Legislature(1999 - 2000)
04/06/2000 08:09 AM House STA
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* first hearing in first committee of referral
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HB 439-PAY RAISE FOR NON-UNION STATE EMPLOYEES Number 2171 CHAIR JAMES announced the next order business is HOUSE BILL NO. 439, "An Act relating to the compensation of certain public employees and officials not covered by collective bargaining agreements; and providing for an effective date." ALISON ELGEE, Deputy Commissioner, Department of Administration, explained that HB 439 is the statutory amendment to the pay schedule that governs non-covered employees. She explained that these are employees in the court system, the legislature, and non-covered employees in the executive branch. She explained that HB 439 proposes amendments that correspond to agreements that the department has reached with groups with whom the department has collectively bargained new contracts, and the new contracts are presently before the legislature for consideration. MS. ELGEE said she envisions that in fiscal year (FY) July 2001, the department would propose paying all non-covered employees a one-time lump-sum payment up to $1200, prorated at $50 for each pay period that the employee was in pay status in FY 2000. She mentioned that there is a special provision for legislative session employees to recognize the peculiar time frame of that particular employment. She indicated that she had requested an amendment to the section with the lump sum to clarify the fact that the lump-sum payments are intended to be reduced by mandatory employer and employee deductions. She informed the committee that the amendment would be in keeping with provisions that are in collectively bargained agreements. She remarked that the department is proposing two-percent and three-percent adjustments to the pay schedule in FY 2002 and FY 2003 respectively. She added that committee members have received a sectional analysis in their packets, and there is a fiscal note on HB 439. Number 2018 REPRESENTATIVE HUDSON said yesterday (4/5/00) he had heard from the co-chairman of the Senate Finance Committee regarding elements in the employee pay package presented for legislative consideration. He surmised that whatever has been done on the collective bargaining side is being offered now by the Department of Administration to non-covered employees. He stated that one of the elements that was brought to his attention was that apparently the administration has agreed to prevent an employee from selling all of his/her sick leave or transferring it over as regular leave and cashing it in. He asked if it were true that some of those cash-ins could be up into the $50,000 bracket. MS. ELGEE replied that what he is referring to is a provision of the agreement that the department bargained with the general government unit (GGU). She said that GGU is the only large employee group still remaining on an annual sick-leave accrual instead of a personal-leave accrual, and what is included in the collective bargaining agreement is a conversion to a personal- leave environment. She noted that the personal-leave environment provides for a sick-leave balance to be converted to personal leave at a rate of 50 percent of what that balance is. In the past when other employee groups have converted from the sick- leave-and-annual-leave environment, there has also been a conversion of sick leave so that the entire amount of sick-leave accrual is not lost to an employee in making that switch. She commented that there are a variety of benefits to a personal- leave accrual environment, not the least of which is that the total amount of accrual is actually less than what is seen in a sick-leave-and-annual-leave accrual. She mentioned that the sick-leave switch is a specific provision in the GGU contract because everybody else is on the personal-leave system now. Number 1892 REPRESENTATIVE HUDSON asked if any employee covered by HB 439 would fall under the new leave provision. MS. ELGEE replied no. She stated that non-covered employees have been in a personal-leave environment since 1978 and any conversion that occurred has already occurred back when the statute was amended in 1978. CHAIR JAMES asked if an employee's sick- and annual-leave days would be totaled together and half put into personal leave, or is half of the sick leave put into personal leave. MS. ELGEE answered that at present, annual-leave accrual has a cash value, and the accrual is not amended. She said that HB 439 amends sick-leave accrual and proposes converting 50 percent of sick-leave accrual to a personal-leave environment. In the future, the accrual rate on an on-going monthly basis is also amended to reflect a personal-leave accrual rate which represents both annual and sick leave. She explained that the employee has discretion as to how personal leave is used. Number 1802 CHAIR JAMES inquired what happens to the other half of the sick leave that has been accrued. MS. ELGEE replied that the other half of the