Legislature(1997 - 1998)

02/11/1998 03:18 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 225 - APPROVAL OF PUBLIC EMPLOYEE AGREEMENTS                                
Number 0572                                                                    
CHAIRMAN ROKEBERG stated the committee's next order was HB 225, "An            
Act relating to legislative approval of the terms of state employee            
collective bargaining agreements."  He informed those present and              
on teleconference that, since this was the bill's first public                 
hearing, it was unlikely the committee would move HB 225 at this               
Number 0629                                                                    
REPRESENTATIVE BILL HUDSON presented HB 225 to the committee.  He              
noted had introduced HB 225 at the beginning of the first session              
of the Twentieth Alaska Legislature.  He said he did it primarily              
because he felt there was something missing in the argument about              
a multi-year contract where this legislature had funded the first              
year of that contract and then there was great discussion as to                
whether or not subsequent years were constituted within the terms              
of the contract. He said he wanted to clarify what appears to be an            
ambiguity under current law.  Representative Hudson said this                  
legislation adds new language to the section of the law which                  
addresses the monetary terms of a collective bargaining agreement.             
Currently AS 23.42.15 (a) states that the monetary terms of any                
collective bargaining agreement are subject to yearly appropriation            
by the legislature's approval.  He said HB 225 does not change the             
statutory requirement giving the legislature authority to approve              
the appropriation of funds for state employee contracts each year;             
it adds language stating that once the legislature agrees to the               
monetary terms of a collective bargaining agreement between the                
state and a bargaining organization, they, the legislature, approve            
all of the monetary terms in the contract pending yearly                       
legislative appropriation.                                                     
Number 0725                                                                    
REPRESENTATIVE HUDSON referred to surety and fairness, stating this            
was essentially an affirmation.  He said, having been a member of              
an administration that negotiated with public employees for four               
years out of his professional life, he knew how difficult it was to            
have an employee representative who is trying to speak for 12,000              
or 17,000 state employees under the various ages of the contract               
negotiations, come in and try to bind their membership to certain              
terms and conditions only to find that the administration agrees,              
but when they come to the legislature, the legislature only takes              
it step by step.  He commented that, like any other contract with              
a multi-year provision, the legislature needed to give some                    
affirmation that it understands the terms and conditions of the                
contract and that it essentially affirms to it.  Representative                
Hudson stated that does not mean the next legislature may                      
necessarily be bound by that; it means the legislature has looked              
carefully at the terms and conditions, and essentially gives it "a             
higher level of affirmation."  In HB 224, once the legislature                 
accepts the terms of the contract and agrees to fund the first year            
of a multi-year contract, that agreement, negotiated in good faith,            
should be honored pending the appropriation of funds by the next               
and subsequent legislature.  He emphasized it was not an                       
appropriation bill, and asked the committee to hear some of the                
members of the public and perhaps the Administration.                          
HB 225 consists of one section which reads:                                    
     "Section 1.  AS 23.40.21(a) is amended to read:                           
          (a) The monetary terms of any agreement entered                      
          into under AS 23.40.070 - 23.4.260 are subject to                    
          funding through legislative appropriation.  Action                   
          by the legislature to fund any monetary term of a                    
          collective bargaining agreement entered into                         
          between the state and a bargaining organization                      
          representing state employees constitutes approval                    
          of all monetary terms in the contract."                              
The sponsor statement for HB 323 read:                                         
     HB 224, "Approval of Public Employee Agreements", would                   
     add new language to the section of the law (AS 23.40.215)                 
     that address the monetary terms of a collective                           
     bargaining agreement.  This new language states that once                 
     the legislature agrees to the terms of a collective                       
     bargaining agreement by funding the first year of a                       
     multi-year contract, they approve all the terms in the                    
     contract, pending yearly legislative appropriation.  Once                 
     the legislature enters into a contract, negotiated in                     
     good faith, I believe it is the fair and right thing to                   
     do to honor the negotiated contract for its entirety.                     
     The time for the legislature to disagree with the terms                   
     of a negotiated multi-year contract would be before ever                  
     appropriating funds during the first year of such a                       
     HB 225 does not change the statutory requirement giving                   
     the legislature the authority to approve the                              
     appropriating of funds for state employee contracts each                  
     year.  Appropriation would still be on a FY by FY [fiscal                 
     year by fiscal year] basis, but employees of the state                    
     would sense a commitment to full funding if the                           
     legislature appropriated funding the first year of the                    
Number 0870                                                                    
CHAIRMAN ROKEBERG asked for Representative Hudson's assistance in              
determining order of witnesses to be called.                                   
Number 0887                                                                    
REPRESENTATIVE GENE KUBINA asked if the chairman was ready for a               
motion to move the bill.                                                       
Number 0897                                                                    
CHAIRMAN ROKEBERG responded that Representative Kubina had missed              
the chairman's previous comments regarding the public hearing on HB
Number 0907                                                                    
REPRESENTATIVE HUDSON recommended calling someone who negotiated               
for the state as a witness, perhaps taking some preference from the            
people who represent the largest group of state employees.                     
