Legislature(1993 - 1994)

04/06/1993 08:06 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 57                                                           
       An  Act  relating  to employment  contributions  and to                 
       extending the pilot project for  the state training and                 
       employment  program;  and  providing for  an  effective                 
  Co-chair  Pearce  directed that  SB  57  be  brought on  for                 
  discussion  and  noted a  TELECONFERENCE link  to Fairbanks.                 
  She  referenced   backup   in   members'   files,   pointing                 
  specifically to  fiscal  notes showing  other  than  general                 
  funds,  position  papers  from the  Dept.  of  Community and                 
  Regional  Affairs  and  the  Dept.  of  Labor,  a  sectional                 
  analysis,  a sponsor  statement,  legal opinion,  Fairbanks'                 
  Native Association history, and a number of overviews.                       
  JUDY KNIGHT,  Director, Employment Security  Division, Dept.                 
  of Labor,  came before  committee.   She explained that  the                 
  proposed bill would extend the STEP program for three years.                 
  Employment Security collects and accounts for STEP  revenues                 
  along with  unemployment insurance taxes from  employers and                 
  employees.  STEP  revenues are  1/10 of one  percent of  the                 
  employee  contributions  that  would  have  accrued  to  the                 
  unemployment insurance  trust fund  to provide  unemployment                 
  benefits to Alaskan workers.                                                 
  The STEP program was  originally enacted in 1989 for  a two-                 
  year period.  In 1991 it was extended for an additional  two                 
  years.   It is scheduled to sunset June  30, 1993.  When the                 
  STEP concept was originally proposed, it recognized that the                 
  state  work force  was  in need  of  additional training  to                 
  remain competitive.   Use of revenues from  the unemployment                 
  trust fund was  determined to  be an  appropriate source  of                 
  funds, given  the three purposes  set forth in  the original                 
  legislation (Ch 95, SLA 1989):                                               
       1.   Help prevent future claims against unemployment                    
       2.   Foster new jobs by encouraging businesses to                       
            locate in Alaska due to the availability of a                      
            skilled labor force.                                               
       3.   Increase training opportunities to workers                         
            severely impacted by fluctuations in the state                     
            economy or technological changes in the work-                      
  Ms. Knight acknowledged  a commitment to employers  who bear                 
  the majority of the cost  of unemployment insurance and want                 
  to see this cost reduced.   Employment and training programs                 
  have thus  been targeted and  evaluated based on  trust fund                 
  In accordance with Sec.  7 of the STEP Act,  last spring the                 
  department   solicited   comments,    recommendations,   and                 
  priorities   from   agencies,   groups,   and   individuals.                 
  Regulations  were then promulgated  to ensure  that training                 
  funded with STEP revenues  would result in a savings  to the                 
  UI trust fund.   Included in target groups  to be served are                 
  individuals   presently   claiming   unemployment  insurance                 
  benefits (including women  and minorities), persons enrolled                 
  in the unemployed parent program  (JOBS program under AFDC),                 
  persons   responsible   for   court-ordered  child   support                 
  payments,  and those who  lack skills  or whose  skills have                 
  been outdated.                                                               
  Ms. Knight made reference to  amendments to the legislation,                 
  advised   that  the  administration  does  not  support  the                 
  amendments, and  urged the  committee to  pass the  original                 
  bill.   Co-chair Pearce  said that amendments  had not  been                 
  presented  to  the committee.    Ms. Knight  advised  that a                 
  packet  of  amendments  had  earlier  been provided  to  the                 
  department.   Co-chair Pearce  said they  were not  included                 
  within  members' files  since they had  not been  offered by                 
  anyone.    Senator  Kelly  voiced  need  to  hear  from  the                 
  department if the amendments are offered.                                    
  Ms.  Knight  stressed  need for  Alaskan  workers  to obtain                 
  better skills.  Thousands of unemployed Alaskans do not have                 
  the wherewithal to return  to work.  Human resources  are an                 
  important factor in economic development.                                    
