Legislature(1997 - 1998)
04/21/1997 01:48 PM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 21, 1997
1:48 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Brian Porter
Representative Norman Rokeberg
Representative Jeannette James
Representative Eric Croft
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 124
"An Act relating to items not subject to collective bargaining and
to application of the Public Employment Relations Act to
municipalities and other political subdivisions."
- MOVED CSHB 124(JUD) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 25
Proposing amendments to the Constitution of the State of Alaska to
guarantee the permanent fund dividend, to provide for
inflation-proofing, and to require a vote of the people before
spending undistributed income from the earnings reserve of the
permanent fund; and relating to the permanent fund.
- HEARD AND HELD
SENATE BILL NO. 19 am
"An Act relating to enforcement of federal laws relating to fish
and game; and repealing the power and duty of the commissioner of
fish and game to assist in the enforcement of federal laws relating
to fish and game."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 124
SHORT TITLE: PERA: LOCAL EXEMPTION/NONNEGOTIABLE ITEMS
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
02/12/97 314 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/97 314 (H) STATE AFFAIRS, JUDICIARY
03/11/97 (H) STA AT 8:00 AM CAPITOL 102
03/11/97 (H) MINUTE(STA)
03/12/97 631 (H) STA RPT 2DP 2DNP 3NR
03/12/97 631 (H) DP: HODGINS, VEZEY
03/12/97 631 (H) DNP: ELTON, BERKOWITZ
03/12/97 631 (H) NR: JAMES, DYSON, IVAN
03/12/97 632 (H) 2 ZERO FISCAL NOTES (LABOR, ADM)
04/21/97 (H) JUD AT 1:45 PM CAPITOL 120
BILL: HJR 25
SHORT TITLE: CONST. AM: PERM. FUND INCOME & DIVIDEND
SPONSOR(S): REPRESENTATIVE(S) AUSTERMAN
JRN-DATE JRN-PG ACTION
02/26/97 483 (H) READ THE FIRST TIME - REFERRAL(S)
02/26/97 483 (H) STATE AFFAIRS, JUDICIARY, FINANCE
03/11/97 (H) STA AT 8:00 AM CAPITOL 102
03/11/97 (H) MINUTE(STA)
03/13/97 (H) STA AT 8:00 AM CAPITOL 102
03/13/97 (H) MINUTE(STA)
03/15/97 (H) STA AT 11:00 AM CAPITOL 102
03/15/97 (H) MINUTE(STA)
03/17/97 688 (H) STA RPT CS(STA) 3DP 4NR
03/17/97 689 (H) DP: JAMES, HODGINS, DYSON
03/17/97 689 (H) NR: ELTON, BERKOWITZ, VEZEY, IVAN
03/17/97 689 (H) FISCAL NOTE (GOV)
03/17/97 689 (H) ZERO FISCAL NOTE (REV)
03/17/97 689 (H) REFERRED TO JUDICIARY
03/21/97 789 (H) CORRECTED STA CS SUBMITTED
04/21/97 (H) JUD AT 1:45 PM CAPITOL 120
BILL: SB 19
SHORT TITLE: REPEAL FED ENFORCEMENT DUTIES/F&G COMSNR
SPONSOR(S): SENATOR(S) SHARP, Taylor, Donley
JRN-DATE JRN-PG ACTION
01/03/97 19 (S) PREFILE RELEASED 1/3/97
01/13/97 19 (S) READ THE FIRST TIME - REFERRAL(S)
01/13/97 19 (S) RES, JUD
02/05/97 (S) RES AT 3:30 PM BUTROVICH ROOM 205
02/05/97 (S) MINUTE(RES)
02/06/97 247 (S) RES RPT 6DP 1NR
02/06/97 247 (S) DP: HALFORD, TAYLOR, TORGERSON,
02/06/97 247 (S) LEMAN, GREEN, SHARP; NR: LINCOLN
02/06/97 247 (S) ZERO FISCAL NOTE (DPS)
02/19/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
02/19/97 (S) MINUTE(JUD)
02/20/97 428 (S) JUD RPT 3DP
02/20/97 428 (S) DP: TAYLOR, PARNELL, PEARCE
02/20/97 428 (S) PREVIOUS ZERO FN (DPS)
02/21/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
02/21/97 (S) MINUTE(RLS)
02/24/97 469 (S) RULES TO CALENDAR & 1NR 2/24/97
02/24/97 473 (S) READ THE SECOND TIME
02/24/97 473 (S) AM NO 1 OFFERED BY SHARP
02/24/97 473 (S) AM NO 1 ADOPTED Y14 N5 A1
02/24/97 474 (S) ADVANCED TO THIRD READING
UNAN CONSENT
02/24/97 474 (S) READ THE THIRD TIME SB 19 AM
02/24/97 474 (S) COSPONSOR(S): DONLEY
02/24/97 475 (S) PASSED Y15 N4 A1
02/24/97 475 (S) ADAMS NOTICE OF RECONSIDERATION
02/25/97 502 (S) RECONSIDERATION NOT TAKEN UP
02/25/97 502 (S) TRANSMITTED TO (H)
02/26/97 478 (H) READ THE FIRST TIME-REFERRAL(S)
02/26/97 478 (H) RESOURCES, JUDICIARY
04/10/97 (H) RES AT 1:00 PM CAPITOL 124
04/10/97 (H) MINUTE(RES)
04/18/97 1167 (H) RES RPT HCS(RES) 2DP 4NR
04/18/97 1168 (H) DP: DYSON, OGAN
04/18/97 1168 (H) NR: WILLIAMS, GREEN, MASEK, HUDSON
04/18/97 1168 (H) SENATE ZERO FISCAL NOTE(DPS) 2/6/97
04/21/97 (H) JUD AT 1:45 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE AL VEZEY
Alaska State Legislature
Capitol Building, Room 13
Juneau, Alaska 99811
Telephone: (907) 465-3719
POSITION STATEMENT: Sponsor of HB 124.
LUCY HOPE, President
Mat-Su Education Association
701 East Bogard Road
Wasilla, Alaska 99654
Telephone: (907) 373-5204
POSITION STATEMENT: Testified in opposition to HB 124.
DON VALESKO, Business Manager
Public Employees Local 71
2510 Arctic Boulevard
Anchorage, Alaska 99503
Telephone: (907) 276-7211
POSITION STATEMENT: Testified in opposition to HB 124.
JIM SAMPSON, Mayor
Fairbanks North Star Borough
P.O. Box 71267
Fairbanks, Alaska 99707
Telephone: (907) 459-1304
POSITION STATEMENT: Testified in opposition to HB 124.
DON OBERG
406 Rogers Road
Kenai, Alaska 99611
Telephone: (907) 283-4233
POSITION STATEMENT: Testified in opposition to HB 124.
ANNE GENTRY
36980 Chinulna Court
Kenai, Alaska 99611
Telephone: Not provided
POSITION STATEMENT: Testified in opposition to HB 124.
ED FLANNIGAN, Deputy Commissioner
Department of Labor
P.O. Box 21149
Juneau, Alaska 99811
Telephone: (907) 465-2784
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 124; opposed bill.
HOLLY SALO ATKINS (ph)
c/o Bartlett High School
25500 Muldoon Road
Anchorage, Alaska 99506-1698
Telephone: (907) 337-1585
POSITION STATEMENT: Testified on HB 124.
JOHN CYR, President
NEA-Alaska
114 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-3090
POSITION STATEMENT: Testified in opposition to HB 124.
MIKE McMULLEN, Personnel Manager
Division of Personnel
Department of Administration
P.O. Box 110201
Juneau, Alaska 99811-0201
Telephone: (907) 465-4431
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 124.
MARILYN PILLIFANT
5824 Bristol Drive
Anchorage, Alaska 99516
Telephone: (907) 345-2660
POSITION STATEMENT: Testified on HB 124.
REPRESENTATIVE ALAN AUSTERMAN
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
Telephone: (907) 465-2487
POSITION STATEMENT: Sponsor of HJR 25.
JOSEPHINE HARDY, Legislative Secretary
to Senator Bert Sharp
Alaska State Legislature
Capitol Building, Room 516
Juneau, Alaska 99801
Telephone: (907) 465-3004
POSITION STATEMENT: Presented sponsor statement for HCS SB
19(RES).
ACTION NARRATIVE
TAPE 97-59, SIDE A
Number 0001
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee
meeting to order at 1:48 p.m. Members present at the call to order
were Representatives Green, Bunde, Porter and James.
Representative Rokeberg arrived at 1:50 p.m., and Representatives
Croft and Berkowitz arrived at 1:52 p.m.
HB 124 - PERA: LOCAL EXEMPTION/NONNEGOTIABLE ITEMS
Number 0060
CHAIRMAN GREEN announced the committee would first hear House Bill
No. 124, "An Act relating to items not subject to collective
bargaining and to application of the Public Employment Relations
Act to municipalities and other political subdivisions."
REPRESENTATIVE AL VEZEY, sponsor of HB 124, said the bill attempts
to change Alaska law to recognize the autonomy of the political
subdivisions of the state. He noted that the Public Employees
Relations Act (PERA) is not a contract but a means of conducting
relationships between employers/management and employees. However,
the court had ruled that once a political subdivision is covered by
PERA, it could never get out from under it. This bill provides a
means of local determination through the democratic process.