Number 0923                                                                    
CHAIRMAN ROKEBERG stated the committee would take testimony first              
from Chuck O'Connell in Anchorage.                                             
Number 0933                                                                    
CHUCK O'CONNELL, Business Manager, Local 52, General Government                
Bargaining Unit, Alaska State Employees Association (ASEA),                    
American Federation of State, County and Municipal Employees                   
(AFSCME), testified via teleconference from Anchorage.  He said on             
the one hand they see the state entering into long-term leases,                
they see the state entering into revenue bond arrangements how                 
Spring Creek Correctional Center and the Kenai courthouse were                 
built, they have seen the state enter into long-term consultant                
contracts, and they have seen the state honoring change orders in              
construction projects.  He said that after these long-term                     
commitments have been honored, the legislature then, in essence,               
puts its stamp of approval on them.  Mr. O'Connell stated it is                
their view that the collective bargaining relationship is no                   
different, noting they are prohibited from bargaining beyond a                 
three-year term.  He said they think it would foster labor peace,              
and make the terms of a collective bargaining agreement a lot more             
meaningful, if, when the agreement was bargained, there was some               
assurance that the terms would be adhered to by all parties.  He               
stated that, for those reasons, speaking on behalf of all the                  
members of the General Government Bargaining Unit, they                        
respectfully request that the committee favorably consider this                
bill and move it on to the House Finance Standing Committee.                   
Number 1052                                                                    
REPRESENTATIVE COWDERY asked if it was Mr. O'Connell's                         
understanding, during the course of negotiations with the                      
administration, that the agreements would be funded for three                  
MR. O'CONNELL responded he thinks it is fairly clear from the                  
behavior of the parties that the Administration and the union, in              
the past two years, have viewed the relationship as a clear three-             
year relationship.  He said this has led to some conflict with the             
legislature, which he thinks has been relatively professionally                
handled, but this statutory change in Title 23 would stabilize that            
relationship even further.                                                     
Number 1114                                                                    
REPRESENTATIVE COWDERY asked if Mr. O'Connell thought this would be            
Number 1121                                                                    
MR. O'CONNELL stated he thought if this was passed, it would                   
require that the administration find a way to honor all the terms              
of the contract, but he was not exactly sure what that would mean.             
He said it might mean a change in program or realignment of                    
staffing, he was not sure.  However, he said it would mean the                 
parties would both adhere to the terms of the contract for the                 
duration of the contract, and nobody would be "blind-sided" by a               
third party.                                                                   
Number 1158                                                                    
REPRESENTATIVE COWDERY confirmed Mr. O'Connell still understood                
that the legislature was the final word on funding sources.                    
Number 1165                                                                    
MR. O'CONNELL replied he understood.  He made an analogy to a                  
change order on the Whittier tunnel.  He said if the case could be             
made to the legislature that the additional expenditure was                    
absolutely necessary, (indisc.) he had faith that the legislature              
would appropriate the funds to honor that change order commitment.             
Mr. O'Connell stated he felt the same way about this process.                  
Number 1192                                                                    
REPRESENTATIVE COWDERY noted, in the case of the Whittier tunnel,              
funding for contingencies was built in, but if it was outlandish or            
something that was extremely expensive, then it would have to come             
back to the legislature, if the funds were not already                         
appropriated.  Representative Cowdery said he really did not                   
understand the comparison.                                                     
Number 1216                                                                    
CHAIRMAN ROKEBERG commented, given the situation the state has                 
found itself in before, where it has had an unfortunate sharp and              
rapid decrease in revenues because of world oil prices, that it is             
clear funding has to be decreased.  He questioned, were HB 225 to              
be enacted, would it not restrict the administration's and the                 
legislature's ability to fund contracts in light of a substantially            
diminished revenue stream, and therefore, as Mr. O'Connell had                 
indicated, require them to reduce programs and services                        
substantially, all things being equal and assuming earnings reserve            
is not tapped into.  Chairman Rokeberg asked Mr. O'Connell, as the             
leader of organized labor for the state employees, what their past             
policy has been and how they view those types of scenarios.                    
Number 1286                                                                    
MR. O'CONNELL responded he recognized that there was some "belt-               
tightening" that would have to occur because of the way the                    
legislature and the administration viewed current revenues.  He                
said he doesn't necessarily view them the same way but noted that              
was not the debate here.  In his view, in the public sector, the               
general fund is a toothpaste tube, squeeze one place and it bulges             
somewhere else, but there is only so much toothpaste in the tube.              
He said it is a matter of priorities, and if there is a dispute                
about whether or not the priority was correct then so be it, but               
hopefully "honorable men will and women will honor a contract."                
Number 1378                                                                    
MIKE McMULLEN, Personnel Manager, Division of Personnel, Department            
of Administration, testified next in Juneau.  He stated the                    
Division of Personnel also contains the Labor Relations Section                
which negotiates state contracts and administers those contracts.              
