02/06/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB62 | |
| Overview, Department of Labor & Workforce Development | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 62 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 6, 2013
3:20 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Mike Chenault
COMMITTEE CALENDAR
HOUSE BILL NO. 62
"An Act relating to the term of office of directors of telephone
or electric cooperatives."
- HEARD & HELD
OVERVIEW: DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT
- HEARD [Rescheduled from January 30, 2013]
PREVIOUS COMMITTEE ACTION
BILL: HB 62
SHORT TITLE: ELECTRIC/TELEPHONE COOPS: BOARD TERMS
SPONSOR(s): REPRESENTATIVE(s) LYNN BY REQUEST
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) L&C
01/16/13 (H) L&C RPT RECD W/CS AWAIT TRANSMITTAL NXT
02/06/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
FORREST WOLFE, Staff
Representative Bob Lynn
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Representative Bob
Lynn, prime sponsor of HB 62.
PHIL STEYER, Director
Government Relations and Corporate Communications
Chugach Electric Association, Inc. (CEA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 62.
DIANNE BLUMER, Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified as appointed commissioner,
although not yet confirmed, during the overview of the
Department of Labor & Workforce Development (DLWD).
BRYNN KEITH, Acting Deputy Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified during the overview for the
Department of Labor & Workforce Development (DLWD).
GREY MITCHELL, Director
Division of Labor Standards & Safety
Central Office
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified during the overview of the
Department of Labor & Workforce Development (DLWD).
MICHAEL MONAGLE, Director
Division of Workers' Compensation (DWC)
Central Office
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified during the overview of the
Department of Labor & Workforce Development (DLWD).
PAUL DICK, Director
Employment Security Division
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: Testified during the overview of the
Department of Labor & Workforce Development (DLWD).
ACTION NARRATIVE
3:20:31 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:20 p.m. Representatives
Josephson, Herron, Millett, Reinbold, and Olson were present at
the call to order. Representative Saddler arrived as the
meeting was in progress.
HB 62-ELECTRIC/TELEPHONE COOPS: BOARD TERMS
3:20:54 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 62, "An Act relating to the term of office of
directors of telephone or electric cooperatives."
3:21:11 PM
FORREST WOLFE, Staff, Representative Bob Lynn, Alaska State
Legislature, on behalf of Representative Bob Lynn, stated that
HB 62 would extend the length of term for board of directors of
certain electric and telephone cooperatives. The current length
of time for terms is up to three years and the bill would change
it to a four-year term, he said.
3:21:54 PM
PHIL STEYER, Director, Government Relations and Corporate
Communications, Chugach Electric Association, Inc. (CEA), stated
that CEA sought this change to provide additional stability and
also to allow board members to use their expertise and technical
ability to assist the technical organizations. He said the
CEA's board has also reached out to other cooperatives to ensure
support for this change. He related the bill is permissive in
nature and makes a provision to allow for changes in the length
of the board term, but in order for an organization, such as
CEA, to make any change the organization would also need to
change its bylaws. Thus the process is a two-step process that
would require convincing the CEA's membership of the necessity
for a bylaw change. This bill would seek step one, the
statutory change, he said.
3:23:23 PM
CHAIR OLSON related the companion bill to HB 62 will be before
the committee on Monday.
REPRESENTATIVE HERRON asked if there is any known opposition on
HB 62.
MR. STEYER answered no.
3:24:04 PM
REPRESENTATIVE SADDLER asked whether any specific boards of
utility or telephone cooperatives are waiting to make changes.
MR. STEYER said the only board specifically interested in
pursuing the changes is the CEA. The bill was discussed at the
last Alaska Power Association (APA) meeting, which is the
statewide trade association for electric cooperative meeting
staggered terms would allow for some flexibility for elections.
Additionally, a fair amount of discussion was held at the last
CEA manager's meeting about the bill since staggered terms would
allow some flexibility in how elections are held. He
characterized the discussion as philosophical in nature rather
than intent.
