Legislature(2021 - 2022)BELTZ 105 (TSBldg)

02/04/2022 01:30 PM Senate LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

Audio Topic
01:30:09 PM Start
01:30:46 PM SB159
02:45:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 159 UNEMPLOYMENT BENEFITS TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 02/02/22>
**Streamed live on AKL.tv**
                   SB 159-UNEMPLOYMENT BENEFITS                                                                             
                                                                                                                                
1:30:46 PM                                                                                                                    
CHAIR  COSTELLO announced  the consideration  of SENATE  BILL NO.                                                               
159 "An Act relating to unemployment benefits."                                                                                 
                                                                                                                                
She  noted that  this  was  the first  hearing  and  there was  a                                                               
committee substitute (CS) for the committee to consider.                                                                        
                                                                                                                                
1:31:10 PM                                                                                                                    
SENATOR REVAK moved to adopt the Committee Substitute (CS) for                                                                  
SB 159, work order 32-LS1313\I, as the working document.                                                                        
                                                                                                                                
CHAIR COSTELLO objected for discussion purposes.                                                                                
                                                                                                                                
1:31:34 PM                                                                                                                    
MELODIE WILTERDINK, Staff, Senator Mia Costello, Alaska State                                                                   
Legislature, Juneau, Alaska, presented the changes from version                                                                 
B to version I of SB 159:                                                                                                       
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     Sec. 3    AS 23.20.350(e)  Page 2, Lines 17-31,  & Page                                                                  
     3, Lines 1-12                                                                                                            
     Version  I revises  the  unemployment benefit  duration                                                                    
     scale  by  starting at  5.00  percent  instead of  7.00                                                                    
     percent,  with  14  weeks of  benefits  instead  of  12                                                                    
     weeks.  It extends  the scale  to a  total of  26 weeks                                                                    
     from 20 weeks.                                                                                                             
                                                                                                                                
     Sec. 4  AS 23.20.350(g) Page 3, Lines 13-16                                                                              
     Version  I  changes  the  definition  used  for  "state                                                                    
     average unemployment rate"  from the average seasonally                                                                    
     adjusted  unemployment rate  for the  third quarter  of                                                                    
     the calendar  year, to the average  seasonally adjusted                                                                    
     unemployment  rate  for  the  most  recently  completed                                                                    
     quarter.                                                                                                                   
                                                                                                                                
1:32:18 PM                                                                                                                    
SENATOR MICCICHE joined the committee.                                                                                          
                                                                                                                                
1:33:37 PM                                                                                                                    
CHAIR COSTELLO removed her objection. Finding no further                                                                        
objection, version I was before the committee.                                                                                  
                                                                                                                                
1:33:59 PM                                                                                                                    
MS. WILTERDINK introduced SB 159 reading the sponsor statement                                                                  
for SB 159:                                                                                                                     
                                                                                                                                
     Unemployment insurance exists  to provide Alaskans with                                                                    
     necessary income  when we are  between jobs.  The State                                                                    
     of Alaska's  current system  determines how  many weeks                                                                    
     of  benefits  each  Alaskan   receives  based  on  work                                                                    
     history. Looking  at the  first four  of the  last five                                                                    
     quarters, an  individual who worked during  all of them                                                                    
     would receive  more weeks of benefits  than someone who                                                                    
     worked  seasonally or  recently  entered the  workforce                                                                    
     but was laid off.                                                                                                          
                                                                                                                                
     By  basing   this  critical  lifeline  on   prior  work                                                                    
     history, the current unemployment  system does not take                                                                    
     into  account  whatsoever  whether there  are  actually                                                                    
     jobs available.                                                                                                            
                                                                                                                                
     Instead of  allotting weeks of  benefits based  on past                                                                  
     work, Senate Bill  159 would base weeks  of benefits on                                                                  
     the  unemployment ratetying   the duration  of benefits                                                                  
     to whether  there are employment opportunities  or not.                                                                  
     SB  159 does  not change  the weekly  dollar amount  of                                                                    
     benefit each  individual is  eligible to  receive, just                                                                    
     the length of time the benefit is available.                                                                               
                                                                                                                                
