Legislature(2003 - 2004)

04/27/2004 01:32 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          HB 305-UNEMPLOYMENT COMPENSATION BENEFITS                                                                           
                                                                                                                                
CHAIR  CON BUNDE  announced  HB  305, version  D,  to  be up  for                                                               
consideration.                                                                                                                  
                                                                                                                                
COMMISSIONER GREG O'CLARAY, Department of  Law (DOL), said he had                                                               
new information regarding a 26-week waiting period.                                                                             
                                                                                                                                
MR.   BILL  KRAMER,   Chief,   Unemployment  Insurance   Program,                                                               
Department   of  Law   (DOL),  brought   a  possible   unintended                                                               
consequence to the committee's attention.                                                                                       
                                                                                                                                
     Last year,  13,780 people who filed  for benefits under                                                                    
     the  voluntary quit,  misconduct  work provisions  that                                                                    
     have   been  discussed   here  recently   -  if   these                                                                    
     individuals  were denied  26 weeks  instead of  six, as                                                                    
     has  been discussed,  there's  a  possibility that  the                                                                    
     number  of claims  that are  filed throughout  the year                                                                    
     could cause  us to  fall below  the level  required for                                                                    
     the federal extended benefits to  trigger on in Alaska.                                                                    
     Part of the  reason we trigger on  to extended benefits                                                                    
     each  year  in  Alaska  is   because  we  have  a  high                                                                    
     recipient rate....                                                                                                         
                                                                                                                                
The state has received it every year since 1971.                                                                                
                                                                                                                                
CHAIR BUNDE  asked if people  had to  wait 26 weeks,  would fewer                                                               
ask to get benefits or be discouraged from filing at all.                                                                       
                                                                                                                                
MR. KRAMER replied  that would be hard to predict.  The number of                                                               
weeks claimed is  part of the calculation  the federal government                                                               
uses  to trigger  benefits. If  the number  of claims  is reduced                                                               
because of the  extended denied period, it could  change the time                                                               
period for  which the  state gets extended  benefits or  the fact                                                               
that we  get it  at all.  During the  last nine  years of  1994 -                                                               
2002, an average of $7.3 million per year has been paid.                                                                        
                                                                                                                                
CHAIR  BUNDE asked  what the  other 47  states do  about extended                                                               
benefits.                                                                                                                       
                                                                                                                                
MR. KRAMER  replied that  it depends  on the  economic conditions                                                               
within  the  state. Alaska  triggers  on  every year  during  the                                                               
winter  through mid-summer.  Most  states do  not  trigger on  to                                                               
extended benefits  regularly. During the recent  recession only a                                                               
handful  of other  states triggered  on to  the regular  extended                                                               
benefits program.                                                                                                               
                                                                                                                                
CHAIR  BUNDE drew  attention  to the  chart  that the  department                                                               
provided the  committee on  unemployment benefits  that indicates                                                               
denials  are  fairly steady  across  the  past three  years.  The                                                               
number of people  who have applied for and  received benefits has                                                               
gone up fairly substantially.                                                                                                   
                                                                                                                                
SENATOR  SEEKINS  asked  what  the trigger  is  for  Alaskans  to                                                               
receive federal extended benefits.                                                                                              
                                                                                                                                
MR. KRAMER  replied that  there are  three different  formulas in                                                               
place and  federal law  allows states to  trigger on  through any                                                               
one of the three.  The most common one - and  the one that Alaska                                                               
triggers -  looks at  the insured  unemployment rate  (IUR). It's                                                               
calculated by dividing the average  number of weeks of UI claimed                                                               
for  the past  13-week  period.  That number  is  divided by  the                                                               
average  covered employment  for the  past four  quarters of  the                                                               
past year. Recent figures indicate  that 231,355 individuals were                                                               
in covered  employment in the  state and the 13-week  average was                                                               
17,797  weeks of  unemployment, an  insured unemployment  rate of                                                               
6.56. That  figure triggers the state  for a minimum of  13 weeks                                                               
extended benefits.                                                                                                              
                                                                                                                                
SENATOR  SEEKINS   asked  how   much  the   state  pays   out  in                                                               
unemployment insurance per year.                                                                                                
                                                                                                                                
MR. KRAMER  replied that it changes  year to year. In  2003, $174                                                               
million  was paid  out;  it  was a  high  year  and included  two                                                               
federal  extension   programs.  One  was  a   temporary  extended                                                               
unemployment  compensation,  which   was  100  percent  federally                                                               
funded,  and that  was simply  turned  on by  Congress without  a                                                               
trigger. At  the same  time, Alaska was  triggered on  to regular                                                               
extended benefits, which was federally funded also.                                                                             
                                                                                                                                
SENATOR SEEKINS asked how much federal money the state got.                                                                     
                                                                                                                                
MR. KRAMER replied  $10 million in regular  extended benefits and                                                               
$40 million for the temporary extension program.                                                                                
                                                                                                                                
CHAIR BUNDE asked what the state's portion of the total was.                                                                    
                                                                                                                                
MR. KRAMER guessed about $130 million.                                                                                          
                                                                                                                                
CHAIR BUNDE  speculated that the  state pays out $130  million in                                                               
order  to get  the  $40 million  in federal  funds.  He asked  if                                                               
something more than  six weeks, but less than  26 weeks, wouldn't                                                               
stop the trigger.                                                                                                               
                                                                                                                                
MR. KRAMER replied  the challenge is trying to  guess what people                                                               
will do under the rules.                                                                                                        
                                                                                                                                
     Would  some  people  now   stay  employed  because  the                                                                    
     penalty is  stiffer? Will some  people find  other ways                                                                    
     to  maintain their  wellbeing when  they are  unable to                                                                    
     get unemployment benefits? It's hard to predict....                                                                        
                                                                                                                                
He added that people who  are denied through the current six-week                                                               
provision are prevented from receiving  any extended benefits for                                                               
a benefit year.                                                                                                                 
                                                                                                                                
TAPE 04-35, SIDE B                                                                                                              
                                                                                                                                
2:20 p.m.                                                                                                                       
                                                                                                                                
CHAIR BUNDE mused  that this situation begs the  question of what                                                               
denying  unemployment benefits  to some  people would  do to  the                                                               
state's welfare rolls.                                                                                                          
                                                                                                                                
SENATOR  SEEKINS moved  to pass  SCS HB  305(L&C) from  committee                                                               
with  individual   recommendations  and  attached   fiscal  note.                                                               
Senators  Gary Stevens,  Hollis French,  Ralph Seekins  and Chair                                                               
Con Bunde voted yea; and SCS HB 305(L&C) moved from committee.                                                                  

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