Legislature(2001 - 2002)

03/19/2001 09:09 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 137                                                                                                        
     "An Act relating to the allocation of money appropriated to                                                                
     the Alaska Human Resource Investment Council; and providing                                                                
     for an effective date."                                                                                                    
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
MARY JACKSON,  staff to Senator Torgerson, testified  that this bill                                                            
extends the first  year funding provision, or allocation  provision,                                                            
of the previous legislative  session's SB 289. She detailed that the                                                            
provision allocated  funding for the  newly created program  through                                                            
the University  of  Alaska, the  Kotzebue Technical  Center and  the                                                            
Alaska Vocational  and Technical Center  (AVTC) because the  program                                                            
itself was not yet established in a manner to receive funding.                                                                  
Ms. Jackson  shared that  these institutions  provide technical  and                                                            
vocational  programs in both  urban and rural  areas of Alaska.  She                                                            
stated  that  a  review  of the  uses  of  the  funds,  "showed  how                                                            
necessary   those   funds   were."  She   referred   to   supporting                                                            
documentation from AVTC.                                                                                                        
Ms. Jackson  explained that  these funds  allow the institutions  to                                                            
"properly  prepare"  for  the  influx of  new  students  into  their                                                            
Co-Chair Donley  asked if the funds  for this program come  from the                                                            
Unemployment Insurance (UI) fund.                                                                                               
Co-Chair Kelly affirmed.                                                                                                        
Amendment #1: This amendment  to Section 1 (a), page 1, lines 12-14,                                                            
changes  the  distribution  of the  allocations  between  the  three                                                            
vocational technical facilities as follows.                                                                                     
          University of Alaska                      52 percent                                                                  
          Kotzebue Technical Center                 16 percent                                                                  
          Alaska Vocational Technical Center        32 percent                                                                  
          University of Alaska                      67 percent                                                                  
          Kotzebue Technical Center                 11 percent                                                                  
          Alaska Vocational Technical Center        22 percent                                                                  
Senator Wilken moved for adoption.                                                                                              
Senator Austerman objected for the purpose of discussion.                                                                       
Senator Wilken  stated this amendment corrects a drafting  error. He                                                            
said that  the existing percentage  breakdown  was a part of  SB 289                                                            
and was determined by the  intent to allocate $1 million to AVTC and                                                            
$500,000 to Kotzebue Technical  Center, with the remainder allocated                                                            
to the University  of Alaska system.  He said the percentage  change                                                            
is necessary to continue  funding the same fixed amounts to AVTC and                                                            
Kotzebue Training Center.                                                                                                       
Ms. Jackson stated that the sponsor supports the amendment.                                                                     
Senator Leman  asked if the intent is to fund the  technical centers                                                            
a fixed  amount then  why percentages  were listed  in the  language                                                            
instead of the  allocations. He predicted changes  would continue to                                                            
be necessary in future years.                                                                                                   
Ms. Jackson  replied,  "The dollar  values  are always  going to  be                                                            
approximate"  She  explained  the  actual  allocation  to  AVTC  the                                                            
previous  year  was $1,032,000  and  the  projected amount  for  the                                                            
current year is $1,001,000  out of a total allocation to the program                                                            
of $4.5 million.                                                                                                                
Senator   Leman  again   asked  why   the  language   contains   the                                                            
percentages, which require changing.                                                                                            
Ms. Jackson  answered that the previous  allocation was not  for the                                                            
"full funding  year" due to the inception  of the program  after the                                                            
fiscal year began.                                                                                                              
Senator  Leman asked  if the  expectation  were therefore  that  the                                                            
amended percentage amounts would be accurate in future years.                                                                   
Ms. Jackson affirmed.                                                                                                           
Senator Green  expressed that  she did not  support the project  the                                                            
previous session  and would not support  it again this year  either.                                                            
She opined,  "I think it's  a misdirection  of funds that were  very                                                            
