Legislature(2001 - 2002)
02/05/2002 08:02 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 361-PILOT PAY PROGRAM FOR STATE EMPLOYEES Number 0042 CHAIR COGHILL announced the first order of business, HOUSE BILL NO. 361, "An Act relating to pilot pay programs to attract and retain exceptional state employees; and providing for an effective date." Number 0114 LINDA SYLVESTER, Staff to Representative Pete Kott, Alaska State Legislature, presented HB 361 on behalf of Representative Kott, sponsor. She stated that the pilot pay program was introduced at the request of the Department of Administration. She read from the sponsor statement, as follows: The bill provides options for the State of Alaska in its efforts to recruit and retain in-demand workers. Alaska's current ... state employee pay plan is based entirely on a job classification system that is defined in law by the principle of "like pay for like work." This system serves the state well in maintaining pay equity, but it doesn't allow the state to respond to the current competitive job market. This legislation authorizes the Personnel Board to adopt regulations defining pilot pay programs for positions that a state agency has difficulty filling, as well as recognizing exceptional employee performance. Payments made under this legislation would not be considered "base pay," nor is it included in retirement calculations. Any HB 361 bonuses would not be a part of collective bargaining during the pilot pay period. Further, the departments must absorb the expenses within their budgets. MS. SYLVESTER noted that the pilot pay program options include payment of a recruitment bonus; "excellence bonuses" and retention bonuses; or other bonuses or incentives that the board determines will help a state agency compete for high-demand job fields or for employees who perform exceptionally. She continued reading from the sponsor statement: Last year the Alaska Legislature passed HB 242 - the retiree return - which partially addressed the issue of critical skill or knowledge loss through retirement. To date, 64 valuable retirees have returned to work ... for 26 employers statewide. Now, the State of Alaska seeks an additional tool in order to maintain a high-quality, public-employee workforce. MS. SYLVESTER noted that the pilot pay program would sunset on July 1, 2007. Number 0351 DAVE STEWART, Personnel Manager, Division of Personnel, Department of Administration, came before the committee in support of [HB 361]. He said the division produced a third- quarter workforce profile in January, based on executive-branch employee statistics effective the close of business, December 30, 2001. Based on those numbers, he noted, 6 percent of the workforce was eligible to retire immediately. Fives years from that date, another 16.7 percent of the workforce will be eligible to retire, he added. Mr. Stewart said nearly 200 job classes are reported by hiring managers and state agencies as difficult to fill because of inability to offer a competitive salary. He reported the following statistics: In the next five years, 90 percent of the state correctional superintendents will be eligible to retire, 81 percent of the public safety lieutenants, 64 percent of the natural resource managers, 60 percent of the supervisory (indisc.-coughing) nurses. 50 percent of the ships' masters for the Alaska Marine Highway System will be eligible to retire. Number 0554 MR. STEWART affirmed that he would provide a written copy of the statistics. He then continued: 30 percent of the eligible nurses will be able to retire within five years. The state law requires that the state pay plan follow the premise of "like pay for like work." That means that similar work is paid the same, no matter where that work occurs. Internal equity, that is, aligning job classes by the "like pay for like work," is the basis out of which salaries are assigned throughout the state's classification system. Making market adjustments, adjusting for competitive pressures and market salaries, requires that the entire class of "like work" be adjusted, and there are job classes in that broad base of work that may or may not be experiencing (indisc.) equipment problems. MR. STEWART stated that the proposed bill provides some flexibility in responding to a changing market. He mentioned pressures in addressing the retention of critical job skills and job knowledge. He defined recruitment bonuses, mentioned in Ms. Sylvester's testimony, as "a onetime payment as incentive to accept employment with the State of Alaska." MR. STEWART explained that the bill envisions a retention bonus, which he defined as "a single or multiple payment to current employees with needed job skills or skill 'sets' in order to get them to stay with the State of Alaska," at least long enough to train someone to take another's place. Number 0625 MR. STEWART defined the excellence bonus as "a payment to reward state employees who perform beyond normal expectations, or whose performance is exceptional on mission-critical projects or work." He paraphrased his written testimony, which read: This proposal allows the Personnel Board to develop regulations adopting some, all, or other pilot programs ... to allow the state to more effectively compete for scarce or needed job skills and knowledge, and to retain valuable skills and knowledge in the workplace. The proposal defines pilot pay programs adopted under it as exempt from collective bargaining. By retaining control over the definitions and duration of pilot programs, the Personnel Board can most