Legislature(2017 - 2018)HOUSE FINANCE 519

02/02/2018 01:30 PM FINANCE

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Heard & Held
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                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 2, 2018                                                                                           
                         1:34 p.m.                                                                                              
1:34:26 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:34 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Mark Neuman (Alternate)                                                                                          
Representative Lance Pruitt                                                                                                     
Representative Cathy Tilton                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Dan Ortiz                                                                                                        
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
ALSO PRESENT                                                                                                                  
Elizabeth Diament,  Staff, Representative Paul  Seaton; Jill                                                                    
Lewis,   Deputy  Director,   Division   of  Public   Health,                                                                    
Department  of Health  and  Social  Services; Jeannie  Monk,                                                                    
Vice  President,  Alaska  State Hospital  and  Nursing  Home                                                                    
Association;  Tom Chard,  Chair, Sharp  Council, State  Loan                                                                    
Repayment, Health  Practitioner Support and  Access, Juneau;                                                                    
Representative   Chris   Tuck,   Sponsor;   Lennon   Weller,                                                                    
Economist,  Department of  Labor and  Workforce Development;                                                                    
Patsy  Westcott, Chief  of Unemployment  Insurance, Division                                                                    
of  Employment and  Training Services,  Department of  Labor                                                                    
and   Workforce   Development;  Caroline   Schultz,   Policy                                                                    
Analyst, Office  of Management and Budget;  Trenton English,                                                                    
Southeast  Representative, Alaska  Laborers, Juneau;  Joshua                                                                    
Gardner, Laborers 942,  Juneau; Sydne Williamson, Carpenters                                                                    
1281, Juneau; Kylee Larsen, Local 1281, Juneau.                                                                                 
PRESENT VIA TELECONFERENCE                                                                                                    
Kate  Glover,  Legislative   Legal,  Juneau;  Lance  Nelson,                                                                    
Ironworkers  751,   Fairbanks;  JD  Wilkerson,   Local  751,                                                                    
Fairbanks;  Dustin Swatek,  PNWRCC, Anchorage;  Ryan Andrew,                                                                    
IBEW Local  1547, Anchorage; Kevin  Macky, IBEW  Local 1547,                                                                    
Wasilla; Vince Beltrami, Alcsks AFL-CIO, Anchorage.                                                                             
HB 142    UNEMPLOYMENT COMPENSATION BENEFITS                                                                                    
          HB 142 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 215    DHSS: PUBLIC HEALTH FEES                                                                                              
          HB 215 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair Seaton reviewed the meeting agenda.                                                                                    
HOUSE BILL NO. 215                                                                                                            
     "An Act relating to program receipts; and relating to                                                                      
     fees for services provided by the Department of Health                                                                     
     and Social Services."                                                                                                      
1:36:03 PM                                                                                                                    
Vice-Chair  Gara  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for  HB  215, Work  Draft  30-LS0673\O  (Glover,                                                                    
Co-Chair Seaton OBJECTED for discussion.                                                                                        
ELIZABETH  DIAMENT,   STAFF,  REPRESENTATIVE   PAUL  SEATON,                                                                    
addressed  the changes  in the  legislation. The  bill would                                                                    
amend  AS 44.29.022(a)  to grant  the  Alaska Department  of                                                                    
Health and Social Services the  authority to collect fees to                                                                    
support the  administration of  public health  programs. She                                                                    
stated  that  during  the Finance  Subcommittee  process  in                                                                    
2017, The Division  of Public Health had  been identified as                                                                    
a  division that  could be  charging  additional fees  where                                                                    
appropriate  and  reasonable  to support  its  mission.  She                                                                    
stated that  the division was  not currently able  to charge                                                                    
fees for all  its potential health related  services. HB 215                                                                    
would give the  department the authority to  charge fees for                                                                    
any public health services provided  under AS 18.05.010, and                                                                    
Tobacco Control Programs under AS  44.29.020. The bill would                                                                    
also  consolidate  all  services listed  under  AS  37.05.14                                                                    
provided by the department under one subsection.                                                                                
1:38:31 PM                                                                                                                    
Ms.  Diament  addressed  changes  in  the  legislation.  She                                                                    
shared  that during  hearings in  the  previous committee  a                                                                    
stakeholder concern  had been voiced considering  public and                                                                    
stakeholder input and the  regulatory process. Basically, by                                                                    
taking  the   discussion  of  charging   fees  out   of  the                                                                    
legislative  process  and  putting it  into  the  regulatory                                                                    
process, the  public would  not have  adequate input  in the                                                                    
initial  planning  stages.  She explained  that  within  the                                                                    
regulatory   process,   public   comment  came   after   the                                                                    
regulations were drafted. She  said that discussion had been                                                                    
held during the interim, which  had resulted in the crafting                                                                    
of Section 3:                                                                                                                   
     Section 3                                                                                                              
     (page 2, line 26)                                                                                                          
     Adds a  new sub section  to AS 44.29.022  requiring the                                                                    
     commissioner of  health and social services  to consult                                                                    
     with  stakeholders,  including   at  least  one  public                                                                    
     meeting,  before a  notice of  proposed action  is made                                                                    
     regarding  the   development  of  new  fees   under  AS                                                                    
     44.29.020(a) (14) or AS 18.                                                                                                
She relayed that the department  had already planned to hold                                                                    
the meetings  and that there  was precedence in  statute for                                                                    
requiring meetings for setting fees in other situations.                                                                        
Co-Chair Seaton asked if there  were questions about the CS.                                                                    
He WITHDREW his OBJECTION. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
1:40:12 PM                                                                                                                    
JILL  LEWIS, DEPUTY  DIRECTOR,  DIVISION  OF PUBLIC  HEALTH,                                                                    
DEPARTMENT  OF  HEALTH  AND   SOCIAL  SERVICES,  provided  a                                                                    
PowerPoint presentation,  "HB 215 DHSS: Public  Health Fees"                                                                    
dated February 2, 2018 (copy  on file). She relayed that the                                                                    
division  focused on  services that  protected the  public's                                                                    
health status  through programs  that protected  that health                                                                    
of  every  Alaskan and  community.  She  stated that  public                                                                    
health  services controlled  infectious diseases,  prevented                                                                    
chronic diseases and  injuries, promoted healthy lifestyles,                                                                    
and protected maternal and child  health. She spoke to Slide                                                                    
     HB215 DHSS: Public Health Fees                                                                                             
    ? Public Health is able to charge fees for certain                                                                          