REPRESENTATIVE VEZEY said the proposed committee substitute would
change the democratic process from a vote of the people to a
measure passed by the elected or governing body of a municipality.
Recommended by the Alaska Municipal League, it was something
Representative Vezey had considered previously. He would leave to
the committee which method is preferable, as he believes either
would work well.
REPRESENTATIVE VEZEY explained that the bill also adds
privatization or contracting out services to the list of items not
subject to bargaining for employers and employees covered under
PERA. In moving toward privatizing many government services, the
largest obstacle is that when public employee unions negotiate
contracts, one of the first things they want in the contract is
that the employer cannot go outside of the bargaining unit to have
work performed.
REPRESENTATIVE VEZEY had just returned from a symposium on
privatization, where the consensus was that privatization can be
put in place, and does work, only when the concerns of public
sector employees are adequately addressed. In most cases, that
means a guarantee that their jobs will not end, even though in some
cases their employers may change. However, starting off with a
playing field that is tilted to prohibit out-sourcing or
privatization of public services unduly restricts the state's
ability to manage that. This bill attempts to level the playing
field in terms of what can be negotiated in a collective bargaining
agreement. It also allows municipalities, whether or not they are
covered by PERA, a choice of whether to use the system.
Number 0387
REPRESENTATIVE CON BUNDE asked Representative Vezey to clarify the
intent of Section 2 of the proposed committee substitute.
REPRESENTATIVE VEZEY explained that it would not require any action
to maintain the status quo. It does require action to change the
status quo, under both the proposed committee substitute and the
original bill. (See page 25 at number 1862 for correction by
sponsor.)
REPRESENTATIVE JEANNETTE JAMES moved to adopt the proposed
committee substitute, 0-LS0540\B, Cramer, 4/21/97, as a work draft.
There being no objection, that version was before the committee.
Number 0512
LUCY HOPE, President, Mat-Su Education Association, testified via
teleconference in opposition to HB 124. The association represents
850 teachers in the Matanuska-Susitna Borough. They have a long
history of collective bargaining. Last year, because of the
financial situation in the borough and school district, they
bargained their contracts a year early, thereby saving the district
considerable money.
MS. HOPE said last week, the district announced that because of
negotiated salary freezes, they had saved $1.9 million. In
addition, negotiated savings in health insurance costs would be
$1.2 million. They had accomplished that through negotiations.
Ms. Hope believes it is important to have a collective bargaining
process because it provides a formal opportunity to sit down and
address concerns on both sides, and it is usually mutually
beneficial.
MS. HOPE expressed concern that the community, if asked to vote on
whether education employees should be part of the collective
bargaining process, would need a lot of education on the benefits
of that. Association members would rather focus on improving
education for kids. They believe HB 124 either attempts to fix
something that is not broken or wrecks something that is working.
Number 0673
REPRESENTATIVE JAMES asked whether Ms. Hope had a copy of the
proposed committee substitute.
MS. HOPE said no.
CHAIRMAN GREEN noted that a copy had been faxed.
REPRESENTATIVE JAMES compared the original bill, which says the
municipality may opt out by a vote of the public, with the proposed
committee substitute, which says a municipality may opt out by
ordinance. She voiced her belief that the proposed legislation
would not be a threat to the Ms. Hope's association. She said it
appears that Ms. Hope has a good working relationship with the
Matanuska-Susitna Borough and would be able to argue, very
strongly, to prohibit the borough from opting out. She cautioned,
however, that other municipalities may not be so fortunate. She
believes the policy makers should have this opportunity. She
stated her understanding that the bill does not take away
collective bargaining but indicates what issues cannot be
addressed.
MS. HOPE agreed that periodically, there is a good relationship
between the employees of the school district and the school board
and borough assembly; now is one of those times. However, that is
not always the case. When situations are not as good, that leads
to the need for the collaborative efforts they are currently
experiencing. As assembly members come and go, voting their
constituents' opinions, things can change regarding public
employees in the borough. As local property taxes increase to fund
schools, assembly members look less favorably on what can be
bargained, for example; she believes that is the concern. There
are 850 people working as hard as they can. They feel that they
need the process guaranteed to them to address the issues important
to their profession and to students.
REPRESENTATIVE JAMES commented that she had heard primarily from
teachers on this issue. She said the bill does not necessarily
take away current rights; rather, it specifies things that cannot
be included in an agreement. She asked: Don't you believe that if
the municipality had a tool, just as teachers have a tool in the
ability to strike, that it wouldn't make a little better, level
playing field?
Number 0899
MS. HOPE requested clarification.
REPRESENTATIVE JAMES suggested if the relationships are
consistently not good, the municipality should be able to opt out.
MS. HOPE replied that removing items from the scope of discussion
is not effective because the problems could still exist. Many
times, the only way to solve a problem is by talking about it, and
often the collective bargaining arena is the most appropriate place
to do that.
Number 0988
DON VALESKO, Business Manager, Public Employees Local 71, testified
via teleconference from Anchorage, saying he had been with the
union since 1978 as the business representative and since 1988 as
a business manager. He had worked for the state since 1964, both
prior to collective bargaining laws and afterwards, and he now
represents employees who work for the state and other public
entities around Alaska.
MR. VALESKO referred to page 2, lines 2 through 4, which removes
from collective bargaining the "right of the employer to contract
out or privatize services or functions previously performed by
employees or that could be performed by employees." He was unaware
of contracts with the state or anyplace else where the contracts
prohibit a public employer's contracting out for services.
MR. VALESKO cited as an example the language in the current Local
71 contract with the state. He read: "Prior to the contracting or
subcontracting of any work covered by this agreement which would
result in the layoff of permanent or probationary employees, the
employer agrees to conduct a cost-efficiency study. And unless the
study shows that the work can be performed by the contractor/
subcontractor with less cost to the employer, no permanent,
probationary employee shall be laid off and replaced by contracted
or subcontracted work."
MR. VALESKO said similar language is in most of the state contracts
that he knows about. The language is primarily to protect the
wages and standard of living for Alaskans.
MR. VALESKO specified that he was testifying against the bill. If
it is not the intent to allow the employer to privatize, with a
resulting cost savings, but to spend more, then he believes it is
wrong to remove this from the collective bargaining process.
Furthermore, contracting out would result in lower wages.
MR. VALESKO referred to "the second part of the bill" and noted
that he did not have a copy of the proposed committee substitute
but had been listening to the previous conversation. He stated,
"That, to me, would result in utter chaos in the work place." He
said the law of the land in the U.S. allows employees to gather
together for the right of collective bargaining with their
employers. What PERA does is extend the law in the private sector
to those in the public sector. Mr. Valesko referred to comments
made by Representative James and said the proposed legislation
would change the playing field in midstream.
MR. VALESKO discussed a hypothetical situation, saying even though
the employees would have the right to strike, a political body
could choose to no longer bargain, even in the middle of
negotiations, by a mere vote of the assembly, for example. He said
that is inherently unfair. He urged the committee to vote against
the bill.
MR. VALESKO pointed out that the state has a long history of
collective bargaining; PERA has existed since 1972, and in large
part, it has been beneficial regarding job stability for both
public employers and employees.
Number 1284
JIM SAMPSON, Mayor, Fairbanks North Star Borough, testified via
teleconference, saying he represents a municipality of 85,000
residents. The municipality has been subject to PERA for 25 years
and has had an excellent labor/management relationship with its
employees.
MR. SAMPSON advised members that he had been commissioner for the
Department of Labor, with responsibility to administer AS 23.40.070
for all municipalities and political subdivisions of the state. In
1990, as commissioner, he recommended to the governor Executive
Order 77, which combined the Alaska Railroad Board, the Alaska
Labor Relations Agency and the Department of Labor's Labor
Relations Agency into one agency, which is the Alaska Labor
Relations Agency now described in statute.
MR. SAMPSON was also commissioner when 54 school districts went
from Title 14 to Title 23 under PERA. In his view, the law works
well. He believes it is not good public policy to have
municipalities, every other year, opt in and out of PERA like yo-
yos, whether by majority vote or ordinance. Schools would be
disrupted and important public services halted. Mr. Sampson asked
how many committee members had received calls supporting the
legislation and said he suspected it was few, if any.
MR. SAMPSON mentioned a rumor that there was a "fight" going on
between legislators in the Senate and House and the state's public
employees. Mr. Sampson said if that were the case, they asked that
it be taken somewhere other than Alaska's schools, cities and
boroughs.
MR. SAMPSON pointed out that PERA does not say a municipality
cannot subcontract out services. For example, the Fairbanks North
Star Borough has no limitation on its right to subcontract; they do
subcontract out work that is in the best interest of the borough.
(Teleconference connection was temporarily lost.)
CHAIRMAN GREEN announced to Mr. Sampson and to personnel at the
LIOs that there had been power problems. He suggested the
committee substitute faxed to the LIO locations may not have
reached them because of that.
Number 1502
REPRESENTATIVE JAMES explained that the bill has two parts. One is
the opt in/opt out provision for municipalities. The other is that
for issues which cannot be bargained, it adds the right of the
employer to contract out or privatize services or functions
previously performed by employees or that could be performed by
employees. She recalled a problem in Fairbanks a few years ago
when they wanted to contract for janitorial work; as she remembered
it, a part of the union agreement did not allow that.