He said the state, as an employer, and the unions, certainly look              
for closure when they have reached agreement on a collective                   
bargaining agreement for whatever term agreed, and they would like             
to be able to know with some certainty that those terms will remain            
in effect as negotiated.                                                       
Number 1410                                                                    
MR. McMULLEN stated HB 225 helps out in this regard.  He noted he              
has been with the division of 20-plus years and he said the thing              
that has always puzzled him is the concept that parties can reach              
an agreement, each having traded something to get there, having                
"walked that path together for some time," and then one party says             
it wants some of that back, or it didn't get enough, it wants more             
before it will continue the walk.  Mr. McMullen said that somewhat             
describes the problem the state and its unions face if the                     
legislature acts to approve bits and pieces of contract in a second            
or third year.  He said that a trade has been struck, everyone has             
given up something to get something else, and the legislature comes            
along at some later point and say it's going to change the trade so            
it doesn't come out equal.  He commented the language of the bill              
saying that once the legislature has agreed to the terms of the                
contract those terms will be recognized for the life of the                    
contract makes a lot of sense to them.                                         
Number 1479                                                                    
MR. McMULLEN stated that does not diminish the legislature's                   
responsibility or obligation in appropriations on a year-by-year               
basis.  He said it does say to the parties, whether it is minor or             
major reductions in funding, that it is not going to pay for as                
many of whatever, as opposed to picking and choosing benefits and              
provisions of the contract to recognize.  Mr. McMullen posed the               
example in the current contract with the General Government                    
Bargaining Unit.  As of next year, the employees are giving up                 
Lincoln's birthday as a (indisc.) holiday.  He said he believed it             
would not be appropriate for the legislature to take that in the               
third year of the contract, but not give the pay increase which was            
in some way included with that trade when the deal was struck.  He             
stated, "It's that sort of changing things in midstream which is a             
problem ... that we'd like to see resolved, and I think this bill              
resolves."  Mr. McMullen said that, in terms of serious reductions             
in funding and he noted there is a history of this in the state,               
the parties have the voluntary option to mutually go back and                  
review their terms.  In the 1985, 1986, 1987 crisis, they entered              
into letters of agreement and had employees working at 75 or 80                
percent of salary to meet that crisis.  He said the parties have               
the means to deal with significant changes, but it's mutual,                   
negotiations occur across the bargaining table to reach that.  He              
noted they think that is the appropriate way for it to happen; it              
gives the parties the say to decide, depending on the funding, if              
they would rather trade and keep jobs, versus a benefit like a                 
salary increase.                                                               
Number 1589                                                                    
MR. McMULLEN stated, however, that is done by the employer and the             
employees' representative when they see the picture, rather than by            
the legislature stepping in and disrupting a balance that was                  
struck.  He said the Administration favors the bill and thinks it              
will "help calm those areas" where people are nervous about second             
and third years of three-year contracts being disrupted by the                 
legislative process.                                                           
Number 1617                                                                    
REPRESENTATIVE JOE RYAN, noting he was playing devil's advocate,               
said it was up to the legislature to make appropriations and one               
legislature could not bind another.  He gave the example of a                  
contract funded in its first year and asked what would happen if               
the "next guys" did not agree.                                                 
Number 1653                                                                    
MR. McMULLEN responded he thought there was a good role in a                   
difficult problem option here.  If the legislature said it doesn't             
want to pay for all these bells and whistles for these employees,              
and therefore the appropriation to carry this out is reduced, then             
the appropriation is reduced, but the trades that went into                    
reaching that agreement are not disrupted.  Mr. McMullen said,                 
after the lower appropriation is apparent, the parties have the                
option of striking different deal.  He said, in most cases, with               
things that require an appropriation of dollars, a reduction in                
appropriation in one scenario means more layoffs and less people to            
perform the work.  Mr.  McMullen stated the other interest from                
employees is keeping their jobs, and they may want to give up                  
salary or benefits in order to do so.                                          
Number 1761                                                                    
REPRESENTATIVE RYAN described another scenario:  he sees a contract            
proposal and does not want to buy it because it is too expensive.              
He asked if the bargaining unit is then forced to stay with the                
previous contract.                                                             
Number 1773                                                                    
MR. McMULLEN stated there is provision elsewhere in PERA (Public               
Employment Relations Act, AS 23.40.200 to 260, which HB 225 would              
amend) that calls for the legislature to pass a resolution advisory            
to the parties before the point of appropriating and approving it              
is reached.  He stated he would really like to see that part work,             
but if the legislature collectively found a contract unpalatable,              
it tells the parties in time for them work out a new deal before               
the legislature adjourns.  He stated there have been past                      
situations where the legislature, in the last ten days of the                  
session, had finally clearly said that it was not going to                     
appropriate a contract.  He said the parties had ten days to go                
back and strike a new deal and he noted, under some of the unions'             
internal processes, there was not enough time for the unions to                
react.  Mr. McMullen commented an indication early in the session              
that the legislature was not going to approve a contract is helpful            
to the parties and sends them back to the table.                               
Number 1830                                                                    
REPRESENTATIVE HUDSON, in follow up to Representative Ryan's                   
questions, referred to the back-up material provided.  He said,                
"We're talking about 23.40.212, and if you look at 23.40.215,                  
you'll see that it - it homes in on the legislature's approval or              
disapproval, but it really highlights more the disapproval than it             
does the approval ....  What we're trying to say is that this                  
forces the legislature to really seriously look at the terms of the            
contract.  They have an opportunity and a responsibility up front              
to review the entire contract and if they agree to fund any portion            
of it, it pretty much accedes to the terms of the whole and then,              
obviously, any next legislature -- and if they didn't want to bind,            
or feel like they could bind the next legislature, they could                  
stipulate that.  They could go right back to the company and to the            
unions and say, 'You know, we - we agree to the one year of this               
thing.  Go back to the negotiations and come back with a new                   
contract next year to a new legislature."  He said he thinks that              
they have to find closure and approval, and that is what this bill             
tries to do.  He said it simply tries to tell the legislature to               
look at all of the provisions of a contract, and if the legislature            
agrees it is a good contract, fund it, and then the next                       
legislature can deal with it on their own merits.                              
