Legislature(2005 - 2006)CAPITOL 106
03/02/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB485 | |
| HB475 | |
| HJR25 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 344 | TELECONFERENCED | |
| + | HJR 25 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 485 | ||
| = | HB 475 | ||
HB 485-STATE PHARMACISTS/DOCTORS/AUDITOR EXEMPT 8:06:19 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 485, "An Act amending the State Personnel Act to place in the exempt service pharmacists and physicians employed in the Department of Health and Social Services or in the Department of Corrections and corporate income tax forensic auditors employed by the division of the Department of Revenue principally responsible for the collection and enforcement of state taxes who specialize in apportionment analysis and tax shelters of multistate corporate taxpayers; and providing for an effective date." 8:06:44 AM JIM DUNCAN, Business Manager, Alaska State Employees Association/American Federation of State, County and Municipal Employees (ASEA/AFSCME) Local 52, told the committee that his union represents approximately 7,500 state employees who are in the general government unit of the union. He said he listened to testimony given on HB 485 on Tuesday and has no disagreements with the statements made by the representatives from the Departments of Revenue, Health & Social Services, and Administration about the fact that pharmacists and corporate income tax auditors are hard to recruit and are underpaid. However, he opined that the approach in HB 485 to move those positions from classified service into exempt service is not the method that should be used to solve the problem. He explained that this issue exists not only with those two job classes, but also with numerous others in state government. He called the proposed bill a "convenient and easy approach for management to resolve a problem instead of addressing the real underlying issue." 8:08:55 AM MR. DUNCAN cited Article 12, Section 6, of the Alaska State Constitution, which read: 6. Merit System The legislature shall establish a system under which the merit principle will govern the employment of persons by the State. MR. DUNCAN read a selection from "The Alaska Constitution: A Citizen's Guide," as follows: A state civil service keeps state jobs from becoming political spoils of office, and it encourages development of a competent, permanent work force. Most permanent employees are included in the state's system. Exempt are policy level positions in each executive department, all employees in the governor's office, and all employees in the legislature. MR. DUNCAN said he thinks it's clear that pharmacists and corporate income tax auditors are not considered policy level positions. MR. DUNCAN referred to a letter dated October 17, 1994, from then Attorney General Bruce Bothello to then Senator Jim Duncan. He read as follows: The Alaska Constitution requires that the legislature establish a system under which the merit principle will govern the employment of persons by the state. Alaska Constitution, Article 12, Section 6, is that provision. ... This constitutionally required policy has been described by the Alaska Supreme Court as the weightiest public concern in the state employers' trust. MR. DUNCAN said the decision before the committee should be considered a weighty one; he emphasized its importance. He said it was after much debate that the founding fathers of Alaska's constitution decided to use the word "shall" instead of "may" in the previously included text of Article 12, Section 6. 8:11:59 AM MR. DUNCAN asked the committee to consider what it would mean if the legislature moves positions into exempt service, where they can be subject to political pressure and are appointed not based on competency and professionalism, but on a political spoil system. He offered an example. He said he does not believe it is good policy to put individuals charged with overseeing and collecting of revenues and enforcement of tax laws into exempt positions where they can be subject to political pressure, changed at will, and where those individuals being audited could perhaps bring pressure back to the policy makers of state government that would have impact on the ability of the auditors to do their job and do it well. 8:13:26 AM MR. DUNCAN said the classified system is not the problem - the pay plan within the system is. Pay plans can be changed, subject to bargaining, he said. He recalled it was stated during the 2/28/06 hearing on HB 485 that the highest possible pay for a pharmacist or auditor would be a range 27, but he indicated that that range could increase to a 30 through bargaining. He stated, "In fact, I am preparing now a letter to the state asking them to go back to the table to discuss a new pay plan that would add those ranges that would be necessary to accommodate the needs of the pharmacists and the auditors." Studies were made based on internal alignment, he said, but they can be made based on external factors, such as the market. He stated his belief that the responsibilities of revenue auditors probably do not compare well with "much more specific responsibilities of some of