Legislature(2009 - 2010)

04/16/2009 05:11 PM FIN


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CS FOR SENATE BILL NO. 170(FIN)                                                                                               
                                                                                                                                
     "An Act modifying the Alaska unemployment insurance                                                                        
     statutes by redefining the base period for determining                                                                     
     eligibility for unemployment benefits; relating to                                                                         
     contributions, interest, penalties, and payments under                                                                     
     the Alaska Employment Security Act; and providing for                                                                      
     an effective date."                                                                                                        
                                                                                                                                
MAX HENSLEY, STAFF,  SENATOR JOHNNY ELLIS, explained  that SB
170  would make  two  minor  amendments to  the  unemployment                                                                   
insurance statutes.  The first  change, found in  sections 13                                                                   
and  20, would  update eligibility  standards for  unemployed                                                                   
workers receiving  benefits front the Unemployment  Insurance                                                                   
Trust  Fund.  Current  eligibility   is  based  on  employers                                                                   
meeting a minimum earnings standard  in the first four of the                                                                   
previous  five  calendar  quarters. The  change  would  allow                                                                   
workers  failing to meet  the standard  to recalculate  their                                                                   
eligibility  using the  last  four completed  quarters.  This                                                                   
would expedite  the receiving  of unemployment benefits.  The                                                                   
change would  make the  state eligible  for $15.6 million  in                                                                   
federal stimulus funding to the  trust fund, and $1.1 million                                                                   
in  administrative costs.  He  stressed that,  as  long as  a                                                                   
portion of the  federal stimulus dollars were  deposited into                                                                   
the  trust   fund,  there  would   be  no  increase   in  the                                                                   
unemployment insurance  taxes paid by businesses  and workers                                                                   
that support the  fund.  Any additional funds  would be spent                                                                   
on targeted job  training. He referred to letters  of support                                                                   
for the  bill in committee  members' packets (copy  on file).                                                                   
The second  change is  the addition  of federally  recognized                                                                   
tribes  to the  list of  reimbursable  employers. Alaska  has                                                                   
been  out of  compliance  with federal  law  since 2002.  The                                                                   
language would  require the state  to treat tribes  like non-                                                                   
profit employers  and municipalities, and would  allow tribal                                                                   
entities  to reimburse  the unemployment  trust fund  for the                                                                   
benefits  drawn  by employees,  after  the funds  are  drawn,                                                                   
rather than before. He referred  to the letter from the State                                                                   
of Alaska Department of Labor  (DOL) to the federal DOL (copy                                                                   
on file).  The letter  notes that  most tribal entities  will                                                                   
not take  advantage of  the change, but  must be  offered the                                                                   
option to do so,  in order for the state to  be in compliance                                                                   
with federal  law. He  cited a list  of tribal entities  that                                                                   
would be affected by the legislation (copy on file).                                                                            
                                                                                                                                
7:23:34 PM                                                                                                                    
                                                                                                                                
GUY BELL,  ASSISTANT COMMISSIONER  AND DIRECTOR,  DIVISION OF                                                                   
ADMINISTRATIVE  SERVICES, DEPARTMENT  OF LABOR AND  WORKFORCE                                                                   
DEVELOPMENT, reported that the  administration was neutral on                                                                   
the bill, but  the preference of the administration  was that                                                                   
the two sections be separated.                                                                                                  
                                                                                                                                
Co-Chair Hawker  asked if the  administration had  a position                                                                   
on  either  section.  Mr.  Bell  related  that  the  governor                                                                   
sponsored  the  Native  Entity Compliance  component  of  the                                                                   
legislation.  He added  that the  state would  be subject  to                                                                   
federal sanctions, if the provision was not adopted.                                                                            
                                                                                                                                
Co-Chair  Hawker  wondered  why  the  other  portion  of  the                                                                   
legislation  had not  been  endorsed by  the  administration.                                                                   
Mr. Bell  referred to the  administrations belief  that there                                                                   
were strings attached to the federal stimulus dollars.                                                                          
                                                                                                                                
7:25:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker asked  what the attached  strings might  be.                                                                   
Mr. Bell thought  there was a required statutory  change that                                                                   
would  have an  impact  on  the systems  liability.  Co-Chair                                                                   
Hawker wondered  what the  benefit to the  state would  be if                                                                   
the statutory changes  were made. Mr. Bell reported  that the                                                                   
state  would  be eligible  to  apply  for and  receive  $15.6                                                                   
million in the Unemployment Insurance Trust Fund.                                                                               
                                                                                                                                
7:27:00 PM                                                                                                                    
                                                                                                                                
Representative  Gara  asked how  much  of the  federal  funds                                                                   
would be  available for the  general fund  in FY 2010  and FY                                                                   
2011.   Mr.  Bell   explained   that  the   money  would   go                                                                   
automatically into the Unemployment  Insurance Trust Fund. He                                                                   
stated that there  were over $1 million general  fund dollars                                                                   
being invested in the trust fund.  A future legislature could                                                                   
make the determination to exchange  some of the $15.6 million                                                                   
in federal funds for the $1 million general fund dollars.                                                                       
                                                                                                                                
7:28:37 PM                                                                                                                    
                                                                                                                                
Mr. Hensley  added that the  stimulus dollars  were available                                                                   
for a limited time, but once procured,  could be spent at any                                                                   
time  going forward.  He  noted that  it  was Senator  Ellis'                                                                   
intent that employees  and employers be held  harmless on the                                                                   
increased liability.                                                                                                            
                                                                                                                                
Representative Gara wondered if  there would be enough in the                                                                   
$15.6 million  to replace $1 million  of the general  fund in                                                                   
other areas. Mr. Bell concluded that he did not know.                                                                           
                                                                                                                                
Co-Chair Hawker ruminated that  the actuarial calculation was                                                                   
fairly sophisticated.                                                                                                           
                                                                                                                                
7:31:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker opened public  testimony, none being offered,                                                                   
public testimony was closed.                                                                                                    
                                                                                                                                
7:33:24 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker commented that  there was a zero fiscal note.                                                                   
                                                                                                                                
7:33:48 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas MOVED  to  report CSSB  170  (FIN) out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSSB  170 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with a new zero fiscal  note by the                                                                   
Department of Labor and Workforce Development.                                                                                  
                                                                                                                                
7:35:16 PM                                                                                                                    
                                                                                                                                

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