     clinical services:                                                                                                         
          ? Maternal and child health services                                                                                  
          ? Nutrition services                                                                                                  
          ? Preventive medical services                                                                                         
          ? Health education                                                                                                    
          ? Public health nursing services                                                                                      
          ? Laboratories                                                                                                        
Ms.  Lewis relayed  that the  fees that  the division  could                                                                    
collect were limited  to the list on Slide 2.  She turned to                                                                    
Slide  3, which  offered a  pie chart  that illustrated  the                                                                    
various  funding sources  for the  division. She  noted that                                                                    
the red represented  the general fund receipts  and that the                                                                    
pie   slice  that   was  slightly   removed  reflected   the                                                                    
approximately $7  million in fees currently  collected. This                                                                    
was out of the $117 million budget overall.                                                                                     
Vice-Chair Gara  noted that the  fiscal note  specified that                                                                    
the bill would  raise $400,000 per year. He  did not believe                                                                    
it would replace  the funding in an  alcohol abuse treatment                                                                    
fund  and the  tobacco  fund,  which were  both  at risk  of                                                                    
Ms. Lewis reported  that the division did  not receive funds                                                                    
from the  alcohol related  fund but  did receive  funds from                                                                    
the  Tobacco   Fund,  approximately  $8  million   per  year                                                                    
(reflected on  the slide)  and over the  last 6  years there                                                                    
had  been  declining  revenues  in  the  tobacco  fund.  The                                                                    
decline had prompted  the division to join  with partners in                                                                    
reducing expenditures  from the  fund. She noted  that there                                                                    
was a $375,000  decrement in the FY 19  Governor's budget to                                                                    
to help  the sustainability  of the  fund in  the long-term.                                                                    
She expected  that further reductions  would be made  in the                                                                    
future to assure  that the division spent  within its means.                                                                    
She said that the fees that  would be collected would not be                                                                    
part of the Tobacco Fund but  would go into the General Fund                                                                    
Program  Receipts  and would  be  redirected  back into  the                                                                    
program that generated the fees.                                                                                                
1:43:55 PM                                                                                                                    
Representative Guttenberg  Aske where  new money  was coming                                                                    
into  the division.  He  mentioned  vaccine assessments  and                                                                    
wondered  how  they  were  being paid  for.  He  probed  the                                                                    
details of who paid the fees.                                                                                                   
Ms. Lewis responded  that she would address  the question as                                                                    
she  proceeded  in her  presentation.  She  had examples  of                                                                    
initial  fees that  would  be  pursued, identified  services                                                                    
that the division  had not been able to provide  due to lack                                                                    
of revenue. She continued to Slide 4:                                                                                           
     HB215 DHSS: Public Health Fees                                                                                             
     ? Public health lacks fee authority for other services                                                                     
          o Professional services                                                                                               
          o Data extraction and analysis                                                                                        
          o Training and expert consultation                                                                                    
          o Administrative functions                                                                                            
          o Inspections and certifications                                                                                      
          o Program administration                                                                                              
She  reiterated  that  the  division  currently  lacked  fee                                                                    
authority for  many services and  functions and had  look at                                                                    
expanding  clinical fee  collections. She  said that  it had                                                                    
been determined  that the division  was maximizing  the fees                                                                    
that  it  was   able  to  collect  and   that  the  greatest                                                                    
opportunity   for   additional   fee   collection   was   in                                                                    
administrative functions and professional services.                                                                             
1:46:41 PM                                                                                                                    
Ms. Lewis moved to Slide 5:                                                                                                     
     HB215 DHSS: Public Health Fees                                                                                             
     ? Fees waived if                                                                                                           
          ? not in the public interest                                                                                          
          ? not economically feasible to collect                                                                                
          ? undermines the division's public health mission                                                                     
     ? Services not denied because of inability to pay                                                                          
     ? Sliding fee schedules                                                                                                    
     ? Limited to the actual cost                                                                                               
     ? Regulations required for each new fee                                                                                    
1:47:44 PM                                                                                                                    
Representative  Neuman wondered  about the  waived fees.  He                                                                    
asked whether there  were any indications of  the fees being                                                                    
waived more in one area of the state than another.                                                                              
Ms. Lewis answered that the  department was required to do a                                                                    
state report  on waived  fees. She returned  to Slide  2 and                                                                    
stated  that the  fees for  public  health nursing  services                                                                    
were calculated on a sliding scale based on income.                                                                             
Representative Neuman  believed the issue was  important. He                                                                    
noted  that there  was currently  much discussion  about the                                                                    
economy and that it was  important to identify the "needier"                                                                    
areas of  the state. He cited  Page 1 of the  bill. He noted                                                                    
that the program receipts were  listed as dedicated receipts                                                                    
- $8  million of $100  million -  he wondered why  they were                                                                    
not fund coded as general  fund program receipts so that the                                                                    
legislature could more easily track the funds.                                                                                  
Ms. Lewis  answered that the  fees the  department collected                                                                    
would be designated general fund  (DGF) and were part of the                                                                    
General Fund (GF).                                                                                                              
1:50:40 PM                                                                                                                    
Representative  Kawasaki referenced  Slide 5.  He noted  the                                                                    
third bullet under the "Fees waived if" line:                                                                                   
     ? undermines the division's public health mission                                                                          
He asked where this language was located in statute.                                                                            
Ms.  Lewis  answered  that  the  third  bullet  was  not  in                                                                    
statute.  She  detailed  that  the   third  bullet  was  the                                                                    