3:25:20 PM
CHAIR OLSON reiterated that the companion bill would be heard on
Monday.
3:25:36 PM
The committee took an at-ease from 3:25 p.m. to 3:27 p.m.
^Overview, Department of Labor & Workforce Development
Overview, Department of Labor & Workforce Development
3:27:12 PM
CHAIR OLSON announced that the final order of business would be
an Overview, Department of Labor & Workforce Development.
3:27:15 PM
DIANNE BLUMER, Commissioner, Department of Labor & Workforce
Development (DLWD), introduced some of her staff present at the
hearing, including Greg Cashen, Assistant Commissioner; Paloma
Harbour, Acting Director, Administrative Services; Cheryl Walsh,
Director, of Vocational Rehabilitation; Jeff Selvey, Executive
director, Alaska Workforce Investment Board; [Corine Geldhof,
Director, Division of Business Partnership]; and Fred Esposito,
Director, Division of Alaska's Vocational Institute of
Technology (AVTEC) (via teleconference).
3:28:42 PM
COMMISSIONER BLUMER outlined the DLWD's mission and core
services to provide safe and legal working conditions and to
advance the opportunities of employment [slide 2]. She said the
department is comprised of primarily three components: the
workforce development component, the protect workers component,
and the income replacement component.
3:29:09 PM
COMMISSIONER BLUMER referred to the DLWD's organization chart
[slide 3]. She explained the department's organization chart is
split out by core services, which she identified: oversight,
including the commissioner's office and administrative services;
the workforce development, including business partnership;
employment security including workforce development.
Additionally, she said the workforce development operates the
labor exchange, including employment and training services, such
as Career Ready, Youth First, Foster Youth, Mature Alaskans, and
Rapid Response services. She reported this group also
administers the individual training accounts and all basic
education.
3:30:53 PM
COMMISSIONER BLUMER related the Alaska Workforce Investment
Board (AWIB) provides policy oversight of state and federally
funded job training, the vocational education program, the
career and technical education grant, the oil and gas training
plan, the Alaska cast and crew advancement program, and the
energy section partnership. She stated the AWIB is made up of
business and industry leaders, union officials, and public
officials. She highlighted the Alaska Vocational Technical
Center (AVTEC) operates the adult vocational training center in
Seward, and an allied health campus in Anchorage offering long-
term training and fifteen fields and a wide variety of short-
term training, as well. She reported the Division of Vocational
Rehabilitation has two components. She characterized the
workforce development element as providing assistance to people
with disabilities to obtain and maintain employment. In 2012,
637 individuals exited the program successfully and were
employed for 90 days or longer, which is up from the 2011 figure
of 569, she reported.
COMMISSIONER BLUMER stated the lighter blue sections on the
slide represent the worker components, consisting of the Labor
Standards and Safety Division (LSSD) and Alaska Labor Relations
Agency (ALRA). She related that the LSSD provides enforcement
training and monitoring of laws governing occupational safety
and health, wage and hour, child labor, and safety of certain
mechanical devices and hazardous substances. She also related
that the ALRA agency administers the Public Employment Relations
Act and the labor provisions of the Alaska Railroad Corporation
(ARRC) pertaining to collective bargaining. This agency also
oversees the employment act, including public bargaining for
public employers: the state, municipalities, boroughs,
universities, school districts, and their employees, she said.
She highlighted the green colored areas on the slide pertain to
income replacement for those unable to work and this function
includes the Employment Security division, which assesses and
collects unemployment insurance, and disburses unemployment
benefits. She pointed out the Workers' Compensation Division
administers the Alaska Workers' Compensation Act, the
Fishermen's Fund, and the Second Injury Fund. She described the
workers' compensation function as aiding Alaskans with
employment related injuries and illnesses. Finally, the
disability determination is one other component of the DVR,
which she said she will not discuss today.