accurately assess their effectiveness. To have the pay programs individually bargained could cause an ineffective program to remain active and only perhaps unused, while preventing the adoption and trial of more effective programs. Number 0752 REPRESENTATIVE FATE asked Mr. Stewart if he knew where the State of Alaska stood in relationship to other Western states regarding pay scale "in that competitive area." He added, "I don't know that we're noncompetitive; I'd like to see some statistics that tell me that we're noncompetitive." MR. STEWART responded that [the Division of Personnel] has salary-comparison information for nurses and engineering job classes, which he offered to provide. REPRESENTATIVE FATE asked if there had been any similar circumstance in which this "type of crunch" had occurred in the past, or if it was the first circumstance. He also asked what Mr. Stewart attributed its occurrence to. Number 0849 MR. STEWART answered that for years, the State of Alaska has enjoyed "probably" a steady stream of applicants for most of its job classes. Some specialty skills, such as particular [computer] programming skills or those for the very technical job classes, have required lengthy or out-of-state recruitment. He mentioned the constant change in technology within the field of analyst/programmers; he said competition throughout the country for those computer programmers, as well as for skilled nurses and licensed engineers, is keener now than ever before. MR. STEWART reported that [the Division of Personnel] finds it often takes six months to get four or five people to compete for a position. He reiterated that he would leave a spreadsheet for the committee that shows approximately 200 job classes and their average length of recruitment. He confirmed that this is a new phenomenon. Number 0957 REPRESENTATIVE JAMES asked Mr. Stewart if he had any statistics indicating how the previous RIP [retirement incentive program] may have exacerbated the problem. MR. STEWART replied that he did not, but would investigate her question. He noted that [the Division of] Retirement and Benefits has a number of people who have retired under the early incentive program and who are exempt from the HB 242 retiree return, but it has not done a comparison on those. REPRESENTATIVE JAMES asked Mr. Stewart if he had noticed a change in the number of openings in the specialized areas, as opposed to jobs that merely require a high school education. She commented that many state jobs have become more specialized than in the past. MR. STEWART answered that many jobs, including local clerical jobs, have become more technical, but applicants for those jobs lack those skills. For example, Mr. Stewart said, he began working for the state 17 years ago as a clerk typist, and didn't have to know Microsoft Office. Now almost everyone from beginning administrative clerks through the director needs proficiency in that skill. Number 1079 REPRESENTATIVE JAMES recalled working for the State of Oregon in the 1950s, when the incentive was benefits, rather than the "paltry" pay. She asked how that has changed over the years and commented that it seems wages must be higher than those in the private sector in order to attract prospective employees. She added, "Where is the job security?" MR. STEWART said there were a couple of forces at work, identified by [the division's] own economist and other economists. He detailed them, as follows: One of those is the changing nature of the people entering the workforce. Fewer people are looking for that long-term security, long-term association with employers, in favor of skill acquisition - learn the skill, move on, use it for someone else, and ... parlay that new skill set into higher wages. The other is the general erosion through ... lack of cost-of-living adjustments and the changing nature of the benefit plans the state offers. Fifteen, sixteen years ago, twenty years ago, the state had one retirement program; the state had one wage base for all its workers. Currently, there are one or two contracts that have two-tiered wage scales. We've got three ... tiers of retirement [with] varying degrees of medical coverage in each of those three tiers. MR. STEWART mentioned the private sector's coming back to single levels of coverage. Number 1221 REPRESENTATIVE STEVENS indicated his understanding that [the proposed bill] was not a mandate, but merely a tool that could be used by a department. He mentioned frequent shortages of personnel in the Alaska Department of Fish & Game (ADF&G). He stated his understanding that COLA [cost of living allowance] is untaxed for federal employees. He said there are "several issues out there that affect our hiring." REPRESENTATIVE STEVENS noted that although the sectional analysis [in the committee packet] deals quite a bit with the Teachers Retirement System (TRS), Mr. Stewart had not mentioned teachers in his testimony. Representative Stevens said he didn't know if they were included in the aforementioned 6 percent eligible to retire. He stated his belief that [HB 361] would apply to the employees of school districts, as well as of the University of Alaska. He asked if this bill is the only vehicle that would allow school districts and the university to use this kind of a bonus program. Number 1291 MR. STEWART responded that the bill, as written, would affect the state pay plan in Title 39, which does not cover school districts or the University of Alaska because they are "defined in the exempt service." REPRESENTATIVE STEVENS asked why the sectional analysis