division's  philosophy of  how  to approach  fees. She  said                                                                    
that  a fee  would  not  be in  the  public  interest if  it                                                                    
undermined the division's health mission.                                                                                       
Representative Kawasaki  noted the  examples of area  of fee                                                                    
implementation  listed on  the fiscal  note. He  asked about                                                                    
the first  bullet and  wondered whether  the payee  would be                                                                    
the clinic or an individual patient.                                                                                            
Ms. Lewis  answered that  the clinic would  pay the  fee for                                                                    
the inspected radiologic device.                                                                                                
Representative Kawasaki  looked at the other  bullets on the                                                                    
fiscal note.  He queried  who would  be directly  paying the                                                                    
listed fees.                                                                                                                    
Ms. Lewis  responded that  it would likely  be some  type of                                                                    
organization rather  than an individual.  She said  that the                                                                    
administrative fee  for the loan repayment  program would be                                                                    
paid  by  the  employers   of  the  practitioners  who  were                                                                    
receiving   the   loan   repayment  program.   The   custom,                                                                    
statistical,  and epidemiological  analysis and  other types                                                                    
of data that  could be charged for, would depend  of who was                                                                    
requesting  the  information, which  could  be  from a  wide                                                                    
variety of entities.                                                                                                            
1:53:33 PM                                                                                                                    
Representative Tilton  asked about  the forth bullet  on the                                                                    
fiscal note:                                                                                                                    
     * The division has turned  away requests to assist with                                                                    
     community health assessments  and community action plan                                                                    
     development.  The division  lost the capacity  for this                                                                    
     service  when  the  position funded  with  unrestricted                                                                    
     general  funds was  eliminated in  recent budget  cuts.                                                                    
     The  ability to  charge fees  would enable  us to  once                                                                    
     again    support    local   efforts    for    healthier                                                                    
     communities.  No   new   positions  are   needed;   the                                                                    
     division  will   utilize  existing  positions.  ($125.0                                                                    
Representative  Tilton  noted  that  the  note  went  on  to                                                                    
reflect that no new positions  were needed and asked whether                                                                    
the division would need to  fill the lost position mentioned                                                                    
in the bullet point.                                                                                                            
Ms. Lewis answered that if  the division was looking to fund                                                                    
a  position it  would utilize  existing positions.  She said                                                                    
that  the  division  had  roughly  426  positions,  with  50                                                                    
current  vacancies.  She  said that  priorities  across  the                                                                    
division  were  considered  when addressing  vacancies.  She                                                                    
said   that   using   existing  positions   before   seeking                                                                    
additional  staffing  was  the  preferred  practice  of  the                                                                    
Representative  Guttenberg referenced  a letter  provided to                                                                    
the  committee by  ASHNHA dated  January 31,  2018 (copy  on                                                                    
file). He  asked whether the  committee would hear  from the                                                                    
Co-Chair Seaton  relayed that the committee  could hear from                                                                    
them later in the meeting.                                                                                                      
1:55:50 PM                                                                                                                    
Representative Neuman asked whether  the money in the fiscal                                                                    
note  had  been  included  in  the  FY  19  budget  for  the                                                                    
Ms.  Lewis replied  that the  department  had no  additional                                                                    
fees reflected  in the  bill included in  the FY  19 budget.                                                                    
She   said  that   could  analysis   and  discussions   with                                                                    
stakeholders would need to happen first.                                                                                        
Representative Neuman asked  whether the department expected                                                                    
additional money for FY 19 as a result of the legislation.                                                                      
Ms.  Lewis  answered  that  the   services  were  not  being                                                                    
provided by  eh department currently and  that no additional                                                                    
funding had been requested or expected.                                                                                         
1:57:51 PM                                                                                                                    
Representative   Guttenberg  asked   for  ASHNHA's   initial                                                                    
concerns about the  bill. He asked about the  changes in the                                                                    
current version.                                                                                                                
JEANNIE  MONK, VICE  PRESIDENT,  ALASKA  STATE HOSPITAL  AND                                                                    
NURSING   HOME  ASSOCIATION   (ASHNHA),  replied   that  the                                                                    
organization' original  concern was  that there would  be an                                                                    
opportunity for  shareholders to provide input  prior to the                                                                    
beginning of the regulation process.                                                                                            
Representative Guttenberg  asked how  the fees  would affect                                                                    
the hospital in the state and other clinics.                                                                                    
Ms. Monk answered that  anytime additional regulatory burden                                                                    
was put on a health organization  someone had to pay for the                                                                    
cost.  She  did  not  believe   the  bill  would  result  in                                                                    
increased costs to users.                                                                                                       
Vice-Chair  Gara understood  that  the process  was new.  He                                                                    
wondered whether the extra layer  of stakeholder feedback in                                                                    
the  regulatory  process  would  add  to  the  cost  of  fee                                                                    
Ms.  Lewis answered  that the  department would  be able  to                                                                    
absorb the  cost associated with meeting  with stakeholders.                                                                    
the costs.  She noted that  the stakeholders would  vary for                                                                    
each individual fee.  She said that the  division had always                                                                    
intended to  receive input  from stakeholders.  She reminded                                                                    
the committee that the fees  under discussion were fees that                                                                    
were  not currently  levied, and  it was  necessary to  make                                                                    
sure that  the fees  would not  undermine the  public health                                                                    
mission and that the fees were set up in a reasonable way.                                                                      
2:02:34 PM                                                                                                                    
Representative Kawasaki wondered how  deep Title 18 would go                                                                    
when added  to the administration  of public health.  He was                                                                    
uncertain that  he was comfortable  with the language  as it                                                                    
was written. He  requested a comprehensive list  of the fees                                                                    
that  could manifest  in the  future that  would be  covered                                                                    
under regualtion.                                                                                                               
Ms. Lewis  answered that  the four on  the fiscal  note were                                                                    