3:33:45 PM
COMMISSIONER BLUMER then turned the committee's attention to the
DLWD's statewide services [slide 4]. She pointed out the map
illustrates the 21 job centers - or one stops - three of which
are located in Anchorage. She also pointed out the blue dots
represent the nine vocational rehabilitation centers and the
AVTEC, while the green dots represent the other programs,
including oversight and protect workers' functions.
COMMISSIONER BLUMER, returning to the presentation, highlighted
the state and private partnerships necessary to accomplish the
large volume of services the DOLWD performs [slide 5]. She
stated the department has partnerships with several state
agencies, boards and commissions, and with the private sector to
aid it in its mission. She offered to provide additional
information if the committee would like more detailed
information.
3:35:16 PM
BRYNN KEITH, Acting Deputy Commissioner, Department of Labor &
Workforce Development (DLWD), offered to provide information on
resources required to deliver the services Commissioner Blumer
mentioned.
3:35:55 PM
MS. KEITH reported the FY 2014 budget request is for $194,404.9
million, of which $98,778.8 million is derived from federal
funding, $69,059.4 in general fund funding, and $26,566.7 in
other funding, primarily as receipts from other agencies - some
of which are federal in origin [slide 6]. She referred to the
pie chart and reiterated the commissioner's comment that the
workforce development function is the department's largest focus
area, noting 66 percent of the department's budget - over $127
million - is for workforce development functions. She
highlighted that $53,248.1 million is designated for income
replacement programs, such as unemployment insurance, workers'
compensation, and disability determination functions. The
Protect Workers program at $13,681.3 million represents about
seven percent of the DLWD's budget, she said.
3:36:46 PM
MS. KEITH reiterated the commissioner's focus on workforce
development [slide 7]. She highlighted that numerous ways exist
to address the department's workforce development, but the one
most readily comes to mind is the employment services the
department offers through its job service offices. She listed
the types of services job service provides, including
counseling, adult basic education, and the labor exchange which
connects workers and potential employees. The department also
administers adult basic education for Alaskans. Regrettably,
the department often hears that many Alaskans are not prepared
with the soft skills or foundational skills necessary to meeting
employers' needs; however, the adult basic education helps
bridge that gap.
MS. KEITH said the department must work effectively with
employers to accomplish its mission, so developing and
maintaining business partnerships provides an important key to
these services. She reiterated the commissioner's comments
about the Alaska Workforce Investment Board (AWIB) by
emphasizing the AWIB as a policy board provides oversight for
vocational and job training in Alaska. Much of what the DLWD
does helps provide career and technical educational training to
Alaskans, which it accomplishes via the Alaska Vocational
Technical Center (AVTEC) in Seward, through grant funding for
regional training centers, and through private entities for
training. Additionally, the department's DVR also helps move
individuals back to employment. In response to Representative
Saddler, she said she was unsure of the per student adult
education cost, although she thought it was a small amount. She
suggested that Director Paul Dick should be able to address this
during his presentation today.
3:39:26 PM
MS. KEITH turned to Alaska's dynamic economy as a backdrop for
the department's mission [slide 8]. She informed members that
approximately 80,000 people move in and out of the state of
Alaska. Although the average employment is 330,000, Alaska
hires over 200,000 new workers, which she characterized as part
of the churning in the labor market. She highlighted that
Alaska's job count is about 45,000 higher in July than in
January due to the seasonal economy in Alaska. In fact, Alaska
has the most seasonal economy in the U.S., she reported. That
means the skill sets needed changes daily and also makes the
department's job complex. In response to Representative
Reinbold, she agreed that Alaska has approximately 330,000 jobs,
which would be different from workers - an important distinction
- but the 200,000 figure represents the number of individuals
moving through the labor market. She explained the number of
jobs is a static point in time and represents the count of the
number of jobs that exist at a certain point. In further
response, she agreed the highest number of workers occurs in the
summer due to fishing, construction, and tourism activities.
3:41:44 PM
REPRESENTATIVE REINBOLD asked how many jobs in Alaska are
military jobs.