MR. SAMPSON suggested that may have been with the city, not the
borough. He said if a collective bargaining agreement had language
specifically prohibiting the employer from contracting out, they
would not be able to do that. However, Mr. Sampson was saying that
the right to contract or subcontract under PERA is a mandatory
subject of bargaining, and both parties have had a legal right to
sit down and bargain over the issue of subcontracting. If some
employer, such as a municipality, wants to negotiate language that
may limit its rights, for whatever reason, it has the right to do
so. Mr. Sampson restated that the Fairbanks North Star Borough can
subcontract without any problem and does subcontract services.
REPRESENTATIVE JAMES indicated she was speaking about the school
district. However, perhaps things had changed since then.
Number 1631
REPRESENTATIVE ERIC CROFT requested that Mr. Sampson explain what
opt-out provisions are currently in place. He noted that the
committee had information that some must opt out through a hearing
or through the judicial process.
MR. SAMPSON acknowledged it had been a number of years since he had
any involvement in the administration of PERA. He believes a
governing body can opt out of PERA by either resolution or
ordinance, although perhaps only by ordinance. Some municipalities
had found themselves in trouble when they attempted to opt out of
PERA right when employees had opted to bargain, in effect denying
the employees' rights under Title 23. Mr. Sampson restated that a
governing body can opt out of PERA, which many have done.
REPRESENTATIVE CROFT asked whether Mr. Sampson had the proposed
committee substitute.
MR. SAMPSON said it had just been handed to him.
REPRESENTATIVE CROFT specified they were discussing Section 2. He
said his concern is what the change in the law is.
MR. SAMPSON responded that his concern is the effect of this type
of action. He stated his understanding that under the proposed
committee substitute, one could opt out of PERA by ordinance or
resolution. The next year, one could opt back in. And a couple of
months later, one could reconsider and opt back out again. Mr.
Sampson suggested that would turn things upside down.
REPRESENTATIVE CROFT pointed out that the operative language is,
"at any time". If a body could opt out now, the main change of the
bill is that it could be done to avoid a group of employees who
were organizing or taking some activity that the body was worried
would have some effect on PERA. The body could do what the courts
now prohibit, which is "bad faith opting-out."
MR. SAMPSON suggested enough cases had been before the supreme
court regarding municipalities that had exercised the Koslosky
Amendment. He said, "They did it at a time when employees were
exerting their concerned activity. They did it when there was an
organizing drive occurring, and they did for the purposes of
denying their rights under the law. And I think that's what the
courts have said here in the last 100 years, in unanimous
decisions, that you cannot do that."
MR. SAMPSON said he believes the bill is trying to correct a
current situation in law that the sponsor does not favor: If a
municipality does not opt out of PERA and basically accepts the
provisions of Title 23, it would have a legal obligation to bargain
with its employees. That obligation would continue throughout the
bargaining relationship. Mr. Sampson believed a situation had
occurred where the city repeatedly opted in and out to deny
people's rights to bargain; that resulted in the supreme court's
ruling that once an entity had opted in, it could not opt out.
CHAIRMAN GREEN noted that there had been several questions, which
the sponsor would address in summation.
Number 1835
DON OBERG spoke via teleconference from Kenai, advising members he
was present to monitor testimony but opposed the bill as written.
ANNE GENTRY testified via teleconference from Kenai. A retired
educator, she believes the concept of the bill is badly flawed.
She concurred with almost everything said by Ms. Hope and Mr.
Sampson. She asked: In terms of teacher contracts, would the
government body be the local borough assembly or the school board?
MS. GENTRY posed another question: If a union agreement expired in
1997, followed by another contract with a different group of
employees in 1998 and so on, must they vote every time a new
agreement is being negotiated? For example, negotiations might
take place with classified employees one year and with certificated
employees another.
CHAIRMAN GREEN advised Ms. Gentry that the sponsor would respond
during his closing statement.
Number 1923
ED FLANNIGAN, Deputy Commissioner, Department of Labor, came
forward to testify. He explained that PERA is within the
department's statute and that the Alaska Labor Relations Agency,
which administers it, is within the department. The department
opposes the bill because it conflicts with the department's basic
statutory mission to foster and promote the welfare of the wage
earners of the state, including public and private employees.
MR. FLANNIGAN said the department also believes that essential to
that welfare is the right to organize for purposes of collective
bargaining. While the department does not promote it, the right
should exist for employees, should they choose to do so, to join
together to have a collective voice - and the strength in numbers -
for dealing with their employers.
MR. FLANNIGAN commented that except for the sponsor, he did not
recall any proponent of the bill in two hearings. He submitted
that instead of leveling the playing field, it obliterates or blows
up what is now a level playing field. He said a right, such as the
right to collectively bargain or unionize, is meaningless - and not
a right - if it can be revoked. He believes this is close to a
civil or human right that should not be legislated one year and
"unlegislated" the next.
MR. FLANNIGAN advised members that there are employees in Alaska in
political subdivisions that have lawfully opted out. For example,
the Municipality of Anchorage and the City and Borough of Juneau
had adopted their own systems. For many political subdivisions,
the preferred method of labor relations is "no labor relations, no
collective bargaining, no recognition of the employee's rights to
any kind of voice in their working conditions." He added, "And
these are not uncommon out there."
MR. FLANNIGAN recounted how when he worked for a labor
organization, he was called to a school district in a small
community in the Interior. At that time, noncertificated school
district employees had no right to bargain, not even under Title
14. The employees were concerned because the teachers were
organized and they were not; they felt they were getting the short
end of the stick. Mr. Flannigan had to explain, in this day and
age, in Alaska and in this country, that they had no right to form
a union. Those employees had worked there for years. When they
decided to organize, they were shocked that they had no right to
form a union. Mr. Flannigan said such situations would be endemic
with the proposed legislation.
MR. FLANNIGAN noted that fortunately, a couple of years later the
legislature gave the noncertificated employees the right to bargain
under Title 14, which was the limited bargaining, "meet and
confer." And a couple of years after that, the legislature brought
them into PERA with all educational employees.
MR. FLANNIGAN said the subcontracting portion of the bill makes for
unbalanced or "unreal" negotiations. Many arbitrators and the
federal courts have recognized that if an employer can subcontract
out part or all of the work of a bargaining unit, the existence of
the bargaining unit is threatened; therefore, they should have a
right to bargain over subcontracting. Mr. Flannigan pointed out
that no federal labor law which PERA or the agency looks at says
that any employer has to agree to any single term or any
subcontracting language, only that they must bargain over it.
MR. FLANNIGAN said as Mr. Valesko mentioned relating to "the state
units," most of them merely say that the employer has to conduct a
cost study to show that, in fact, it will save money. He said
Local 71 has some wage protection in that contract employees should
get something akin to what the replaced employees made.
MR. FLANNIGAN referred to a book entitled Reinventing Government,
which says competition "can be structured that will produce more
equitable results than service delivery by a public monopoly.
Contractors can be required to provide comparable wages and
benefits and to promote affirmative action, for example." Mr.
Flannigan said the competition, the contracting out, would not just
be done on the backs of the workers. Whether they were state
workers, ex-state workers who had moved into the private sector or
workers who replaced the state workers, there should be other
reasons for it. Mr. Flannigan stated that it is an argument for at
least allowing the parties to negotiate.
MR. FLANNIGAN referred to earlier comments by Representative James
that suggested the good relationship in the Matanuska-Susitna
Borough and the school district would continue, that they should
not have a problem and would still have the tool of the strike
under HB 124. Mr. Flannigan pointed out that the good relationship
probably exists because the parties operate "in a balance." He
said HB 124 would remove that balance. For example, if the
employee union was being totally unreasonable in the eyes of the
school district or the local government, the local government could
opt out. In that case, the right to strike would be lost because
for public employees not under PERA, there can be an injunction to
put them back to work; that was common and happened to teachers
before they were covered by PERA. Mr. Flannigan restated
opposition to HB 124.
Number 2167
REPRESENTATIVE JAMES said she tended to agree that the focus ought
to be more than just a cost issue. It should include efficiency or
generally having better services. She stated, "And I tend to agree
with the bargaining part of this issue, except I have a real
problem with public employees, as opposed to private. It seems to
me like they're bargaining with the wrong payer to get their
agreement."
REPRESENTATIVE JAMES mentioned the ability to at least discuss
contracting out. She recalled earlier days in Fairbanks where
there were huge salaries resulting from the oil pipeline days;
suddenly, the municipal government had been unable to pay those
kinds of salaries, although that had leveled out somewhat over the
years. She said when they attempted to contract out, she believes
it was because they felt they could get it done for less.
REPRESENTATIVE JAMES said she is not necessarily against unions;
she believes there is a part for them to play. However, especially
for publicly funded entities, the ability of people to pay taxes
and the wages people receive should balance. If the bill would not
accomplish that, she asked whether there is another way besides
"heavy bargaining" that can do that.