Number 1895                                                                    
REPRESENTATIVE RYAN noted he brought these questions up because of             
possible legal and judicial scrutiny and intervention.                         
CHAIRMAN ROKEBERG asked Mr. McMullen, in his capacity as a                     
representative of the Administration, for the current status and               
history of the present contract, what has happened in the last                 
three fiscal years, and the funding or non-funding of the contract             
in recent history.                                                             
Number 1955                                                                    
MR. McMULLEN replied, for the executive branch, exclusive of some              
of the public corporations and noting the state has just gone to               
its tenth bargaining unit with the correction officers, the state              
has nine in place.  Four of these have an opener now, or over the              
next several months, and the other five all expire June 30, 1999.              
He said these nine represent the bulk of employees:  general                   
government, supervisors, labor trades and crafts.  Noting they are             
now in the second year of a three-year contract with those                     
employees, approaching the third year, he said the major economic              
provision is a cost of living escalator that is half of the                    
consumer price index (CPI) from Anchorage.  The first year was 1.4,            
the second year was 1.5, noting that was an issue last year but it             
was ultimately approved.  He said the figures for next year will be            
out on February 24 from the United States Department of Labor.  Mr.            
McMullen stated the contracts also have had an escalator provision             
on health care costs with caps for both employers and employees,               
which are running their course as well.  They are currently in the             
middle of setting the rates for the health insurance coverage, and             
it looks like some understanding is going to have to be negotiated             
with the General Government Bargaining Unit because the "fixed                 
benefits and fixed costs provisions the contract are running into              
a conflict," and that is going to have to be resolved.                         
Number 2059                                                                    
CHAIRMAN ROKEBERG commented that he believed the legislature did               
not approve a contract in FY 1997 and there was a year lapse.                  
Number 2070                                                                    
MR. McMULLEN said it went back further than that.                              
Number 2078                                                                    
REPRESENTATIVE KUBINA noted it was negotiated during Governor                  
Hickel's last year in office, so whatever fiscal year Governor                 
Knowles took over, he inherited Governor Hickel's contract.  The               
legislature turned the contract down and did not fund it.                      
Representative Kubina said Governor Knowles went back, came in for             
his second year with this contract, which the legislature did                  
Number 2090                                                                    
CHAIRMAN ROKEBERG clarified that there had been a gap of one fiscal            
Number 2095                                                                    
MR. McMULLEN added he thought that there had been these last minute            
changes in contracts, where the parties had to renegotiate in the              
last ten days of the legislative session, going back even as far as            
the Sheffield Administration.                                                  
Number 2112                                                                    
REPRESENTATIVE KUBINA said he thought the point, though, is that               
Governor absorbed those increases within his budget and did not ask            
for specific money this year or last year to fund those increases.             
He said that was his understanding of the way the Governor's budget            
was submitted.                                                                 
Number 2137                                                                    
CHAIRMAN ROKEBERG noted he would be asking Mr. McMullen for some               
"feedback" on this and commented he thought the House Labor and                
Commerce Standing Committee, because of its jurisdictions, should              
be briefed on contracts, noting Mr. McMullen had indicated four                
bargaining units were currently up and open.  Chairman Rokeberg                
asked if Mr. McMullen could provide the committee with an update on            
the status of the labor negotiations, and other things in this                 
entire area, for this fiscal year and the next coming fiscal year              
so that the committee would have an understanding of the scoping               
and so forth.  He noted that, since the members do not sit on the              
House Finance Standing Committee, sometimes they are not attuned to            
some the things which are happening and (indisc.) budgetary mindset            
here, however, it was important the committee members understand               
what was happening in the state's relationship with its employees,             
and be aware of potential problems.  Chairman Rokeberg also asked              
if there had been any case law developed along this line in regard             
to the agreement to contracts and then the lack of funding, and                
also if there was any case law history that was used as a                      
Number 2204                                                                    
MR. McMULLEN responded that there have been two or three cases                 
which have gone to the state supreme court regarding the                       
legislature's authority on the appropriations question.  He stated             
that he is not an attorney, but he thinks there is a narrow issue              
out there which has never been clearly put before the court, of                
whether the specific provision of a contract, once struck, can be              
rejected by lack of funding in the future year.  Other than that it            
is well settled, the legislature has the power of appropriation,               
and that is inviolate.                                                         
Number 2246                                                                    
CHAIRMAN ROKEBERG questioned whether that was a constitutional or              
statutory right under the case law that has occurred.                          
Number 2250                                                                    
MR. McMULLEN responded he thought it was constitutional.                       
REPRESENTATIVE HUDSON added that the courts have determined it.                