clearly laid  out how they were supposed  to be used." She  stressed                                                            
that this legislation "goes totally against" the UI program.                                                                    
Senator  Austerman   removed  his  objection  to  adoption   of  the                                                            
Senator  Olson  stated  the  UI fund  is  an employer  contribution                                                             
intended  to have  "a  positive action"  on  employees.  He did  not                                                            
understand  why the University of  Alaska was receiving the  "lion's                                                            
share" of the  funds for this program.  He predicted the  university                                                            
would continue to receive  larger percentages of this fund and would                                                            
eventually expect to receive  all of the funds. He stressed that the                                                            
emphasis  of the program  is for vocational  and technical  training                                                            
and that  the percentage  shifts would take  away from the  original                                                            
intention. He  spoke of the preparations for a gas  pipeline and the                                                            
need  to train  Alaskans  throughout  the state  for  the jobs  this                                                            
project would bring.  He  saw this amendment as reducing funding for                                                            
"the only technical institution  in my area." As a result, he stated                                                            
that he objected to its adoption.                                                                                               
Senator  Olson opined  this amendment  "polarizes",  "separates  the                                                            
haves from the  have-nots" and causes "a bigger burden  to be placed                                                            
upon  those of  us that  are  already overburdened  by  the lack  of                                                            
availability of training."                                                                                                      
Senator Olson  expressed that  the intent of  the legislature  is to                                                            
provide a  consensus and  "a more even playing  field." He  saw this                                                            
amendment as divisive.                                                                                                          
Co-Chair Kelly noted that  the funds would be directed to vocational                                                            
pursuits  and  therefore  be  used  to  help  Alaskans  develop  the                                                            
necessary skills  for jobs, such as with the proposed  gas pipeline.                                                            
He  stressed  that  this  amendment   does  not  change  the  amount                                                            
originally  intended   for  the  university,  but  rather   corrects                                                            
language to allow it.                                                                                                           
Senator  Wilken explained  that the  amount funded  the program  the                                                            
previous  year was only  enough to  fund three-fourths  of the  year                                                            
because the program started after the fiscal year had begun.                                                                    
Senator  Olson understood  this, but  stressed the  need to  provide                                                            
training in rural areas of the state.                                                                                           
Co-Chair Kelly  recalled the original intent was to  provide funding                                                            
to  the  vocational   training  centers  and  that  this   amendment                                                            
continues to do this.                                                                                                           
Senator  Hoffman suggested  that  the intent  of the  program is  to                                                            
provide  training   for  jobs  in  technical  areas   and  that  the                                                            
university  is  an  institution  of higher  learning.  He  said  the                                                            
question  is actually whether  the allocation  to the university  is                                                            
Senator Green  reminded that there  was "great heated debate"  on SB
289 during  the previous  session about the  method of changing  the                                                            
use of the UI  funds. She remarked, "That's not what  this money was                                                            
intended for,  it's not why the money  was collected. It  was not go                                                            
to institutions.  It  was to  got to  individuals  who had  specific                                                            
needs."  While she understood  the  fund has a  surplus, she  argued                                                            
that this  money should go  to individuals.  She stated that  SB 289                                                            
was "supposed to be a one-year budget fix."                                                                                     
Co-Chair Kelly  did not remember SB 189 as a "one-year  budget fix."                                                            
Senator  Green asked if  it was not,  why the  issue was before  the                                                            
Committee this session.                                                                                                         
Co-Chair   Kelly  recalled   the   original   discussions   included                                                            
statements that the program would be on-going.                                                                                  
Senator  Wilken also  did not remember  the program  as a  "one-year                                                            
budget  fix." He  stressed  that funding  for  this  program is  not                                                            
collected from the employee  but rather from the employer's matching                                                            
funds. He found  it appropriate to train unemployed  workers so they                                                            
could qualify  for other jobs, which would be an appropriate  use of                                                            
UI funds. He added that  the University of Alaska is included in the                                                            
program  because it  has a "statewide  reach." He  noted that  while                                                            