  End, SFC-93, #51, Side 1                                                     
  Begin, SFC-93, #51, Side 2                                                   
  In response to  a question  from Co-chair  Frank asking  how                 
  STEP  moneys  are expended,  Ms.  Knight explained  that the                 
  Dept.  of Labor  collects  STEP  revenues from  unemployment                 
  insurance payments.  The department then contracts or enters                 
  into a  reimbursable services  agreement with  the Dept.  of                 
  Community  and Regional  Affairs  which  is responsible  for                 
  delivery of services and training.  Funding is divided among                 
  the three service  delivery areas established under  the Job                 
  Training  Partnership  Act.    The  mechanism for  JTPA  was                 
  utilized in an  attempt to minimize overhead  administrative                 
  MARK MICKELSON, JTPA/SDA Program Manager, Dept. of Community                 
  and  Regional  Affairs,  next  came  before committee.    He                 
  explained  that  the  federal JTPA  is  administered  by the                 
  department and passed along to three entities:                               
       1.   The Anchorage/Mat-Su private industry council.                     
       2.   Fairbanks private industry council.                                
       3.   The  statewide  private industry  council, located                 
                 the department,  that serves  the balance  of                 
  the            state.                                                        
  The  intent  with   the  STEP   program  was  to   piggyback                 
  administrative functions  with  JTPA which  was  already  in                 
  place.  The STEP program fills an important niche in overall                 
  program  strategy  in that  it does  not generally  focus on                 
  people with multiple barrier, severe dysfunction in terms of                 
  the  labor force.  That focus is  subsidized by Title 2A and                 
  2B of JTPA.                                                                  
  In response to  further inquiries from Co-chair  Frank, Judy                 
  Knight explained that the job  training council, a 21-member                 
  board appointed by the Governor, determines how funding will                 
  be apportioned.                                                              
  Mr.  Mickelson  voiced   support  for   the  STEP   program,                 
  describing it  as an  important contributor  to the  overall                 
  effort of work force preparation.                                            
  Senator Rieger  asked if the  above-listed councils contract                 
  with  other  entities  to  provide  direct  training.    Mr.                 
  Mickelson   said  that  the  state  merely  administers  the                 
  program.  Training  is provided by non-state  private-sector                 
  businesses,  nonprofits,  the  Alaska  Vocational  Technical                 
  Center in Seward, joint apprenticeship programs, etc.  These                 
  direct  service providers  are more  familiar with  industry                 
  requirements  and  the  skills that  need  to  be developed.                 
  Grant    award    is   through    competitive   procurement.                 
  Representatives  of  private industry  councils  sit on  the                 
  proposal review committee that makes final selections.                       
  Further  discussion followed  regarding  paper handling  and                 
  reporting  responsibilities  at  various  levels within  the                 
  program.   In response to  comments by  Co-chair Frank,  Mr.                 
  Mickelson said  that the  private industry  council provides                 
  planning, oversight, and guidance to administrative staff.                   
  JANE DEMMERT and JOHN REGITANO next came before committee on                 
  behalf of the  Fairbanks Native  Association.  Mrs.  Demmert                 
  noted that the Fairbanks Native Association is unique in its                 
  30-year  history of  service  in Fairbanks.    While it  was                 
  originally established to  serve the Native community,  many                 
  services  have  been  extended  and  expanded to  serve  all                 
  ethnicities  in  Fairbanks.    Services  include  education,                 
  social services,  services to elders, alcohol  and addiction                 
  prevention  and treatment  to  adults and  adolescents,  and                 
  employment counseling, training, and placement.                              
  The employment services component was established during the                 
  pipeline construction  days and  has provided services  with                 
  public funds since that time.                                                
  Mrs.  Demmert noted  that the  Association  is not  a tribal                 
  entity.  It is not eligible  for tribal job training funding                 
  as are some  regional nonprofits.  The  Association focus is                 
  upon provision  of services  to residents  of the  Fairbanks                 
  North Star Borough.  One becomes eligible for services after                 
  residing in the Fairbanks area 30 days.                                      