MS. KEITH answered the department's figures do not cover the
uniformed military, but the department does track civilian
military and military spouses. She offered to provide these
figures to the committee.
3:42:26 PM
MS. KEITH turned to Alaska's skills mismatch, which helps
describe what happens in Alaska's work force [slide 9]. During
2011, Alaska's labor surplus was 7.6 percent annual unemployment
or 28,000 unemployed Alaskans. She explained this figure was
derived from the unemployment figures and is due, in part, to
Alaska's seasonal economy. Additionally, the department also
assesses the labor shortage, which is based on the number of
nonresidents employed in Alaska. In fact, in 2011 over 20
percent of Alaska's workers, or 83,488 individuals, were
nonresidents. She acknowledged that some nonresidents work as
seasonal workers; however, some also work year round in Alaska.
3:43:46 PM
REPRESENTATIVE REINBOLD asked for an explanation of the 20
percent labor shortage figures. She asked whether Alaska is not
training individuals to take the jobs or if the Lower 48 workers
are more highly trained.
MS. KEITH responded that much of the nonresident hire is related
to seafood processing, as well as tourism-related jobs, but
nonresidents also hold some year round high-wage jobs. She said
the department has determined the nonresident high wage job hire
is partially due to the skill set disadvantages. She concluded
this illustrates a need for training and the state needs to
assess if it should provide more training.
3:44:51 PM
CHAIR OLSON asked whether Alaska is losing a portion of its
skilled labor [to oil industry related jobs] in North Dakota
since numerous Alaska-based companies are working in North
Dakota.
MS. KEITH agreed some skilled craft have moved to the Lower 48
to take jobs. She said the department doesn't have a good way
to track that information, although it would like to do so.
CHAIR OLSON said he was unsure of how that could be tracked,
except anecdotally.
3:45:30 PM
MS. KEITH, returning to the presentation, turned to Alaska's
dynamic labor market [slide 10]. She highlighted that a
prepared workforce requires career awareness, effective,
training opportunities, and employer-worker connections [slide
10].
3:46:21 PM
MS. KEITH next turned to the final slide on workforce
development related to the training system at a glance [slide
11]. She explained that activities are listed in the lower-left
on the slide. She characterized the DLWD's partners in its
training system as being broad and very deep. She said, "In
general, the outcome data show that although there is work to be
done, we're doing a pretty decent job of actually getting
employees connected with employers."
3:46:49 PM
MS. KEITH turned to Alaska's safety concerns and asked to shift
to another core service provided by the DLWD, which is the
Protect Workers function [slide 12]. The two charts listing
fatalities demonstrates the reason the department is interested
in worker safety. In fact, in 2011, Alaska had 38 fatalities,
she reported. She directed attention to the first chart, which
shows the percentage of total fatalities in Alaska by type of
industry, while the second chart shows the type of injuries per
100 workers. She said Alaska is different from other states due
to its economy. The industries that define Alaska's economy:
fishing, mining, construction, air transportation, construction,
are high-hazard industries and occupations are high-risk
occupations. Still, Alaska has seen reductions in its
fatalities and the department continues to chip away at the
figures, she stated. While the figures are much larger than
desired, fatalities often involve multiple people, such as for
an airplane crash or when a fishing vessel capsizes. In
conclusion, she said the bar is moving in the right direction,
in part, due to the department's efforts to work with and
educate employers and workers to ensure safe workplaces.
3:48:53 PM
REPRESENTATIVE REINBOLD expressed alarm over the high percentage
- 7.7 percent - of workplace injuries and illnesses that occurs
in manufacturing. She asked for clarification on the types of
manufacturing occurs in Alaska.
MS. KEITH answered that manufacturing in Alaska is almost
exclusively seafood related and typically would consist of cuts
and abrasions. In further response, she remarked that seafood
manufacturing is not an obvious type of manufacturing.