repeatedly addresses TRS. MR. STEWART explained that there are employees in the Department of Education and Early Development who are members of TRS. Number 1339 REPRESENTATIVE WILSON noted that one reason for the crisis at hand was because all of the so-called baby boomers [the baby- boom generation born between about 1947 and 1961] are retiring. She said the reason for her own move to Alaska nine years ago was because the wages were so much better than in the Lower 48; however, the wages in the Lower 48 have risen, but Alaska's haven't. She asked Mr. Stewart who would make the decisions, and she mentioned the need for checks and balances. MR. STEWART named three programs defined in the draft: the recruitment bonus, the retention bonus, and the excellence bonus. He explained that the recruitment bonus, based on the job class, was designed to attract applicants to state employment, whether they be residents or nonresidents. He continued: On nomination of a department's commissioner, or the Personnel Board, the Division of Personnel would compile a list of job classes and monitor the recruitment, as we decide which job classes require some incentive, or would be eligible for incentive. ... In the pilot pay, ... for vacancies in those job classes, agencies would be authorized to offer a recruitment bonus up to a maximum established by the Personnel Board in ... the program, whether it's 2 percent of the annual salary, 5 percent of the annual salary - some number that would make the position competitive. The board would then look at changes in recruitment - whether that particular recruitment incentive actually attracted more applicants or different applicants with different skill sets. MR. STEWART turned attention to the retention bonus, which would also be class-based, rather than individually position-based. Referring to mention by Representative Stevens of ADF&G's job classes, he said it is a noted problem. He added: "There are House chair-related and law enforcement-related positions that have the same sort of retention difficulty. Based on nomination of commissioners from those departments, the Personnel Board would entertain authorizing a bonus to ... those classes of individuals also." MR. STEWART noted that the excellence bonus would be an individual award based on nomination by the commissioner. The process could be as simple as a commissioner's nominating an individual in a state agency to the Personnel Board for granting of an award. He added, "We envisioned, however, that a peer review - members of some of the bargaining units - would interview nominations for service excellence and make ... final recommendations to the Personnel Board for those awards, with limits set, or the other programs defined by the Personnel Board members." Number 1578 REPRESENTATIVE WILSON asked Mr. Stewart how many people serve on the Personnel Board and how they are selected. MR. STEWART answered that the Personnel Board is allowed up to three members appointed by the governor and confirmed by the legislature. He estimated that the terms are five to six years in length. Mr. Otte, who is in his second year, and Mr. Borg, who is in his second or third year, currently fill two seats. Mr. Stewart told the committee that during the two years he has been with the Division of Personnel, there have been two members on the board. Number 1643 REPRESENTATIVE WILSON commented if [the bill] passes, the board would become much more important than it has been in the past. MR. STEWART concurred. Number 1668 REPRESENTATIVE JAMES asked Mr. Stewart to confirm that some employees in Seattle work for the State of Alaska. MR. STEWART offered his belief that there are five or six employees in Seattle. REPRESENTATIVE JAMES asked if there was any difficulty retaining those out-of-state employees, considering they may or may not be in an area with "more work or higher pay." MR. STEWART replied that the employees in question work at the [Alaska State] Ferry Terminal; he conveyed his belief that the state is not experiencing higher turnover in that regard than elsewhere in the state; however, no monitoring has been done specific to that issue. REPRESENTATIVE JAMES commented that those employees do receive a permanent fund dividend (PFD), which may be another incentive for them to stay. [Laughter] Number 1710 REPRESENTATIVE CRAWFORD said he felt trepidation anytime consideration veered away from the collective bargaining process. He asked Mr. Stewart if he knew how the public employees unions feel regarding this program. CHAIR COGHILL noted that Bruce Ludwig was also available to comment on that question. Number 1799 MR. STEWART responded, "The earlier conversations with ... representatives from the bargaining units indicated some positive interest in this legislative proposal. Recently, there were concerns about not having it collectively bargained." He mentioned central monitoring, rather than individual plans, and the flexibility that a central plan offers; he suggested looking at those, as well as the peer-review concept for individual awards and the class-based concepts for other awards. Number 1823 REPRESENTATIVE HAYES indicated his understanding that there are approximately 200 job classifications for which job recruitment is difficult. He asked if evaluations had been done in those job classifications to determine whether [the State of Alaska] is not competitive with federal jobs or other jobs out of state. MR. STEWART answered that some ADF&G and health care job classes are known to be noncompetitive with private-sector