sick leave is put into basically a catastrophic medical bank which is maintained on behalf of the employee. She commented that the employee has to be ill for a threshold number of days before he/she can access the medical leave bank. If the employee terminates, the medical leave bank goes away at no cost to the state. She reiterated that the employee's medical leave only remains on the books as long as the employee is consistently employed. CHAIR JAMES inquired as to how accrued sick leave was funded into the reserve account. Number 1795 MS. ELGEE answered that the department funds leave on basically a cash flow basis rather than on approved liability basis, and it is funded through the department's working reserve account. She said that the factor to generate those monies is part of the personnel services budgeting factors. She noted that there are two accounts: 1) a leave cash-in account and 2) a terminal leave account. She explained that the leave cash-in account is calculated for each department based on their own historical cash-in usage by employees, and that account is funded annually in $10 million. She commented that the terminal leave account is used when an employee actually terminates service and at that time receives whatever the cash value is of accrued leave that has not been used. She mentioned that the terminal leave account also is $10 million. The two accounts are constantly being refilled because they are part of the department's personnel services budgeting factor. CHAIR JAMES asked if the two accounts are funded by money that is appropriated or is the money just a number. Number 1685 MS. ELGEE replied that the two accounts are funded by money that is appropriated for personnel services expenses and included in that budget line. REPRESENTATIVE OGAN noted that HB 439 covers legislative employees and asked if it also covers legislators. MS. ELGEE answered that as drafted, HB 439 does cover legislators, governor and lieutenant governor. She said legislators are no longer tied to the pay scale and are addressed separately with a set salary, but HB 439 would adjust those salaries in future years. REPRESENTATIVE OGAN asked if a vote for HB 439 would give legislators a raise. CHAIR JAMES replied yes. REPRESENTATIVE GREEN asked what would happen if in the bargaining process a problem arises with funding. He added that the bargainers would go back to the drawing board and subsequently could remove the benefits now under discussion from bargaining unit contracts. He observed that if HB 439 passes then non-union people might have a better deal than bargaining unit people. Number 1569 MS. ELGEE acknowledged that the outcome as described by Representative Green could happen, but she anticipates that HB 439 would be a part of the larger decision relative to the collective bargaining agreements as those continue to be considered. She noted that the reverse has also been true in past years when the department has collectively bargained agreements, and legislation has not subsequently passed to amend non-covered pay schedules. REPRESENTATIVE GREEN asked if that meant yes. MS. ELGEE replied that all things are possible, yes. REPRESENTATIVE GREEN asked if Ms. Elgee thought there was any possibility that passing HB 439 would have a tendency to box in negotiations between the legislature and the administration in regard to funding bargaining unit contract increases. MS. ELGEE requested clarification. REPRESENTATIVE GREEN explained that there is an ongoing negotiation between 12 bargaining units very similar to HB 439, and there has been some agreement made without the benefit of funding. The legislature is reviewing negotiated agreements and may not fund the agreements, in which case a problem arises with passing HB 439. He asked if, in her opinion, passing HB 439 would have any influence on what happens with those bargaining unit negotiated contracts. He asked if HB 439 is placing "the cart before the horse." Number 1496 MS. ELGEE answered that the department did not request introduction of HB 439 until agreements had been negotiated with all the collective bargaining units because the department was sensitive to not trying to box in the bargaining negotiations by suggesting something for non-covered employees that was different from what was being discussed at the table. She commented that agreements have been reached with all the bargaining units, and many contracts have been ratified; so now HB 439 can be brought before the committee. She stated that she does not think that passage of HB 439 would, in essence, box people in. She emphasized that the first-year provision of the lump-sum payment proposed in HB 439 is subject to appropriation; so the funding decisions were made in such a way as to not include money for any of these agreements. Number 1372 REPRESENTATIVE HUDSON said he had heard that the governor has signed off on all of the negotiated contracts at the present time so all of the contracts have been duly negotiated, and now it is up to the legislature to fund or not to fund. He