  Mrs. Demmert next  spoke to  allegations that the  Fairbanks                 
  Native Association prefers not to go through the competitive                 
  process to apply  for funding.  That  is not the case.   The                 
  purpose of this  appearance before  committee is to  suggest                 
  that a  competitive process which would enable organizations                 
  such as the Fairbanks Native Association to be a part of the                 
  STEP program would serve the state  very well.  Mrs. Demmert                 
  directed attention to the Association's position paper on SB
  Mr.  Regitano spoke  to  needed adjustments  in the  bill to                 
  better  serve  the  large demand  for  employment assistance                 
  among  minority  populations  in  the  Fairbanks North  Star                 
  Borough.  The timing  of awards is now sporadic and does not                 
  allow  FNA   and  other  organizations   seeking  employment                 
  assistance money to apply for and  obtain funding on a year-                 
  round basis to provide a continuum of service to clients.                    
  A  further  problem  is  the   screening  process  for  STEP                 
  applicants.  That  process is long  and so detailed that  it                 
  discourages many from seeking employment assistance.                         
  The requirement  that STEP applicants must  have contributed                 
  to the  unemployment insurance  fund within  the last  three                 
  years is prohibitive and eliminates any people.  During  the                 
  past year,  two out of  three individuals "who  came through                 
  the door" were not eligible and had to be denied service.                    
  Mr. Regitano stressed need for flexibility and adjustment of                 
  eligibility criteria  to cover  a broader  range of  people.                 
  Some mechanism should  be built into  SB 57 to directly  tie                 
  funding  cycles to  the  state fiscal  year.   Mr.  Regitano                 
  acknowledged that the current  unscheduled cycle serves some                 
  programs but not FNA.  He  again voiced need for adjustments                 
  providing FNA equal access to funding.                                       
  Mr. Regitano noted  that FNA  competition for funding  would                 
  not interrupt  the flow of  moneys to PIC  (private industry                 
  council).  Dept.  of Community and Regional  Affairs figures                 
  for FY 92 indicate $552.0 in unused STEP moneys.                             
  Co-chair Frank inquired concerning the  success rate for FNA                 
  programs.  He asked that  representatives elaborate on other                 
  federal funds for  the FNA  employment program and  indicate                 
  how  a  competitive mechanism  could  be implemented  in the                 
  legislation.  Mr. Regitano proposed a competitive process at                 
  the Dept. of Community and Regional Affairs similar  to that                 
  utilized  by the Dept.  of Health and  Social Services where                 
  RFPs issue in April or May for funding to be  made available                 
  July 1.   Following application,  review, and award  by June                 
  30, organizations would then know what amounts they would be                 
  In  further discussion  with  Co-chair  Frank, Mr.  Regitano                 
  expressed a preference for award to be made at the 21-member                 
  state JTPA council level.                                                    
  Speaking  to the success rate  of FNA programs, Jane Demmert                 
  advised that long-term  follow-up of clients placed  in jobs                 
  indicates 69% have  remained in permanent employment.   That                 
  is a  significant turn  around.   Those  individuals are  no                 
  longer on  state welfare rolls, and they are contributing to                 
  the state economy.                                                           
  Addressing the question of alternative funding, Mrs. Demmert                 
  explained that  FNA is  not eligible  for categorical  funds                 
  provided to Indian  tribes.   FNA is thus  not eligible  for                 
  specific JTPA funding.                                                       
  Co-chair  Frank  asked  if FNA  programs  duplicate  similar                 
  programs offered by  the private  industry council or  other                 
  entities.  Mrs. Demmert said that  75% of the clients served                 
  by FNA are Native and other minorities.  The reverse is true                 
  of  the Fairbanks private  industry council.   Approximately                 
  30% of those clients are Native  or other minorities.  Need,                 
  demand, and  response is  such that  the two programs  serve                 
  different client  groups and  hopefully meet  the employment                 
  needs of the entire community of Fairbanks.                                  
  Senator  Kerttula  inquired  concerning FNA  overhead.   Mr.                 