the  only four  yet identified.  She said  that broader  fee                                                                    
authority had  been requested because public  health was not                                                                    
free and  reasonable fees could  develop in the  future. She                                                                    
added that any fee that would  be needed in the future would                                                                    
include public and stakeholder input.                                                                                           
2:05:05 PM                                                                                                                    
Ms.  Monk announced  that the  written comments  from ASHNHA                                                                    
could  be  found  in  member  packets.  She  said  that  the                                                                    
association  supported the  legislation  with the  increased                                                                    
stakeholder  involvement  prior  to the  initiation  of  new                                                                    
Co-Chair  Neuman  wondered  whether the  bill  would  affect                                                                    
pioneer homes.                                                                                                                  
Ms. Monk did  not think that the bill  spoke specifically to                                                                    
fees  that would  impact either  hospitals or  nursing homes                                                                    
but gave  them the opportunity  to charge the  fees. Whether                                                                    
pioneer homes, which were part  of the association, would be                                                                    
affected would depend on the fee.                                                                                               
Representative  Neuman was  interested to  know whether  the                                                                    
bill would impact Pioneer Homes.                                                                                                
Representative  Kawasaki  asked  for detail  on  who  ASHNHA                                                                    
Ms. Monk replied that  ASHNHA Represented Alaska's hospitals                                                                    
and  skilled  nursing  facilitates.  All  tribal  hospitals,                                                                    
nursing  homes,  community   health  centers,  rural  health                                                                    
clinics:  ASHNHA represented  a  wide  spectrum of  services                                                                    
provided  under  the  umbrella  of  a  hospital  or  skilled                                                                    
nursing facility.                                                                                                               
2:08:59 PM                                                                                                                    
TOM  CHARD,  CHAIR,  SHARP COUNCIL,  STATE  LOAN  REPAYMENT,                                                                    
HEALTH  PRACTITIONER SUPPORT  AND  ACCESS, JUNEAU,  provided                                                                    
information  about  the  council  and its  18  members  that                                                                    
included  dentists,   doctors,  and   other.  To   date  the                                                                    
organization  had  administered  250  contracts  with  sites                                                                    
across the state. He shared  that the council had considered                                                                    
the bill  and had ultimately  voted to support the  bill and                                                                    
administrative fees that may result from the program.                                                                           
2:12:16 PM                                                                                                                    
Co-Chair Seaton CLOSED public testimony.                                                                                        
Vice-Chair  Gara  had  a   question  for  Legislative  Legal                                                                    
Services. He  asked whether any other  process in regulation                                                                    
required  by  statute  the  additional  consultation  for  a                                                                    
change to regulation.                                                                                                           
KATE    GLOVER,     LEGISLATIVE    LEGAL,     JUNEAU    (via                                                                    
teleconference),  she  could  not say  with  certainty  that                                                                    
nothing  else   existed  in  statute.  She   said  that  the                                                                    
Administrative Procedure  Act required consultation  after a                                                                    
proposal, this bill would require it beforehand.                                                                                
Representative  Guttenberg expressed  concern that  the bill                                                                    
would further bifurcate public health.  He stressed that the                                                                    
state  needed  to  get  control   of  the  finances  of  the                                                                    
healthcare community.                                                                                                           
Ms. Lewis  explained that AS 44.64.213  authorized an agency                                                                    
to contact a person about  the development of the regulatory                                                                    
action  and  to  answer  question from  a  person  that  was                                                                    
relevant  to the  development of  a  regulatory action.  She                                                                    
said  that  other  consultations  between  departments  were                                                                    
required but did not pertain to the regulatory process.                                                                         
2:16:43 PM                                                                                                                    
Vice-Chair  Gara asked  about  the intent  of the  committee                                                                    
pertaining to bill action.                                                                                                      
Co-Chair Seaton answered the intent  was to move the bill if                                                                    
it was the will of the committee.                                                                                               
Representative   Neuman  wanted   to   offer  a   conceptual                                                                    
amendment  that would  require two  meetings instead  of one                                                                    
for stakeholder discussions.                                                                                                    
Co-Chair Seaton said  that the bill would be  held until the                                                                    
following Monday.                                                                                                               
2:18:42 PM                                                                                                                    
AT EASE                                                                                                                         
2:19:03 PM                                                                                                                    
Co-Chair Seaton  noted that the  bill was  already scheduled                                                                    
for the following Wednesday.                                                                                                    
HB  215  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 142                                                                                                            
     "An Act relating to unemployment insurance benefits;                                                                       
     increasing the maximum weekly unemployment insurance                                                                       
    benefit rate; and providing for an effective date."                                                                         
Representative  Guttenberg  reported  that he  had  asked  a                                                                    
young woman in  the back of the room why  she was supportive                                                                    
of the bill. She had replied  that it would help her pay her                                                                    
mortgage. He was supportive of the legislation.                                                                                 
2:20:36 PM                                                                                                                    
REPRESENTATIVE CHRIS TUCK, SPONSOR, provided a summary of                                                                       
the bill:                                                                                                                       
      The   Alaska   Department  of   Labor's   Unemployment                                                                    
     Insurance (UI)  program provides  unemployment benefits                                                                    
     to eligible  workers who  become unemployed  through no                                                                    
     fault of  their own,  working less than  full-time, and                                                                    
     meet certain  other eligibility requirements.  With the                                                                    
     seasonal nature  of much of  the state's  workforce and                                                                    
     Alaska's vast  remoteness, UI  benefits serve  not only                                                                    
     to bridge  the economic gap for  the individual worker,                                                                    
     but   also  as   a  stabilizing   influence  on   local                                                                    
     The  current Maximum  Weekly Benefit  Amount (MWBA)  of                                                                    
     $370 only  replaces 36% of  the state's  average weekly                                                                    
     wage of $1,020. An MWBA  of $510 would provide 50% wage                                                                    
     replacement of  the average  weekly wage,  a nationally                                                                    
     recognized norm.                                                                                                           
