Legislature(1993 - 1994)
04/06/1993 08:06 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 date. 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 The STEP program was originally enacted in 1989 for a two- year period.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 benefits. 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- place. 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 savings. 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 costs. 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 within 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 57. 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 receiving. 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 group. 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 increases. 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 understand.) 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 program. 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 agencies. 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 Fairbanks. [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 date. 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.