Legislature(1999 - 2000)
04/28/1999 08:07 AM House URS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 174 - ELECTRIC COOPERATIVE EMPLOYMENT CONTRACT TAPE 99-20, SIDE A CHAIRMAN HUDSON announced that the next order of business was House Bill No. 174, "An Act relating to personal services contracts for certain employees of electric cooperatives." EDWARD BURKE, Legislative Administrative Assistant for Representative Sanders, Alaska State Legislature, read the sponsor statement into the record: Good public policy dictates that those who are elected by the constituency have the right and the responsibility to implement their own perspective and agenda on the operational management of the organization they were elected to by selecting and hiring paid staff of their own chosing. This holds true with the President of the United States, the Governor, and on down through the ranks of municipal forms of government. In each case the elected executives are granted the authority to select staff they have confidence will implement the agenda favored by the elected official. When first organized under the Rural Electric Association [REA], Alaska Cooperatives were beholden to this policy by a mandate from REA that dictated no General Manager's contract should exceed three years, the typical term of the elected boards of director of cooperatives. Since the abolition of REA, there is no official policy on the records to reinforce this traditional limit on cooperative executives' contracts. Indeed, since the demise of REA, we have seen the implementation of at least one utility cooperative General Manager contract that essentially grants a perpetual term through a unique automatic renewal clause that requires the Board to take affirmative action to negate the automatic renewal of the contract for another year on a five year term. In the case cited above, if a new board of directors wished to terminate the current General Manager's contract, they could find themselves obligated to in effect buy-out the remainder of the term of the contract. With current utility managers salaries and benefit packages reaching the $200,000 a year level, this could mean up to one million dollars, a figure most rural electric cooperatives would find staggering. Number 0360 REPRESENTATIVE ROKEBERG asked who is supporting HB 174. MR. BURKE indicated that it was done by request. REPRESENTATIVE ROKEBERG asked who requested it. Number 0385 MR. BURKE stated that the lobbyist Mich Gravvo(ph) talked to his boss and requested the bill. REPRESENTATIVE ROKEBERG asked if Mr. Burke knew for who the bill was requested. MR. BURKE replied no. REPRESENTATIVE PORTER indicated that they may want to take a look at the wording, because it may not be precluding what it is desiring to preclude. It just states that the term of a contract may not exceed 12 months. MR. BURKE stated that he believes the situation currently is that a general manager can be extended if the board does nothing. HB 174 would limit that, so the board could only do nothing one time, which would extend that contract for one year. After that, HB 174 would force them to send it back to the members of the cooperative to vote on that person. REPRESENTATIVE PORTER said that he doesn't doubt that is the intent, but he is concerned about the wording accomplishing that intent. Number 0540 MR. YOULD stated that they are unanimously against the bill. They feel that it is regressive, it does not give boards of directors the ability to attract good management to their utilities and it imports a level of micro-management. He indicated that when a contract runs out, it runs out. That general management no longer has an obligation to serve that utility, nor does a utility have an obligation to that general manager. He has not seen contracts for general managers that automatically re-up if the board of directors does not take an affirmative action. Also there was an allusion to the fact that the REA no longer requires contracts limited to 36 months, and it is true that they do no longer require that, because they stepped out of the business of trying to micro-manage general contracts. He added that as a general bill it is best left up to the local boards of directors to take care of, and in the event they are not acting well on behalf of their constituents they are subject to recall or a revote.
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