     When  there are  few  jobs  available, whether  someone                                                                    
     worked annually  or seasonally over the  past year does                                                                    
     not  matterfinding   a  new   job  will  be  difficult.                                                                    
     Similarly, when  the economy is  growing and  many jobs                                                                    
     are  available, finding  employment is  easier. SB  159                                                                    
     would treat  all Alaskans  who are  facing unemployment                                                                    
     equally by  considering the job market  they are facing                                                                    
     when determining the duration of benefits.                                                                                 
                                                                                                                                
     Determining weeks  of unemployment benefits  on whether                                                                    
     jobs are  available would save valuable  resources when                                                                    
     jobs  are abundant  in order  to  distribute a  greater                                                                    
     number of weeks of benefits  to every Alaskan when jobs                                                                    
     are difficult to find.                                                                                                     
                                                                                                                                
1:36:09 PM                                                                                                                    
SENATOR STEVENS asked  if the benefit is tied to  the type of job                                                               
a person  had as well  as the fact  that they are  unemployed. He                                                               
related that  in Kodiak,  jobs are  readily available  during the                                                               
fishing season  because the cannery  almost always  has openings,                                                               
at least  on the  slime line.  However, an  unemployed accountant                                                               
may not want to take that kind of position.                                                                                     
                                                                                                                                
MS.  WILTERDINK answered  that the  unemployment system  does not                                                               
look  at the  type of  job  and the  bill does  not address  that                                                               
issue. She deferred further explanation  to Patsy Westcott who is                                                               
familiar with state and federal laws  and may know whether or not                                                               
that type of distinction would be legal.                                                                                        
                                                                                                                                
SENATOR  STEVENS narrowed  his question  asking if  an unemployed                                                               
person  could turn  down  a job  and  still receive  unemployment                                                               
benefits.                                                                                                                       
                                                                                                                                
1:37:44 PM                                                                                                                    
PATSY  WESCOTT, Director,  Division  of  Employment and  Training                                                               
Services, Department of Labor  and Workforce Development (DOLWD),                                                               
Juneau, Alaska, asked him to restate the question.                                                                              
                                                                                                                                
SENATOR  STEVENS related  his experience  that  jobs are  readily                                                               
available in his community during  fishing season. He asked if an                                                               
individual  who is  unemployed has  to apply  for jobs  for which                                                               
they are overqualified.                                                                                                         
                                                                                                                                
MS. WESTCOTT  answered that all  states have provisions  in their                                                               
laws regarding  refusal of suitable  work. If somebody  refuses a                                                               
legitimate job  offer, the division  looks at the  suitability of                                                               
the work that  was offered and whether or not  the individual has                                                               
the skillset, training, or education  to perform the work. If the                                                               
division  determines the  work is  suitable  for the  individual,                                                               
their eligibility to receive benefits  is affected. Similarly, if                                                               
the  division determines  the  job offer  was  not suitable,  the                                                               
individual would be allowed benefits.                                                                                           
                                                                                                                                
1:39:40 PM                                                                                                                    
CHAIR  COSTELLO   asked  if  she   could  provide  data   on  the                                                               
unemployment rates  during different periods and  the duration of                                                               
benefits that Alaskans received  during those specific periods of                                                               
unemployment.                                                                                                                   
                                                                                                                                
MS. WESTCOTT agreed to follow up with the information.                                                                          
                                                                                                                                
CHAIR COSTELLO asked her to  briefly explain the existing program                                                               
for unemployment benefits.                                                                                                      
                                                                                                                                
MS.  WESTCOTT  asked  if  she  was asking  how  the  duration  of                                                               
benefits  is calculated  or  for an  overall  explanation of  the                                                               
unemployment insurance program.                                                                                                 
                                                                                                                                
CHAIR  COSTELLO  replied  the calculation  for  the  duration  of                                                               
benefits                                                                                                                        
                                                                                                                                
MS. WESTCOTT explained that the  duration of benefits calculation                                                               
is based on the wages an  individual earned in their base period,                                                               
which is the  first four of the most recent  five quarters at the                                                               
time  an individual  files for  unemployment  insurance. A  ratio                                                               
methodology is applied  to determine the maximum  number of weeks                                                               
an  individual would  be  eligible. The  maximum  duration is  26                                                               
weeks and the  minimum duration is 16 weeks.  An individual whose                                                               
wages are consistent  from quarter to quarter will  be assigned a                                                               
higher duration  of benefits than  an individual whose  wages are                                                               
inconsistent over the base period.  She noted that this statutory                                                               
language predates her 28 years with the department.                                                                             
                                                                                                                                