MR. FLANNIGAN suggested the method already exists. For example,
where there is a dramatic decrease in revenues, hard bargaining by
the employer is certainly called for; that is where the will of the
public is represented. The result of negotiations is subject to
legislative approval. In addition, those voting on that contract,
or funding it, are subject to the will of the voters. Mr.
Flannigan believes it is amply addressed.
MR. FLANNIGAN related a personal experience with a group of
Fairbanks city employees under PERA, whom he represented in the
mid-80s. They had a good contract, but in 1986 things fell apart.
The employees he represented had voluntarily delayed two raises,
extending the agreement for six years. Mr. Flannigan submitted
that the system works.
Number 2354
REPRESENTATIVE BRIAN PORTER observed that currently the law allows
a municipality to opt out. He asked: If a municipality did so,
was there no federal requirement or legal obligation to recognize
the right to bargain?
MR. FLANNIGAN said that is correct. They would be in limbo as far
as collective bargaining unless the municipality, through some
other method or ordinance, granted some form of collective
bargaining.
REPRESENTATIVE PORTER referred to the provision in the contract
described by Mr. Valesko that allows contracting out if it could be
shown to be cost-effective. He asked whether Mr. Flannigan was
aware of such a situation ever being arbitrated or taken to court.
MR. FLANNIGAN responded that he knew it had been arbitrated, but he
did not know the details. He believed there had been more than one
instance. He suggested Mr. McMullen from the Department of
Administration might have information on that. He thought it had
gone to the state supreme court.
REPRESENTATIVE CROFT expressed his understanding that political
subdivisions could generally opt out unless there had been
substantial organizing activity or they were doing it to prefer one
unit over another.
MR. FLANNIGAN responded that it is more limited than that. He
explained that the Koslosky Amendment was a floor amendment to PERA
in 1972; as it came to the floor, PERA had applied to all employees
of political subdivisions, as it applies to the state. There was
a floor amendment to allow the opt-out; it said it applies to
municipalities and political subdivisions unless they elect
otherwise.
MR. FLANNIGAN said the "genesis through the courts" was that there
was a window for existing municipalities to opt out. A newly-
created municipality has the opportunity, within a reasonable time,
to exercise the opt-out right. Mr. Flannigan believes the court
said that time period is one year.
TAPE 97-59, SIDE B
Number 0006
REPRESENTATIVE CROFT asked whether those grandfathered in could opt
out only under limited circumstances.
MR. FLANNIGAN said they cannot opt out.
Number 0016
REPRESENTATIVE BUNDE commented that a limited number of political
subdivisions had the opportunity to opt out. He asked whether
under current statutes, subdivisions could no longer opt out.
MR. FLANNIGAN said, "That's correct."
REPRESENTATIVE BUNDE asked whether a bargaining unit could opt out
at will.
MR. FLANNIGAN stated, "A bargaining unit can cease to exist if the
members vote to de-certify it. That's correct."
REPRESENTATIVE BUNDE asked whether those employees would not be
covered but PERA would still exist for the rest of the
municipality.
MR. FLANNIGAN replied, "It could, yes. You have municipalities
where there are some unorganized employees and other organized
employees."
Number 0046
REPRESENTATIVE NORMAN ROKEBERG asked how many municipalities and
political subdivisions are in PERA now and how many are not.
MR. FLANNIGAN responded that he would be relying on the legislative
research done for Representative Vezey (included in committee
packets.) He said the Alaska Labor Relations Agency does not keep
a list per se. Ballpark figures are 11 of each.
REPRESENTATIVE ROKEBERG asked whether anyone could opt in.
MR. FLANNIGAN said yes. Two municipalities that had previously
opted out had affirmatively opted in: the City of Fairbanks, in
approximately 1981 and, he believes, the City of Cordova within the
last five years.
REPRESENTATIVE ROKEBERG asked why there are no restraints for
opting in, whereas there are restraints for opting out.
MR. FLANNIGAN said he believes the right to bargain is a human or
civil right that, once granted, is meaningless if it can be
revoked. There is no parallel in the private sector, where an
employer who does not like the way the labor relations system is
working cannot say, "I don't want to play anymore." If an employer
is under the national labor relations act, that employer is always
under it. Although an employer may, through various methods,
become non-union, that employer still operates under the law. Mr.
Flannigan specified that they were talking about the requirement to
recognize a duly-constituted union.
Number 0138
CHAIRMAN GREEN asked whether Fairbanks, for example, would also be
unable to opt out.
MR. FLANNIGAN said that is correct. He stated, "Over the years, I
think that's where this legislation has stemmed from, back to '88,
the first time it was introduced, City of Fairbanks." He noted
that although all the city's bargaining units may decide to
dissolve, the law would still exist there. Should some employees
in the future decide to form a union, they would do so under PERA.
Number 0163
REPRESENTATIVE ETHAN BERKOWITZ asked whether corporations and
companies fall under the national labor relations act but
municipalities and other political subdivisions do not.
MR. FLANNIGAN said that is correct; public employees are
specifically excluded from the national labor relations act.
REPRESENTATIVE BERKOWITZ asked whether municipalities have greater
freedom to deal with their employees than private corporations do.
MR. FLANNIGAN replied, "I'd say they have greater freedom to deal
with their employees. And concomitant to that, their employees
have, without barring PERA, a whole lot less rights than the
employees of those corporations do."
REPRESENTATIVE BERKOWITZ asked whether, then, there is a greater
disparity already in the public employee/employer relationship than
in the private employee/employer relationship.
MR. FLANNIGAN said for those not under PERA in Alaska, that is
definitely true. He added that while PERA does not directly
parallel the national labor relations act, it is closely modeled
after it, and the case law is utilized by the agency in its
decisions.
HOLLY SALO ATKINS (ph) came forward to testify, stating that she is
in her seventh year of teaching. Currently at Bartlett High School
in Anchorage, she expects to go through many more contract
negotiations. She discussed a contract recently ratified with the
Anchorage School District, which would result in $900 less per
month for her and her husband at the end of the contract. In spite
of that, she had voted to agree to that contract partly because of
the rules that were followed with the bargaining.
MS. ATKINS expressed concern about HB 124 because the relationship
between school districts and their employees during a bargaining
time is usually "cautious and fragile." She assumed that PERA was
carefully created to promote fairness in bargaining practices. She
said PERA provides an organized system for creating contracts and
ironing out bargaining issues. With this bill, it seems that
organized system would be jeopardized.
MS. ATKINS asked: If a municipality creates an ordinance to end
PERA, what is the alternative? And how would her own contract be
created? She suggested this bill would disenfranchise tens of
thousands of public employees that PERA affects. "We should be
working to make efficient change that urges cooperation, rather
than seeking contention and dividing public workers," she said.
"Working in a proactive, forward-thinking fashion would be more
productive."
REPRESENTATIVE JAMES asked whether Ms. Atkins knew that the
Municipality of Anchorage had opted out of PERA.
MS. ATKINS said no.
REPRESENTATIVE JAMES asked whether, even though she was not
satisfied with the results, Ms. Atkins was satisfied with the
bargaining.
MS. ATKINS replied, "Well, we bargained with the school district,
if that's under the same thing. I do know that the previous
contract, I voted to strike because of the way the bargaining was
held. I felt like it was very below-board."
Number 0355
REPRESENTATIVE PORTER said it had been five years since he was on
the municipal assembly. He asked: Are you saying that you will
lose a raise that you thought you otherwise would have had?
MS. ATKINS explained that when she signed her contract with the
district, she was given a salary schedule that told her how much
she would be making in her eighth year of teaching if she had 90
credits past her degree. Although she has those credits, she will
not be paid that amount.
REPRESENTATIVE CROFT commented that PERA seemed to be a balance of
rights. He suggested Ms. Atkins' point at the beginning was that
she had bargained under a system that guaranteed her right to
organize.
MS. ATKINS concurred.
JOHN CYR, President, NEA-Alaska, came forward to testify. Prior to
1990, school districts bargained under Title 14 but had no right to
strike. Nor was there any finality to it; they could meet, confer
and be unionized, which they did for a number of years. However,
at some point, school districts had the right to refuse further
discussion.
MR. CYR explained that they had asked for some kind of finality.
Their preference would have been binding arbitration. However,
although they met with the legislature for years about that, it did
not happen. There had been a feeling that it was not a good idea
to give decisions regarding final terms and conditions to a third
party who may not be from Anchorage, for example. In the final
analysis, all parties - including the school boards association and
the superintendents association - agreed to move under PERA, which
would provide them with basically the same bargaining laws as for
other state employees.
MR. CYR said with that came the right to strike. That happened in
1990, and there was a two-year sunset provision that gave the state
time to see whether it worked to have school districts under PERA.
In 1992, the legislature voted to repeal the sunset, which was
vetoed by then-Governor Hickel and overridden by the legislature.
Thus, they have been firmly under PERA since 1992.
MR. CYR indicated NEA-Alaska's perception is that PERA provides a
framework where both parties can sit down and bargain not just
wages and similar employment issues but also other issues that are
part and parcel of how schools work. "That, we believe, worked
quite well," he commented. Last year, the legislature passed HB
465, which amended PERA and made the process even more public. It
allowed for public bargaining and made proposals from both sides
available to the public. When a tentative agreement (TA) is
reached, that is available for public comment before there is a
vote of the organization and a vote of the school board.
