Legislature(1997 - 1998)
02/11/1998 03:18 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 meeting. 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 contract. 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 contract. 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 225. 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 years. 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 binding. 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 approve. Number 2090 CHAIRMAN ROKEBERG clarified that there had been a gap of one fiscal year. 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 foundation. 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 mentioned. 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 losing. 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 money. 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 members. 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 that. 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.