1:44:32 PM                                                                                                                    
SENATOR GRAY-JACKSON referred to  Senator Steven's question about                                                               
job suitability. She asked what  the definition is for "suitable"                                                               
and whether  a job  on the  slime line  in a  cannery would  be a                                                               
suitable job for an accountant.                                                                                                 
                                                                                                                                
MS. WESTCOTT replied it is not  a simple yes or no answer because                                                               
every case  is individualized. However,  the department  tries to                                                               
place people in a similar position or occupation moving forward.                                                                
                                                                                                                                
1:46:30 PM                                                                                                                    
CHAIR COSTELLO  reminded the committee  that SB 159  solely deals                                                               
with the duration of the benefit,  not the monetary amount of the                                                               
benefit.                                                                                                                        
                                                                                                                                
SENATOR  GRAY-JACKSON  asked  for   the  agency's  definition  of                                                               
suitable.                                                                                                                       
                                                                                                                                
MS. WESTCOTT agreed  to provide the factors  the department looks                                                               
at in determining suitability of work.                                                                                          
                                                                                                                                
1:47:28 PM                                                                                                                    
SENATOR  MICCICHE  asked  if  the  size  of  the  benefit  ranges                                                               
dramatically if a person earned  $75,000 per year versus a person                                                               
who earned $30,000 per year.                                                                                                    
                                                                                                                                
MS. WESTCOTT  answered that  the size of  the wage  earned during                                                               
the base period  does affect the size of the  weekly benefit. The                                                               
range is from $56 per week to $360 per week.                                                                                    
                                                                                                                                
CHAIR COSTELLO  advised those who  were following along  that the                                                               
documents attached  to the bill included  a calculation worksheet                                                               
for the weekly benefit amount  and duration along with a benefits                                                               
table.                                                                                                                          
                                                                                                                                
1:51:47 PM                                                                                                                    
SENATOR STEVENS mentioned anecdotes  he'd heard since Covid about                                                               
people who take  unemployment but have no  intention of returning                                                               
to work. He asked if those stories are accurate.                                                                                
                                                                                                                                
MS. WESTCOTT  answered that she  asked the  department's research                                                               
and analysis section  to do a study on what  is being referred to                                                               
as the "great resignation" because  the division knows that Covid                                                               
presented  an   opportunity  to  examine  one's   life  and  some                                                               
individuals  decided to  not return  to the  workforce. She  said                                                               
that is a personal decision, but  it does affect their ability to                                                               
collect  unemployment  insurance.  A long-standing  principle  of                                                               
eligibility is  that a person  must be able and  actively seeking                                                               
work.                                                                                                                           
                                                                                                                                
SENATOR  STEVENS asked  how  the division  knows  whether or  not                                                               
someone is actively seeking work.                                                                                               
                                                                                                                                
MS. WESTCOTT  explained that individuals are  required to conduct                                                               
weekly work  searches and report  those searches to  the division                                                               
every week  that they  file for  benefits. The  division, through                                                               
the  reemployment  eligibility   and  assessment  program,  calls                                                               
people in  to ensure  that they  are doing  more than  just going                                                               
through the  motions of looking  for employment. If  the auditors                                                               
determine there is a need,  the benefit control unit will conduct                                                               
an investigation.                                                                                                               
                                                                                                                                
SENATOR  STEVENS  said  he appreciates  that  the  division  uses                                                               
auditors and investigators to ensure  that the searches are valid                                                               
and the filings are legitimate.                                                                                                 
                                                                                                                                
1:56:23 PM                                                                                                                    
SENATOR  GRAY-JACKSON  asked what  the  state  and employee  each                                                               
contribute toward unemployment insurance.                                                                                       
                                                                                                                                
MS.  WESTCOTT replied  it  is  a 73/27  split  with the  employer                                                               
paying 73 percent and the employee paying 27 percent.                                                                           
                                                                                                                                
CHAIR COSTELLO asked  if the employer contribution  has ever been                                                               
reduced.                                                                                                                        
                                                                                                                                