MR. CYR emphasized that the law has built in a number of safeguards
that lay out a framework for how these are supposed to happen, so
that the guidelines are clear. At some future time, a municipality
and a teachers association or classified association may be unable
to agree. People may be on the streets with picket signs. Mr. Cyr
asked, "Does the association want that? Of course not. It takes
just an immense amount of time and organizational effort, and we
would much rather see things handled, as I'm sure school districts
would. But it does happen. And this law ... provides the
oversight by the Department of Labor to make sure that it happens
in a real, rational manner."
MR. CYR pointed out that there are things that cannot be bargained
now, including management rights, employment practices of the
district, classification of employees, the school calendar,
evaluations and the subjects of evaluations. They believe there is
truly a balance now.
MR. CYR referred to testimony by Lucy Hope about the millions of
dollars saved over the last few years through a negotiated
agreement. He said Juneau now has a two-tiered salary schedule,
which will save the district millions of dollars; Kenai has a two-
tiered salary schedule as well. Those were negotiated.
MR. CYR stated, "It would be nice to think that somewhere out there
that unions have the ability to just impose what they want on
school districts and get the kind of settlements that I think they
deserve, but we know that isn't true. It's a process. And PERA
builds that process in."
Number 0709
MR. CYR discussed whether "unionism" in schools benefits students.
He referred to a lengthy document entitled, "Are Teachers' Unions
Hurting American Education?" The executive summary therein was
independent research by the University of Wisconsin. He referred
to the third paragraph of that and stated, "The results of this
study demonstrate clearly that student performance on the tests -
we're speaking of the SATs and NAEPs - is significantly better in
states with high levels of unionization. With all other variables
held constant, average student scores on the SATs are 43 points
higher in states where over 90 percent of teachers are unionized
[than] in states where less than 50 percent of the teachers are
covered by collective bargaining or `meet and confer.'
Furthermore, when collective bargaining is removed from the
analysis, scores drop in all states." Mr. Cyr advised members that
statistics followed that.
MR. CYR said clearly, at least in that study, the idea that school
districts and their employees get to sit down and discuss, within
a framework, the terms and conditions of employment and the way
schools run for students is the better way to go about it.
MR. CYR said he agrees with the sponsor of HB 124 that consensus of
public sector employees must be addressed for things to work. Mr.
Cyr said that is what PERA does. It provides public sector
employees a forum where they can come to consensus with their
employers. He stated his belief that it should continue.
Number 0810
CHAIRMAN GREEN stated, "In that third paragraph, it says that
`furthermore, when collective bargaining is removed from the
analysis, scores drop." He asked whether that is theoretical.
MR. CYR explained that some states that had collective bargaining
as part of the law became "right-to-work" states where the right to
collective bargaining was withdrawn. In those states, uniformly,
student test scores had dropped.
CHAIRMAN GREEN asked whether the drop in scores occurred because by
removing the union, salaries dropped, resulting in lower-quality
teachers.
MR. CYR said he did not know. When school districts bargain with
employee groups, they bargain more than salaries. They bargain
issues like student safety. In some states, they bargain class
size and curricular decisions. Although those issues are not
written up by the press, they are the heart of many agreements.
MR. CYR emphasized the importance of financial considerations but
said they also bargain hard for those things that they believe
directly affect students.
Number 0917
REPRESENTATIVE PORTER inquired about the date of the document.
MR. CYR said he had received it this past year. He believes the
work was done in the spring of 1996, with publication following
that summer or fall.
Number 0942
REPRESENTATIVE ROKEBERG asked whether the Anchorage School District
is under PERA but the municipality itself is not.
MR. CYR replied that all school districts are covered under PERA.
In 1990, the Anchorage School District came under PERA. The
municipality had removed itself; it has its own separate bargaining
guidelines.
REPRESENTATIVE ROKEBERG asked whether the school districts' being
under PERA was mandated or permissive.
MR. CYR specified that the legislature had passed the law placing
school districts under PERA.
REPRESENTATIVE JAMES asked what this bill does to change that.
MR. CYR read portions from Section 2, page 2, beginning at line 5.
On line 6, it says, "Except as provided in (b) of this section, the
provisions of AS 23.40.070 - 23.40.260 do not apply to
municipalities and other political subdivisions." Mr. Cyr stated,
"We believe that that sentence stands alone, and it takes all
school districts out of PERA. Then, when you read further, it
says, `A municipality may, by ordinance, and a political
subdivision other than a municipality may, by resolution, choose to
accept or reject application of the provisions [of AS 23.40.070 -
23.40.260] at any time.'"
MR. CYR said he believes, and their legal counsel has informed
them, that if this bill passes, school districts will be out of
PERA. And then they may, by ordinance or resolution, go back in.
Mr. Cyr said according to the sponsor, they may be in until they
opt out. However, Mr. Cyr believes a real argument can be made
that school districts will no longer have the right to bargain
contracts when those expire unless the municipality or political
subdivision institutes an ordinance or resolution, which they could
choose not to do should they no longer want to bargain.
Number 1073
REPRESENTATIVE CROFT said, "So, under either interpretation, either
they're all out and they can opt back in or they can opt out. This
would allow school districts, municipalities, to say, `We don't
have to recognize your bargaining rights ....'"
MR. CYR replied, "We believe that is correct. This would
effectively do away with our right to bargain as we know it."
Number 1102
MIKE McMULLEN, Personnel Manager, Division of Personnel, Department
of Administration, came forward to testify regarding Section 1. He
said subsection (5), the new subsection under Section 1, is a
completely different kind of topic to be excluded from bargaining.
Subsection (1) prohibits negotiation of terms relating to
reemployment rights for injured state employees under AS 39.25.158.
Subsection (2) regards reemployment rights of state employees who
serve in the organized militia and thereby provide a benefit to the
state. Both subsections (1) and (2) relate to people who have
already been employed by the state, whose rights cannot be
"trumped" by a collective bargaining agreement.
MR. McMULLEN noted that subsections (3) and (4) were added the
previous year under welfare reform. They say that collective
bargaining cannot defeat the process regarding temporary employees
under the Alaska Temporary Assistance Program or the authority of
agencies to employ them.
MR. McMULLEN said in contrast, subsection (5) is not a comparative
right between two employees but a limitation on the right of all
employees to bargain about things that have to do with their own
personal security, which is loss of their jobs through contracting
out.
MR. McMULLEN provided a handout describing six state collective
bargaining agreement provisions on contracting. He said Don
Valesko's testimony had accurately described provisions of the
"labor, trades and craft" contracts. Mr. McMullen stated, "In all
cases where it's been an issue to the point of bargaining to a
provision - i.e., we have some contracts which don't have
provisions about subcontracting, but ... the agreement has been not
to have a provision in the agreement about it - but in the six
where we have reached agreement, every one of them has a
requirement for advance notice to the union, that a feasibility
study be done, that the results actually show that there will be a
financial savings to the state before you can enter a contract
which displaces state employees."
MR. McMULLEN said one question would be: If that is not a
reasonable approach, what approach would an employer be expected to
take? If there were to be provisions about contracting, presumably
the cost would be one item. He further asked: If it cannot be
done more cheaply, why have someone else do it? He said the
handout shows how the state has handled it. He sees no reason why
future bargaining would produce different results.
MR. McMULLEN referred to an earlier question about supreme court
decisions; he was unsure which one was being mentioned. There had
been two supreme court decisions of interest regarding collective
bargaining. One had to do with "finding, under a provision of
PERA, the things which are the fundamental purposes of the employer
are not subject to bargaining; and the case that went to the
supreme court had to do with the state's classification system."
MR. McMULLEN said another supreme court decision had to do with
contracting, although it was not a question of PERA but of
contracting versus the Merit System. The court found that
government's business is to govern, not to employ; it was equally
permissible to employ under provisions of the constitution and
statutes, as with the Merit System, or to contract for work. That
decision makes it a choice so long as either is done according to
the laws governing that activity.
MR. McMULLEN expressed concern about timing. There was a bill
regarding a task force on privatization that would generate reports
by November of 1997 and November of 1998. The first year's topic
includes contracting. He stated, "We may find, from that task
force, an outcome which is an appropriate outcome for collective
bargaining contracts. And if it doesn't provide something, of
course, this legislature will have next session to deal with the
topic anyway."
MR. McMULLEN suggested that Section 1 be removed from the bill or
amended.
Number 1454
REPRESENTATIVE JAMES asked whether Mr. McMullen believes the
language in the bill takes this right away from school districts to
bargain.
MR. McMULLEN replied, "I believe it does. They are a political
subdivision of the state. And the language `except as provided
below' that says PERA does not apply, ... as I read it, the
requirement is to positively opt in or it doesn't apply. And I
don't know what that what mean in terms of (indisc.) contracts in
place."
REPRESENTATIVE JAMES referred to subsection (5) and said although
she understood Mr. McMullen's testimony about this being a
"different color stripe," she believes that under the title, it
fits. She noted that privatization and out-sourcing are current
buzz-words nationwide. She asked about Mr. McMullen's testimony
regarding restrictions to contracting out.