AVTC and Kotzebue  Training Center  are located in two rural  areas,                                                            
there  are campuses  of the  University  of Alaska  in several  more                                                            
rural  communities.  He  pointed   out that   University  of  Alaska                                                            
President Hamilton  understands the  need to provide vocational  and                                                            
technical training.                                                                                                             
Co-Chair  Kelly stated, "There  is no reallocation  of dollars  from                                                            
one institution  to another." He stressed  that this is a  technical                                                            
amendment.  He  reiterated  that the  university  is  the  statewide                                                            
entity able to  funnel these funds into rural Alaska  for vocational                                                            
Senator Austerman asked  for a breakdown of how the university spent                                                            
the funds allocated to it for this program.                                                                                     
Co-Chair  Kelly   stated  this  information  is  available   on  the                                                            
Senator  Green expressed,  "the university  [has]  done a fine  job"                                                            
with the  funds allocated  for this  program. She  cited the  "major                                                            
emphasis"  at the  Mat-Su campus  on vocational  technical  studies.                                                            
However she  repeated that the intended  use of the UI fund  was not                                                            
for institutions,  but rather  to individuals  with specific  needs.                                                            
She stated  that the funds could be  given to unemployed  workers to                                                            
pay for tuition at one of the institutions.                                                                                     
Co-Chair  Donley remembered  the argument that  was held during  the                                                            
Senate debate  on SB 289  the previous  session regarding  employer-                                                            
matching funds  comprising the allocation to this  program. He asked                                                            
for an  explanation of  how the  source of these  funds affects  the                                                            
"bottom  line."  He  understood  that the  "bottom  line"  is  money                                                            
available to pay benefits  to unemployed Alaskans who contributed to                                                            
the fund.  He surmised that  using UI funds  for the vocational  and                                                            
technical  training programs  would reduce  the amount available  to                                                            
unemployed Alaskans  regardless of whether the funds  were collected                                                            
from the employer contribution or the employees.                                                                                
Senator  Wilken recalled  a  chart referenced  during  the  previous                                                            
discussions,  which he no longer possessed.  He remembered  that the                                                            
unemployment  benefits  were based on  the demand  of the  available                                                            
money.  He explained  that  the funds  allocated  to the  vocational                                                            
technical  training  program are  "over and  above"  the demand  and                                                            
would not  affect the benefits.  He qualified  that in the  previous                                                            
session, the  Department of Labor  and Workforce Development  warned                                                            
that using  the excess amount in the  fund for other purposes  would                                                            
affect benefits.  He remarked that  this was found to be  untrue and                                                            
that the excess  balance has grown  despite the withdrawal  of funds                                                            
for the vocational technical training program.                                                                                  
Co-Chair  Donley stated that  it does not  matter whether the  funds                                                            
allocated  to the  vocational and  technical  training program  come                                                            
from the employee  or the employer  share of the payments  to the UI                                                            
fund. He  expressed that  any usage of the  fund for other  purposes                                                            
affects the amount  available to pay unemployment  benefits. He said                                                            
this is  because of the  presupposition that  the status quo  is the                                                            
proper  policy  call. He  stated  that the  amount  paid  unemployed                                                            
workers in benefits is  "some of the most miserable lacking benefits                                                            
in the  nation." He  suggested that  the policy  should actually  be                                                            
whether to  increase the  amount of benefit  payments or direct  the                                                            
funds  to  other projects  such  as  the  vocational  and  technical                                                            
training program.                                                                                                               
Senator Wilken  disagreed and emphasized  that the amount  allocated                                                            
from the UI  fund to the vocational  and technical training  program                                                            
is  excess money  in  that fund,  which  constitutes  a reserve.  He                                                            
stated  that  Co-Chair  Donley's  suggestion   to  increase  benefit                                                            
payments  would  need  to  be addressed   as separate  legislation.                                                             
Senator Wilken  admitted that while  it could be stated that  Alaska                                                            
has  "miserable"   unemployment  insurance,  the   state  has  other                                                            
"extraordinary" benefits that compensate for this.                                                                              
Co-Chair Donley  argued that the benefit  payment issue is  directly                                                            