MS. WESTCOTT  replied the tax  rate fluctuates from year  to year                                                               
for  both the  employer and  employee  depending on  the cost  of                                                               
benefits in  previous years. She deferred  further explanation of                                                               
the tax rate to Lennon Weller.                                                                                                  
                                                                                                                                
1:59:00 PM                                                                                                                    
SENATOR  STEVENS asked  if the  unemployment  insurance fund  was                                                               
healthy and  what assurance there  was that it would  continue to                                                               
be sufficient to pay benefits.                                                                                                  
                                                                                                                                
1:59:29 PM                                                                                                                    
LENNON  WELLER, Economist;  Actuary, Unemployment  Insurance (UI)                                                               
Trust  Fund,  Department  of   Labor  and  Workforce  Development                                                               
(DOLWD),  Juneau, Alaska,  answered yes  the (UI)  Trust Fund  is                                                               
fully  solvent and  has the  ability  going forward  to absorb  a                                                               
large majority  of potential costs.  The fund balance at  the end                                                               
of December 2021 was $396.7  million, which is equivalent to just                                                               
over a  3 percent reserve ratio.  The target reserve ratio  is 3-                                                               
3.3 percent.                                                                                                                    
                                                                                                                                
SENATOR STEVENS, noting that the  current governor put funds into                                                               
the budget  that were not  expected, asked  if the UI  trust fund                                                               
was untouchable for anything other than benefits.                                                                               
                                                                                                                                
MR. WELLER  replied any  entity can deposit  money into  the fund                                                               
but once in the  fund, the money may only be  withdrawn to pay UI                                                               
benefits.                                                                                                                       
                                                                                                                                
SENATOR STEVENS  asked for assurances  the money in the  UI trust                                                               
fund is not "sweepable."                                                                                                        
                                                                                                                                
MR. WELLER  stated that  those funds  are untouchable  by federal                                                               
law.                                                                                                                            
                                                                                                                                
CHAIR COSTELLO turned to invited testimony.                                                                                     
                                                                                                                                
2:02:13 PM change                                                                                                             
SCOTT  CENTORINO, Senior  Fellow, The  Foundation for  Government                                                               
Accountability,  Naples,   Florida,  stated  that  he   was  also                                                               
appearing  in  his  capacity  as   a  visiting  fellow  with  the                                                               
Opportunity  Solutions  Project  (OSP).   Previously  he  was  an                                                               
assistant attorney general in Louisiana.  He stated his intention                                                               
to add color  to the effects of SB 159  and the experiences other                                                               
states have had.                                                                                                                
                                                                                                                                
MR. CENTORINO  stated that  his review  of Alaska's  tax policies                                                               
confirmed his  suspicion that  Alaska is ranked  near the  top of                                                               
nearly every list of pro-business,  pro-worker states. Alaska has                                                               
shown that being  a pro-business state is a  matter of principles                                                               
and policy.  He highlighted  that The  Tax Foundation  has ranked                                                               
Alaska number  three among states  for its business  tax climate.                                                               
Policies  such as  no income  tax  are a  deliberate choice  that                                                               
clearly say that Alaska is  open for business. New businesses and                                                               
workers are  welcome. He offered  his view that  pro-business, no                                                               
income tax  states like Florida  and Tennessee are  Alaska's only                                                               
competitor. They  have no income tax  and already do what  SB 159                                                               
proposes.  They index  the duration  of unemployment  benefits to                                                               
the unemployment rate.                                                                                                          
                                                                                                                                
2:04:45 PM                                                                                                                    
MR. CENTORINO  recapped the reforms in  SB 159. It sets  the base                                                               
of   unemployment  benefits   to  14   weeks  when   the  state's                                                               
unemployment rate  is lower  than 5  percent; it  adds a  week of                                                               
benefits for every .5 percent  increase in the unemployment rate;                                                               
and  the  maximum duration  of  benefits  is  26 weeks  when  the                                                               
unemployment rate  is 10.5 percent  or higher. Benefits  rise and                                                               
fall with the unemployment rate.                                                                                                
                                                                                                                                
