05/13/2024 10:00 AM House FINANCE

CS FOR SENATE BILL NO. 259(FIN)                                                                                               
                                                                                                                                
     "An   Act  relating   to  the   compensation  of   state                                                                   
     employees;   relating  to  the   salary  of   the  chief                                                                   
     administrative   law  judge;   and   providing  for   an                                                                   
     effective date."                                                                                                           
                                                                                                                                
12:27:09 PM                                                                                                                   
                                                                                                                                
SENATOR  ELVI GRAY-JACKSON,  SPONSOR, explained  that  SB 259                                                                   
was  a  technical   cleanup  bill  unanimously   approved  by                                                                   
Legislative Council  on February  28, 2024, to  be introduced                                                                   
as  a  committee  bill.  She  delineated  that  HB  226  (Pay                                                                   
Increases  For Certain  State Employees,  Chapter 50  SLA 22,                                                                   
08/01/22) passed  in 2022,  sponsored by Representative  Andy                                                                   
Josephson   and  included   an   amendment   by  the   former                                                                   
Representative   Steve   Thompson.  The   amendment   granted                                                                   
certain state employees  not covered by a bargaining  unit to                                                                   
receive  salary  adjustments  in line  with  the  Supervisory                                                                   
Bargaining  Units  negotiated  agreement. Unfortunately,  the                                                                   
Department  of Law (DOL)  argued that  the bill language  did                                                                   
not  allow   the  Department   of  Administration   (DOA)  to                                                                   
implement the salary  changes for 2,800 exempt  and partially                                                                   
exempt  employees  across  the  legislative,  executive,  and                                                                   
judicial   branches.   She   noted  the   legal   memo   from                                                                   
Legislative  Legal  Services dated  March  4,  2024 (copy  on                                                                   
file)  was included  in member's  bill  packets. Senate  Bill                                                                   
259   clarified  and   confirmed  the   original  intent   by                                                                   
providing  clear  authority  to  DOA to  adjust  salaries  as                                                                   
intended. The  legislation amended AS 39.27.011(m)  to ensure                                                                   
the  salary  adjustments  would  happen  without  legislative                                                                   
intervention.                                                                                                                   
                                                                                                                                
She  continued that  some substantial  changes  were made  in                                                                   
the  Senate  Finance Committee:  retroactive  pay  provisions                                                                   
were  removed  that  eliminated  the  need  for  supplemental                                                                   
funding.  Additionally,  the  bill included  a  section  that                                                                   
removed  the existing  salary  cap on  the pay  scale of  the                                                                   
Chief  Administrative  Law  Judge.  She  furthered  that  the                                                                   
adjustment  was  necessary in  order  to attract  and  retain                                                                   
qualified  individuals.  She   informed  the  committee  that                                                                   
there  was a  letter  of support  from  the DOA  commissioner                                                                   
[Commissioner  Paula Vrana].  She shared  that recently,  the                                                                   
supervisory  bargain  unit  reached  an  agreement  with  the                                                                   
state. She indicated  that based on the agreement  the Office                                                                   
of Management  and Budget (OMB)  included a new  fiscal note.                                                                   
She  concluded  that  the bill  fulfilled  a  commitment  the                                                                   
legislature made  to state employees  and the bill  "stood as                                                                   
a   testament  to   fairness   and  equity"   and   reflected                                                                   
appreciation for  their service to the state.  She listed the                                                                   
invited testifiers available to answer questions.                                                                               
                                                                                                                                
12:30:48 PM                                                                                                                   
                                                                                                                                
Co-Chair Foster OPENED public testimony.                                                                                        
                                                                                                                                
Co-Chair Foster CLOSED public testimony.                                                                                        
                                                                                                                                
12:31:54 PM                                                                                                                   
                                                                                                                                
LAURA B.  TIMKO, CHIEF POLICY  ANALYST, OFFICE  OF MANAGEMENT                                                                   
AND  BUDGET,  OFFICE  OF  THE  GOVERNOR,  explained  the  OMB                                                                   
fiscal impact  for all branches  of government  [Various] and                                                                   
all  fund  sources.  The  fiscal  note  total  was  $22.220.9                                                                   
million,  which  was  broken  down on  the  analysis  on  the                                                                   
second page.                                                                                                                    
                                                                                                                                