and federal employers, partly because the federal COLA of 25 percent is tax- free. Furthermore, the nature of the work tends to draw some state employees to move into federal or private-sector jobs. For example, private-sector construction jobs are pulling engineering staff from the Department of Transportation and Public Facilities (DOT&PF) and other departments that hire engineering staff, he said. He noted that the like pay for like work requires broader-based salary increases. Number 1913 JANET CLARKE, Director, Division of Administrative Services, Department of Health & Social Services, testified in support of the comments of the Division of Personnel, noting that she would discuss market pressures and competition for certain job classifications. She reported that one and one half years ago, the Division of Administrative Services recognized it was beginning to have problems in recruitment and retention of staff, so it engaged a contractor to execute a workforce development plan. Although the plan is still in progress, the department has already gleaned significant information that will help it design its workforce for the next five years. She offered to provide the report upon its completion. MS. CLARKE said the department has looked at vacancy rates, turnover rates, and retirement rates for several of its positions, as well as "supply." She quoted statistics: The U.S. Department of Labor predicts that Alaska will need 40 percent more nurses over the next ten years, which is about 220 nurses per year. ... The University of Alaska graduates 60-80 nurses per year. The Alaska State Hospital Nursing Home Association did a study in taking into account the aging of the workforce [and] predicted that Alaska would need 400 nurses per year. MS. CLARKE said the key problem the department is experiencing is competing with the private sector. She mentioned a need for nurses, particularly in public health and at API [Alaska Psychiatric Institute], where vacancies have resulted in mandatory, burdensome overtime for nurses. Ms. Clarke noted that although the legislature authorized a salary increase last year, the department is currently not competitive. Other hospitals are providing bonuses and raises above that amount, as well as contracting with other firms. Number 2063 MS. CLARKE reported that the U.S. Department of Labor also ranked Alaska seventh among the states in the need for additional social workers. She noted that the Division of Family and Youth Services looks to hire highly qualified social workers. She mentioned a licensing law that came into effect last summer and continued problems in "retaining and keeping up with that demand." MS. CLARKE told members that during the 2001 anthrax scares and bioterrorism incidents, the department had a 50 percent vacancy in the microbiologist staff in its new public health lab in Anchorage. For several weeks, the lab director was working 18- hour days to keep up with specimens that had to be tested. She said the department discovered that many microbiologists could get positions in other hospitals, or other health fields, and make $700-800 more per month; although perhaps tempted by the state's new facility, they'd earn more in the private sector. Number 2152 CHAIR COGHILL asked if the anticipated recruitment bonus would be enough to attract people. He indicated Ms. Clarke's reference to an hourly wage and asked if she could foresee the department using the incentive bonuses in retaining employees. MS. CLARKE responded that the department believes the bonuses would be another tool that would allow it to either recruit or retain individuals. She stated a need to respond to market pressure, as well, explaining that bonuses alone would not make up for the aforementioned salary differential for microbiologists. Number 2199 CHAIR COGHILL indicated the need for ongoing training, mentioning the high-tech world. He also referred to "onward training" and the need to reward excellence; he asked if that would be considered. MS. CLARKE responded that the department currently has the ability to provide specialized training, which is a tool used to retain its workforce and move people on a career ladder. She said one intention of this plan is to help the department reexamine how it develops career ladders and provides training, even for employees in entry-level jobs, so they will stay with the organizations and move up, rather than leave. Number 2320 REPRESENTATIVE STEVENS asked how the morale of an organization would be affected when the employer gives a new employee a bonus to do the same job that an established employee is doing already for less money. Number 2345 MS. CLARKE said that issue would have to be developed with the Personnel Board when these programs are designed. Some situations exist because of differences between state jobs and other employment. She said she routinely hears people, especially in the health care fields, ask why they should stay [in a state job], even one they like, when they can get paid more in a non-government position. Ms. Clarke said the question is why the state can't "react more quickly to both programs and respond to those market conditions." She concluded that it is clearly an issue to address with caution. CHAIR COGHILL thanked Ms. Clarke and noted that she represents "a section of very large employment in very specialty areas." Number 2419 BRUCE LUDWIG, Manager, Alaska Public Employees Association/American Federation of Teachers (APEA/AFT), came before the committee to testify. He said APEA/AFT - which represents