Number 2261                                                                    
CHAIRMAN ROKEBERG also asked if Mr. McMullen could indicate some               
warning mechanisms and how those worked if there is a decrease in              
revenue, and how the bargaining process and the legislature would              
fit into that.  He wondered if there were any provisions in the                
existing code, and asked Mr. McMullen for a "thumbnail sketch."                
Number 2283                                                                    
MR. McMULLEN responded in the affirmative, adding that he thought              
Representative Hudson had referred to a different section.                     
Number 2288                                                                    
CHAIRMAN ROKEBERG asked for the particular case law as well.                   
Number 2314                                                                    
HAROLD CLEEK, Local 52, Alaska State Employees Association (ASEA),             
American Federation of State, County and Municipal Employees                   
(AFSCME), came forward to testify.  He noted he was a negotiator               
for the state, and a right-of-way agent with the Department of                 
Transportation and Public Facilities (DOT/PF).  He said he was also            
a member of the medical health benefits committee, a labor                     
management committee, which advised the Commissioner of                        
Administration on issues like employee medical health benefits, and            
he referred to an article in the previous evening's Juneau Empire              
which related that group had been quite busy for the last two to               
three months.  Mr. Cleek stated he came to today's meeting because             
this was a cause near and dear to his heart, and he appreciated the            
Chairman's comments.                                                           
Number 2365                                                                    
MR. CLEEK confirmed that the union had negotiated three years with             
the previous administration and then were caught another year while            
the administration and legislature changed.  He said, for the                  
"employee in the trenches," it was very "disserting" to have three             
or four years go by with no consideration for shaking hands or                 
meeting minds.  He stated that if there is a meeting, and hands are            
shaken, as when he is doing his job, they do not know if they have             
a deal because somebody on that "third parties list" might change              
his or her mind, and they would have to start all over again.                  
Number 2395                                                                    
MR. CLEEK stated he wanted the committee to know the concern was               
very mutual regarding the agreements made.  Mr. Cleek drew an                  
analogy to his work as a right-of-way agent.  He has to go out                 
everyday and represent the state, negotiating federal and state                
projects.  He talks with city managers, regular people, and some               
attorney, noting he has the power of recommendation, but not the               
final say in the field.  If his administration approves what he has            
put together, he said he knows it is going to go through and the               
funding is there.  At one point in his past, he was an airport                 
leasing agent and he leased property for airports to the federal               
government as well as fixed base operators (FBOs), concessions and             
car rental agencies.  He said the lease at the federal level has a             
clause which is very similar to HB 225; once a 10 or 20-year lease             
is entered into, it is subject to appropriation.  He noted this is             
not a new concept in government, commenting, "The 'feds' have been             
doing it for years, maybe not on the same level as this, but it is             
in their lease ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE]                     
TAPE 98-12, SIDE B                                                             
Number 0001                                                                    
CHAIRMAN ROKEBERG said, "... cause of action against the                       
government, is that correct?"                                                  
Number 0003                                                                    
MR. CLEEK stated he was not an attorney, but he said his                       
"guesstimation" was that the Chairman was correct.                             
CHAIRMAN ROKEBERG stated, "I'm a lease guy, I know."                           
MR. CLEEK stated, in his understanding, that was correct.  Today he            
is representing approximately 8,000 employees, noting he thought               
they recently lost 719, so the number is probably a little lower               
than 8,000.  He said he would like the committee to consider this              
language.  He thinks it speaks to the issue, and he echoes Mr.                 
McMullen's testimony to the committee exactly, stating, "When all              
is said and done, we're not diminishing, we're clarifying and ...              
your power is not gonna to be taken away, it - it just will be                 
clarified.   ... Once you approve that contract you have a three-              
year obligation subject to appropriation."  From his experience                
with leases, that sounds like a reasonable and acceptable clause in            
a contract.  He said they gave up their birthdays this year, and               
Lincoln's birthday goes next year, as Mr. McMullen previously                  
Number 0050                                                                    
REPRESENTATIVE RYAN commented he gave his up a long time ago.                  
MR. CLEEK noted those were things which had been in their contract             
which they gave up over the course of the three years.                         
CHAIRMAN ROKEBERG clarified, "You gave it up but that's under the              
contract ...."                                                                 
MR. CLEEK stated, "This is under a contract issue."                            
Number 0060                                                                    
CHAIRMAN ROKEBERG stated, "I didn't want to make the distinction               
that this was a interim type thing where they changed the terms                
more recently rather than the - the contract that's in place now."             
