Legislature(1995 - 1996)
04/18/1996 03:05 PM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 229
An Act relating to employment contributions and to
making the state training and employment program a
permanent state program; and providing for an effective
date.
Co-chairman Halford directed that SB 229 be brought on for
discussion. DWIGHT PERKINS, Special Assistant, Dept. of
Labor, came before committee to speak to CSSB 229 (L&C). He
explained that it reflects combination of SB 229 and SB 276.
In the first portion, concerns raised by both the Dept. of
Community and Regional Affairs and the Dept. of Labor were
addressed and agreed upon in CSSB 229 (CRA). The original
SB 229 made the STEP program (State Training and Employment
Program) permanent. The six-year pilot program has worked
well over that term. Sunset provisions were then applied to
the program which changed the title of the legislation. Mr.
Perkins pointed to further wording changes and additional
subsections incorporated within the new version. He spoke
to changes to improve past problems with record keeping in
service delivery areas, a limitation of administrative costs
to 20 percent, and new reporting requirements.
The second portion of the bill was originally incorporated
within SB 276--calculation of weekly benefits for insurance
claimants. Directing attention to page 10, line 27, Mr.
Perkins noted the current weekly benefit for unemployment
insurance. He explained that the payment is based on 75
percent of the average weekly wage earned by the individual.
He further noted a maximum of $248.00 per week.
Pointing to accompanying fiscal notes, Mr. Perkins advised
that the $3,946.2 (relating to Sec. 2) refers to the STEP
program. The $231.8 note (relating to Sec. 5) shows the
unemployment benefit increase. Fiscal notes do not seek
additional moneys in the budget. Mr. Perkins next spoke to
qualifications which make workers eligible for unemployment
benefits.
Discussion in previous committees indicated that while there
was no objection to increasing the weekly benefit amount,
legislators and constituents would "like to see the
employees picking up part of this cost." Under present
statutes, the employer pays 82 percent and the employee pays
18 percent. Mr. Perkins then attested to a proposed
reduction, to the employer, of $15 per employee and an
increase in employee payments of $20 per year (38 cents a
week).
Senator Rieger inquired concerning cross-subsidization of
unemployment benefits. He suggested that those employed in
seasonal jobs collect more unemployment benefits than those
working year-round jobs. Mr. Perkins explained that
everyone who works pays half of one percent for unemployment
insurance. Total collections are not industry specific.
However, one industry does not subsidize another since those
in seasonal jobs have higher rates than those in year-round
jobs.
REMOND HENDERSON, Director, Administrative Services, Dept.
of Community and Regional Affairs, next came before
committee. He clarified that while collections accrue to
one account, moneys are separated by industry. ARBE
WILLIAMS, Director, Administrative Services, Dept. of Labor,
concurred that rates for individual industries are set to
cover the cost of benefits for the industry.
In response to a question from Senator Sharp, Ms. Williams
advised that an employer's rate is based on how steady
employment has been over a previous period of time.
Responding to a further question from Co-chairman Frank, Ms.
Williams explained that funds paid by both employer and
employee accrue to the employer trust fund. Payments are
handled like trust fund moneys. Senator Rieger asked if
benefits are appropriated by the legislature. Ms. Williams
responded negatively, saying they flow directly from the
unemployment insurance trust fund.
Co-chairman Frank asked why STEP program services are
limited to those who have been employed over the last three
years. Ms. Williams advised that the program is funded by
employee contributions to minimize the effect of
unemployment on the trust fund. It was felt important to
maintain a tie between workers who both contribute to the
program and may subsequently need to benefit from training
programs offered by STEP. STEP is a diversion of
unemployment insurance moneys to which all workers
contribute.
Co-chairman Frank inquired concerning availability of other
programs to those who have not been employed for a period of
time. Ms. Williams attested to numerous federal programs.
Discussion of JTPA and other training programs followed.
Co-chairman Frank next asked who would receive grants under
the proposed bill. Mr. Perkins explained that funds flow
through the Dept. of Labor to the Dept. of Community and
Regional Affairs for dispersement. Mr. Henderson said funds
are dispersed by three services delivery areas: Anchorage,
Fairbanks, and the balance of state. He referenced a list
(copy on file in the original Senate Finance Committee file
for SB 229) of recipients for 1995.