employees in the state government, the university, municipalities, boroughs, and school districts - agrees with most of the concepts embodied in the bill, but disagrees with removing it from collective bargaining. He said the association believes collective bargaining casts light on the process; when it's excluded from the process, it opens the door to abuse, he said. He added that the Personnel Board is made up of political appointees, appointed by the governor to serve the governor's requests and do "what his appointees ask them to do." MR. LUDWIG explained that in collective bargaining, there is a process called arbitration. If problems arise, there is a method for having an impartial third party scrutinize the problem and ascertain that everything was executed fairly. He said APEA/AFT believes there ought to be recruitment-retention bonuses and exceptional-pay bonuses, but the collective bargaining process should cover those. Number 2480 REPRESENTATIVE JAMES agreed there is a "huge cavern" between the bonuses given to people and the collective bargaining process. She said she is supportive of employees' being treated properly - and knows there are unions "specifically with that in mind" - but is embarrassed that a state agency cannot treat people fairly without a union. Representative James clarified that her intent was not to destroy the union. REPRESENTATIVE JAMES said even with collective bargaining, this would be a difficult issue. She suggested the state may need a process every few years to evaluate the market and the value of jobs. She commented that [the state] has known for nearly ten years that it's had an "exodus," or "missing ingredient" in its 18- to 44-year-old residents. She mentioned hearing that many people are ready to retire, but that no replacements are available. She opined that part of that is a complicated issue in which the legislature may have participated by focusing on a single issue, rather than the whole system. REPRESENTATIVE JAMES asked how the witness would do these types of incentive bonuses, without creating a long process through the collective bargaining. She expressed her belief that it would not be possible to do so. Number 2602 MR. LUDWIG responded that Workplace Alaska is used by the state to hire people; once a pilot project, it was polished before being put in place for the whole workforce. He suggested a similar situation could exist with pilot projects through the collective bargaining process. He said statutory authority would be needed, and he mentioned monetary terms and any type of increase coming back to the legislature. MR. LUDWIG stated that the difficulty of recruiting and retaining [employees] is not unique to Alaska; the national union has a task force, "the Recruitment and Retention Task Force." As increasing numbers of baby boomers leave the workforce, there are fewer people to take their place, he said. [The entire country] is competing for the same people; until [the state] trains more people to fill those jobs, it will be chasing scarce resources, he concluded. Number 2675 REPRESENTATIVE STEVENS asked how the aforementioned inequities would be addressed regarding giving a bonus to a new employee to do a job that the established employee is already doing for less pay. He also asked what the state could do about teachers, for example, who come to work for a $10,000 bonus, then leave the following year - a phenomenon which Representative Stevens said has occurred in other states. MR. LUDWIG addressed inequity. He said [APEA/AFT] has had a difficult time with the University of Alaska's hiring both classified employees and professors for more money than the current employees are making, which affects productivity and results in the loss of employees who look elsewhere for work. He said [the employer] must proceed with caution while maintaining the balance of the workforce. MR. LUDWIG referred to a previous comment by Representative James and said there used to be a requirement that the Division of Personnel conduct a salary survey every year; that was one of the first "casualties" in the mid-'80s, when oil was at $8 a barrel. He indicated he thought it was not in the statutes to do every year; he mentioned making it a requirement to [conduct a survey] every five years. He likened it to doing proper maintenance on a heater, which will break without that maintenance. Number 2770 REPRESENTATIVE STEVENS reiterated his question regarding retention of employees. He asked if there would have to be some kind of agreement made. MR. LUDWIG responded that currently [the state] pays people to move [to Alaska] in some cases. He indicated recruitment is done "Outside" and mentioned a two-year payback provision; he suggested a bonus similar to that could be tailored. Mr. Ludwig said he knew that, in some places, banks were offering no- interest loans to teachers to teach in inner-city schools, a benefit that continues each year. He suggested [Alaska] might try that. He added that perhaps "some kind of a hook " could be put in those employees so that if they leave early, they would have to pay back [the bonus or benefit] received. Number 2875 CHAIR COGHILL asked how Mr. Ludwig envisions collective bargaining as a part of excellence bonuses - pay incentives for excellence. MR. LUDWIG replied that APEA/AFT has been offering something similar for a number of years. He offered the following: When we had this mental health lands claim deal going on, we had some people in the Department of Natural Resources that put a lot of time and effort into helping