Number 0069                                                                    
MR. CLEEK stated the contract in place runs from 1996 to 1999, and             
there were "stair-stepped" concessions.  To get a 1 percent pay                
increase the employees gave up some holidays and other things,                 
including their birthdays and Lincoln's holiday.  He said,                     
supposedly, according to their financial folks over at OMB (Office             
of Management and Budget, Office of the Governor), he thought the              
increase was pretty much offset by the cost of these holidays, and             
some of the other reductions agreed to in the contract                         
negotiations.  Mr. Cleek said he sat at the bargaining table as a              
member of the medical health benefits committee, and he is a                   
negotiator for the state, but he was not on the contract                       
negotiation team.                                                              
Number 0111                                                                    
REPRESENTATIVE RYAN stated what he thought was the basic concern in            
the legislature, using the analogy, "Your wife goes shopping, and              
comes home with bags full of stuff and then tells you all the money            
she's saved, and then you tell her, try to make the mortgage                   
payment with that money she's saved.  It's a -- the governor and               
politics being what it is can be nice fellow, and (indisc.) good               
contract, but the buck comes back here 'cause we have to pay for               
it.  So we're -- our concern is to make sure that ... we're not                
getting ourselves into a position where we're gonna be, you know,              
responsible for whatever the governor negotiates.  We may not agree            
with that."                                                                    
Number 0134                                                                    
MR. CLEEK stated he understood Representative Ryan's comments,                 
noting this last year they have had to do some real adjusting in               
DOT/PF, including considering job-share.  He said they are getting             
half of the CIP, so they are not making a fortune off of this; he              
thinks most of that increase was consumed by the medical health                
benefits.  Mr. Cleek noted he has been working with the Department             
of Administration through his volunteer position on the medical                
health benefits committee to try to get those costs under control.             
Mr Cleek stated, "There's other things that ... are out there                  
happen on an annual basis, sometimes never, such as the RIP                    
(retirement incentive program), so there are tools that the                    
administration uses to minimize the impacts and to live within the             
budgets as agreed on."  He also mentioned empty positions that                 
might not have been filled, and he noted he was speaking from his              
observations as an employee, not as an expert.                                 
Number 0157                                                                    
MR. CLEEK reminded the committee that, even if the legislature did             
change the language, it would still exercise its right to                      
appropriation, which, he said, was probably the bottom line anyway.            
Number 0202                                                                    
CHAIRMAN ROKEBERG made a request to Mr. McMullen, in addition to               
the other material he would be providing, for information about the            
situation with health care benefits and the current ramifications.             
Chairman Rokeberg also pointed out that the legislature, in its                
appropriations for the current fiscal year, has asked a number of              
the employees to (indisc.) take an unpaid two-week leave this year.            
Number 0237                                                                    
FRANK SMITH, retired state employee, former union shop steward,                
Alaska State Employees Association, testified next via                         
teleconference from Barrow.  He commented he was now self-employed.            
Mr. Smith said he had been the shop steward in Barrow when he                  
worked for the state.  He noted difficulties had come up with the              
funding of the ASEA contract on the last go around, and the                    
legislature had finally been able to resolve it in a way that both             
the union membership and the legislature found reasonable.  Before             
that impasse was overcome, the state employees were looking at the             
possibility of a strike or ever-diminishing salary benefits.  He               
said the employees were so concerned that a number of them came to             
him and said they were considering retiring.  Mr. Smith mentioned              
job stresses and noted many, many positions have gone unfilled in              
recent years in order to make the budgets the governor has tried to            
make.  Mr. Smith stated the stresses brought by the indecision                 
about the contract cause people to work less well than they might              
otherwise have been able to and this is an enormous stress.  He                
said, "I just want to let you know that it's not productive when               
you, ... as many (indisc.) employers outside have discovered, it's             
not productive to drive your workers to the point where they can no            
longer concentrate on the business at hand."  Mr. Smith commented              
he knew the committee appreciated that, and noted many of the                  
members have been "working men," formerly blue collar workers, and             
were able to understand how the uncertainty of a contract could                
affect people and their families.  He commented on Mr. Cleek's                 
eloquence, and stated he believes the legislature knows that health            
benefits for state employees, in this case ASEA members, have                  
diminished substantially, deductibles and co-payments have up                  
significantly, so the employees are already experiencing a constant            
erosion of their purchasing power.  He said HB 225 would go a long             
way in relieving some of those stresses he has addressed.                      
Number 0360                                                                    
REPRESENTATIVE JERRY SANDERS said he could easily understand how               
this uncertainty would have an effect on employees, but he asked               
for Mr. Smith's assistance in understanding what HB 225 would do               
about that uncertainty.                                                        
Number 0375                                                                    
MR. SMITH replied HB 225 would remove the uncertainty of the last              
two years of a contract.  If the current one (indisc.) was funded              
for the first year, the membership would not be stressed by the                
possibility that it would not be funded in its second and third                
year, and they would not be looking at the prospects of a strike.              
He said these state workers want to do their absolute best for the             
public but they don't need anymore job stressors; they are already             
working under substantial pressures.                                           
Number 0401                                                                    
REPRESENTATIVE SANDERS commented that this was not binding on                  
anyone and does not change anything.  He stated, "This is like the             
Indian treaties, made 'em feel just, everything was gonna be fine              
as long as the grass grew and the streams flowed or until somebody             
changed their mind.  I don't see what this bill does for you."                 
Number 0418                                                                    
MR. SMITH responded, in his reading of HB 225, noting he was not an            
attorney, it appears to say that once this contract has been funded            
for its first year the legislature has some obligation to continue             
that level of funding through its second and third year as a three-            
year contract.                                                                 
REPRESENTATIVE SANDERS said that is the way it appears.                        
REPRESENTATIVE HUDSON said that is the intent.                                 
MR. SMITH stated that would remove a huge amount of uncertainty.               