Senator Donley voiced his understanding that the bill
decreases contributions from employers, and increases
contributions from employees, to extend unemployment
benefits and fund the STEP training program. Mr. Perkins
reiterated that the bill reflects combination of two
unrelated pieces of legislation. The sources of incoming
revenues to pay for the programs are different. Only
employee-generated payments fund STEP.
Discussion followed between Senator Donley and Arbe Williams
regarding diversion of trust fund moneys to fund the STEP
program. Mr. Perkins advised that the program is scheduled
to end on June 30. The first portion of the proposed bill
would re-establish it in law and provide a two-year sunset
for subsequent legislative review.
Further discussion and review of the list of training grants
followed.
END: SFC-96, #87, Side 2
BEGIN: SFC-96, #88, Side 1
Co-chairman Halford specifically inquired concerning grants
to entities outside the state. LAMAR COTTEN, Deputy
Commissioner, Dept. of Community and Regional Affairs, came
before committee. He advised that Golden Age Fishery in
Seattle is a partner with one of the CDQ groups in Alaska.
Mr. Perkins added that necessary in-state training is not
always available. Arbe Williams noted that training is
provided to those who qualify for STEP funds--those who have
an attachment to the Alaska unemployment insurance trust
fund.
Further discussion of listed grantees and training services
ensued. Co-chairman Halford referenced $142.0 in individual
referrals and subgrants of $865.0 for a total of $1,008.9.
Mr. Henderson advised that the total reflects actual FY 95
expenditures in the statewide service delivery area only.
Expenditures for the Anchorage service area were $731.0.
The Fairbanks area expended approximately $170.0. The
fiscal note is an estimate of FY 97 expenditure based on the
amount being RSA'd to the Dept. of Community and Regional
Affairs by the Dept. of Labor. That totals $3,333.6.
In response to an inquiry from Co-chairman Frank concerning
how people find out about the STEP program and the actual
point of entry, Mr. Henderson attested to brochures
advertising the program as part of the general job training
information the department provides. Services are provided
through field offices. Arbe Williams added that welfare
counselors are also aware of the program as are employment
service employees in the Dept. of Labor's 19 field offices.
Co-chairman Frank asked what would prevent employers from
using the program to fund training for new hires. Mr.
Henderson noted need for the individual to have contributed
to the unemployment insurance fund in order to qualify and
be eligible for the program. He acknowledged that employers
could take advantage of the program for new trainees. He
further advised of benefits of JTPA (the Job Training
Partnership Act) under which employers pay only 50 percent
of the employee's wage during training. Mr. Perkins
stressed that both programs assist in getting individuals
off welfare or unemployment and into productive jobs. Co-
chairman Frank asked why the program could not be extended
to the longer term unemployed. Arbe Williams explained that
not every employer, employee, or occupation is eligible to
receive STEP funds. The program targets occupations and
industries that have high unemployment and tend to hire non-
residents. Statistics are derived from the annual non-
resident hire report. Funds are dispersed by area,
depending upon where those occupations and industries are
located.
Senator Donley MOVED for passage of the bill with individual
recommendations. Co-chairman Frank expressed need to
determine whether training programs could serve longer term
unemployed individuals as well. He expressed concern that
some individuals have been denied benefits because the
program targets the recently unemployed. Co-chairman
Halford voiced his understanding that subgrants apply to
anyone. Co-chairman Frank said that if an individual has
not worked for four years, he or she would not qualify.
Arbe Williams concurred. She explained that the reason is
that employees are paying for the program. Mr. Perkins
voiced need to review expansion of the program to determine
whether or not there might be negative impact on the trust.
Mr. Henderson suggested that expansion could be handled
since all available funds are not currently being spent.
Co-chairman Frank attested to the desirability of expanding
the program to a larger pool of participants. Arbe Williams
advised that she would feel more comfortable consulting the
actuarial regarding the potential impact on the trust fund,
before action is taken. At this time, the STEP program is a
"fairly small pot of money" that serves a "fairly small pool
of people."
Co-chairman Halford suggested that Co-chairman Frank develop
an amendment for discussion at the next meeting. Senator
Donley withdrew his motion for passage, and CSSB 229 (L&C)
was held in committee.
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