Number 1560
MR. McMULLEN explained under current law, that is a subject of
bargaining. If subsection (5) passes, that will be a subject they
can no longer bargain about. It is generally called "effects
bargaining." If the employer decides to pass work off to the
private sector, for example, the employees' rights under the
national law - to which the state's law is fairly close - say that
the effect on employees is a subject of bargaining. If this bill
passes, that can no longer be bargained. The employees will lose
their right to have any say about the outcome.
Number 1604
REPRESENTATIVE PORTER stated, "Mike, I believe your second
reference to the supreme court case found that contracting out was
legal, assuming that the law is supported ...."
MR. McMULLEN concurred.
REPRESENTATIVE PORTER asked whether Mr. McMullen knew of any
arbitration ruling or court decision defining the language in the
contract Mr. Valesko had described, relating to the ability to
contract out if it is determined to be cost-effective.
MR. McMULLEN replied, "We've had several arbitrations over the
years and several changes in contract language as a result of them.
In Mr. Valesko's contract, we've had, in and out over a period of
years, a size limitation on the community. It's not in there at
the present time, but it was a subject of bargaining, that the `no
contracting' provided only the community was of a certain size or
something."
MR. McMULLEN advised members that a notable case on contracting was
when the legislature first decided that certain welfare work would
be performed by the regional nonprofit corporations. The
legislature had appropriated money to Kawerak, Norton Sound and
possibly one other entity. The state said, "Well, the legislature
passed some money; that's how we have to spend it," and then wrote
those contracts and laid state employees off.
MR. McMULLEN explained, "Under a collective bargaining agreement,
it said we had to do a feasibility study before we could do that.
And we lost that arbitration. We paid, for a period of time, the
employees who were not working for us, because we hadn't followed
the contractual provision."
MR. McMULLEN referred to the handout and noted that each contract
contains its own language and each would be interpreted differently
as it reaches arbitration. He said the department has current
cases relating to contracting out.
REPRESENTATIVE PORTER again asked whether Mr. McMullen knew of a
decision by an arbitrator or a court that has come close to
defining cost-effectiveness in terms of a requirement prior to
contracting out.
MR. McMULLEN said no.
CHAIRMAN GREEN advised members that Kathy Murphy (ph) had called
in; she feels this bill will not benefit the schools or the
students. He asked Marilyn Pillifant to testify only if she had
something to add beyond previous testimony.
MARILYN PILLIFANT came forward to testify, asking that the
committee proceed with caution and not eliminate employees' rights
to conduct meaningful discussions on issues involving them. She
said she would submit other comments.
CHAIRMAN GREEN asked whether anyone else wished to testify and then
closed public testimony. He called on the sponsor to answer the
questions posed during the hearing.
Number 1862
REPRESENTATIVE VEZEY said he believed that most of the questions
had been answered.
REPRESENTATIVE VEZEY said he had misspoken earlier in describing
the situation of the "status quo." He stated, "The bill provides
that PERA doesn't apply to a political subdivision unless the
political subdivision follows the process and says, `we're
covered,' or it says, `we're not covered.' The effect of what
would happen if this went into law was that ... if one of the 17
political subdivisions or one of the 54 school districts that's
covered by this PERA didn't change the way they did business, they
would go on, without changing the manner they did business. The
only difference would be that the provisions of PERA would not be
legally enforceable until they took action saying, `We going to
bind ourselves to that.'"
Number 1940
REPRESENTATIVE BERKOWITZ referred to AS 23.40.070, the declaration
of policy for PERA, and read subparagraph (2). It states that
these policies are to be effectuated by "requiring public employers
to negotiate with and enter into written agreements with employee
organizations on matters of wages, hours, and other terms and
conditions of employment".
REPRESENTATIVE BERKOWITZ suggested if there is a provision to opt
out of PERA, there should be an alternative agreement between the
public employer and the public employee.
REPRESENTATIVE VEZEY replied, "I believe the whole point of this
debate is the properness of the state of Alaska mandating on
democratically organized societies how they're going to conduct
their business. I believe that local government units, organized
along the principle of democracy, are capable of ruling themselves.
The vast majority of the people in the state of Alaska live in
governmental units that are not covered by PERA. Virtually all of
them that I'm aware of have some sort of system for relating
between their governing body, the management of the municipality or
the political subdivision, and the employees. I think they're all
different. And I think they kind of look at each other sometimes
and say, `Well, you know, we have a problem with our system. Maybe
there is something in their system that we could benefit from."
REPRESENTATIVE BERKOWITZ said he tends to agree they should let
local governments do as they see fit. However, the previous week,
they had passed a bill that "told them that they couldn't do things
regarding shooting ranges and airports." He suggested when there
is a broader state interest involved, such as ensuring that public
employees have certain rights and declarations of principle, there
should at least be some oversight by the state.
Number 2140
REPRESENTATIVE VEZEY restated his belief in the ability of people
to govern themselves. He said there was no chaos in the
management/labor relationships of the cities of Anchorage or
Soldotna. He said he understands that Soldotna has one of the more
innovative management/labor relationships in Alaska and explained,
"They have an informal relationship. They have bargaining. They
take their best proposal, and if they can't reach a compromise
between the city managers and the bargaining units, they take the
two proposals before the voters. And the voters decide not on a
compromise but which is the best offer. And they've never had to
take it to a poll yet. So, I mean, there are other systems, and
people do work together, because we all have a constructive,
mutually beneficial relationship."
Number 2206
REPRESENTATIVE BERKOWITZ noted that they had heard no testimony
from a school district or political subdivision indicating
dissatisfaction with the current arrangement. "And if there is
something else out there, I'd be curious to know what it is," he
added.
REPRESENTATIVE VEZEY stated that a lot of people had told him, "We
could do a lot of things much better ... if we weren't bound by
this legal structure." He stated, "And they're really not saying
they don't want to bargain with their employee. They're not saying
that they just want to have totally unilateral employee/employer
relationships. They say the constraints of PERA -- and PERA is
only one method of collective bargaining out of a thousand
different methods that are out there in the world. It's only one."
CHAIRMAN GREEN asked whether Representative Vezey believed, then,
that if this passed and individually the various school districts
opted back in as political subdivisions, that would be all right,
as it would be their choice. He asked, "Now, if they were to do
that, would it be your feeling that they would be, then, bound by
that, as they claim they are now?"
REPRESENTATIVE VEZEY replied, "I believe the answer is yes, Mr.
Chairman. The difference is now they have no choice. We're
telling them how to run their business. And I think many of them
would probably make some changes in PERA. Many of them would
probably just take it the way it is, because it is a system that
does work. It's just there are perhaps better ones out there."
CHAIRMAN GREEN called an at-ease at 3:22 p.m.
TAPE 97-60, SIDE A
Number 0006
CHAIRMAN GREEN called the meeting back to order at 3:37 p.m.
Number 0021
REPRESENTATIVE BUNDE asked, "Why the CS and why not a vote of the
public, then, rather than just a vote of the political
subdivision?"
REPRESENTATIVE VEZEY said that is a decision for the committee. He
had brought the committee substitute forward but had not made a
recommendation. He believed both methods would work. He noted
that the Alaska Municipal League had told him they would prefer an
ordinance-type of action rather than a ballot referendum. He
stated, "I don't see much difference. I do believe in a
representative form of democracy. I can support either version."
REPRESENTATIVE BUNDE said at the adoption of the proposed committee
substitute he had not voiced his objection. However, he much
preferred the previous version.
REPRESENTATIVE JAMES stated that her motion to accept the committee
substitute had been a matter of procedure. She stated, "Based on
the testimony that I heard and everything, I think that the vote of
the public would be not allowing them to do it so quickly and make
it - the opting in and out - a different process. And I would have
more respect - and do have more respect - for the voters than I do
a legislative body."
Number 0173
REPRESENTATIVE PORTER said having been a member of a local body and
the legislature, he tries to avoid establishing mandates on local
bodies. If they adopted the original version of the bill, they
would be saying, "If you want to do this, you can, but you have to
go through the costs of an election." He stated, "Other than that,
I would support keeping the version that we have on that point.
When we get to discuss the bill itself, I've got a couple of other
observations."
REPRESENTATIVE BERKOWITZ offered Amendment 1, which read:
Page 1, line 1
Following "relating",
delete "to items not subject to collective bargaining
and"
Page 1, line 5 through page 2, line 4
delete all material
renumber following sections accordingly
REPRESENTATIVE BERKOWITZ explained that it deletes subsection (5)
from Section 1.
CHAIRMAN GREEN noted that it was a suggestion heard during
testimony.
REPRESENTATIVE JAMES objected for discussion. She said she
understood the purpose of the amendment. She noted they had heard
testimony saying it is working fine. However, putting "contracting
out" and "privatizing" in the same sentence made no sense to her,
because she considers them two different issues. If only
"contracting out" was in there, she would have no problem with the
amendment, but putting in "privatization" changes the whole
complexion.
REPRESENTATIVE JAMES explained that she understands privatization
to be the government's going out of business providing a service
and it being picked up by private industry in a "non-monopoly-type
manner." It is not so much a cost savings as implementing good
services, for example.
CHAIRMAN GREEN asked whether the objection was maintained.
REPRESENTATIVE JAMES said yes.