     To compare  to other western  states, the MWBA  rate in                                                                    
     Washington is  $681, Oregon is $590,  and California is                                                                    
     $450. In addition,  Alaska is one of  only three states                                                                    
     where the  cost of providing  UI benefits is  shared by                                                                    
     employers and employees.                                                                                                   
     House  Bill  142  would  increase  the  maximum  weekly                                                                    
     benefit amount under  the UI Program in  two steps from                                                                    
     the current $370 to $458 in 2018 and to $510 in 2019.                                                                      
     Among 50  states, the District of  Columbia, and Puerto                                                                    
     Rico, Alaska is:                                                                                                           
         • 39th in Maximum Weekly Benefit Amount                                                                                
          • 44th in Average Weekly Benefit Amount ($252)                                                                        
         • 52nd in Wage Replacement Ratio (.288)                                                                                
          • 9th in Recipiency Rate (unemployed workers                                                                          
          receiving benefits - .37)                                                                                             
     As a  claimant filing for UI  benefits, individuals are                                                                    
     responsible  for  actively  seeking  suitable  fulltime                                                                    
     employment   and   reporting   activity   for   seeking                                                                    
     employment each week to remain eligible.                                                                                   
     The  federal poverty  level for  a family  of three  in                                                                    
     Alaska  for  2016 is  $25,200,  or  $2100 a  month.  An                                                                    
     unemployed  single parent  with two  dependent children                                                                    
     receiving  the MWBA  of $370  plus the  dependent child                                                                    
     allowance of  $24 per child  under 18 (up to  a maximum                                                                    
     of three) receives approximately  $1800 per month in UI                                                                    
     By passing House Bill 142,  Alaska will be more in-line                                                                    
     with  the  average  weekly  benefits  and  provide  the                                                                    
     necessary  financial support  families need  to survive                                                                    
     while seeking employment.                                                                                                  
2:25:49 PM                                                                                                                    
Representative Tuck reviewed the sectional analysis (copy                                                                       
on file):                                                                                                                       
     Section  1:  AS  23.20.350(d)      Amends  the  benefit                                                                    
     schedule  by  increasing  the maximum  qualifying  wage                                                                    
     requirement  from $42,000  to  $59,500. The  qualifying                                                                    
     wage schedule  is extended in $250  increments to reach                                                                    
     the   new  maximum   qualifying  amount.   The  benefit                                                                    
     schedule  is   extended  in  $2  increments   for  each                                                                    
     additional  $250 of  qualifying  wages to  reach a  new                                                                    
     maximum weekly benefit amount of $510.                                                                                     
     Section   2:  Amends   AS  23.20.350   by  adding   new                                                                    
     (h) Annually,  after December 31, 2019,  authorizes the                                                                    
     Department to increase the  highest WBA for individuals                                                                    
     earning  at  least  $59,750. The  new  WBA  calculation                                                                    
     shall  amend  the highest  base  period  wages in  $250                                                                    
     increments and the highest WBA  in $2 increments if the                                                                    
     state's average weekly wage  increases. The new maximum                                                                    
     WBA shall not exceed 50% of the average weekly wage.                                                                       
     (i)  Provides  for public  notice  of  any new  benefit                                                                    
     amounts  calculated under  (h)  by December  1 of  each                                                                    
     year by  posting a notice  on the Alaska  Online Public                                                                    
     Notice  System and  allows for  public  comment on  the                                                                    
     accuracy of the Department's calculations.                                                                                 
     New maximum WBAs apply to  benefit years established on                                                                    
     January 1  of each  year and  does not  change existing                                                                    
     Changes to  the WBA shall  be calculated only  once per                                                                    
     (j)   Establishes   the   calculation   procedure   for                                                                    
     determining Alaska's average weekly  wage by December 1                                                                    
     of each year. The average  weekly wage is determined by                                                                    
     dividing the average  annual wage in the  state for the                                                                    
     preceding  12-month period  ending June  30 by  52. The                                                                    
     state must include wages of  all employees in the state                                                                    
     covered by  this chapter, both  public and  private. If                                                                    
     the calculation  does not result in  whole dollars, the                                                                    
     amount shall be rounded down.                                                                                              
     Section 3: Provides for an effective date of January                                                                       
     1, 2018.                                                                                                                   
2:28:13 PM                                                                                                                    
Representative  Tuck noted  that the  bill was  not changing                                                                    
the dependent factor.                                                                                                           
Vice-Chair  Gara referenced  opposition  from  the NFIB.  He                                                                    
understood  that calculation  of employer  contributions was                                                                    
written in another area of statute.                                                                                             
Representative Tuck deferred to the department.                                                                                 
LENNON WELLER, ECONOMIST, DEPARTMENT  OF LABOR AND WORKFORCE                                                                    
DEVELOPMENT, replied  that a  separate statute  AS 23.22.290                                                                    
outlined how tax rates were calculated.                                                                                         
Vice-Chair Gara  asked whether the  bill would  increase the                                                                    
employee contribution.                                                                                                          
Ms. Weller answered that any time  the cost of a program was                                                                    
increased there  was a corresponding  increase in  tax rates                                                                    
going  forward. There  was a  forecast to  FY24 showing  the                                                                    
difference  employers and  employees would  pay if  the bill                                                                    
passed.  There  was  a 73/27  percent  split  (employer  and                                                                    
employee respectively).                                                                                                         
2:31:10 PM                                                                                                                    
Vice-Chair Gara  asked for verification  that in  all states                                                                    
but two the employer covered the costs.                                                                                         
Representative  replied in  the  affirmative -  Pennsylvania                                                                    
and New Jersey were the two  other states that did not cover                                                                    
the costs.                                                                                                                      
Representative Neuman asked how  the bill would impact self-                                                                    
employed people.                                                                                                                
Representative Tuck deferred to the department.                                                                                 
PATSY  WESTCOTT, CHIEF  OF UNEMPLOYMENT  INSURANCE, DIVISION                                                                    
OF  EMPLOYMENT AND  TRAINING SERVICES,  DEPARTMENT OF  LABOR                                                                    
AND  WORKFORCE  DEVELOPMENT,   answered  that  self-employed                                                                    