the jobs they compared with." 8:15:01 AM MR. DUNCAN said he has copies of federal regulations that require that individuals who are funded by federal grants be in a merit system, and he said pharmacist positions are federally funded at approximately 50 percent. He questioned whether that federal funding would be lost if the move were made to exempt service. He continued: Another constitutional provision - Article 1, Section 15 - says that statutes can't impair a contract. This statute, with an effective date of July 1 of '06 would impair a contract - our collective bargaining agreement. Article 1.01 says that we will represent all folks that are in the classified service and [General Government Unit (GGU)] positions. The pharmacists and auditors are in GGU positions at this point. That prohibits this law moving them out of classified into exempt service. If the law should pass, we of course would have to take steps to challenge it as impairment of a contract and challenge it on a constitutional basis. MR. DUNCAN opined that the process being used for revenue auditors is flawed. He explained that he cannot find a job description or position statement for "forensic auditor" to show how that position's duties differ from the Income Tax Auditor IV. He said he thinks they are one in the same. Mr. Duncan highlighted the steps necessary to create a new position and indicated that the those steps were not taken. 8:16:40 AM MR. DUNCAN summarized his previously stated points and asked the committee to consider each. 8:17:41 AM REPRESENTATIVE GARDNER thanked Mr. Duncan for his compelling testimony, but pointed out, "We're still left with, ... in the immediate term, the problem of not having some of the essential workers that we need." She asked Mr. Duncan if he had any suggestions to meet the immediate need while other possible fixes are being implemented. 8:18:06 AM MR. DUNCAN said that is a serious issue, but it has been around for a number of years. First, he recommended putting a pay plan in place through a collective bargaining agreement, which would add new pay ranges. Second, he said he thinks management should review the classes that it is looking at for internal alignment. He recollected that in her testimony from 2/28/06, the Director of the Division of Personnel in the Department of Administration - Mila Cosgrove - had said the division is putting together proposals in order to do market-based comparisons with the private sector and nonstate jobs. He said that should be done immediately, after which, he suggested, the division should "put those folks on the new pay plan, recruit, and fill those positions." He said it may take two or three months to do that, but it will be quicker than passing a piece of legislation that is flawed and will be subject to challenge. 8:19:31 AM REPRESENTATIVE GARDNER said she is looking for an even shorter- term answer, for example, to place pharmacists in the Alaska Pioneer Homes this week or next. 8:19:46 AM MR. DUNCAN responded that he thinks there unfortunately is nothing that can be done this week or next, but reiterated that [HB 485] won't pass quickly enough to do that either. He said the goal should be to look for a solution that would be in place as quickly as the bill's effective date of July 1, 2006, without moving from classified service to exempt service. 8:20:44 AM CHAIR SEATON closed public testimony. 8:21:02 AM JANET CLARKE, Assistant Commissioner, Central Office, Finance and Management Services, Department of Health and Social Services (DHSS), in response to a question from Chair Seaton, said the questions raised by Mr. Duncan's testimony could be best answered by the Department of Administration's Division of Personnel. She stated that DHSS is the agency that has brought the problem to the legislature and the administration and there will be a serious "life, health, safety issue" if it is not addressed. In response to a follow-up question from Chair Seaton, she confirmed that she wants a fix that will put pharmacists into the Alaska Pioneer Homes, and whatever answer that the Department of Administration comes up with to accomplish that is okay with her. 8:22:48 AM REPRESENTATIVE LYNN said he understands there is an emergency situation and the bill would not take effect until July 1; therefore, he suggested [hiring contracted pharmacists] in the mean time. 8:23:25 AM MS. CLARKE said that is what is being done, but it is not the best situation. 8:23:54 AM MS. CLARKE, in response to a question from Representative Gatto regarding contracting for pharmacists, emphasized that the cost of that type of outsourcing is more expensive than paying state pharmacists. 