03/16/1995 02:00 PM House HES

 HHES - 03/16/95                                                               
 HB 171 - COMMISSIONER OF EDUCATION SERVES AT BOARD'S PLEASURE               
                                                                               
 Number 1580                                                                   
                                                                               
 TOM ANDERSON, Legislative Assistant for Representative Terry                  
 Martin, provided the sponsor statement for HB 171.  He said                   
 Representative Martin was unable to attend due to a Legislative               
 Budget and Audit meeting.                                                     
                                                                               
 MR. ANDERSON said basically, the bill addresses a recent occurrence           
 regarding the commissioner of education.  There was an article                
 included in the bill packets from the newspaper which stated that             
 Commissioner Covey was given an "early-out payoff" of about                   
 $120,000 because of a contractual agreement he had made due to AS             
 14.07.145 in the statutes.  This basically allows a commissioner to           
 serve a term of office of five years.  This means a commissioner of           
 Education and also the commissioner of Fish and Game can remain               
 through one governor's term to another if there is a switch in                
 Administrations.                                                              
                                                                               
 MR. ANDERSON continued that in essence, the current Governor of               
 Alaska, in the hopes of getting rid of Commissioner Covey, had to             
 essentially pay him off.  Representative Martin feels this is wrong           
 and should not occur.  Therefore he drafted HB 171, which says the            
 commissioner of Education serves at the pleasure of the Board of              
 Education, and may not be appointed by the board for a term of                
 office.                                                                       
                                                                               
 MR. ANDERSON said therefore, that would exclude the five-year rule.           
 The five-year rule was put in place to bridge continuity in Fish              
 and Game for fish management issues and for education goals.  But             
 this is not necessary because currently the present commissioner is           
 extremely qualified to serve and can continue those goals.                    
                                                                               
 Number 1678                                                                   
                                                                               
 CO-CHAIR BUNDE said that he was addressing "golden parachutes," and           
 certainly the commissioner of Education is not the only person that           
 has ever encountered a golden parachute.  Co-Chair Bunde asked if             
 Mr. Anderson had an amendment.  Mr. Anderson did have an amendment,           
 and Co-Chair Bunde moved it.  An objection was raised for                     
 discussion purposes.                                                          
                                                                               
 MR. ANDERSON said the amendment continues the concept of the bill             
 by prohibiting the use of state money for severance pay or other              
 separation bonus for certain public officials.  An example of the             
 need for this amendment is the former executive director of the               
 Alaska Housing Finance Corporation (AHFC) was in the job for about            
 six months.  He had a golden parachute of $60,000 as a severance              
 payoff, as did the previous executive director.  Mr. Anderson said            
 this has happened at other levels, but he did not have any                    
 statistics handy at the moment.                                               
                                                                               
 MR. ANDERSON said the amendment prevents that type of severance               
 pay.                                                                          
                                                                               
 Number 1731                                                                   
                                                                               
 CO-CHAIR BUNDE said the amendment was obviously expanding the bill,           
 and it did not seem like it fit under the current bill title.                 
                                                                               
 MR. ANDERSON said there is going to be a title change should the              
 amendment pass.                                                               
                                                                               
 CO-CHAIR BUNDE said therefore, there are two different issues.  The           
 first is the five-year term, and the second is the golden                     
 parachute.  He asked the HESS Committee members if they understood            
 the amendment and the thrust of the bill.  A vote was called on               
 amendment number one.                                                         
                                                                               
 REPRESENTATIVE ROKEBERG interjected that he had concerns.   In the            
 course of dealing with employee and executive compensation and                
 employment, in certain instances there might even be provisions for           
 severance in a hiring contract as part of a bargaining basis.                 
 Representative Rokeberg asked if this bill would affect such                  
 aspects.                                                                      
                                                                               
 CO-CHAIR BUNDE asked Mr. Anderson if he was right to assume that              
 this would be not retroactive.  It would only apply to future                 
 contracts.  He was right.                                                     
                                                                               
 REPRESENTATIVE ROKEBERG said that was not his question.  He asked             
 if a term or element of a bargain for an employment contract was              
 agreed upon with one of these stipulated officers, would HB 171               
 make that bargained-for provision illegal.                                    
                                                                               
 CO-CHAIR TOOHEY answered yes.                                                 
                                                                               
 CO-CHAIR BUNDE thought Representative Rokeberg previously meant the           
 bargain was part of a current contract.                                       
                                                                               
