tom Nelson and James Wilson.
JAMES WILSON, Economist, Research and Analysis Section,
Department of Labor and Workforce Development (DOLWD),
introduced himself and said he was available to answer
questions.
1:29:53 PM
SENATOR BUNDE asked why the department hadn't done this already
if it's such a good idea, and "before we were bribed by this
money." He was concerned that if we make this change the extra
$2 million would likely be an ongoing cost, and after the
stimulus money goes away, that would be a continuing impact on
the program.
TOM NELSON, Director, Division of Employment Security,
Department of Labor and Workforce Development (DOLWD), answered
that they calculated an actual number of 1,293 individuals that
otherwise would have been eligible for benefits in 2008. Of the
$1.9 million impact to the trust fund, 26 percent is borne by
the actual worker. If approximately $3 million would be left in
the trust fund, the trust fund solvency factor would cover at
least the first year of the costs in the years outgoing.
1:31:37 PM
SENATOR BUNDE asked about putting a sunset on this.
MR. NELSON replied that 18 states already have this program
before the stimulus package came out, and some of them had a
sunset provision. The federal guidance is that they understand
the ability of state legislatures to change laws after this is
over with and they only require a certification that the states
are acting on good faith.
SENATOR BUNDE commented that the feds might not understand the
politics behind trying to change unemployment benefits.
1:32:42 PM
SENATOR BUNDE remarked that one of the bones of contention in
changing UI in Alaska has always been that workers who are fired
for cause can claim UI insurance, and this doesn't change that.
MR. NELSON replied that is correct, but he added that they go
through a six-week waiting period.
1:33:24 PM
SENATOR THOMAS asked the department's position.
MS. SCAVARA replied the department and the administration is
neutral.
SENATOR THOMAS asked in that case if the attached zero fiscal
note goes out to only 2015 or to a point beyond that when the
federal money is gone.
1:34:15 PM
MR. NELSON explained that the fiscal note is zero because
regardless of how many claims they process throughout a year,
the workload actually dictates what the federal government
reimburses back to the state. He couldn't speculate on why the
fiscal note only goes out to 2015.
MS. SCAVARA added that the form goes to 2015, so they just put
zeros across.
SENATOR THOMAS asked if the department agreed with the
explanation from Senator Ellis' staff.
1:35:03 PM
MR. NELSON replied yes.
1:35:33 PM
SENATOR BUNDE said he is stuck on the idea that calculating
eligibility for more than 1,300 people seems like a fairly minor
technicality, but he was curious about why the department did
not choose to do that in the first place. Would there be an
economic impact?
MS. SCAVARA responded that UI eligibility would require a
statutory change, and she has worked at the department for six
years and has not heard of it being brought up.
1:36:39 PM
DENNY DEWITT, National Federation of Independent Businesses
(NFIB), supported SB 170. They worked hard with the department,
legislators, staff and consultants on this issue in the federal
arena to unwind all the requirements particularly whether or not
the expanded benefits changed the character of the program and
what the impact on premiums would be. And they are satisfied
that the deposits via the Finance committees will offset the
costs quite a ways into the future.
In terms of change in the base period and how ongoing benefits
are paid, they have been assured that the character of the
program will remain intact. He thanked Senator Ellis and his
staff for their work and help.
1:39:44 PM
CHAIR PASKVAN closed public testimony. He observed that this is
the type of bill that deserves the support of this committee and
added that the business community supports it.
1:40:15 PM
SENATOR THOMAS moved to report SB 170, version E, from committee
with individual recommendations and attached fiscal note(s).
There were no objections and it was so ordered.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Governor's Appointments.pdf |
SL&C 3/26/2009 1:30:00 PM SL&C 3/31/2009 1:00:00 PM |
|
| CSSB 149 version E.pdf |
SL&C 3/31/2009 1:00:00 PM |
SB 149 |
| SB 149 Bill Packet.pdf |
SL&C 3/19/2009 1:30:00 PM SL&C 3/31/2009 1:00:00 PM |
SB 149 |
| SB 60 Bill Packet.pdf |
SL&C 3/24/2009 1:30:00 PM SL&C 3/31/2009 1:00:00 PM SL&C 4/16/2009 1:00:00 PM |
SB 60 |
| SB 170 Bill Packet.pdf |
SL&C 3/31/2009 1:00:00 PM |
SB 170 |