  Regitano answered that the currently approved rate is 19.3%.                 
  Delivery is  thus at  81%.   The STEP  program, however,  is                 
  capped at 15%.                                                               
  Discussion  followed  between   Mr.  Regitano  and   Senator                 
  Kerttula regarding the cross referencing of services.                        
  Senator Kelly inquired concerning FNA's  annual budget.  Mr.                 
  Regitano advised that  the most recent audit  evidenced $5.1                 
  million.   The STEP program is  merely one piece of  a total                 
  service system.  It is an important piece  in that FNA works                 
  on a  multiple department basis, offering community service,                 
  family  intervention, education, and  the largest (80%) drug                 
  and   alcohol   prevention   and  rehabilitation   programs.                 
  Employment  is  a key  component  of  these services.    Mr.                 
  Regitano  observed  that   clients  who  receive  assistance                 
  through other FNA  services but who are  subsequently unable                 
  to find work, are often readmitted to assistance programs.                   
  Senator Kelly voiced his understanding that the STEP program                 
  is  currently successful.    FNA is  requesting a  change in                 
  funding source, criteria, screening, etc.  He then asked why                 
  that should  be done when the program  is working well.  Mr.                 
  Regitano acknowledged  that the  program is  working for  "a                 
  certain  group."   He  then voiced  his  opinion that  it is                 
  "missing  a large  group  of  people."   Further,  there  is                 
  available  funding  that  could  be   used  to  serve  those                 
  individuals.   FNA is only asking for changes in order to be                 
  able to compete.                                                             
  In  response to an additional question by Senator Kelly, Co-                 
  chair  Frank noted  that FNA  seeks to  serve  the long-term                 
  unemployed as well  as short-term.  Senator  Kelly suggested                 
  that STEP is not designed to do that.  Mr.  Regitano advised                 
  that those who have been out of work for a longer period are                 
  not  being  served.    He  noted  that  minority  population                 
  unemployment in Fairbanks is double that of the majority.                    
  Co-chairman Frank  acknowledged  a  teleconference  link  to                 
  Fairbanks   and    directed   that   testimony    from   the                 
  teleconference site commence.                                                
  NEAL PLATEAU, (683-2698) Alascan, Inc., first testified.  He                 
  voiced support for the STEP program, saying that it has been                 
  of  great benefit  in  enabling the  company  to employ  new                 
  techniques  that allow  Alascan  to lower  the  cost of  its                 
  product.  Without  STEP, Alascan would  not be able to  keep                 
  its employees  working full time.   The  program is  working                 
  well as  it is.   It should  not be  changed.   Alaska needs                 
  manufacturing  and   other  industry.     Under  STEP,  more                 
  businesses can utilize  funds for  special training than  if                 
  certain amounts  of funding  are dedicated  to a  particular                 
  BOB SWOPE next spoke in support of continued funding through                 
  FY  96.    He  explained  that  as a  non-Native  client  of                 
  Fairbanks Native  Association  services  he  benefited  from                 
  FNA's job referral program.                                                  
  End, SFC-93, #51, Side 2                                                     
  Begin, SFC-93, #53, Side 1                                                   
  It represents a  proactive rather than reactive  response to                 
  problems  associated  with getting  a younger  generation of                 
  Native men and women trained and employed in the work force.                 
  There  is  an  overwhelming savings  from  reduction  of the                 
  number  of  individuals  on unemployment  rolls  and  social                 
  service programs  that far  outweighs the  cost of  the STEP                 
  program.  Mr. Swope asked that regardless of whether funding                 
  issues  through   grants  or   competitive  proposals,   the                 
  committee  ensure  that  the  level   remains  the  same  or                 
  NELLIE   HENSLEY,   Program   Director,   Fairbanks   Native                 
  Association  employment   program,  next  testified.     She                 
  explained  that  over the  past  two years  the  program has                 
  served over  1,000 clients.   That  number reflects  the FNA                 
  STEP program, a federal program,  and a small JTPA  project.                 