MR. CENTORINO  discussed the effects  SB 159 may have.  First, he                                                               
said indexing has  been shown to get people back  to work as much                                                               
as  twice  as fast  as  systems  that  do  not index.  Less  time                                                               
colleting benefits is  better both for business  and workers. The                                                               
longer an  individual is unemployed,  the more likely it  is they                                                               
will fall into long-term dependency and  the harder it is to find                                                               
work. Second,  based on  the experience in  other states,  SB 159                                                               
will  strengthen the  state's UI  trust fund.  Over the  last two                                                               
years the fund has fallen 20  percent from more than $500 million                                                               
to  less than  $400 million.  Indexing  will help  with that.  He                                                               
reported that states that index  are 84 percent more solvent than                                                               
states like  Alaska that do not.  Based on the solvency  of their                                                               
trust funds  they have also  weathered the pandemic  much better.                                                               
Finally, SB 159 will help  lower taxes on businesses and workers.                                                               
The Tax  Foundation ranked Alaska 43rd  on unemployment insurance                                                               
taxes. As a percentage of total  wages, the UI tax rate in Alaska                                                               
is  0.86 percent.  Only six  states have  unemployment tax  rates                                                               
that are  higher. The  rate in  Florida is  0.10 percent  and the                                                               
rate in  Tennessee is 0.14.  He said Idaho also  indexes benefits                                                               
and its rate is about half the Alaska rate.                                                                                     
                                                                                                                                
MR.  CENTORINO  encouraged  the  committee  to  support  SB  159,                                                               
thereby making Alaska more pro-business and pro-worker.                                                                         
                                                                                                                                
2:09:42 PM                                                                                                                    
CHAIR COSTELLO  asked whether the  UI trust funds in  states that                                                               
implemented  indexing prior  to  the pandemic  fared better  than                                                               
states that did not index.                                                                                                      
                                                                                                                                
MR. CENTORINO recounted  that Florida began indexing  in 2011 out                                                               
of desperation  because its trust fund  was deep in the  red. Now                                                               
it is one  of the most solvent  UI trust funds in  the nation and                                                               
it  weathered the  pandemic well.  The  UI trust  funds in  North                                                               
Carolina and Tennessee  also fared well during the  pandemic.  He                                                               
said   states  that   index  are   able  to   weather  unexpected                                                               
emergencies better because flexibility is built into indexing.                                                                  
                                                                                                                                
2:11:48 PM                                                                                                                    
CHAIR COSTELLO  asked him to  talk about the  differences between                                                               
the  existing  unemployment system  versus  the  system the  bill                                                               
contemplates and  why he would  argue that indexing is  a smarter                                                               
approach to address unemployment benefits.                                                                                      
                                                                                                                                
MR. CENTORINO  answered that  the existing  system looks  only at                                                               
the past whereas SB 159 proposes  a system that looks at both the                                                               
present  and  future  job  prospects  of  the  benefit  claimant.                                                               
Alaska's current  system, while somewhat unique,  is more similar                                                               
to the  one-size-fits-all approach that  most states use.  SB 159                                                               
proposes a system  that is responsive and  reflective of Alaska's                                                               
dynamic economy.                                                                                                                
                                                                                                                                
2:14:03 PM                                                                                                                    
CHAIR COSTELLO  asked what unemployment  insurance is and  is not                                                               
supposed to be.                                                                                                                 
                                                                                                                                
MR.  CENTORINO  replied  that  it  is meant  to  be  a  temporary                                                               
supplement for a  worker who is moving from one  job to the next.                                                               
It  is not  designed  or  meant to  be  a  permanent or  complete                                                               
replacement of their wages.                                                                                                     
                                                                                                                                
2:15:33 PM                                                                                                                    
SENATOR MICCICHE  directed attention to  the handout in  the bill                                                               
packet   from  the   Foundation  for   Government  Accountability                                                               
(FGA)that shows [how  each state's UI trust  fund balance changed                                                               
from January  2020 to November 2021.]  He noted that most  of the                                                               
states that are  underwater are fairly blue and  said he presumes                                                               
they have more lenient  unemployment insurance policies. However,                                                               
Texas is an outlier; it is a red  state and the balance of its UI                                                               
trust fund declined 392 percent  over that timeframe. He asked if                                                               
it  was policy,  Covid policy,  or unemployment  insurance policy                                                               
that accounts for that precipitous decline during the pandemic.                                                                 
                                                                                                                                