individuals did  not pay into  the program and would  not be                                                                    
Representative  Neuman  recalled  a   similar  bill  on  the                                                                    
subject from  the past. He  spoke of  construction companies                                                                    
and  the complications  surrounding independent  contractors                                                                    
on job sites. He wondered whether the bills were related.                                                                       
2:33:16 PM                                                                                                                    
Representative   Tuck   answered    that   the   independent                                                                    
contractor legislation  had more  to do with  cheating Davis                                                                    
Bacon  requirements.  He   explained  that  a  self-employed                                                                    
contractor working on a Davis  Bacon job was not required to                                                                    
pay  themselves the  same  benefits and  wages  laid out  in                                                                    
Title 36. He said that the  bill did not speak to the issue.                                                                    
He added  that with  private contractors the  employer could                                                                    
avoid paying the benefits due to hourly employees.                                                                              
Representative Neuman stated  that self-employed individuals                                                                    
also  had  to  pay  self-employment  taxes.  He  was  unsure                                                                    
whether the unemployment compensation  act was part of self-                                                                    
employment taxes.                                                                                                               
Ms.  Westcott asked  Representative  Neuman  to restate  the                                                                    
Representative Neuman complied.                                                                                                 
Ms.   Westcott   answered    that   contributions   to   the                                                                    
Unemployment Insurance Trust Fund  were not taken from self-                                                                    
employed  individuals.  The  division  investigated  workers                                                                    
that   were  misclassified   and  reported   incorrectly  as                                                                    
independent  contractors,  those  issues were  addressed  so                                                                    
that the  employer could correctly report  the employees and                                                                    
pay security tax contributions on their behalf.                                                                                 
2:35:36 PM                                                                                                                    
Representative  Pruitt  asked  when the  employer  paid  the                                                                    
money, withheld  from an  employee's check  for unemployment                                                                    
benefits, to the department.                                                                                                    
Ms. Westcott replied  that the funds were  deducted from the                                                                    
employees check  each pay period  and then held in  trust by                                                                    
the  employer on  behalf  of the  employee.  The funds  were                                                                    
submitted to the department on a quarterly basis.                                                                               
Representative  Pruitt  referenced  the  effective  date  of                                                                    
January 1,  2018. He understood  that this could  affect the                                                                    
payments after March 31, 2018.                                                                                                  
Mr. Weller answered that tax  rates were calculated once per                                                                    
year by the department and  were effective for the following                                                                    
calendar  year. He  said  that  he could  not  speak to  the                                                                    
retroactive  nature of  the  bill but  that  the three  most                                                                    
recent  state  fiscal years  of  costs  and the  trust  fund                                                                    
balance  at the  end  of September  were  used to  calculate                                                                    
rates for  the following  January. He  did not  believe that                                                                    
rates would  be recalculated  if the  bill went  into effect                                                                    
partway through a calendar year.                                                                                                
Co-Chair Seaton noted that the  bill had been introduced the                                                                    
previous  session and  wondered whether  the effective  date                                                                    
should be updated.                                                                                                              
2:38:04 PM                                                                                                                    
Representative Tuck answered that  the effective date should                                                                    
be amended.                                                                                                                     
Representative Pruitt  referenced Section 2 of  the bill. He                                                                    
expressed  concern   for  the  elimination   of  legislative                                                                    
control in issues related to the bill.                                                                                          
Representative Tuck  responded that the bill  would bring us                                                                    
up  to  date   with  other  states  by   bringing  the  wage                                                                    
percentage factor up  to 50 percent. He said  that there was                                                                    
a  chart  in  the  packet   that  showed  actual  wage  base                                                                    
predictions through 2024.                                                                                                       
Representative Pruitt  struggled to understand  the numbers.                                                                    
He hoped that the department could address his concerns.                                                                        
2:40:57 PM                                                                                                                    
Representative  Neuman referenced  Line  14, page  9 of  the                                                                    
bill, which  discussed the increase  of weekly  benefits. He                                                                    
wondered whether  the increase mentioned would  be increased                                                                    
to remain at the 50  percent of weekly average determination                                                                    
or would it fluctuate.                                                                                                          
Representative  Tuck  responded  that it  would  be  changed                                                                    
annually and would be locked in  for a year. The wages would                                                                    
be determined  before November 1, and  the calculation would                                                                    
be used to determine the benefits after January 1.                                                                              
Representative  Neuman   clarified  that  the   increase  or                                                                    
decrease would  depend on the  average wages of  Alaskans at                                                                    
50 percent of the average weekly determined rate.                                                                               
Representative Tuck answered in the affirmative.                                                                                
Representative Tilton  asked whether  the bill  would impact                                                                    
the Technical Vocational Education Program (TVEP) funds.                                                                        
Representative Tuck  replied that the legislation  would not                                                                    
impact TVEP  or STEP [State Training  and Education Program]                                                                    
Ms.  Westcott  explained  that those  programs  were  funded                                                                    
through a portion of a  tax collected from employees and was                                                                    
dedicated to  the TVEP and  STEP programs prior to  the rest                                                                    
of the  tax being deposited  into the trust fund.  The funds                                                                    
from the trust could only  be used to pay benefits, training                                                                    
programs  were  funded   through  different  federal  grants                                                                    
received by the department.                                                                                                     
2:44:39 PM                                                                                                                    
Representative Guttenberg queried the  logistics of the $250                                                                    
increments to  reach the new  maximum qualifying  amount and                                                                    
the $2  increments for each  additional $250  for qualifying                                                                    
Representative   Tuck   referenced   a  handout   from   the                                                                    
Department  of  Labor  and Workforce  Development  (copy  on                                                                    
     • For every additional $250 in base year wages, $2 is                                                                      
        added to  the  weekly  benefit,  with  the  schedule                                                                    