  If these clients had not been served, they would qualify for                 
  AFDC   or   other   welfare   programs   for    economically                 
  disadvantaged individuals.   Of  the 1,000,  FNA placed  301                 
  individuals in jobs, and 69%  have retained their employment                 
  and are  contributing to the unemployment  insurance system.                 
  The  FNA  program is  needed.    It provides  services  to a                 
  population  that  is   not  being  served  through   present                 
  employment  and training  programs  available in  Fairbanks.                 
  There  is  need for  both the  STEP  program and  changes to                 
  enhance the program.                                                         
  HOLLY  BURNS  voiced  support  for  the program.    (Unclear                 
  transmission  and  noises  in the  committee  room  make Ms.                 
  Burns'   brief   teleconference   testimony   difficult   to                 
  TED  WICKEN  next  spoke in  support  of  the  program.   He                 
  explained that  it  made a  great  difference in  his  life.                 
  After having  worked construction for many years,  he is now                 
  undergoing  training  through  STEP so  he  can  continue to                 
  support his family.                                                          
  JAMES  WRIGHT next spoke  via teleconference from Fairbanks.                 
  He  advised that  he is  an  Alaska Native,  originally from                 
  Ruby, who is presently undergoing  FNA training in cadastral                 
  surveying.    Mr.  Wright urged  continued  support  for the                 
  MADELINE WILLIAMS advised that  she is a Native from  Huslia                 
  and  a client at  FNA.  She voiced  support for FNA training                 
  and urged that support continue.                                             
  LINDA   PEARSON,   Counselor,   Hutchinson  Career   Center,                 
  Fairbanks   North   Star  Borough   School   District,  next                 
  testified.    She  explained  that  the  career  center  has                 
  traditionally prepared  students for  the job  market.   Ms.                 
  Pearson attested to the fact that a number of adult minority                 
  clients have taken classes and thereafter secured jobs.  She                 
  voiced support for FNA's employment  program.  It provides a                 
  one-stop-shopping type service  to a  unique clientele  (75%                 
  minority), with  a  personal  touch.   In  addition  to  job                 
  development,  education,  work  experience,   and  day-labor                 
  placement, counselors teach  clients how to  get and keep  a                 
  job.  Clients explore their interests and assets.  They work                 
  on   application  and   resume   development  and   practice                 
  interviewing in order  to improve interview  skills.  It  is                 
  the personal touch that reaches  discouraged individuals who                 
  might  not  otherwise seek  help  from  job service  or  the                 
  private industry council.  It is valuable in that it puts to                 
  work   individuals  who   might   not   otherwise  have   an                 
  opportunity.   Speaking  from  a national  perspective,  Ms.                 
  Pearson  said that job readiness  skills are as important as                 
  actual job training.                                                         
  KENNY HOKE, member, Fairbanks Private Industry Council, next                 
  spoke to  committee.   He voiced  private-sector support  as                 
  well  as support  for FNA's  competitive bid  approach.   He                 
  suggested that that approach could be more readily addressed                 
  through regulatory rather  than statutory change.   He urged                 
  support of SB 57 without the amendments.                                     
  In response to  a question from Co-chairman  Frank, Mr. Hoke                 
  suggested  that proposed changes  should address  funds that                 
  lapsed to the  general fund.  Unused  unemployment insurance                 
  funds from the  previous year  should be held  in a  special                 
  account and issued via competitive bid.                                      
  DAVID DEAN,  executive director, Fairbanks  Private Industry                 
  Council, next testified.  He referred to earlier comments by                 
  Mr. Regitano that two out of three individuals coming to FNA                 
  are not eligible  for the  STEP program.   That analysis  is                 
  based upon a designated grant to FNA.  It does not represent                 
  the statistics  of the  Fairbanks Private  Industry Council.                 
  Council statistics indicate  that far more are  eligible for                 
  the program.                                                                 
  Addressing comments regarding STEP funding cycles,  Mr. Dean                 
  said  funding  is based  upon  actual allocation  arrival at                 
  private industry councils.  There is no delay in advertising                 
  for proposals or award of contracts.                                         
  Mr.  Dean  noted that  the  long-term unemployed  are served                 
  under Title  2 of JTPA.  Councils administer those programs.                 