CHAIRMAN GREEN requested a roll call vote. Voting for Amendment 1
were Representatives Croft and Berkowitz. Voting against it were
Representatives Bunde, Porter, James and Green. Representative
Rokeberg was absent. Therefore, Amendment 1 failed, 4-2.
REPRESENTATIVE BERKOWITZ offered Amendment 2, which read:
Page 2, line 4
following "employees",
insert "except to insure cost savings to the public
employer"
REPRESENTATIVE BERKOWITZ noted that Amendment 2 relates to the end
of subsection (5). He explained, "It would limit the right to
contract out or privatize, except to ensure cost savings to the
public employer. And this would preclude, I would think, any sort
of bad-faith negotiation, retaliatory or for reasons that don't
have to do strictly with saving the political subdivision money."
REPRESENTATIVE PORTER objected for purposes of discussion. He
asked the sponsor to respond.
Number 0594
REPRESENTATIVE VEZEY said he objected and stated, "Obviously, there
should be a reason for the actions. It could be something other
than cost. But my biggest objection is, it goes back to the old
saying that `figures don't lie but liars do figure.' I'm an
estimator, and you can say the same thing about estimates."
REPRESENTATIVE BERKOWITZ responded, "We're dealing here with a
section of the bill that violates another one of those old rules:
`If it ain't broke, don't fix it.' And we're already dealing with
something that ain't broke. No one's complained about this. And
I don't know why we're tinkering with it. So, this would just
ensure that if we're tinkering with it, it's done in good faith."
Number 0650
REPRESENTATIVE PORTER said he had managed a contract that had a
provision that disallowed opting out, period. He indicated that is
a problem for someone trying to run an organization. He noted that
there had been no testimony about a problem, then said, "I was
completely intrigued by the notion that Mr. Valesko testified to,
that this kind of a provision was in their contracts. I'm sure
that there are situations that could come up that would cause
someone to want to consider contracting out for some other purpose,
but for the life of me, I can't think of one right now, other than
cost savings. And I would have killed to have this provision in my
contract."
REPRESENTATIVE BERKOWITZ responded that he could think of reasons
such as giving one's cousin or brother-in-law a contract. A cost-
savings analysis would preclude just giving away a contract.
REPRESENTATIVE CROFT noted that they had been talking about
mandates. He stated, "This is a provision that does not allow us
to contract in this area. It does not allow us to negotiate in
this area. I mean, they're still free to make ... whatever
agreement they want without this bill, without this provision.
They can have it or they cannot. You can be free of it or bound by
it. And so, to the extent we're going to further bind what they
can negotiate, we should do it for legitimate purposes. And I
think this works to ensure that the legitimate purpose of cost
savings is the one that is allowed. So, I speak in favor of the
amendment."
Number 0787
REPRESENTATIVE BUNDE agreed that cost savings seems the most
logical reason, and he said it gets pretty far-fetched to think of
people doing it for other reasons. "But if there was any danger
that someone would do it to just thwart a bargaining position, I
guess I wouldn't have problems with putting cost savings in there,"
he concluded.
REPRESENTATIVE JAMES cited an example involving privatization of
highway maintenance in British Columbia, about which she had heard
testimony. She commented, "It's not something that we could do in
this state because we're a totally different configuration."
British Columbia's transportation department had "gone out of
business" and sold all their equipment. In many cases, the new
contractors hired former employees. Although they expected to save
money, after a few years, the costs were about equal. However,
more people were driving new pick-ups in the various communities,
indicating the profit was being spread among the people who had the
jobs performing these services. The same cost provided a bigger
economic impact on the province.
REPRESENTATIVE JAMES concluded that cost is not necessarily the
only issue. For that reason, and because it says "privatization,"
not "out-sourcing," a different issue, she could not support the
amendment.
Number 0952
REPRESENTATIVE CROFT asked about Representative James's distinction
between contracting out and privatizing services. He asked whether
to her, contracting out was out-sourcing.
REPRESENTATIVE JAMES replied that contracting out and out-sourcing
are the same to her. Privatization is when you let the private
industry take over the function, without planning on coming back
into doing it any time in the future.
REPRESENTATIVE CROFT responded, "So, then, the way I read it, this
has both contracting out, or out-sourcing, and privatizing services
it allows, and this would condition both."
REPRESENTATIVE JAMES agreed.
CHAIRMAN GREEN asked whether the objection was maintained.
REPRESENTATIVE JAMES said yes.
CHAIRMAN GREEN requested a roll call vote. Voting for Amendment 2
were Representatives Bunde, Porter, Croft, Berkowitz and Green.
Voting against it was Representative James. Representative
Rokeberg was absent. Thus, Amendment 2 was adopted, 5-1.
Number 1033
REPRESENTATIVE PORTER stated that the bill puts him in a quandary.
He likes the idea that a municipality would have the option of
selecting what form of relationship it would have with its
particular groups of employees. On the other hand, he had once
been such an employee, working under a system with no recognition
of employees and seeming to get the "leftovers when it came to the
city disbursement of available funds." He announced he would vote
to move the bill with no recommendation and then examine his
conscience.
Number 1113
REPRESENTATIVE BUNDE said he was in the same quandary. Because of
his own experience, he did not see the problem in Anchorage. If
there were places in the state where the problem existed, he was
unaware of them. He restated his preference for the original
version of the bill. While he would not hold up the bill, he was
lukewarm in his enthusiasm.
Number 1143
REPRESENTATIVE JAMES said she had no particular love or hate for
this piece of legislation. Although happy to move it out of
committee, she would make no further commitment.
REPRESENTATIVE CROFT commented that it had been a good, far-sighted
idea 25 years ago to give public employees the right to bargain; it
was a poor idea to take that away from them. "We end up with
better relations, employees doing a better job, a better standard
of living for them, and there's some evidence that they end up
doing a better job in the schools as well when this happens," he
said. "I don't think this is a good idea. I'll be voting not to
move the bill and, if it does reach the floor, against it."
REPRESENTATIVE PORTER made a motion to move the proposed committee
substitute, 0-LS0540\B, Cramer, 4/21/97, as amended, from committee
with individual recommendations and attached fiscal notes.
REPRESENTATIVE CROFT objected.
Number 1238
CHAIRMAN GREEN requested a roll call vote. Voting to move it from
committee were Representatives Bunde, Porter, James and Green.
Voting against it were Representatives Croft and Berkowitz.
Representative Rokeberg was absent. Thus, CSHB 124(JUD) moved from
the House Judiciary Standing Committee.
HJR 25 CONST. AM: PERM. FUND INCOME & DIVIDEND
CHAIRMAN GREEN announced the next item of business was House Joint
Resolution No. 25, proposing amendments to the Constitution of the
State of Alaska to guarantee the permanent fund dividend, to
provide for inflation-proofing, and to require a vote of the people
before spending undistributed income from the earnings reserve of
the permanent fund; and relating to the permanent fund. Before the
committee was CSHJR 25(STA), version 0-LS0659\H.
REPRESENTATIVE ALAN AUSTERMAN, sponsor, explained that HJR 25 came
about following much discussion during his last two campaigns "in
reference to the apparent misunderstanding and also phobia out
there in reference to what the permanent fund dividend program
really is." He said every time he got into a discussion during the
campaign or during the interim in reference to the permanent fund
itself, he was cut short by people saying, "Don't touch my
dividend."
REPRESENTATIVE AUSTERMAN noted that the legislature, with approval
of the governor, could eliminate the dividend program. However,
most of the populace believes it is already protected by the
constitution.
REPRESENTATIVE AUSTERMAN explained that HJR 25 places the dividend
and inflation-proofing in the state constitution so they cannot be
removed from the permanent fund program without a vote of the
people. The third aspect is interest earnings from the
undistributed earnings of the permanent fund itself.
REPRESENTATIVE AUSTERMAN discussed the difference between his
resolution and the one presented to the Senate; his version allows
the undistributed income to be appropriated by the legislature as
it is now. In contrast, the Senate resolution puts that
undistributed income in the constitution; it can only be spent by
a vote of the people or it can go back into the principal of the
permanent fund, as has been done the past few years. He stated,
"As most of you know, the last two years we put $1.8 billion back
into the principal of the permanent fund.
REPRESENTATIVE AUSTERMAN expressed concern that with the public
perception that all the money must go back into the principal of
the permanent fund, they will never use that third part, the
interest earnings, to help balance the budget or for anything other
than putting it back into the principal.
REPRESENTATIVE AUSTERMAN acknowledged concern about changing the
current set-up; he was willing to discuss that. Part of the reason
for introducing the resolution was to begin an educational process
for legislators and the public about what the permanent fund does
and is being used for.
Number 1495
CHAIRMAN GREEN, noting that this indicates 25 percent will go back
into the corpus, asked whether that had not been changed to 50
percent several years ago. He then asked whether this was an
amendment to bring it back to 25 percent.
REPRESENTATIVE CROFT stated, "It says `at least,' and I thought the
current one said `at least' and we changed it by law to 50."
CHAIRMAN GREEN said that was what he was asking about.
REPRESENTATIVE AUSTERMAN indicated he would check on that.