 Number 1804                                                                   
                                                                               
 MR. ANDERSON said on page 2, lines 6 and 7 say that the bill does             
 not affect an agreement entered into before a certain date.                   
                                                                               
 REPRESENTATIVE ROKEBERG said it is not uncommon, when an executive            
 is approached to take a state job, that he or she will take a pay             
 cut.  There might be some consideration in the contract to do it up           
 front.                                                                        
                                                                               
 CO-CHAIR BUNDE said this bill would preclude the state negotiating            
 a severance package.  It is not right for a person to work for six            
 months and then get $60,000 as a parachute when an education bill             
 was just passed that was quite heavy-handed.                                  
                                                                               
 REPRESENTATIVE ROKEBERG pointed out that in the private sector,               
 there are many activities like this that are preconditioned, pre-             
 existing bargains and agreements.  They have nothing to do with               
 golden parachutes.                                                            
                                                                               
 CO-CHAIR BUNDE responded that the private sector is the private               
 sector, and they can spend their money however they want.   This is           
 the state, and the people do not want their money spent on high-              
 dollar individuals passing through.                                           
                                                                               
 Number 1851                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said he does not want to restrict the                 
 recruitment of good people from some top level corporations.  He              
 suggested an amendment would help the bill further.  He agrees with           
 the concept, but HESS Committee members should be careful and not             
 rush the bill through the committee.                                          
                                                                               
 CO-CHAIR BUNDE felt that you either allow severance pay or you                
 don't.  If the bill was amended to allow severance pay, then there            
 is no need for the bill.                                                      
                                                                               
 REPRESENTATIVE ROKEBERG said the bill says, "or other separation              
 bonus."  He has not had proper time to study the bill.                        
                                                                               
 CO-CHAIR BUNDE said the bill did not have to be moved that day.               
                                                                               
 Number 1881                                                                   
                                                                               
 REPRESENTATIVE DAVIS sees some corporations, even though they are             
 under the Executive Budget Act, which are quasi-governmental                  
 organizations and as such, they need to operate as independently as           
 they can at times without the government looking over their back              
 before they make decisions.  The ability to provide severance pay             
 has a purpose, mostly in the private sector, but also in the public           
 sector.  Representative Davis said therefore, he would object to              
 the amendment and would rather discuss the issue more in detail               
 before it is voted on to possibly kill the amendment.                         
                                                                               
 CO-CHAIR BUNDE did not see an obligation of the state to make                 
 wealthy people wealthier.                                                     
                                                                               
 MR. ANDERSON added that generally, one can look at past occurrences           
 such as the building that the AHFC was intending to construct but             
 the legislature said "stop."  That would perhaps be a retort to the           
 statement that Representative Davis does not want to micro-manage             
 the quasi-entities.  Yet, situations like this can occur, in which            
 there was no vote by the legislature and now they are constructing            
 a building.  That is going to be prevented.                                   
                                                                               
 Number 1951                                                                   
                                                                               
 CO-CHAIR BUNDE said obviously, people need to study the issue more            
 closely.  A vote will not be called for on the amendment at this              
 time.  The bill and amendment will be heard at a later time.                  
                                                                               
 REPRESENTATIVE ROKEBERG felt that the bill should be studied more             
 closely.  The money enables one to be able to remove his or her               
 family and leave the state after his/her contract expired normally            
 or he/she was terminated under a termination clause.  This                    
 situation is very common, especially in jobs such as school                   
 superintendents and university presidents.  The amendment clearly             
 reads of a separation, but the amendment should be cleaned up.                
 Representative Rokeberg does not want to restrict hiring practices.           
 However, he agrees with Co-Chair Bunde conceptually about golden              
 parachutes.                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG felt, however, that if it was a pre-agreed            
 bonus or provision going into employment, that is not the same                
 thing.                                                                        
                                                                               
 CO-CHAIR TOOHEY referred to Section 2 of the bill, which regarded             
 severance pay.  The bill states unless they qualify under a general           
 law applicable to all qualified persons, "the following persons may           
 not be paid severance pay or other separation bonuses...."                    
                                                                               
 CO-CHAIR TOOHEY noted that if that is the practice of the state to            
 do that for all separations, then that is fine.                               
                                                                               
 CO-CHAIR BUNDE said that time will be more productively served                
 after all HESS Committee members have studied the bill and the                
 issue more thoroughly.  He withdrew the motion to move amendment              
 number one pending further discussion.