MR.  CENTORINO  answered that  FGA  is  working to  identify  the                                                               
reason the Texas  UI trust fund is in this  situation. He guessed                                                               
(and asked  to not  be held  to it)  that the  tax rates  did not                                                               
reflect  the reality  of  the benefit  duration.  Texas does  not                                                               
index and has  a similar benefit duration  calculation as Alaska,                                                               
and  its  unemployment  taxes  are  much  lower.  By  comparison,                                                               
Florida  lowered  its unemployment  tax  rates  after it  started                                                               
indexing.                                                                                                                       
                                                                                                                                
SENATOR  STEVENS asked  what it  means to  index and  how SB  159                                                               
changes the approach to indexing.                                                                                               
                                                                                                                                
MR. CENTORINO  explained that indexing  connects the  duration of                                                               
benefits to the unemployment rate  in the state instead of basing                                                               
duration of benefits on past work.                                                                                              
                                                                                                                                
2:19:45 PM                                                                                                                    
CHAIR COSTELLO asked Ms. Wilterdink to proceed.                                                                                 
                                                                                                                                
2:19:57 PM                                                                                                                    
MELODIE WILTERDINK  presented the PowerPoint titled,  Senate Bill                                                               
159  "An Act  relating  to unemployment  benefits." She  directed                                                               
attention to  the chart  on slide  2 that  shows two  workers who                                                               
each  earned $48,000  in the  past  year. The  division looks  at                                                               
wages  earned in  the first  four of  the last  five quarters  to                                                               
calculate  the amount  and duration  of the  benefit. Worker  1's                                                               
income was consistently spread through  all four quarters whereas                                                               
worker  2's income  was seasonal.  Under the  current UI  system,                                                               
worker 1  would receive 26 weeks  of benefits and worker  2 would                                                               
receive just 20  weeks. She asked, "Why do we  have a system that                                                               
treats these two people differently."                                                                                           
                                                                                                                                
MS.  WILTERDINK stated  that SB  159  takes the  job market  into                                                               
account  and gives  individuals who  are unemployed  at the  same                                                               
time the  same duration  of benefits.  She directed  attention to                                                               
the table on pages  2 and 3 of the bill that  shows the new scale                                                               
that SB  159 proposes. For  example, if the  average unemployment                                                               
rate is below  five percent, the maximum duration  of benefits is                                                               
14  weeks. For  each  0.5 percent  increase  in the  unemployment                                                               
rate, another  week of  benefits is  added. The  cap is  26 weeks                                                               
when the unemployment rate is above 10.50 percent.                                                                              
                                                                                                                                
2:22:10 PM                                                                                                                    
MS. WILTERDINK directed attention to  the graph on the right side                                                               
of slide  5 and  pointed out  that with  the exception  of Covid,                                                               
there  has  been a  consistent  decrease  in Alaska's  seasonally                                                               
adjusted unemployment  rates over the  last ten years.  She noted                                                               
that in  in early  2012 the  rate was over  seven percent  but by                                                               
2019 it had dropped below  six percent. She directed attention to                                                               
the table  on the left side  of slide 5 that  shows the quarterly                                                               
average unemployment  rate for UI applicants  throughout the same                                                               
timeframe.  She  explained that  the  last  entry, which  is  5.9                                                               
percent,  reflects the  seasonally adjusted  average unemployment                                                               
rate for  October through  December of  2021. If  SB 159  were in                                                               
place,  the department  would average  the 5.9  percent [and  the                                                               
last three  quarterly rates on  the line  above] to arrive  at 16                                                               
weeks of benefits.                                                                                                              
                                                                                                                                
MS. WILTERDINK  restated that SB  159 does not change  the amount                                                               
of  the  weekly  benefit.  She  pointed  to  the  weekly  benefit                                                               
calculation worksheet depicted on slide  6 and explained that the                                                               
first two  sections of the  worksheet would remain  unchanged. It                                                               
is the third section that would  no longer be used; it determines                                                               
duration of benefits by calculating  earnings ratio. Section 5 of                                                               
the bill  repeals AS 23.20.350(g)(2),  which is the  reference to                                                               
the earnings ratio calculation.                                                                                                 
                                                                                                                                
