Legislature(2005 - 2006)SENATE FINANCE 532
04/25/2005 09:00 AM FINANCE
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL NO. 71 "An Act relating to the compensation of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. MIKE TIBBLES, Deputy Commissioner, Department of Administration, testified in support of the legislation. This bill would align the statutory pay schedule for partially exempt and exempt employees in the executive, legislative, and judicial branches with recent negotiated union contract salary schedules. It is anticipated that "complicated issues" would arise were the bill denied. Mr. Tibbles stated that the area of interest is the process involved in making State employees wage adjustments: the wage adjustment process for Union employees is addressed via collective bargaining negotiations and, once an agreement is reached at that level, the proposed monetary terms are submitted to the Legislature for approval; partially exempt or exempt employee salary adjustments are addressed by the submittal of legislation that would update State wage Statutes. SB 71 is the vehicle for that wage adjustment this year. Mr. Tibbles noted that due to the fact that partially exempt and exempt wage bill proposals have not always "moved forward", there is currently an approximate five-percent disparity between their wage schedules and those represented by collective bargaining. This disparity would increase further in FY 2006 and 2007 as contracted wage implementations occur. Mr. Tibbles stressed that were the salary scales of partially exempt or exempt employees not brought into alignment with those of union employees, three issues could arise. The first is an equity issue in that all State employee positions are assigned a salary range based on the nature and complexity of work and the amount of supervisory oversight. Since State Statutes require "like pay for like work", the Department's opinion is that were SB 71 to not move forward, a disparity between the two salary schedules would occur which would violate "the like pay for like work" statutory mandate at the point "when we get to a nine-percent difference between the two salary schedules". Mr. Tibbles also shared that difficulties have arisen in situations where an effort was made to "move a position laterally" in the same range. For example, were an exempt fiscal analyst position to open in the Office of Management and Budget, a collective bargaining fiscal analyst employee would be disinterested in the position because "there was such a difference in pay". This situation has become problematic. 9:45:52 AM Mr. Tibbles stated that a second issue is that recruitment efforts become more difficult as the disparity between the two schedules increases; particularly in the case of recruiting professionals, especially as "managers and directors are asked to do more". Were this "bill to not pass, the message being sent is that we are not respecting the management that they do perform ... in many cases, individuals" they supervise would be making more money than them at the point in time that a nine-percent difference in the two salary schedules occurs. Mr. Tibbles communicated that the third issue is that when a large disparity between the two salary schedules is reached, it discourages people "from moving up" into management positions. The State is "required to encourage career progression" and, in his opinion, that requirement could not be met when it would not take "that many years in merit step" increases for an individual to earn more than his or her own new supervisor. This is exampled by a situation in which an individual in a Range 23 Step D supervisory position would be earning more than his or her Range 26, Step A supervisor. This situation is reflected in the "Comparison of Statutory and Supervisory Salary Schedules after bargained increases" chart depicted on page three of the "Comparison of Statutory, Judicial and Supervisory Salary Schedules" handout [copy on file]. Mr. Tibbles summarized that this bill is "very important" in addressing the inequity, recruitment, and difficulty in upward progression issues. It would provide a better playing field. The "union contracts have been submitted to the Legislature and are moving forward in the budget process". He asked the Committee's support in adjusting "the statutory schedules as well". Senator Hoffman asked when the exempt and partially exempt salaries were last adjusted; specifically the salaries of Alaska Court System employees Mr. Tibbles stated that the historical wage increases for exempt; partially exempt; and Court System employees are depicted on page two of the aforementioned handout. Court employees wage adjustments are specified in the column titled "Wage Increases for XJ". Their most recent wage adjustments included a two-percent increase in 2001 and a three-percent increase in 2002. 