relevant to the legislation  before the Committee. This, he stressed                                                            
is because other usage  of the UI funds "cuts off the availability,"                                                            
or  impedes  the  flexibility   to improve   the  benefits  paid  to                                                            
uninsured Alaskans.                                                                                                             
Senator Wilken  countered the bill does not address  the possibility                                                            
of using  employer  and employee  contributions  to the  UI fund  to                                                            
increase  the amount of  benefits paid to  individuals. He  stressed                                                            
that  this bill  allocates  funds  collected  "over and  above"  the                                                            
amount paid  out in benefits and establishes  the amount  of reserve                                                            
funds necessary.                                                                                                                
Co-Chair  Kelly agreed Co-Chair  Donley's concern  is a subject  for                                                            
another bill.  He explained  that the existing  structure of  the UI                                                            
fund enables payments for  vocational programs without impacting the                                                            
benefits paid to individuals.                                                                                                   
Senator Wilken noted that  the matter is complicated, just as it was                                                            
when  it was  first discussed  the  prior year.  He  asked that  the                                                            
Department  of Labor and Workforce  Development explain the  issues.                                                            
Co-Chair  Kelly ordered the  bill HELD until  later in the  hearing.                                                            
The motion to adopt Amendment #1 remained on the table.                                                                         
     SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL                                                                            
[The Committee continued  deliberations from earlier in the hearing.                                                            
A motion to adopt Amendment #1 remained on the table.]                                                                          
Co-Chair  Donley restated  his  objection to  the bill  as the  same                                                            
reason he voted  against similar legislation  the previous  year. He                                                            
expressed  that this  legislation  utilizes funds  that would  "more                                                            
appropriately"  be used in  improving the  unemployment benefits  to                                                            
those workers who have  paid into the system.  He asserted that this                                                            
is  the  "purpose  of the  system"  and  that  the  current  benefit                                                            
schedule is "sub par" and  does not adequately compensate unemployed                                                            
workers.  He noted  that  the  intended purposes  contained  in  the                                                            
legislation are worthy.                                                                                                         
Co-Chair Kelly  reminded that the Committee debate  has been whether                                                            
this  bill  could   adversely  affect  the  potential   to  increase                                                            
unemployment payments.                                                                                                          
SENATOR  JOHN TORGERSON  affirmed Co-Chair  Donley's assertion  that                                                            
this legislation  "intercepts"  unemployment  insurance (UI)  funds.                                                            
Senator Torgerson listed  this amount as one-tenth of one percent of                                                            
the amount paid into the  fund by the employee. He remarked that the                                                            
UI trust fund  is "the most lucrative it has been  in the history of                                                            
our state"  with a balance  of approximately  $220 million.  He said                                                            
the average  balance is between  $160 million  and $180 million.  He                                                            
noted there is other legislation  before this legislature that would                                                            
increase  the UI  benefits.  He stressed  that  if at  any time  the                                                            
benefits  need exceeds  the balance  of the UI  trust, the  employer                                                            
would pay the  difference. Therefore,  he assured that the  trust is                                                            
never compromised.                                                                                                              
Senator  Torgerson  made the  case  that  by providing  funding  for                                                            
training facilities the  number of workers reliant on UI benefits is                                                            
reduced.  In  fact,  he pointed  out,  these  workers  were  instead                                                            
employed and  therefore contributing  to the UI fund. He  noted that                                                            
this  theory  was  also agreed  upon  when  establishing  the  State                                                            
Training Employment  Program (STEP)  several years earlier  and as a                                                            
result, the balance of the trust increased.                                                                                     
Senator Ward  referenced the  amendment and  asked if its  necessity                                                            
was  caused  by  a  mistake  in  SB  289,  which  set  the  original                                                            
allocation percentages.                                                                                                         
Senator Torgerson  replied, "this was actually driven  by money" and                                                            
that his intention  was to allocate $3 million to  the University of                                                            
Alaska. He stated this  was because the House of Representatives did                                                            
not fund the  full request in the  FY 01 operating budget.  He noted                                                            