noted that those contracts have gone to the Finance Committee. He explained that because the administration does not negotiate directly with non-covered employees, HB 439 is essentially a parity bill to present to the Finance Committee just as negotiated contracts have been presented to Finance so that both covered and non- covered employees would be considered. He said that it is still up to the legislature to determine whether or not the legislature agrees with increases in the collective bargaining contracts and those presented in HB 439. He asked Ms. Elgee if his understanding was correct. MS. ELGEE replied in the affirmative. REPRESENTATIVE GREEN agreed that what Representative Hudson said was true, but HB 439 has a fiscal note, and the governor was instructed not to increase bargaining unit costs. He stated that funding for the bargaining units has not been approved so if the committee approves HB 439, the committee also approves the fiscal note. Therefore, he reiterated that if the committee passes HB 439, the fiscal note is approved whereas no approval has been given for bargaining unit contracts, yet HB 439 has been presented as a parity bill. He said HB 439 is getting "the cart before the horse." Number 1300 REPRESENTATIVE HUDSON explained that he thought that fiscal notes for the bargaining unit contracts were already in Finance Committee. CHAIR JAMES said the fiscal notes did not come to the House State Affairs Standing Committee. REPRESENTATIVE GREEN stated the fiscal notes have not been approved. Number 1287 CHAIR JAMES noted that this committee is the first committee of referral on HB 439 before it goes to the House Finance Committee, because this is a policy issue. She commented that she is not passing anything out of committee that has the legislature getting a raise. She explained that she does not have any problem sending HB 439 up to the Finance Committee because House State Affairs Standing Committee does not approve fiscal notes, but the committee could send HB 439 without a fiscal note. She indicated that she does not have a problem sending HB 439 up to Finance not knowing what it might do about the contracts, but she told the committee that if the legislature does anything with the contracts, she thinks the legislature ought to do the same thing for non-covered employees. She mentioned that the committee is not going to make that decision in this committee because that decision is a finance issue more than it is a policy issue. She informed the committee that if improvement of state benefits for state workers was a policy issue and not a finance issue, this committee could make policy decisions here. REPRESENTATIVE WHITAKER agreed that HB 439 is a policy issue, but there is a broader policy issue which is a balanced budget. He said that the legislature does not have a balanced budget and until the legislature comes to grips with that, it is incredibly disingenuous of this committee to pass HB 439 as a matter of policy. Number 1184 MS. ELGEE asked if she could clarify the money issue. She explained that the administration had included the cost of implementing HB 439 in the budget amendments that were presented to Finance in February [2000] in order to meet the budget amendment deadline along with all the rest of the collectively bargained agreement funding. She stated that Finance was aware at that time of what the complete picture would be. She commented that the administration cannot simply implement [pay changes] with non-covered employees without legislation. MS. ELGEE mentioned that Section 1 implements pay raises for legislators in years two and three. She indicated that Section 8 would need to be amended to strike the word "legislators" from line 5. Number 1100 REPRESENTATIVE HUDSON informed the committee that HB 439 is a $40 increase for legislators. REPRESENTATIVE OGAN moved to adopt conceptual Amendment 1, to eliminate the word "legislators" from HB 439. CHAIR JAMES noted that technically removal of "legislators" is Section 1; on page 4, line 5, [conceptual Amendment 1] would remove the word "legislators." REPRESENTATIVE OGAN asked if that would be acceptable. CHAIR JAMES called it Amendment 1 and asked if there were any objections. REPRESENTATIVE GREEN objected. He asked if Amendment 1 would adversely affect legislative aides. CHAIR JAMES replied no. MS. ELGEE answered no, because legislators are specifically addressed in a section of statute reference in Section 1, and legislative aides are covered by a pay schedule. Number 0955 REPRESENTATIVE HUDSON admitted that getting $40 more a month is up to his constituents. He said that he had never been embarrassed to accept range 10 legislative pay. even though the lowest paid position in his office is a range 15 and in some cases range 19. He noted that he for one is willing to stand up and say that he is worth $40 more. He commented that he cannot support Amendment 1 to take the word "legislators" out of HB 439. CHAIR JAMES explained that she has another bill which takes 10 percent off of legislators' salaries, but this