Co-Chair  Foster indicated  that  there was  an amendment  to                                                                   
the bill.                                                                                                                       
                                                                                                                                
12:34:40 PM                                                                                                                   
                                                                                                                                
Co-Chair Foster MOVED Amendment 1.                                                                                              
                                                                                                                                
Representative Cronk OBJECTED for discussion.                                                                                   
                                                                                                                                
BRODIE   ANDERSON,   STAFF,   REPRESENTATIVE   NEAL   FOSTER,                                                                   
explained Amendment  1 was sponsored  by Co-Chair  Foster. He                                                                   
communicated that  the amendment identified  as 33-LS1475\R.1                                                                   
better reflected  the final  agreement  that was accepted  by                                                                   
the  Supervisory  Unit.  The  bill  was  written  before  the                                                                   
negotiations  were  completed.   The  unit  included  a  step                                                                   
increase  for its  employees, but  due to  the difficulty  of                                                                   
translating  the increase  into the same  amount of  increase                                                                   
for  the exempt  employees an  amendment  was necessary.  The                                                                   
amendment calculated  a 3.38 percent increase  that reflected                                                                   
the   step  increase   received  by   the  Supervisory   Unit                                                                   
employees. The  current bill reflected  a 5 percent  increase                                                                   
on July 1, 2024.  On July 8, 2024 the step  increase would be                                                                   
implemented as per  Amendment 1. In addition,  subsection (o)                                                                   
and  subsection  (p)  included the  negotiated  increases  in                                                                   
2025  and  2026.  He summarized  that  the  Supervisory  Unit                                                                   
agreement was  reflected as closely  as possible in  the bill                                                                   
with the adoption of Amendment 1.                                                                                               
                                                                                                                                
Co-Chair  Foster  felt  that  Amendment  1  was  a  technical                                                                   
amendment but also substantive.                                                                                                 
                                                                                                                                
12:37:48 PM                                                                                                                   
                                                                                                                                
PAUL LABOLLE,  STAFF, REPRESENTATIVE NEAL  FOSTER, summarized                                                                   
that  the amendment  mirrored  the final  negotiation of  the                                                                   
Supervisory Unit  agreement, and  the substantive  effect was                                                                   
the   3.38  percent   step  increase.   He  elaborated   that                                                                   
historically,  the exempt  employees did  not participate  in                                                                   
contract  negotiations  and  salary  adjustments  had  to  be                                                                   
handled through  legislation that was typically  based on the                                                                   
Supervisory Unit negotiated agreement.                                                                                          
                                                                                                                                
Representative  Coulombe  asked  for  clarity  regarding  the                                                                   
total wage increase.                                                                                                            
Mr. Anderson  responded  that the overall  increase would  be                                                                   
an  8.3  percent   increase  calculated  by  the   5  percent                                                                   
included in  the original bill  and the step increase  of 3.3                                                                   
percent.                                                                                                                        
                                                                                                                                
Mr.  Labolle clarified  the  difference  between  a step  and                                                                   
range increase.  He explained  that a  range increase  was in                                                                   
the  underlying  bill  and  the  step  increase  was  in  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
Senator Gray Jackson stated her support for the amendment.                                                                      
                                                                                                                                
Representative Cronk REMOVED his objection.                                                                                     
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
12:40:29 PM                                                                                                                   
                                                                                                                                
Co-Chair  Edgmon MOVED  to REPORT  HCS CSSB  259(FIN) out  of                                                                   
committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
HCS  CSSB 259(FIN)  was REPORTED  out of  committee with  ten                                                                   
"do  pass" recommendations  and  with  one new  indeterminate                                                                   
fiscal note from the Office of the Governor for Various.                                                                        
                                                                                                                                
12:41:03 PM                                                                                                                   
                                                                                                                                
Senator Gray Jackson thanked the committee.                                                                                     
                                                                                                                                
Co-Chair  Foster recessed  the meeting  to the following  day                                                                   
at 9:00 a.m.                                                                                                                    
                                                                                                                                
12:41:26 PM                                                                                                                   
RECESSED