that other  legislation  was pending  that could  have accomplished                                                             
this, but that SB 289 was  chosen to also provide funds to AVTEC and                                                            
Kotzebue Technical Center.                                                                                                      
Senator  Ward  asked  the  projected  amount   appropriated  to  the                                                            
university under this amendment.                                                                                                
Senator Torgerson answered, $3,051,046.                                                                                         
SFC 01 # 47, Side A 10:44 AM                                                                                                    
Senator  Leman requested  that the  debate return  to the  amendment                                                            
before the Committee.                                                                                                           
Co-Chair  Kelly  pointed  out  that the  amendment  is  a  technical                                                            
correction,  but noted there  was objection  to the amendment  based                                                            
upon the program. He emphasized  that the program continues, whether                                                            
the amendment  is adopted or not,  but warned that if the  amendment                                                            
is not  adopted, the  program does  not continue  as intended  in SB
289. He surmised  that while this debate could be  "healthy" it does                                                            
not pertain to the amendment  or the legislation before the members.                                                            
He reiterated that the  amendment adjusts the percentages to reflect                                                            
a full fiscal year rather  than the three-quarter year funded in the                                                            
first year of the program.                                                                                                      
Senator  Leman concluded  that  this  amendment  is "a  fix that  is                                                            
necessary  to get  us to  where  we intend  to be."  He appreciated                                                             
Senator  Olson's comments  but disagreed  that this  takes from  the                                                            
"have-nots"  and gives to the "haves".  Senator Leman did  not think                                                            
the redistribution was  in a manner that would be detrimental to the                                                            
Kotzebue Training  Center. He supported the amendment  because it is                                                            
consistent  to the intent  of SB 289. He  stated that like  Co-Chair                                                            
Donley and  Senator Green,  he objected to  the use of the  UI funds                                                            
for an education  program in the previous session  and that he voted                                                            
against  the original  legislation.  He qualified  that  he did  not                                                            
oppose funding  vocational  technical programs.  However, he  stated                                                            
that this  amendment  is appropriate  given that  the program  is in                                                            
Senator   Olson  moved  to   amend  the   amendment,  changing   the                                                            
percentages  to 61 percent to the  University of Alaska,  13 percent                                                            
to the  Kotzebue Technical  Center and 26  to the Alaska  Vocational                                                            
Technical Center. He said  he offered this as a compromise saying it                                                            
would provide a 40 percent increase to each institution.                                                                        
Co-Chair Kelly understood  the amendment as stated but did not think                                                            
it gave a 40 percent  increase over what was requested  in the prior                                                            
Senator Torgerson  pointed out that the Kotzebue Training  Center is                                                            
estimated   to   receive  $516,000   under   the   previous   year's                                                            
appropriation  and would receive  $500,019  in the current  year. He                                                            
continued that  AVTC was projected  to receive $1,032,000  and would                                                            
receive  $1,001,000.  He suggested  that  the percentages  could  be                                                            
changed slightly  to make up for these reductions.  He stressed that                                                            
the intent is to provide  the same amount to each facility as in the                                                            
prior year  and for  the university  to receive  the maximum  amount                                                            
Co-Chair  Kelly   stated  that  because  the  actual   amount  would                                                            
fluctuate every  year, he did not support adjusting  the percentages                                                            
based on the previous year's funding.                                                                                           
A roll call was taken on the motion to amend the amendment.                                                                     
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
OPPOSED: Senator  Wilken, Senator Austerman, Senator  Leman, Senator                                                            
Ward, Co-Chair Donley and Co-Chair Kelly                                                                                        
ABSENT: Senator Green                                                                                                           
The motion FAILED (2-6-1)                                                                                                       
The amendment FAILED to be adopted.                                                                                             
Senator   Leman   expressed   that  Senator   Torgerson   raised   a                                                            
"compelling"  argument  in  that these  numbers  are not  exact  and                                                            
suggested that a one-half  percent adjustment would accomplish this.                                                            
He surmised  changing  the Kotzebue  Training  Center percentage  to                                                            
11.5, changing  the AVTC  percentage to 22.5  and the University  of                                                            
Alaska percentage to 66,  would achieve the same funding amounts for                                                            