committee has not heard the bill. She mentioned that she thinks the salary gives each legislator ability to have someplace to offset their health insurance and an opportunity to have a little retirement, but the salary is so small that it is almost nonexistent in her life as to what it provides. CHAIR JAMES indicated she does not have any problem [with legislative pay] as long as she gets paid for what it costs her to do the job, and that is why she is so protective of per diem because she could not [be a legislator] without it. She informed the committee that she could not do this job if per diem were not at its current rate and even that hardly reaches from payday to payday. She agreed that legislators are paid what people believe legislators are worth, and people do not believe that legislators are worth much. She emphasized that legislators ought not to change their pay until people believe legislators are worth more, and she thinks that the legislature's biggest challenge is to convince people that legislators are worth more. Number 0670 REPRESENTATIVE KERTTULA remarked that she is really torn about HB 439 because she thinks the public perception is that legislators are all overpaid and perhaps do not deserve their pay. One of the ways to fight that perception is to pay a decent salary in order to attract diverse people to become legislators. She reminded the committee that with decent pay, a legislator could work all year long and participate in interim committees. She added that she is going to vote with Representative Hudson because she thinks "you pay peanuts, you get monkeys." REPRESENTATIVE OGAN stated that he thinks removing the word "legislators" from HB 439 is a small, symbolic gesture and is leading by example. He recognized that the state is asking state workers to do more with less money, and he thinks it is disingenuous for legislators to give themselves a raise. He said that he would rather people vote on whether or not legislators could have a raise because he thinks it is an inherent conflict. He reiterated that every year he gets beat up [by constituents] for anything that happens to legislator pay because there is this perception that legislators can vote to line their pockets. He said that it is appropriate that the committee remove the word "legislators" from HB 439 because it is just not worth bleeding for him to get $40 a month. REPRESENTATIVE WHITAKER noted that legislators do not deserve an extra $40 a month until, in a body as a whole, the legislature steps forward and deals with the budget. Number 0381 REPRESENTATIVE HUDSON offered that if legislators refuse or fail to honor the negotiated labor contracts and HB 439 for non- covered employees then legislators will get nothing. He commented that he is not suggesting that legislators get something and his constituents get nothing. He emphasized that he does not want anything if his constituents are not first of all treated similar to what is agreed for all other employees because he is for parity and treating employees of the state with dignity. He stated that he did not want one dime if the legislature does not approve the contracts for all other employees. In fact, he added, he would vote for Chair James' 10 percent reduction. CHAIR JAMES called for the vote on conceptual Amendment 1. A roll call vote was taken. Representatives Green, Ogan, Whitaker, and James voted for the amendment. Representatives Hudson, Kerttula, and Smalley voted against it. Therefore, conceptual Amendment 1 was adopted by a vote of 4-3. Number 0086 JEFF JESSEE, Executive Director, Alaska Mental Health Trust Authority, testified via teleconference from Anchorage. He said that the Trust has an amendment to present which would basically correct an oversight in the drafting of the Mental Health Trust Settlement legislation. He explained that the oversight was in failure to explicitly direct that Trust Authority employees are in the exempt service sector. He noted that Trust Land office employees in the Department of Natural Resources (DNR) were placed in the exempt service, but due to an oversight, Mental Trust Authority employees were not placed in the exempt service. He commented that the reason the trustees feel this oversight is important to them is because the Trust does have a very small staff and has found that having to follow all of the various complex personnel rules dramatically limits the Trust's flexibility. He indicated that the Trust is requesting that this amendment be placed in HB 439, but the Trust does not have a particular position on the bill itself. TAPE 30, SIDE A Number 0024 CHAIR JAMES remarked that she does not think HB 439 is a good bill on which to tack Mr. Jessee's amendment. She added that the amendment sounds like it could stand on its own as a separate piece of legislation and have a better chance of getting passed. She does not know what is going to happen to HB 439 even if the committee moves it on. MR. JESSEE said he felt that trying to place the amendment in a separate piece of legislation and going through the