        maxing out at a  base year wage of  $42,000 and $370                                                                    
        weekly   benefit    (excluding    dependent    child                                                                    
        allowances, if applicable).                                                                                             
Representative Guttenberg understood that  the rate would go                                                                    
up automatically as pay wages increased to $250.                                                                                
Representative Tuck replied that  the number would be locked                                                                    
in annually.                                                                                                                    
Representative  Pruitt  asked  whether someone  could  speak                                                                    
about the fiscal note.                                                                                                          
Ms.  Westcott  deferred  to the  Office  of  Management  and                                                                    
Representative Pruitt  asked about  the mechanism  that made                                                                    
the  employee percentage  of  contribution  at average  rate                                                                    
class go down over the next 5 years under the legislation.                                                                      
Mr. Weller answered that the  decrease was due to the change                                                                    
in the minimum tax rates.                                                                                                       
2:48:56 PM                                                                                                                    
Representative  Gara referenced  Page 7  of the  legislation                                                                    
and stated that the benefit rate had not increased.                                                                             
Representative Tuck replied in the affirmative.                                                                                 
Vice-Chair  Gara understood  that the  bill assumed  that as                                                                    
wages went up with inflation the benefit also increased.                                                                        
Representative Tuck  answered in the affirmative.  Whether a                                                                    
person was  making $42,000  or $84,000  per year,  they were                                                                    
locked  in at  the  #370  per month.  He  speculated that  a                                                                    
person  making   $84,000  per   year  probably   had  higher                                                                    
Representative   Neuman  asked   about  people   filing  for                                                                    
disability  insurance.  He  asked  whether  the  bill  would                                                                    
increase disability payments.                                                                                                   
2:51:07 PM                                                                                                                    
Representative Tuck  answered that the bill  only dealt with                                                                    
unemployment insurance.                                                                                                         
Representative  Neuman  remarked  that   he  had  not  known                                                                    
whether disability insurance fell under //                                                                                      
Representative Pruitt  referred to the  indeterminate fiscal                                                                    
note. He hoped  that an estimate of cost to  the state could                                                                    
be determined.                                                                                                                  
CAROLINE SCHULTZ,  POLICY ANALYST, OFFICE OF  MANAGEMENT AND                                                                    
BUDGET, responded that  OMB had used actual  state costs and                                                                    
liabilities from  2017 to  model as  if the  legislation had                                                                    
been in  effect in  2017. There had  been about  1,500 state                                                                    
employees   that   qualified    for   the   benefits   under                                                                    
unemployment  insurance.  She  reminded the  committee  that                                                                    
state employees  and the  state as an  employer did  not pay                                                                    
into the unemployment fund through  the traditional tax that                                                                    
most employers did, rather the  state reimbursed the fund as                                                                    
the  state. If  a state  employee  made a  claim, the  state                                                                    
reimbursed the fund,  which came out of  the working reserve                                                                    
fund. She said  that the cost difference to  the state would                                                                    
have been  $456.6 thousand more  dollars out of  the working                                                                    
reserve fund in the 2017  calendar year; the state paid $4.4                                                                    
million  in calendar  year 2017  and had  the 487  claimants                                                                    
qualified for the  higher rate greater that  $370, the total                                                                    
cost to the state would have been $4.9 million.                                                                                 
Representative  Pruitt  stated   that  the  explanation  was                                                                    
2:54:46 PM                                                                                                                    
Co-Chair Seaton  asked whether the department  could craft a                                                                    
new  fiscal note  that reflected  the fiscal  impact due  to                                                                    
inflation adjustment.                                                                                                           
Ms. Schultz said that because  the amounts of employees that                                                                    
would  be claiming  against the  fund, and  what their  base                                                                    
wages   would   be,   the   fiscal   impact   would   remain                                                                    
Co-Chair  Seaton relayed  that the  bill would  be heard  on                                                                    
February  7, 2018.  He asked  amendments to  be in  Co-Chair                                                                    
Foster's office by 5:00 pm on February 6.                                                                                       
2:56:34 PM                                                                                                                    
AT EASE                                                                                                                         
2:56:52 PM                                                                                                                    
Co-Chair Seaton OPENED public testimony.                                                                                        
TRENTON ENGLISH, SOUTHEAST  REPRESENTATIVE, ALASKA LABORERS,                                                                    
JUNEAU, testified  in favor  of the bill.  He felt  that the                                                                    
rising  cost  of  living  should   be  considered  and  that                                                                    
unemployment benefits  should be  increased to  help working                                                                    
2:58:27 PM                                                                                                                    
JOSHUA GARDNER,  LABORERS 942, JUNEAU,  spoke in  support of                                                                    
the  bill. He  shared  that  it had  been  a  slow year  for                                                                    
construction workers  and if he was  lucky he worked 7  to 8                                                                    
months of the year, making $800  to $1,000 per week. He said                                                                    
that  when he  was on  unemployment he  made $370  per week,                                                                    
which made  it difficult to  support his family  and prepare                                                                    
for emergency expenses.                                                                                                         
2:59:16 PM                                                                                                                    
SYDNE  WILLIAMSON,  CARPENTERS  1281, JUNEAU,  testified  in                                                                    
support of  the legislation. She shared  her personal story.                                                                    
She relayed that  she had worked jobs she did  not enjoy and                                                                    
had  lived in  the women's  shelter.  She had  gone back  to                                                                    
school and  she was now a  carpenter. She loved her  job and                                                                    
worked  hard  to  support  herself  and  her  daughter.  She                                                                    
relayed that she had to have  a roommate to afford living in                                                                    
Juneau.  She  had been  part  of  the  crew that  built  the                                                                    
building at  the airport.  She was  now out  of work  as the                                                                    
nature of carpentry  work was job by job. She  felt that she                                                                    
should  not have  to deplete  her savings  while in  between                                                                    
jobs.  She  asked  the committee  to  consider  raising  the                                                                    
weekly unemployment insurance benefit rate.                                                                                     
3:02:27 PM                                                                                                                    
KYLEE LARSEN,  LOCAL 1281, JUNEAU,  spoke in support  of the                                                                    