8:24:51 AM MILA COSGROVE, Director, Division of Personnel, Department of Administration, said Mr. Duncan made some good points, and she echoed his statement that the decision before the committee is one that should not be taken lightly. Notwithstanding that, she said the Personnel Act also clearly contemplates the ability of [the legislature] to move people out of the classified service. She noted that AS 39.25.110 includes a list of classifications other than exempt level policy and political appointees who have been exempted for a variety of reasons. Ms. Cosgrove said that although she appreciates Mr. Duncan's well-intended offer to negotiate, she pointed out that he is not the sole representative of the pharmacists. In fact, she said, most of the pharmacist positions are in the Alaska Public Employees Association (APEA) bargaining unit, in the supervisory bargaining unit. She continued as follows: While we can certainly take a look at raising the pay scales and adding additional ranges, the question still becomes, with these classifications, the pay they're receiving in the market is so high that it becomes difficult to place them at the upper ends of the pay scale; essentially you'd be placing them at the same level of commissioners or the governor. And ... there's a process where it's actually more palatable to pay somebody a straight wage versus attach them to a salary schedule, if that makes any sense. MS. COSGROVE noted that Mr. Duncan had raised some questions regarding the concept of political spoils and competency. She argued that pharmacists certainly would be competent, because there is no way to put an unlicensed pharmacist into one of those positions, and management would not put an incompetent pharmacist in place, because "that simply wouldn't do for patient safety." She said she doesn't think political pressure would come into play either. She said she would make similar arguments for the forensic auditors, because the department needs people who are at the highest level of competency, able to both perform the work and provide training and "knowledge transfer" to the lower-level staff. She said, "They're in an untenable position at this point and they're beyond being able to function effectively in their current capacity. They need additional staff ... now, and they need to have the access to the wages in order to accomplish that goal." 8:28:38 AM MS. COSGROVE, regarding Mr. Duncan's assertion about taking the state to court if the legislature [adopts HB 485], said she is not confident that that would be successful. She added that she is not an attorney, thus her opinion should not "weigh too much in that"; however, she reiterated that the legislature clearly has the authority to remove people from classified status and "the Personnel Act does consider that." Regarding contract pharmacists, she stated her understanding that the state is required to employ the chief pharmacist at the Alaska Pioneer Home, which has to do with a relationship with the drug enforcement agency. Ms. Cosgrove said when dealing with a contract agency there is no continuity of employees. Ultimately, the contracting firm can be held responsible for the individual's performance, "but it becomes much more difficult to deal with issues as they arise." Furthermore, she noted, it is always difficult and often an unworkable situation when contracted pharmacists are supervising state employees. She explained that there are other state employees in the pharmacies, such as pharmacy technicians. She said it is desirable to have a clear line of supervisory authority. She said she would gather that the home administrators don't have the time and resources to adequately supervise the lower-level staff. 8:30:16 AM CHAIR SEATON said he knows that within some [exempt] categories, people can be terminated without cause. He asked if that would be the case for the pharmacists and auditors if they were made exempt. 8:30:47 AM MS. COSGROVE replied that there is nothing specific in the state Personnel Act that addresses dismissal for cause or "not cause" with exempt level employees. She reviewed from the 2/28/06 testimony that there are two types of exempt level employees. There are those who are clearly political employees, such as commissioners who purely serve at the will of the governor. She said she would argue from a legally defensive human resource standpoint that the state would need to have some level of cause to dismiss them from employment, otherwise the state would be subject to a legal challenge. She said across the nation there are a majority of employers who have a high degree of their workforce who are technically "at will," but those employees still have to observe "the same sorts of processes and solid business practices or they open themselves up for legal suits." She concluded, "The legal environment of human resources is becoming more and more contentious in that way, and employers are being held to a higher standard of cause, even for at-will employees. 8:32:13 AM CHAIR SEATON asked if the pharmacists under federal reimbursement contract have to be in the Ameripay system. 8:32:19 AM MS. COSGROVE deferred to DHSS to answer that question. 