whole process would be perhaps more trouble than the amendment would be worth. He said that he did understand that his amendment would be tied to the ultimate fate of HB 439. Number 0122 CHAIR JAMES noted that the committee could have accepted the amendment if it had been presented sooner. REPRESENTATIVE HUDSON asked if Mr. Jessee's amendment just lies on the table and is not attached to HB 439. CHAIR JAMES replied yes. DON ETHERIDGE, AFL-CIO, said he is here to speak in favor of HB 439 and against Amendment 1 which just passed. He noted that many union leaders are speaking out in different public forums on this very issue. He explained that legislators should have more of a living salary than what they have now due to the fact that it is difficult to get candidates who can do the job without receiving a living wage. Number 0290 CHAIR JAMES replied that she wants to get a living salary for the next legislators who come in and not for legislators of today. She commented that she does not want to argue about Amendment 1. MR. ETHERIDGE mentioned that when reviewed from her point of view, there is never going to be change of all 60 legislators, therefore, it cannot be viewed from her point because there is always going to be a next guy. He indicated he gets real frustrated when listening to people talk about the wages of legislators. He emphasized that when legislators review how much of the state falls under their responsibility - budget wise, operational wise and everything - legislators should recognize that the responsibility upon their shoulders matches more than most executives in any large company in this country. He reminded the committee that company executives make much more money than legislators. Number 0401 CHAIR JAMES acknowledged that maybe company executives numbers should be included in a consideration of exactly what the state should be spending. She agreed that Amendment 1 does eliminate many good people from being able to come down here because coming here as a legislator is a big challenge, and people do not understand what it is like to move away from home for four months and still try to care for things at home. She remarked that maybe the legislature does want to open the door so that more people can be able to do legislative work. She has the same argument about foster care; she is not doing well on that one either because she believes people should only be reimbursed their cost for providing foster care. She added that she believes people should provide foster care because they are dedicated to the cause and not for the money. She is a legislator because she is dedicated to the cause, and she would not put herself through this if it were a way to make a living. MR. ETHERIDGE reiterated that the AFL-CIO believes it is only fair that non-covered employees get benefits and wages that everybody is getting because they deserve it and are working just as hard as the rest of the public employees. Number 0595 CHRIS CHRISTENSEN, General Counsel to the Judicial Branch of Government, Alaska Court System, said HB 439 was drafted to apply to all non-covered employees of the state, not just the executive branch, and was intended to give all judicial and non-judicial employees of the judicial branch a cost-of-living adjustment (COLA). He noted that judge and magistrate salaries are set out in statute differently than salaries of other non-covered employees. He explained that four years ago a bill similar to this had worked its way through the legislature and during the process it was realized that there was a way to read language in the bill so that judges could get two pay raises instead of one. MR. CHRISTENSEN commented that in memory of that situation, HB 439 was very tightly drafted to make sure that such an argument could not be made this year; unfortunately he thinks the opposite has occurred. He mentioned that the better way to read HB 439 language is to say that judges and magistrates get the exact same COLA as other non-covered employees. He indicated that while the fiscal note certainly provides funding, there is a way to read HB 439 language to say that judges and magistrates do not get a COLA at all. He informed the committee that he has prepared some language which would clarify the intent of HB 439 to provide the same COLA for judges and magistrates as that provided to other non-covered employees. Number 0720 REPRESENTATIVE HUDSON asked if the proposed amendment would amend the fiscal note as well. MR. CHRISTENSEN replied that the fiscal note does provide for COLA. CHAIR JAMES said that the committee had reduced the fiscal note just a tad with Amendment 1. REPRESENTATIVE HUDSON moved to adopt Amendment 2, which read: Page 4, line 24, after "BRANCH." insert: "a)" Page 5, following line 1, insert a new paragraph: "b) Justices of the supreme court, judges of the court of appeals and the superior and district courts, and magistrates are entitled to receive salary adjustments provided for in sec. 5 and 6 of the Act, in accordance with AS 22.05.140(d), AS 22.07.090(c), AS 