Number 0450                                                                    
ROBERT MILLER, state employee, union shop steward and member,                  
Alaska State Employees Association, came forward to testify.  He               
noted he did not have a lot to add to the previous testimony.  He              
said, as a shop steward, he is asked a lot of questions during                 
contract negotiations from people on his floor, and the only thing             
he really had to say was that the level of stress is palpable.  He             
stated certain questions are asked frequently, and one of them is:             
"Why do we have to bargain with an agency that doesn't have the                
power to grant what we're bargaining, and then turn around and have            
another group of people reject it?"  His answer is the state                   
constitution provides the legislature with absolute funding power.             
The next question, then, is:  "Well, why aren't we negotiating with            
them then?"  He noted he did not have an answer, but he used the               
husband and wife analogy.  He said a couple make a purchase offer              
on a house and the bank agrees and the couple moves in.  After the             
first year the husband says his wife has control of the pocketbook,            
and that she says they have to reduce the mortgage payment, or that            
they can't afford the increasing payment.  The bank now has the                
option to tell the couple that the bank will have to evict them.               
Mr. Miller said it puts the membership in a position of wondering              
what to do.  They made a deal and, to the membership, it feels like            
someone is backing out, although he noted legally it is not that               
way.  He said he thinks it would foster a lot of good will, and                
actually enhance productivity more than the 1.5 percent per year               
which is in question, even if, as Representative Sanders said, it              
really does not change anything legally.  He stated, "It's a                   
perception thing, I guess.  Does that make any sense?"                         
Number 0557                                                                    
REPRESENTATIVE COWDERY asked if Mr. Miller thought negotiations                
with the legislature would be better, and how would he go about                
doing that when most legislators have two-year terms.                          
Number 0569                                                                    
MR. MILLER responded that maybe they need to do two-year contracts,            
although, since negotiating costs a lot of money, there are some               
disadvantages to that also.  He stated he was an engineer, and in              
his profession, but not necessarily as a state employee, he has had            
to negotiate with firms.  He said the first thing a firm needs to              
provide is proof that it has the authority to give what it is                  
agreeing to.  Noting he also was not an attorney, he  commented                
that, as he understands the Fair Labor Standards Act, it is                    
generally considered an unfair negotiating practice to send someone            
to the table who does not have the authority to grant what is being            
negotiated.  He said, however, our state constitution supersedes               
that.  He said it is a tough problem and one everybody needs to                
come together to solve, because he thinks they are currently all               
Number 0622                                                                    
CHAIRMAN ROKEBERG stated he was disturbed by Mr. Miller's testimony            
that the level of stress in his work setting was palpable.                     
Chairman Rokeberg asked if that was  because the employees of the              
state were fearful that the legislature  would not appropriate the             
funds at budget time every year, or were the employees worried                 
about changes in the terms of the deal.                                        
Number 0648                                                                    
MR. MILLER responded that he was not sure the average state                    
employee understood the process in all of its detail, but he said              
the uncertainty about what is next as the legislative session                  
progresses, mentioning the Supplemental Benefits System Annuity                
Plan (SBS) as an example, hangs over somewhat like a cloud.  People            
wonder what they do.  Mr. Miller stated he has had to call the                 
union and ask what it means if the legislature rejects it, are the             
members still bound by the terms of the contract?  He asked how a              
contract could be a one-way street.  He said he doesn't know all               
the answers, but he thinks 1.5 percent of a 7.5 hour day comes out             
to 6 minutes.  He said if 6 minutes of time is wasted by somebody              
worrying about this, then everybody loses.                                     
Number 0707                                                                    
REPRESENTATIVE RYAN referred to Mr. Miller's mention of SBS, and               
stated he was not aware of another state that provided a retirement            
program and something similar to SBS.  He said the packages they               
have provided for employees are fairly comprehensive.                          
Number 0720                                                                    
MR. MILLER agreed that it was comprehensive and a good package,                
noting he had not meant that by way of a complaint.                            
Number 0736                                                                    
MARY GRAHAM, state employee, union shop steward, Alaska State                  
Employees Association, testified next on HB 225.  She stated she               
was speaking on her own behalf as a state employee.  She commented             
that, in addition to being an ASEA shop steward, she was an                    
alternate to the negotiating committee for the next General                    
Government Bargaining Unit contract.  Ms. Graham referred to Mr.               