8:32:40 AM CHAIR SEATON recalled that Mr. Duncan had said he could not find a job description for [the forensic auditor], and he asked if there is a description or if forensic auditor is the same as a [Corporate Income] Tax Auditor IV. 8:33:09 AM MS. COSGROVE explained that the Department of Revenue did not approach the Division of Personnel directly to announce its intention to create a new job class. She said the division recently conducted a classification study of all revenue auditors. Prior to about a year ago, she said, they were all in one job class. The division broke them out into distinct job class families - corporate income tax, oil and gas, and tax auditors - and did an internal alignment. She said, "So, in that assertion they have followed the process. They came to us with the work, we studied it, we did our internal alignment, and we came up with where we believe the salary ranges were appropriate given that internal alignment." Ms. Cosgrove stated her understanding is that the body of work the department is seeking to exempt is similar to that of the Corporate Income Tax Auditor IV. She said there may be some additional duties assigned, but she recommended asking that of the Department of Revenue. She continued: That said, I do know from talking with their division management that the type of work assigned at that highest level takes the highest degree of competency from their auditors. And division director Wilson discussed the special sets of skills those people need in order to adequately and competently represent the state in those types of audits. And those are the types of skills and competencies that come at a fairly high level of pay. ... If we were to take the whole series and adjust them to market, then ... we would be raising their lower levels up to a point where we were the market leader in terms of pay at the lower level, and I don't think that that's good business practice. I think it's better ..., in this rare case, to take that isolated group of people and put them in a different class. And for just the information of the committee, we do encourage different exempt titles than classified titles, so we can clearly articulate. So, if they tried to name that group of work, "Corporate Income Tax Auditor IV," we would come to them and say, "We would like you to use a different name, because this body of work is in the exempt service." 8:36:22 AM MS. COSGROVE directed attention to a memorandum in the committee packet [dated 3/2/06], which she said was information collected anecdotally on the bequest of Representative Gardner and shows turnover and retention in all job classes. She offered to answer questions about the handout, and she said more detailed data will be forthcoming. 8:37:32 AM JERRY BURNETT, Director, Administrative Services, Department of Revenue, in regard to Chair Seaton's question about whether there are any differences in the job description for the Forensic Auditor position and [Corporate Income] Tax Auditor IV, said there has not yet been a formal job description completed for the Forensic Auditor. He explained that the department would create a formal job description after it has identified "even possibly the person who's doing it so we can identify the job description to their skill to some extent." He said the department is trying to find people with very specific knowledge and expertise having to do with corporate income tax returns. He offered examples. 8:39:19 AM CHAIR SEATON said he is somewhat troubled about the department's practice of writing job descriptions after identifying people. He suggested that it would help the committee to have job descriptions broad enough to allow the department to choose among people that have the required skills. 8:39:42 AM MR. BURNETT responded, "In the exempt service it is very common that the job descriptions are not very specific in terms of the work as a classified system; ... "they're broad until they're filled and then you hone in." He said this is not the same as descriptions used in the classified system. Mr. Burnett noted that the Department of Revenue has had investment officers since the '80s who are in the exempt service. The $20-plus billion that is invested by the Department of Revenue is handled by exempt employees and he doesn't believe there is any evidence of political influence in the department's investment policies that has affected people's jobs in that time, he said. 8:41:00 AM MS. CLARKE said she believes Mr. Duncan raised a question about there being a federal issue regarding paying for individuals in exempt service. She stated that she is aware of a federal rule about the federal government not paying for the chief executive. She offered an example. She said that is the only prohibition that she is aware of regarding federal rules. She said the department has many employees in the exempt service who are being paid for by means of federal funds, for example, the psychiatrists at the Alaska Psychiatry Institute (API). She said she thinks the federal government looks at the work being done to determine whether it is the work of a federal grant. She said there are other states who have at-will or exempt employees not in collective bargaining and get similar federal grants. She concluded, "It's not a problem for our department." 8:42:54 AM CHAIR SEATON asked Ms. Clarke to research that issue further to ensure that there are no problems. MS. CLARKE said she would ask Mr. Duncan to give her the regulation he is concerned about. 8:43:34 AM REPRESENTATIVE GATTO moved to report HB 485 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 485 was reported out of the House State Affairs Standing Committee.
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