22.10.190(d), AS 22.15.220(b), and AS 22.15.220(3)." REPRESENTATIVE OGAN objected. He said the state cannot afford it. A roll call vote was taken. Representatives Hudson, Kerttula, Smalley, Whitaker, and James voted for the amendment. Representative Ogan voted against it. Representative Green was absent. Therefore, Amendment 2 was adopted by a vote of 5-1. CHAIR JAMES announced that now the committee had before it Amendment 3 as presented by Mr. Jessee. Number 0852 REPRESENTATIVE HUDSON objected. CHAIR JAMES said Amendment 3, Cramer, A.1, had not been moved yet and asked for a motion. REPRESENTATIVE HUDSON explained that he does not support Amendment 3 because he thinks it is mixing apples and oranges. He commented that the committee has before it HB 439, which deals with non-covered employees in the state minus the legislature and another amendment that changes the conditional status of the Mental Health people. He agrees that Amendment 3 ought to be put into a bill, but he thinks putting the two together could sink the designation if the legislature does not approve the pay raises. He suggested that Amendment 3 be a stand-alone bill. CHAIR JAMES asked Mr. Jessee if the committee could wait on Amendment 3 and do it next year. MR. JESSEE replied yes. He indicated that the Trust was just trying to take what it thought was a simple approach to do what it wanted. He agreed that if it is determined that the best thing to do is wait and submit a separate bill then the Trust will certainly do so. Number 0920 CHAIR JAMES remarked that she could have a bill drafted for next year. MR. JESSEE answered that the committee could do as it wished. Number 0960 REPRESENTATIVE KERTTULA said she would commit to helping with the bill, but she agrees with Representative Hudson at this point that it is probably best not to mix the two topics; however, she is supportive of Mr. Jessee's idea. CHAIR JAMES announced that now the committee will go on to Ms. Elgee's amendment, which is now Amendment 3. It read: Section 7(a) Pg. 3, line 26: Following "in pay status in fiscal year 2000." Add a new sentence: The lump sum payment will be reduced by amounts necessary to pay mandatory employee and employer deductions. She mentioned that Amendment 3 includes mandatory deductions from the lump sump payment. Number 1017 REPRESENTATIVE HUDSON made a motion to adopt Amendment 3 to HB 439. There being no objection, Amendment 3 was so adopted. CHAIR JAMES announced that she would get HB 439 re-drafted into a proposed CS and bring it up at the next meeting. REPRESENTATIVE OGAN said he shakes his head in amazement at the cavalier irresponsibility of the administration in continuing to ratchet up the cost of government in light of the fiscal situation. He stated he will not support HB 439, and he thinks it is like funding a lifestyle on a credit card. He reiterated that HB 439 is basically credit-card spending; it appears that the legislature views the CBR as the fund from which the legislative/administrative credit card is paid. He emphasized that he would not run his household finances that way, and he thinks it is irresponsible of the administration to do so. Number 1133 REPRESENTATIVE WHITAKER acknowledged that he also has a problem with HB 439. He remarked that parity and dignity certainly are important words and concepts. He added that he does not think that Alaska should be the land of the lowest paid employees but, nonetheless, trust was discussed earlier in this meeting and the lack of trust or the disconnect between the electorate and the legislature [is apparent]. He observed that the legislature refuses to deal with the looming, ominous problem of an incredibly out-of-balance budget which should embarrass all legislators, and yet legislators exacerbate the problem by adding to the cost. REPRESENTATIVE WHITAKER stated that he is not an advocate of mindless cuts; rather. he is an advocate of sound fiscal and budgetary policy. He reiterated that Alaska's budget is out of balance, and HB 439 adds to the imbalance; then legislators wonder why the public lacks trust. He said it is not too difficult to answer why legislators are not trusted and asked from which side of its face is the legislature speaking. He asked if the legislature was saying that it needed to balance the budget or was it saying proceed with more imbalance. Furthermore, he refused to be part of the [doublespeak]. He stated that the legislature should balance its budget and then deal with parity and dignity but first deal with responsibility. He reiterated that it is the legislature's responsibility to balance the budget. REPRESENTATIVE HUDSON made a motion to move HB 439, as amended, out of committee. REPRESENTATIVE OGAN objected. A roll call vote was taken. Representatives Hudson, Kerttula, Smalley and James voted in favor of moving the bill. Representatives Ogan and Whitaker voted against it. Representative Green was absent. Therefore, CSHB 439(STA) moved from the House State Affairs Standing Committee by a vote of 4-2.
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