Legislature(2005 - 2006)HOUSE FINANCE 519
04/13/2005 01:30 PM FINANCE
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* first hearing in first committee of referral
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HOUSE BILL NO. 98 "An Act relating to the compensation of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." MIKE TIBBLES, DEPUTY COMMISSIONER, OFFICE OF THE COMMISSIONER, DEPARTMENT OF ADMINISTRATION, explained that HB 98 matches the statutory schedule for the partially exempt/exempt employees in the legislative executive and judicial branches, to the salary schedules recently negotiated with the supervisory unit. He describe the two- tier approach that is required to update salary schedules for state employees. One is through the collective bargaining process, the second tier for partially exempt/exempt employees. Because there are two different approaches, the salary schedules have drifted apart. Currently they are 5 percent off, and will increase to 9 percent at the end of the recently negotiated contracts. Mr. Tibbles expressed three concerns. The pay system requires payment based on "like pay for like work", which will not meet statutory obligation. He referred to a chart on page 3 of the packet "Comparison of Statutory, Judicial and Supervisory Salary Schedules" (copy on file.) The other two concerns regard upward career progression and recruitment. He recommended that the legislature adopt the statutory schedule. 4:16:16 PM In response to a question from Co-Chair Meyer, Mr. Tibbles replied that it is common practice to submit legislation to track the two salary schedules. They are not always approved in the same year and so there is sometimes catch up, like there is this year. In response to a question from Representative Holm, Mr. Tibbles explained the difference between steps A through step F. In response to a question from Representative Kelly, Mr. Tibbles reiterated the current and projected salary schedule gap. 4:17:51 PM Representative Croft asked for the total cost for the next five years. Mr. Tibbles describe each of the three fiscal notes. Representative Croft questioned the "free ride" of organizations that have not negotiated. Mr. Tibbles responded that the salary schedule applies to individuals that are exempt from collective bargaining and it meets statutory obligation. He pointed out problems if parity is not followed. 4:20:37 PM Representative Hawker observed that the legislature has imposed upon itself a 23.5 percent reduction in per diem pay. He questioned what happened to cost reduction. MILA COSGROVE, DIRECTOR, DIVISION OF PERSONNEL, ADMINISTRATION underscored the parity issue of the bill. She addressed Representative Croft's concern about equity and negotiation issues. She spoke of an obligation to insure "like pay for like work", and a duty to treat management level and "rank and file" fairly. Representative Kelly asked which comes closest to a competitive scale. Ms. Cosgrove reported that the state of Alaska does not have a market driven pay system. Representative Kelly noted that equal pay for equal work is not relevant today. He asked how competitiveness is sensed. 4:24:11 PM Ms. Cosgrove replied that the executive branch is hemmed in by statute. She explained that the pay is not competitive with the private sector. She agreed that steps need to be taken to adjust pay scales. There is an impact on recruitment. Representative Kelly suggested that the department should be aware of the market condition in order to get to a competitive measurement. He stressed another reason to stay competitive. 4:26:50 PM CHRIS CHRISTENSEN, DEPUTY ADMINISTRATOR, OFFICE OF THE ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM, shared the background of the court system. He related statistics surrounding court employees. He discussed high turnover rates and talked about cost-of-living adjustments resulting in employees joining a union. He related the history of judges' salaries in Alaska, including a comparison of the average annual increases for judges nationally and locally. Judges do not get annual longevity increases. He spoke of rural judge differentials. HB 98 would bring salary adjustments equal to salaries approved by the legislature for APEA members last year. The bill sends a message to employees that the legislature does value them as much as union employees. 4:33:03 PM He referred to Representative Croft's question about non- union employees stating that often non-monetary compensation in union contracts is not matched. 4:37:27 PM Vice-Chair Stoltze recalled that there has been an effort to match employees' salaries. He noted that judges have an honorary position. Mr. Christensen responded that going from number 49 to number 47 does not seem to be much of an increase. He contrasted private sector lawyers with public sector lawyers and judicial pay raises. 4:38:05 PM PAM VARNI, EXECUTIVE DIRECTOR, LEGISLATIVE AFFAIRS AGENCY, testified in support of HB 98, for equity reasons. She recalled the history of the executive and judicial salary schedules. She described the difference between the partially exempt and CPIU salary increases as 26.68 percent. She shared statistics from various states regarding salary increases. The per diem rate has gone down for legislators, which is set by Department of Defense. 4:40:44 PM Vice-Chair Stoltze asked on who's behalf Ms. Varni is testifying. She replied on the behalf of the agency employees. Legislative council would also support this. 4:41:48 PM Representative Hawker observed that the bill puts him in a very uncomfortable position. Dealing with costs of retirement plans is a big issue. Alaska's retirement plan is very generous. He suggested "do no harm until we figure out how to solve the problem." He debated the other side of the argument. He stated his opposition to the radical changes proposed to the PERS and TRS plans. He suggested that granting a wage increase is hypocritical on his part. He stated that his concern is not with equity and fairness to employees. 4:45:27 PM Co-Chair Meyer suggested proposing a hiring freeze until PERS and TRS is decided. He emphasized that current employees need to be treated fairly. He spoke in favor of passing HB 98. Vice-Chair Stoltze agreed with Representative Hawker Representative Holm also agreed with Representative Hawker. He quoted the high pay level of 28 E. He voiced concern about COLA, vacation pay, and other compensations. He requested more information about those costs. 4:47:50 PM Co-Chair Meyer pointed out that union employees have already received their wages. This bill will bring non-union employees up to the same level. 4:49:03 PM Ms. Cosgrove spoke of collective bargaining. ART CHANCE, DIRECT, LABOR RELATIONS, DEPARTMENT OF ADMINISTRATION, shared information about the executive branch related to leave, pay, geographical differentials, and merit steps, all established in statute. 4:51:56 PM Representative Foster spoke in support of the legislation. He concluded that denial of the legislation would result in greater unionization. Mr. Chance stated that the only employees that could not collectively bargain are elected and appointed officials. He noted that he is currently seeking to eliminate labor relations staff from the current bargaining unit. 4:54:20 PM Co-Chair Chenault referred to Section 6, salaries for University of Alaska, and questioned why they are being treated differently. Ms. Cosgrove noted that the university pay structure is completely different from the other branches. Mr. Chance added that many of their salaries are established through collective bargaining. 4:55:52 PM Representative Kelly spoke in support of the legislation. He observed that public pay has slipped, the legislation thth would only raise judges from 49 to 47[place in regards to pay nationally], and there is a threat of underemployment. He stressed that the PERS and TRS issue is separate. He concluded that employees would be lost or organized if this legislation is not adopted. 4:59:30 PM Co-Chair Meyer pointed out that it is not an union or non- union issue, but one of fairness and equality. Representative Foster MOVED to report CSHB 98 (STA) out of Committee with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 98 (STA) was REPORTED out of Committee with a "do pass" recommendation and with three fiscal impact notes: #1 GOV, #2 LEG, and a new CRT note.