9:46:32 AM Co-Chair Green understood therefore, that, under the current system, were a Range 10, Step "E" or Step "F" employee encouraged to advance in their career and increased to a Range 12, Step A or Step B position, "they would actually lose money" by such a promotion. Mr. Tibbles responded that is possible. He also noted that were an employee to move from a classified position to a non-classified position, they would be moving from a collective bargain negotiated schedule that is higher than the non-classified schedule existing in Statute. Co-Chair Green asked for further information regarding how the Step placement for a person earning the highest step in one range but who is being advanced to the next range would be determined. Mr. Tibbles responded that there are "certain rules that govern advanced step placement". Continuing, he noted that the operating procedures in place in the Executive Branch of State government specify that an individual "can't be moved into longevity and certain criteria must be met" before one could be placed within advanced steps. Such things as "exceptional service" are considerations. He was unfamiliar with the Legislative employee rules in this regard. Co-Chair Green concluded therefore, that this legislation would serve to make "the smoothing much easier" and more aligned with employee counterparts in non-exempt positions. While this wage issue might "have been overlooked or intentional in years past for various reasons", this legislation would serve to correct the situation. It would make it "even, equal" and provide parity amongst between the two groups of employees. 9:49:12 AM Co-Chair Green introduced her grandsons, Connor and Noel Leaf, who were visiting from Kenai. 9:49:30 AM CHRIS CHRISTENSEN, Deputy Administrative Director, Alaska Court System, voiced appreciation for Court System employees being included in this Administration sponsored legislation. Of the Court System's approximate 733 permanent employees, 62 are judges appointed by the Governor, 39 are magistrates, and the majority of the remaining employees are clerical in nature. The Court System consumes less than two-percent of the State's operating budget, and even though it is one of the smallest departments in the Executive branch, more private citizens interact with the System on a daily basis than any other entity in State government with the plausible exception of the University of Alaska system. The majority of the private citizens with whom the Court System's staff work with every day are unfamiliar with the workings of the Court System, "are angry or scared, and might be undergoing the most traumatic experience of their lives". In addition, more than 150,000 new cases were filed with the Court System the previous year. While Court employees work hard under very stressful conditions and most of them work "at a very low salary", they are, nonetheless, proud of their work and believe that what they do matters. Mr. Christensen informed the Committee that because approximately 70-percent of the employees are Range 15 or below, the Court experiences large turnover rates. This, in turn, results in management issues. Currently there is a 50-percent employee turnover rate for employees who have been with the System for less than five years. The turnover rate in Rural locations, such as Kotzebue, is 100 percent for five-year or less employees, and at times the turnover has been 100-percent in one year. One factor in the high Rural turnover is that the local boroughs or Native Corporations offer higher compensation to employees than the State does for similar work. Mr. Christensen reminded the Committee that the Legislature has historically provided non-judicial Court employees a cost of living adjustment (COLA) equal to the COLA provided to union employees. When this failed to occur in 1993, non-supervisory Court employees voted to join the IBEW union. In 1996, the Legislature provided both union and non-union employees a COLA amount that restored parity. Subsequently, those Court employees voted to de-certify the IBEW when the first collective bargaining agreement expired. Pay equity rather than working conditions appears to have been the driving force behind the initial vote. Currently, "the Court System has the largest non-union shop in State government". Mr. Christensen informed the Committee that while the salaries of the Alaska Court System's judges "were ranked first in the nation in 1982", today, "according to the National Center of State Courts, the salary of a Superior Court Judge in Alaska ranks 49th, once adjusted for cost of living". This decline has occurred in a little more than twenty years. "The average annual increase for Superior Court Judges in other states during the period from 1992 to 2004 was three-point-one percent. In Alaska it averaged under one percent which was well under half the rate of inflation … unlike other State employees, Judges do not get annual longevity increases". The salary of a new Judge is exactly the same as a Judge with 15 years of experience. There are no longevity increases to compensate for missed cost of living adjustments. In addition, the geographic differential (GD) provided to Rural judges is substantially less than that of other State employees. For example, a union employee in Barrow receives a 43-percent GD and a non-union employee receives a 31.5 percent GD. The local Superior Court Judge receives a 17-percent GD. In addition, Judges' geographic differential is calculated only on the first $40,000 of his or her salary. Other State employees' GD is calculated on their entire salary. Due to the combination of there being no longevity increases and a limited GD, there are places in Rural Alaska in which the local prosecutor or the local public defender makes more than the local Superior Court Judge. Mr. Christensen stated that this bill would provide non-judicial Court employees a salary adjustment effective in FY 2006 that would place the Court's salary schedule on par with the salary schedule approved last year for Alaska Public Employees Association (APEA) members. Nonetheless, Court employees have lost substantial ground to inflation over the last two decades. Judges would receive a salary increase equal to the percentage increase that SB 71 proposes for a Range 28 Step E in the Executive Branch, as State Statutes ties a Judge's salary to that Range. Mr. Christensen observed that this increase would improve Alaska's judges' ranking of 49th in the nation to 47th place. The increase would be appreciated, and by approving this bill, "the Legislature would send a message that it values Court employees as much as it does union employees in the Executive Branch and that it doesn't take their hard work for granted." Support of this bill would be appreciated. 