Miller's statement, also noting Representative Sanders' statement,             
and said it somewhat dovetails her comments.  She stated it may not            
really bind the legislature, but it may put the perception out                 
there with the union's members.  She noted currently the union has             
negotiated three-year contracts and she commented on the expense of            
negotiations for all these employees statewide.  Ms. Graham said               
she sees this as saying the legislature was really looking at that             
and saying it looked okay.  She noted it did not mean Alaska was               
not going to have a disaster, which sometimes happens, but she said            
it was an attempt to find that level playing field, where if the               
legislature approves and decides to fund the contract in the first             
year, the union's members through their elected officials have                 
signed a contract which says this is what they have agreed to for              
three years.  She noted most of their contracts contain a "no-                 
strike clause," so even if the funding does not come through, the              
union's bargaining chip is gone.  She asked if the employees were              
still held by all the rest of the terms of the contract containing             
the concessions they made.  Ms. Graham stated, "There will not be              
a work stoppage, which is, you know, basically as employees, and               
not that we're advocating that, that - that's like our only                    
bargaining chip, and when we sign a three-year contract, basically             
that's what we're saying to the administration, we will agree to               
these terms and for three years let's have ... calmness in our                 
relationship with each other."                                                 
Number 0852                                                                    
MS. GRAHAM noted the union's bargaining team negotiates with the               
Department of Administration through the governor, but the money               
comes back to the legislature,  stating she did not think there was            
any mechanism for the union to negotiate with the legislature and              
she thought it was set up through the administration as a time                 
saving measure.  She noted there are 5 people at the table                     
representing the union's 8,000 members.  Ms. Graham mentioned the              
concern with health insurance, noting their contract has a clause              
which says if health insurance goes up, the members will pay up to             
$25 a pay period for health insurance benefits.  During the last               
contract negotiations, when they received a 1.4 increase on one                
hand, they had to pay $19.50 out on the other hand.  For some                  
people that "was a zero effect," and their standard of living did              
not go up at all.  Ms. Graham gave the example of a woman in her               
office in longevity, which means she cannot receive a merit                    
increase.  If this woman pays $16 more every pay period for                    
insurance, which is a number that has been thrown about, she loses             
Number 0949                                                                    
MS. GRAHAM stated again that it really does affect people.  She                
said, "We did our trade-offs, we signed a contract [that] says we              
won't go on strike, and we said we'll do that for three years.                 
Yes, the legislature gets to fund it, and if the legislature                   
doesn't fund it, basically, we don't have any recourse."  She said             
when that came up in the past the administration has said it could             
leave this position vacant, or maybe not do this or that, and the              
money has come through.  She stated maybe she was just asking for              
a good faith effort to say, "Yeah, we're gonna look at it and if               
it's a totally bad deal, we'll let you know ... by not funding the             
first year, but if it's a reasonable deal we're saying a                       
handshake's a handshake."                                                      
Number 0993                                                                    
REPRESENTATIVE COWDERY asked who had come up with the idea for                 
three-year contracts.                                                          
Number 1000                                                                    
MS. GRAHAM responded she did not know, it seemed to be common                  
practice and almost all the unions use three-year contracts.                   
Number 1016                                                                    
REPRESENTATIVE COWDERY noted, however, they were "out of sync" with            
the constitution and the fact that the legislature has to                      
appropriate them yearly, and maybe that should be rethought.                   
Number 1029                                                                    
MS. GRAHAM stated she thought there were about 19 union contracts              
and was it a good use of state resources for the administration to             
be negotiating 19 union contracts every year.                                  
Number 1051                                                                    
REPRESENTATIVE HUDSON noted he was probably the only one at that               
table who had ever negotiated with every one of the state of                   
Alaska' unions.  He said the administration went into multi-year               
considerations on the basis that it was good for the state.   It               
received continuity of performance from its employees and control              
over its benefits.  He stated to the committee that negotiating                
with public employees on a contract is somewhat of an ongoing                  
process.  He said the state gets something one year and gives up               
something another year.  Representative Hudson stated that the                 
state has people representing management's side of the issue and               
they obviously try to keep stability - the ships running, airports             
humming, roads maintained - all the different things the employees             
of the state do.  Representative Hudson stated that a three-year               
contract will never be struck by management unless management feels            
the contract is in its best interest.  He said the unions, in turn,            
sit down and try to negotiate what they think is best for their                
Number 1108                                                                    
REPRESENTATIVE HUDSON referred to one of Ms. Graham's comments,                
noting it was one of the reasons he feels something like HB 225 is             
essential.  Commenting on the discussion of negotiating and the                
legislature's involvement, he said, "Good faith really does mean               
something."  If an administration negotiates a multi-year contract             
with the union, with both sides compromising to reach agreement,               
all he wants to see is that the legislature takes a hard look at               
that contract the first time around, and consider whether or not it            
is willing to assert that it is a good deal.  Representative Hudson            
stated, "If they do, this legislation then says that ... it's a                
good faith effort on our part as well as their part."  He stated he            
believes sincerely that a deal is a deal, and while this is not                
binding to the next legislature, it ratchets up the legislature's              
assertion and, hopefully, gives the employees of the state of                  
Alaska some feeling there is going to be closure.  He noted the                
difficulty, without negotiating experience, of understanding a                 
multi-year contract with concessions on both sides.  He said the               
legislature is not a part of the negotiating, but he wants to force            
it to take a hard look at that first year, and then if it agrees               
with the contract, he thinks that establishes some sort of good                
faith table.  Representative Hudson said the employees deserve                 
Number 1198                                                                    
CHAIRMAN ROKEBERG concluded the public hearing on HB 225 for that              
meeting, there being no further witnesses.  He requested that                  
staff, working with the bill sponsor, obtain a legal opinion on the            
bill's constitutionality.  Chairman Rokeberg also noted he was                 
somewhat concerned about the language construction of the bill                 
itself; he requested an attorney opinion of the legal foundation,              
and case law history.  In addition, Chairman Rokeberg stated the               
committee would look forward to Mr. McMullen's "nut-shell" report.             
He noted the committee hadn't had an overview on any of the labor              
aspects of bargaining and so forth, which might be taken up later.             
He indicated HB 225 would be held for further consideration.                   

Document Name Date/Time Subjects