figure that out. It wasn't even their job, you know; they did it at night. And we paid them extra money through the vehicle of a letter of agreement in the collective bargaining process. We have done that in a couple other instances where people have done exceptional work. It recently came to light that that probably violates not only the collective bargaining agreement, it probably violates the statute by saying we aren't coming back to the legislature, because that is the amendment to the pay plan. MR. LUDWIG indicated APEA/AFT encourages the legislature to do something, ensuring that it at least meshes with collective bargaining. CHAIR COGHILL offered, "If we exempt the collective bargaining, then those types of agreements will still be outside of your ability to do, is how you see it." MR. LUDWIG answered, "If you pass this, yes." Number 2889 CHAIR COGHILL asked how Mr. Ludwig envisions the collective bargaining process working with regard to retention bonuses. MR. LUDWIG reiterated Representative Stevens' comment about [the lowered morale of] the rest of the employees, when one person is hired for more money than other employees are receiving for the same work. He indicated that by doing so, the employer is telling existing employees they aren't worth as much. TAPE 02-05, SIDE B Number 2918 REPRESENTATIVE JAMES mentioned that before her years as a legislator, she had challenged the unions to be more active "in training, in excellence on the job." She asked Mr. Ludwig if the state employee programs have any type of workshops, training, or methods of encouragement that would produce better- performing employees. MR. LUDWIG answered that he thinks all the collective bargaining agreements have provisions in them for training. In response to a follow-up question by Representative James regarding who would pay for it, he said primarily it would be the state. REPRESENTATIVE JAMES said she wondered if the unions had any program that "paid out of their dues." MR. LUDWIG answered that he does not believe any of the current state employee unions have apprenticeship programs; the private sector has them, and they work well. He added, "If a contractor comes to town, you can go to the hiring hall and you can get ... very qualified people." MR. LUDWIG told the committee that [APEA/AFT] has something in its supervisory unit that is part of the contract and is funded by an appropriation from the legislature for $50,000 a year. Through a labor-management committee, APEA/AFT provides supervisory training to produce bargaining-unit members who are better supervisors in general. MR. LUDWIG noted that APEA/AFT also represents blue-collar workers. The state employs a lot of general maintenance people, he pointed out, not only in state government, but also for the university and the Alaska Housing Finance Corporation. He suggested it would be nice to have some type of apprenticeship program or a partnership with the university to create a scheduled training whereby one could excel in boating maintenance, for example. Number 2811 REPRESENTATIVE JAMES asked Mr. Ludwig whether his union is just managing grievances regarding wages and fair treatment, or is also trying to help its members to be better employees. Number 2735 MR. LUDWIG replied that any union in the country which has taken a poll [has discovered that] the number-one concern of members is getting professional training to help them excel in their jobs. Mr. Ludwig said, "One of the things that we've tossed around in this training program is creating a mentor program." He mentioned private-sector unions and that, for example, "you're not going to find a better operator than somebody in the operators' hiring [hall]." He said, "We just need to get the public-sector unions similar to that, but there are so many different job classes and so many disciplines that you really run into difficulties." REPRESENTATIVE JAMES expressed her appreciation of the conversation and of Mr. Ludwig's response. Number 2698 CHAIR COGHILL noted that the committee needed to discuss whether to amend the language in the bill. He asked Mr. Ludwig: "If it doesn't get amended, how do you feel you'd be shut out of the discussion?" MR. LUDWIG answered that all kinds of situations will arise after it becomes law. Whether it's true or not, people are going to say someone was hired because of being a friend of the supervisor or that someone received a bonus because the supervisor liked that person better than somebody else. He added, "If you don't have some kind of light on the process, then it's going to make the process suspect." He expressed concern that something with the potential to be good would turn out otherwise. Number 2651 REPRESENTATIVE FATE referred to testimony regarding baby boomers [who are retiring] and the increased need [for workers]; he indicated the creation of a dichotomy. He also referred to previous testimony about giving bonuses "without that light being shed," which he predicted would result in an escalated cost of [running] the state proportionate to the bonuses given. He mentioned a need to give more bonuses and the argument over whether those bonuses are given to the right people, for the right reasons. Number 2603 REPRESENTATIVE STEVENS said he would be interested in hearing from state personnel regarding how arbitration would be handled. Number 2570 CHAIR COGHILL agreed that the same discussion needs to be held with the administration. He recommended that [HB 361] not be passed out of committee until a proposed committee substitute (CS) was, perhaps, created. He