bill. She stated  that the economy in Alaska  thrived in the                                                                    
summer months. She spoke to  struggling to find work and pay                                                                    
bills.  She  was  a  first-year   apprentice  in  the  local                                                                    
carpenters' union.  She had broken  her hand earlier  in the                                                                    
year  and had  healed,  but  the work  was  now scarce.  She                                                                    
stated  that the  average daycare  charged $900,  per month,                                                                    
per child, which  was a major stressor on top  of food, gas,                                                                    
and rent.  She lamented that these  factors left hardworking                                                                    
individuals to contemplate moving to another state.                                                                             
3:04:50 PM                                                                                                                    
LANCE    NELSON,    IRONWORKERS    751,    FAIRBANKS    (via                                                                    
teleconference), spoke  in favor of  the bill. He  felt that                                                                    
when   work  slowed,   and   lay-offs   occurred,  the   low                                                                    
unemployment benefits forced people  to move out-of-state to                                                                    
find work and benefit  from better unemployment benefits. He                                                                    
stressed  that $370  per week  was  not a  livable wage  for                                                                    
Alaska  families.   He  argued  that  the   funds  were  not                                                                    
considered  a  luxury by  needy  working  families but  went                                                                    
right back into the economy  being spent on home heat, food,                                                                    
and rent.                                                                                                                       
3:06:52 PM                                                                                                                    
JD  WILKERSON, LOCAL  751,  FAIRBANKS (via  teleconference),                                                                    
spoke in favor of the  legislation. He indicated he had seen                                                                    
his volume  of work drop  about 50  percent over the  past 2                                                                    
years. He reported  that over the last couple  of years he'd                                                                    
seen young  workers forced  to leave  Alaska. He  hoped that                                                                    
the states economy  could provide the means  for families to                                                                    
remain in the state.                                                                                                            
Co-Chair  Seaton   indicated  the   legislative  information                                                                    
office was having technical difficulties.                                                                                       
3:10:22 PM                                                                                                                    
AT EASE                                                                                                                         
3:11:55 PM                                                                                                                    
Co-Chair  Seaton  reported  that  there  were  4  additional                                                                    
testifiers in Anchorage.                                                                                                        
3:13:14 PM                                                                                                                    
At EASE                                                                                                                         
3:14:12 PM                                                                                                                    
DUSTIN  SWATEK,  PNWRCC,   ANCHORAGE  (via  teleconference),                                                                    
spoke in  favor of HB  142. He said  that much of  the trade                                                                    
work  in the  state  was seasonal.  He  lamented that  these                                                                    
workers often  lived paycheck to paycheck.  He believed that                                                                    
a  raise in  the  unemployment benefits  would help  workers                                                                    
meet their financial needs until they could procure work.                                                                       
3:15:27 PM                                                                                                                    
RYAN    ANDREW,   IBEW    LOCAL    1547,   ANCHORAGE    (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
The  state  was  experiencing tough  economic  times,  which                                                                    
meant the  union had  seen members move  from the  state for                                                                    
work in other locations. He  felt an increase in the benefit                                                                    
would retain the Alaskan workforce.                                                                                             
3:16:36 PM                                                                                                                    
KEVIN MACKY, IBEW LOCAL  1547, WASILLA (via teleconference),                                                                    
spoke  in  favor of  the  bill.  He  shared that  about  220                                                                    
members worked a seasonal career.  The bill would be a major                                                                    
benefit, especially in  the winter. He was  a constituent of                                                                    
Representative Tilton. He  spoke to the high  cost of living                                                                    
and low unemployment insurance.                                                                                                 
3:17:50 PM                                                                                                                    
VINCE    BELTRAMI,    ALCSKS   AFL-CIO,    ANCHORAGE    (via                                                                    
teleconference),  testified  in  support of  the  bill.  The                                                                    
current amount  of $370 per week  was over a decade  old. He                                                                    
said  that due  to  inflation, people  collecting that  $370                                                                    
rate had  lost $62,  per week. He  stressed that  Alaska was                                                                    
behind  most   other  states   for  wage   replacement.  The                                                                    
organization had over 1,000 members  working in the Lower 48                                                                    
because they  could not  wait to find  work in  Alaska while                                                                    
living under  a paltry  wage replacement. He  referenced the                                                                    
Alaska  Workforce  Investment  Board that  had  submitted  a                                                                    
letter  unanimously endorsing  the bill.  He referenced  the                                                                    
number of  employers supporting  the bill.  He felt  that if                                                                    
the state  was on the  brink of  building a new  pipeline it                                                                    
was necessary to have a workforce ready to work.                                                                                
3:22:05 PM                                                                                                                    
Co-Chair  Seaton   CLOSED  public  testimony.   He  reminded                                                                    
members of the  amendment deadline of 5:00  p.m. on February                                                                    
3:23:19 PM                                                                                                                    
Representative   Neuman   queried    the   last   time   the                                                                    
unemployment insurance had been raised.                                                                                         
Ms. Westcott answered that the  last time the weekly benefit                                                                    
amount had  been raised in  the state was  effective January                                                                    
1, 2009.  Prior to  that the  maximum weekly  benefit amount                                                                    
had been $248.                                                                                                                  
3:24:11 PM                                                                                                                    
HB 142 was HEARD and HELD in committee for further                                                                              
Co-Chair Seaton discussed housekeeping.                                                                                         
3:24:23 PM                                                                                                                    
The meeting was adjourned at 3:24 p.m.                                                                                          

Document Name Date/Time Subjects
HB215 Draft Proposed CS Ver O.PDF HFIN 2/2/2018 1:30:00 PM
HB 215
HB215 Explanation of changes Ver J to Ver O 1.18.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
HB215 Sponsor Statement ver O 1.17.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
HB215 Sectional Analysis ver O 1.17.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
HB215 Public Health Briefing Paper 2018.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
HB142 Additional Document - WBA Charts from DOL 1.29.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB142 Additional Document - Updated facts from DOL 1.29.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB 142Letter-DOLWD to HFIN 1.30.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB 142 Letter in Opposition 2.1.2018.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB 142-Letter in support DOLWD to HFIN 1.30.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB 215 DHSS slides HFIN 2-2-2018.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
ASHNHA HB 215 Letter 1-31-18.pdf HFIN 2/2/2018 1:30:00 PM
HB 215
HB142 Support Document - Support Letters 2.1.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142
HB142 Support Document - Support Letters 2.2.18.pdf HFIN 2/2/2018 1:30:00 PM
HB 142