9:55:00 AM Co-Chair Green understood therefore that the Court System views this legislation "as a good thing for its employees". Mr. Christensen affirmed. 9:55:24 AM PAM VARNI, Executive Director, Legislative Affairs Agency, noted that in the 1980s and again in the 1990s, Executive Branch employees received salary increases that Legislative Branch employees did not. "Currently, Legislative employees' salaries are roughly five-percent behind their counterparts in the Executive and Judicial Branches with the exception of partially exempt employees. This bill should be passed as a matter of fairness and to eliminate any suggestion that employees doing similar work are not paid equally. It is long overdue. You want to retain the best and the brightest employees". Numerous "employees have been lost to the Executive Branch because they can take a position at the same range and step and make more money or they accept positions at a higher range, and receive an additional five percent increase in pay". Ms. Varni stated that absent parity in salary, it is difficult to retain employees such as attorneys, programmers, personal assistants, and Legislative staffers. When reviewing the Legislative budget, "the drain" of long-term Legislative staff is noticeable as the number of Legislative staff receiving longevity Step increases is decreasing. In addition to this, the Legislative Affairs Agency is experiencing difficulty in recruiting Legislative Information Office (LIO) teleconference moderators in Rural areas as the "private sector wages are higher". It is difficult for staff at the lower Range levels "to keep up with cost of living". Wage adjustments are not keeping pace with the cost of living. In the 15-year period from 1988 to 2003, the Anchorage Consumer Price Index (CPI) increased 49.89-percent while Legislative pay increased 14.72-percent: a difference of 35.08-percent. "This is a significant difference". When comparing Alaska's Legislative wage increases for the past five years to other state's it is found that in contrast to Alaska's five percent increase, New Mexico increased 14.5-percent, Louisiana increased 30-percent, Indiana increased 12.7-percent, Virginia increased 11.8-percent, and Rhode Island increased 12.3-percent. Ms. Varni thanked the Committee for their attention, and, as a manager and personnel officer, she urged for passage of this bill in order "to make wages fair and equitable to all employees in the Legislative branch". Co-Chair Wilken noted that, regardless of political affiliation, over the years, Administrations have "struggled" in their search to find individuals to fill commissioner positions. Extended searches have occurred and oftentimes, the people filling those positions "have the financial means" that allow them to fulfill their public service. This is a re-occurring situation every election cycle. To that point, he asked whether this bill would be the avenue through which commissioner salaries could be addressed. 9:59:12 AM Mr. Tibbles replied that the salaries of commissioners "are unique because they are tied to a range and a step". That creates a situation in which the salaries are frozen. As a result, other employees' salaries could increase beyond that of the Commissioner. He noted however, that people serve the state for a variety of reasons: some of them "are financially able" to accept the position at a lower salary than they would make in other professions. Generally; however, this is a concern. There were three acting commissioners this year. He shared that a number of the applicants would be taking a pay cut from their current job were they to become commissioner. Co-Chair Green asked whether the applicants who would have taken a pay reduction were existing State employees. Mr. Tibbles affirmed that a number of the applicants were State employees who would have received less compensation had they taken a commissioner position. 10:00:32 AM Co-Chair Wilken suggested that the commissioner salary issue be addressed in this legislation. Doing so could assist in making the process of hiring a commissioner easier for the next governor. Such conditions as implementing a salary upgrade effective date to coincide with the seating of the next governor could be considered. Co-Chair Green noted that action eliminating the statutorily specified salary range and allowing the position to be subject to the range and step process could also be considered. Mr. Tibbles opined that a simple solution would be to eliminate the Step "E" designation and simply include the Range 28 designation in Statute. This would allow the commissioner salary to move up the steps in the same manner that other State employees do. Co-Chair Green asked whether the Range 28 Step "E" designation is frozen at its original level or would increase in line with other State salary increases. Mr. Tibbles verified that it increases with the State's statutory schedules. Co-Chair Green asked for confirmation that the salary currently increases in that manner. Mr. Tibbles affirmed. Co-Chair Green stated that further work on this legislation would be conducted. The bill was HELD in Committee.