suggested a discussion of merit pay would be important as well. He asked Mr. Stewart to comment on collective bargaining. Number 2516 MR. STEWART responded that the Personnel Board process is a public process in which bargaining units have always participated, which is something that [the division] expects. Referring to the 200-some job classes that are experiencing some difficulty in recruiting, he asked the committee to consider that a number of job classes - many of them on the previously mentioned list - don't exist solely in one bargaining unit. For example, analyst/programmer positions exist in the confidential bargaining unit, the supervisory unit, and the general government unit. He said, "To have individually bargained incentive programs spanning a particular job class would make administration of that program complicated, if not impossible." Engineers exist in supervisory and general government unit positions, he added. MR. STEWART referred to the issue of fairness previously mentioned by Representative Stevens. He indicated one suggestion is to consider a referral bonus, an existing option in certain states whereby current employees responsible for bringing a successful candidate for state employment - whether or not that individual is eligible for a recruitment incentive - might be eligible for a referral incentive. He then stated: The idea behind this piece of legislation is to provide agencies with a tool to make up the loss of, or the failure to compete successfully for, specific skill sets. ... Through the board process, through that open process, and through work groups established to deal with the specific bargaining unit issues, I think that the "light" that Representative Fate was talking about would be shed on this process, continually. Number 2397 CHAIR COGHILL told Mr. Stewart that regulations would have to be written; certainly, the collective bargaining units would be a part of that discussion. He asked, "Do you see that as part of the rule making, coming into what the board might have to view as safe criteria for the recruitment, or criteria for bonuses?" MR. STEWART answered that the entire regulatory process is through the board; it has to adopt the regulations, which are subject to public comment. CHAIR COGHILL summarized the following points for the committee to consider. The bill would allow considerable latitude, and the committee had not taken a position on that. He noted that favoritism would have to be addressed. Regarding recruitment within the ranks and Outside recruitment, he indicated the need to deal with filling state job vacancies but not ignore those already in the state workforce. He mentioned criteria for what is above and beyond a normal work expectation, as well as making certain that standards for the regular workforce are not set too low - rewarding what would, in any other job class, be expected. Number 2307 REPRESENTATIVE JAMES said she would like to know how other Western states deal with this issue. She offered that in her experience of writing regulations, she found the public process flawed. She concluded that although she could see the need for this legislation, she was struggling with how it would work without adding more confusion to the process. Number 2259 REPRESENTATIVE WILSON said she views this as a nationwide supply-and-demand problem: anytime supply is low and demand is great, one has to pay "somewhere along the line." She offered that her own town [Wrangell] has not received a single inquiry for an available pharmacist position. She also mentioned difficulty in getting nurses to come to her town; she said nurses who were recruited were paid $45 an hour and wouldn't work weekends without getting paid overtime, whereas those already there had to work every other weekend. Representative Wilson indicated there were morale problems. She said Alaska needs to deal with this problem and will need money to do it, but she didn't know where the state would get the money. Number 2160 CHAIR COGHILL told Representative Wilson there was a zero fiscal note attached to [HB 361] because "they decided, for a pilot program, they would work within their departments to work out whatever retention and excellence bonuses and recruitment bonuses." He indicated there were incentives to work for the state back in the 1980s; he mentioned changing to a tier system because of a lack of money. Chair Coghill opined that the committee would want to consider a balance in those tiers, to give incentives when needed and to reduce those incentives when the need no longer existed. He agreed having people work [the same job] for different benefits creates conflict. CHAIR COGHILL requested that Mr. Stewart return with answers to some questions he might have. He also asked that [Ms. Clarke] look at issues that may arise and how the [legislation] would be implemented. He indicated having a collective bargaining discussion "is going to be a good one." He asked: "Does the board process give us a broad enough scope to all agencies through all the different categories that we'll be dealing with? Is that better, or do the collective bargaining units really have a niche, and can ... that work in certain ways and should we install it in this bill?" CHAIR COGHILL stated his intention to move the bill out of committee the next time it was heard. He mentioned incentives and said even the constitution has a merit-based system. He remarked: "Merit pay is a bigger part of where we're going." [HB 361 was held over.]
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