2:24:26 PM                                                                                                                    
CHAIR COSTELLO  noted that Ms.  Westcott indicated that  a person                                                               
who willingly leaves  their job is not  eligible for unemployment                                                               
benefits. However,  businesses and individuals from  nearly every                                                               
sector of the economy are  saying they are having trouble finding                                                               
people  to  take  available  jobs.  She  noted  the  current  low                                                               
unemployment rate and asked if  the unemployment rate calculation                                                               
accounts for those individuals who are unemployed by choice.                                                                    
                                                                                                                                
MS.  WILTERDINK offered  her understanding  that individuals  who                                                               
are unemployed by  choice are not counted;  the unemployment rate                                                               
includes those  individuals who  are actively  seeking employment                                                               
in the job market.                                                                                                              
                                                                                                                                
CHAIR COSTELLO  said that  was her assumption  but she  wanted it                                                               
clarified.                                                                                                                      
                                                                                                                                
2:26:27 PM                                                                                                                    
SENATOR  GRAY-JACKSON  summarized   her  understanding  that  the                                                               
duration of benefits is based on  inflation and it applies to all                                                               
applicants.                                                                                                                     
                                                                                                                                
MS. WILTERDINK confirmed  that the duration of  benefits would be                                                               
based on the unemployment rate  for the previously ended quarter.                                                               
Everyone who  applies in that  timeframe/job market  receives the                                                               
same weeks of benefit.                                                                                                          
                                                                                                                                
SENATOR GRAY-JACKSON  restated the  point saying, "The  number of                                                               
weeks based on inflation is  applicable to anyone who applies for                                                               
unemployment benefits."                                                                                                         
                                                                                                                                
MS.  WILTERDINK restated,  "It is  the unemployment  rate of  the                                                               
previous  quarter that  is  going  to apply  to  everyone who  is                                                               
applying at that time."                                                                                                         
                                                                                                                                
SENATOR  STEVENS  asked how  indexing  and  seasonal workers  are                                                               
connected.                                                                                                                      
                                                                                                                                
CHAIR COSTELLO  answered that whether  a person  works seasonally                                                               
or  year-round  is a  separate  issue  than indexing.  Under  the                                                               
current  system  a  seasonal  worker   receives  fewer  weeks  of                                                               
benefits  than a  year-round  worker who  earns  the same  annual                                                               
wage. She said it is not  fair to penalize workers who earn their                                                               
income in a  shorter period of time. SB 159  treats both types of                                                               
workers the same.                                                                                                               
                                                                                                                                
CHAIR COSTELLO continued  to explain that SB  159 also eliminates                                                               
the current system that bases  duration of benefits on a worker's                                                               
previous earnings.  The bill instead adopts  indexing, which ties                                                               
the number  of weeks a  person may receive  unemployment benefits                                                               
to the  unemployment rate. She  said she believes  indexing makes                                                               
sense,  but she  would like  Shawnda O'Brien  to talk  about what                                                               
happens to  an individual who has  received unemployment benefits                                                               
for 26 weeks and is still unable to find a job.                                                                                 
                                                                                                                                
2:31:31 PM fix                                                                                                                
SHAWNDA  O'BRIEN,   Director,  Division  of   Public  Assistance,                                                               
Juneau,  Alaska, explained  that  the division  has two  programs                                                               
that  are   designed  to  help   both  employed   and  unemployed                                                               
individuals.  These  are  the Supplemental  Nutrition  Assistance                                                               
Program (SNAP)  and the Temporary  Assistance for  Needy Families                                                               
(TANF) program.  Both programs require  individuals to  either be                                                               
seeking  employment or  be working  a certain  number of  hours a                                                               
week.                                                                                                                           
                                                                                                                                
2:32:31 PM                                                                                                                    
SENATOR MICCICHE  said he supports  indexing but he  wonders what                                                               
everyone  is  missing when  they  look  at  the question  of  why                                                               
businesses are having  trouble finding workers to  fill even high                                                               
paying jobs  such as those on  the Slope that can  pay $100,000 a                                                               
year.                                                                                                                           
                                                                                                                                
CHAIR COSTELLO asked Ms. Westcott to respond.                                                                                   
                                                                                                                                