  Long-term  unemployed individuals  would certainly  meet the                 
  economically  disadvantaged  criteria.     The  council   is                 
  currently serving  approximately 30% minority  clients in  a                 
  city with a minority population of less than 20%.                            
  The  Fairbanks  Private  Industry  Council  has  cooperative                 
  agreements  with the  Fairbanks Native  Association and  the                 
  Tanana Chiefs Conference,  and clients are referred  by both                 
  Mr.  Dean next read  a letter of support  for SB 57, without                 
  amendments,  from the  chairman  of  the  Fairbanks  Private                 
  Industry  Council.  In  response to an  inquiry from Senator                 
  Kelly, Mr. Dean advised that a  copy of the March 31,  1993,                 
  correspondence was faxed to each Senator's office.                           
  CHRISTINA HILL, member,  FNA, next spoke  in support of  the                 
  bill.    She explained  that she  is  a public  employee who                 
  employs approximately 23  Native staff  members.  She  urged                 
  continuation of funding for FNA  services and requested that                 
  the  legislature  consider  expansion  of  funding  sources,                 
  noting  that   agencies  that  directly   serve  the  Native                 
  community and other  minority communities should be  able to                 
  compete for funding.                                                         
  EDNA  MATTHEW,  employment   specialist,  Fairbanks   Native                 
  Association, next testified, requesting continued funding of                 
  FNA STEP  programs.  There  are presently 262  clients being                 
  served by three counselors at FNA.   Each client is provided                 
  orientation   regarding   the  association's   programs  and                 
  services.   They then progress through intake and work skill                 
  assessment.  Clients  are provided a job readiness class and                 
  learn resume skills prior to  referral to jobs or additional                 
  training.     FNA  services   are  not  duplicating  similar                 
  programs.   Although  minorities  may  only  be 20%  of  the                 
  Fairbanks    population,    they    are   disproportionately                 
  represented  in the  unemployed  sector.   FNA's  employment                 
  program serves a need that must be met in Fairbanks.                         
  HARRY FIELDS  next voiced  support for the  STEP program  on                 
  behalf of  the  private industry  council.   (Teleconference                 
  testimony is unclear and difficult to discern.)                              
  JULIE WILSON next testified.   She explained that she  is an                 
  instructor at the  Fairbanks Native  Association.  She  then                 
  voiced support for  continued funding of the  FNA employment                 
  program through STEP moneys.  Ms. Wilson said that she works                 
  specifically with adult basic education, academic assessment                 
  of  clients, and job  readiness workshops.   FNA services do                 
  not duplicate other programs in the Fairbanks area.                          
  Co-chair Pearce called for additional testimony on the bill.                 
  None   was   forthcoming.      Upon    conclusion   of   the                 
  teleconference, Co-chair Pearce directed that  SB 57 be HELD                 
  in  committee  pending  arrival of  Mayor  Jim  Sampson from                 
  [See page 22 for further comments on this legislation.]                      
  SENATE BILL NO. 57                                                           
       An  Act  relating to  employment  contributions  and to                 
       extending the pilot project for  the state training and                 
       employment  program;  and  providing for  an  effective                 
  JIM  SAMPSON,  Mayor,  Fairbanks North  Star  Borough,  came                 
  before committee in support  of SB 57.  He said  that a good                 
  public policy argument could be made for investment in long-                 
  term  programs allowing  unemployed  individuals to  develop                 
  skills needed  in the  current job  market.   He voiced  his                 
  belief that FNA should be allowed to compete for funding and                 
  stressed need for earlier receipt of STEP moneys.  The mayor                 
  concurred in previous  testimony regarding  need to  provide                 
  programs for the long-term unemployed.                                       
  Co-chair  Pearce  directed   that  SB  57  be  placed  in  a                 
  subcommittee under Senator Kelly.                                            

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