each of the three facilities.                                                                                                   
Co-Chair Kelly  stressed that although  this might make the  amounts                                                            
the same  as the previous  year, they would  be different in  future                                                            
years.  He did  not recommend  adjusting  the percentages  to  align                                                            
exactly  with the  previous  year's  amounts, but  rather  supported                                                            
establishing a percentage breakdown.                                                                                            
Senator Torgerson  affirmed that the actual amounts  are fluctuating                                                            
depending on the amount paid into the UI trust fund.                                                                            
Senator Leman stated that  he would no offer this as an amendment to                                                            
the amendment.                                                                                                                  
A roll call was taken on the motion to adopt the amendment.                                                                     
IN  FAVOR: Senator  Leman,  Senator  Ward, Senator  Wilken,  Senator                                                            
Austerman, Co-Chair Donley and Co-Chair Kelly                                                                                   
OPPOSED: Senator Hoffman and Senator Olson                                                                                      
ABSENT: Senator Green                                                                                                           
The motion PASSED (6-2-1)                                                                                                       
The amendment was ADOPTED.                                                                                                      
Co-Chair Donley  stated that there was confusion as  to whether this                                                            
bill is  necessary in order  to extend the  program. He referred  to                                                            
the sponsor  statement;  "…SB  137 extends  the date  of the  direct                                                            
allocations to  named institutions for two more years."  He asked if                                                            
the bill accomplishes  two functions,  adjust the percentage  levels                                                            
and also extend the effect of SB 289 for two years.                                                                             
Senator Torgerson responded  that SB 289 established a grant program                                                            
that would be given to  accredited institutions in Alaska based upon                                                            
grant  criteria.   He  stated   that  he   introduced  the   current                                                            
legislation   because  the   Department  of   Labor  and   Workforce                                                            
Development  has not  issued  any regulations,  nor  has the  Alaska                                                            
Human  Resource Investment  Council  (AHRIC)  taken  steps to  issue                                                            
these grants.  Henceforth, he remarked, this legislation  provides a                                                            
direct  grant to the  three institutions,  rather  than require  the                                                            
institutions apply for the grants.                                                                                              
Co-Chair   Donley  asked   how  this   legislation   with  the   set                                                            
percentages, relates to  the operating budget. He noted that because                                                            
it does not set specific  amounts, it is not an appropriations bill.                                                            
He wanted  to  know if it  is a  guide or  formula to  be used  when                                                            
preparing the operating budget.                                                                                                 
Senator Torgerson  replied that this  legislation has nothing  to do                                                            
with the operating  budget and that  a forthcoming fiscal  note will                                                            
reflect the percentage breakdowns to each institution.                                                                          
Co-Chair  Donley  referred  to an  outdated  zero fiscal  note  that                                                            
stated the bill appropriates $4.5 million to the program.                                                                       
REMOND HENDERSON,  Director,  Division of  Administrative  Services,                                                            
Department  of Labor  and Workforce  Development,  testified that  a                                                            
fiscal  note would  be necessary  to appropriate  the intended  $4.5                                                            
million into  the department's  budget. This,  he stated is  because                                                            
the  funds  are not  included  in  the  budget under  the  House  of                                                            
Representative's version  of the FY 02 operating budget. He admitted                                                            
that this  request should  have been submitted  with the  governor's                                                            
proposed operating budget  but was omitted. He stressed that if this                                                            
bill passes  without the related fiscal  note, the department  would                                                            
not have the necessary  $4.5 million to issue in grants to the three                                                            
Senator  Torgerson  stated his  intent  to reflect  the  funds in  a                                                            
fiscal  note in  the event  that the  governor vetoes  the bill.  He                                                            
explained  that  if  the  veto occurred,  the  funds  would  not  be                                                            
available for  the department to expend otherwise  and would be held                                                            
for future appropriation.                                                                                                       
Co-Chair  Kelly announced  the  Committee  would wait  for a  proper                                                            
fiscal note.                                                                                                                    
Senator Torgerson offered to write the fiscal note.                                                                             
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              

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