MS. WESTCOTT deferred to Mr. Weller  who was part of the research                                                               
and analysis  team that was looking  into the issue of  the great                                                               
resignation and the workers shortages.                                                                                          
                                                                                                                                
2:34:44 PM                                                                                                                    
MR.  WELLER said  it is  a  complicated question  and the  answer                                                               
involves  a  variety  of  factors  including:  skill  mismatches,                                                               
geographic  mismatches, and  individual household  circumstances.                                                               
He added  that at any  moment in time  there is always  a certain                                                               
amount  of  frictional  and  cyclical   unemployment  but  it  is                                                               
heightened now, primarily because of the pandemic.                                                                              
                                                                                                                                
SENATOR  MICCICHE restated  that he  believes there  is something                                                               
else contributing to the current  situation where relatively high                                                               
paying  jobs  are going  unfilled.  Turning  to the  question  of                                                               
indexing, he  asked about  the idea  of basing  the index  on the                                                               
different geographic and economic areas of the state.                                                                           
                                                                                                                                
MR.  WELLER  said  it  is  a  good  question  because  the  local                                                               
economies throughout  the state  vary significantly.  Some areas,                                                               
such as  Skagway, are more  subject to seasonal swings  than more                                                               
urban  and developed  areas like  Anchorage and  MatSu where  the                                                               
unemployment  rate tends  to be  much lower  and more  stable. He                                                               
suggested that if individuals are  considered based on geographic                                                               
location, the  local labor market  attached to the area  would be                                                               
important.                                                                                                                      
                                                                                                                                
2:38:58 PM                                                                                                                    
CHAIR COSTELLO highlighted that the  balance of the UI trust fund                                                               
decreased  during  Covid, and  stated  her  belief that  indexing                                                               
would cushion  such declines and  help unemployed workers  in the                                                               
future. She  asked how long it  would take before the  trust fund                                                               
became  an unfunded  liability if  the state  were to  experience                                                               
pandemics in the future similar to the last two years.                                                                          
                                                                                                                                
MR.  WELLER replied  he  had not  done a  stress  test with  that                                                               
distinction, but  the system is  structured to account  for costs                                                               
borne by the system and it  is recession-ready due to the reserve                                                               
ratio. Benefit  costs were  dropping in the  weeks leading  up to                                                               
Covid, largely because of the  benefit schedule in statute, which                                                               
is  not indexed.  He said  what we  have seen  over time  in real                                                               
terms  is a  reduction in  those benefit  costs. That  has driven                                                               
costs down  and the expectation is  that this will not  change in                                                               
the future unless the statute changes.                                                                                          
                                                                                                                                
CHAIR COSTELLO pointed  out that the bill  will increase benefits                                                               
for seasonal workers. She said that  will be an added cost to the                                                               
trust,  but it  is balanced  by the  sliding scale  based on  the                                                               
unemployment rate.                                                                                                              
                                                                                                                                
SENATOR  STEVENS  mentioned   resignations  in  school  districts                                                               
across  the state  due to  health concerns  related to  Covid. He                                                               
asked Mr.  Weller to  comment on  what the  future holds  for the                                                               
state.                                                                                                                          
                                                                                                                                
MR. WELLER said  the research and analysis team  has been focused                                                               
on that  question and he did  not believe anyone had  quite put a                                                               
finger on the  reason or solution. He posited that  it would take                                                               
years to play out and probably would not be uniform across                                                                      
regions, industries, or occupations.                                                                                            
                                                                                                                                
SENATOR STEVENS said he would appreciate the legislature being                                                                  
kept up to date on what the research and analysis team finds.                                                                   
                                                                                                                                
CHAIR COSTELLO held SB 159 in committee.                                                                                        

Document Name Date/Time Subjects
SB 159 version I.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Explanation of Changes, version B to I.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Sponsor Statement.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Sectional Analysis version I.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Fiscal Note 236 - DOH.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Fiscal Note 2276 - DOLWD.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Powerpoint Presentation 2.4.22.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Supporting Document - Calculating UI Benefits.pdf SL&C 2/4/2022 1:30:00 PM
SB 159
SB 159 Supporting Document - FGA, Indexing Unemployment.pdf SL&C 2/4/2022 1:30:00 PM
SB 159