Number 1525
REPRESENTATIVE ROKEBERG stated, "Right now, the statute is 50
percent of fuels that were discovered after `x' date, which is
circa about 1982 or '81 or something around in there. For the
committee's information, I had some legal research done on this,
and right now we're only garnering about $19 million per annum
because of the differential. However, this is interesting because
with the new string-of-pearl-type fuels that are being developed,
the so-called `satellite fuels' and so forth, ... the gross amount
of dollars will be going up. And as a result, the percentage of
income from the newer fuels will be increasing in the coming years.
So, it's a great concern I have right now. But that is a statutory
thing and ... not in the constitution."
Number 1568
CHAIRMAN GREEN agreed and said this would apply to all fuels, as he
understood it.
REPRESENTATIVE AUSTERMAN said he would provide an answer. He
believed part is covered in statute and part by the constitution.
CHAIRMAN GREEN said the 25 percent is constitutional.
REPRESENTATIVE AUSTERMAN stated that this is a constitutional
amendment that they are asking for.
CHAIRMAN GREEN said the question comes back to whether that takes
precedent over the statutes that raised it to 50 percent.
REPRESENTATIVE AUSTERMAN emphasized that says, "at least."
REPRESENTATIVE CROFT asked: Why not constitutionalize the dividend
structure as well? He referred to page 2, lines 5 through 7, which
says, "an amount of income shall be transferred from the earnings
reserve account for distribution as dividends to State residents as
provided by law." He noted that the legislature could cut it in
half or down to a dollar.
Number 1632
REPRESENTATIVE AUSTERMAN explained that the original bill defined
how that was to be broken down. After discussing it with the
"permanent fund people," they felt that by leaving the formula in
statute, it could be adjusted, depending on the world market.
Otherwise, there may be a drop in the market, for example,
resulting in insufficient money available for dividends or
inflation-proofing. "With statute, it could be changed on a rapid
basis," he concluded.
REPRESENTATIVE CROFT asked: So we really constitutionalize the
right to the dividend and the principle of inflation-proofing at an
appropriate amount for inflation-proofing but not necessarily the
exact formula?
REPRESENTATIVE AUSTERMAN agreed that is the objective with the
committee substitute.
REPRESENTATIVE CROFT referred to a memorandum in committee packets
from Ron Lorensen, legal counsel for the Alaska Permanent Fund
Corporation, which raises questions about possible tax consequences
and potentially having to defend this at some point against a
challenge by the Internal Revenue Service (IRS). Representative
Croft asked whether Representative Austerman had that document.
REPRESENTATIVE AUSTERMAN answered that he had not seen it.
Number 1717
REPRESENTATIVE BUNDE said he had similar concerns about the
public's perception of the "permanent dividend fund."
Specifically, he is concerned that the public confuses the corpus
with the dividend. Representative Austerman's description caused
him less concern than the Senate version, which he understands to
put the amount of dividend in the constitution. He asked: In your
discussions with people, if we were to do that, did they understand
that that guaranteed they would then be paying taxes in the not-
too-distant future? He noted that the state has two sources of
revenue: taxes and earnings of the permanent fund.
Number 1764
REPRESENTATIVE AUSTERMAN replied that discussions with constituents
indicated they would rather receive dividends and pay taxes than to
abolish the dividend program. He said whether that is short-
sighted on their part is another question. He stated, "I,
personally, from my perspective, in talking to my constituents, ...
I don't have a problem with re-instituting an income tax."
REPRESENTATIVE BUNDE said he was not advocating an income tax. He
understood that under the resolution, the principal of the dividend
is enshrined but not the amount. Therefore, people could choose to
receive $1,000 from the government and then pay it back in taxes,
should a tax be imposed, to provide services they feel are
appropriate. He mentioned the cost of paying for the bureaucracy
to collect a tax and suggested there was no net gain there.
REPRESENTATIVE BUNDE said he is less concerned about the resolution
if there is that flexibility than if it enshrines procedure and
amounts. He requested that the sponsor research the tax question,
noting that a guaranteed amount may be viewed differently by the
IRS and the state may have to pay taxes on the earnings.
Number 1860
CHAIRMAN GREEN referred to the language, "at least 25 percent." He
asked whether designations of various fields would be made by the
Department of Natural Resources as to what amounts applied to what
fields.
REPRESENTATIVE AUSTERMAN replied that that is a highly technical
question and said he had no idea what future legislators would want
to do in statute. He noted that the 50 percent is currently in
statute, as he understands it.
Number 1930
REPRESENTATIVE ROKEBERG said one of the many concerns he had about
the amendment is the calculation of inflation-proofing. He noted
there is controversy in the world of economics right now involving
numbers used by the bureau of labor statistics to calculate the
national Consumer Price Index (CPI) or cost-of-living index. He
said there is certainly a debate over which index to use when
talking about inflation. He cited examples. He believes at least
a slim majority of economists concede that the CPI index is
overstated now by as much as 50 percent because of "the lack of the
market basket of goods to fully reflect the increases in
productivity, the impact of technology, particularly computers, on
the workplace, [and] the various other arguments."
REPRESENTATIVE ROKEBERG said recommendations have been made to the
federal government and the Department of Labor, bureau of labor
statistics, to reformulate the cost-of-living index. He noted that
as a legislature, they annually appropriate, using that index, a
substantial amount of dollars, in the hundreds of millions of
dollars. He submitted that they are probably overpaying in "so-
called inflation-proofing" right now by $200 to $300 million a
year. He said he would be very, very concerned at this point about
putting into constitutional language something so controversial and
unsettled.
REPRESENTATIVE AUSTERMAN agreed. He said that was one reason they
had not specified, in the committee substitute, how inflation-
proofing is to be calculated. That would be left up to the
legislature to do through statute. Even with the current way it is
calculated, the statute can be changed to fix whatever problems are
perceived to exist.
Number 2069
REPRESENTATIVE CROFT referred to the tax question mentioned in Mr.
Lorensen's memorandum and stated his understanding that normally,
corporations have double taxation; they are taxed, and then
dividends come out of the "post-tax." However, a public
corporation is not taxed that way. At some level on the continuum,
if the permanent fund just generates what corporate law understands
as dividends, with no other public function, the IRS will say,
"You're a private corporation with the citizens of the state of
Alaska as your shareholders, and we're going to double-tax you."
REPRESENTATIVE CROFT said he did not know the likelihood of that
happening. He proposed that the committee hear testimony in
executive session, if necessary because of the legal impact of
this, to figure out for themselves how real that concern is.
CHAIRMAN GREEN asked whether there was merit in hearing it in a
joint executive session with the House Finance Committee.
REPRESENTATIVE CROFT said there might well be.
REPRESENTATIVE AUSTERMAN said he could not remember all of the
discussion in reference to the tax issue, but it had arisen on
several occasions. He stated that the original concept of the bill
brought up that discussion in reference to taxes. He said, "The CS
that we passed, we passed on March 21. This memo is dated March
10. So, if I remember correctly, part of the tax question was
eliminated when we took out all the formulas ... and just put in
the fact that it's a dividend program. But I'll research it again
just to make sure that that's the right answer."
Number 2164
REPRESENTATIVE PORTER stated, "Notwithstanding that, I would
appreciate a briefing from the Department of Revenue, at least, on
this point. And I concur that it should be an executive session
because it probably could have one of the bigger effects on the
state's finances that we could imagine."
REPRESENTATIVE PORTER said considering what the House Finance
Committee was currently up against, it perhaps would not be
duplicative for this committee to obtain information and then share
it individually with those members.
REPRESENTATIVE AUSTERMAN suggested it may turn out an executive
session is unnecessary "because they may say that it has no bearing
at all anymore." However, he would check that to make sure.
REPRESENTATIVE ROKEBERG cautioned about rocking the boat.
REPRESENTATIVE CROFT, noting that Mr. Lorensen is from a Juneau law
firm, suggested it would be relatively easy for him to appear
before the committee.
CHAIRMAN GREEN advised the sponsor that the committee would await
information from him.
(HJR 25 was held over.)
SB 19 am - REPEAL FED ENFORCEMENT DUTIES/F&G COMSNR
CHAIRMAN GREEN announced they would briefly hear Senate Bill No. 19
am, "An Act relating to enforcement of federal laws relating to
fish and game; and repealing the power and duty of the commissioner
of fish and game to assist in the enforcement of federal laws
relating to fish and game." Before the committee was HCS SB
19(RES), version 0-LS0173\E.
JOSEPHINE HARDY, Legislative Secretary to Senator Bert Sharp,
presented the sponsor statement. She said, "Senate Bill 19 repeals
the present statutory mandate that the state of Alaska will assist
the federal government agencies in the enforcement of federal laws
and regulations as they apply to fish and game resources in Alaska.
In light of aggressive federal actions to assume management of fish
and game over large areas of our state, in violation of our
statehood compact, Senator Sharp believes repeal of this statute is
prudent and in the best interests of the citizens of Alaska."
CHAIRMAN GREEN noted that it repeals just one section.
MS. HARDY agreed that it repeals Section 1.
CHAIRMAN GREEN advised members that he had heard the bill in the
House Resources Committee. He asked whether there were questions
of Ms. Hardy; there were none.
(SB 19 was held over.)
ADJOURNMENT
Number 2305
CHAIRMAN GREEN adjourned the House Judiciary Standing Committee
meeting at 4:11 p.m.
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