CHAIR OLSON remarked that the seafood industry leads fatalities
especially in commercial fishing.
MS. KEITH agreed. She clarified that fish harvesting fatalities
are tracked by the Department of Natural Resources (DNR) whereas
fish processor fatalities falls under the DLWD.
3:50:39 PM
GREY MITCHELL, Director, Division of Labor Standards & Safety
(DLSS), Central Office, Department of Labor & Workforce
Development (DLWD), identified that the DLSS protects workers
through four main components [slide 13]. He explained that the
wage and hour component handles the wage and child labor law
enforcement; the occupational and health component handles
workplace safety consultation and enforcement, as does the
Alaska Safety Advisory Council. Finally, the mechanical
inspection function handles the mechanical device inspection,
which includes boilers, elevators, electrical work, and
plumbing. He pointed out the mechanical device inspection is
unique since it includes both safety and worker safety aspects.
3:52:11 PM
MR. MITCHELL offered to highlight the performance in each of the
categories. He referred to LSSD's funding breakdown by
component [slide 14]. He pointed out the pie chart depicting
the funding breakdown by component. He highlighted the
occupational safety and health as the largest component,
including the occupational safety and health component as the
major component totaling 52.3 percent of the overall funding.
Second would be the mechanical inspection component, followed by
the wage and hour component, and lastly, a small percentage, 1.1
percent, provided by the Safety Advisory Council. He directed
attention to the bottom of the slide, which lists the number of
current positions. He reported that most positions are field
inspectors or investigators who spend substantial time outside
their offices performing tasks providing services to Alaskans.
3:53:05 PM
MR. MITCHELL turned to the Wage and Hour Administration (WHA)
[slide 15]. He highlighted the division's performance for FY
2012. He related the WHA conducted 14,870 employer briefings.
He described this activity as outreach to assist employers in
understanding the intricacies of the wage and hour laws. He
reported that the department has found most employers want to do
the right thing. The WHA attributes the reduction in the
numbers of wage claims filed over the last ten years to the
employer briefings. Last year, 359 wage claims were resolved
compared to the nearly 600 claims ten years ago. He reported
the department collected $600,000 in unpaid wages on behalf of
Alaska's workers who filed wage claims. The WHA approved 7,857
and denied 96 youth work permits for workers under the ages of
17. He highlighted that the denials typically happen when
employers don't recognize the hazardous job activities. He
emphasized that the work permit denials not only protect youth,
but also help employers avoid violating the stricter federal
law, which also includes a penalty. He reported the WHA
conducted 584 construction sites related to Alaska resident hire
and prevailing wage worksite inspection enforcements. Last
year, the department collected $157,000 in prevailing wages for
Alaska's workers and issued approximately $70,000 in resident
hire penalties for Alaska hire violations. He estimated the
WHA's field work covers approximately 20 percent of public
construction projects funded with state dollars.
3:56:02 PM
REPRESENTATIVE REINBOLD asked for clarification on the types of
violations related to the $70,000 in for Alaska resident hire
violations on public construction projects.
MR. MITCHELL explained that contractors can be penalized when
they fail to meet a 90 percent Alaska employment preference on
public construction projects. He explained these contractors
can be penalized an amount equal to the amount of wages paid to
the nonresident. The penalty amount does not equal the amount
of the violation since in some instances settlement agreements
further provide funding for training programs so Alaskans have
future opportunities. Essentially, the $70,000 represents the
amount of wages paid to nonresidents with some proviso on public
construction projects. In further response, he said the total
number of violations ranged from 20-30 violations.
3:57:55 PM
REPRESENTATIVE REINBOLD asked whether private construction
companies were fined since they did not meet the 90 percent
Alaska hire requirement even though skilled workers weren't
available.
MR. MITCHELL agreed. He elaborated that Alaska has a waiver
process employers can use in cases in which the employer can
demonstrate the company could not find qualified Alaska workers.
In instances in which contractors fail to go through the waiver
process, the department would assess a penalty; however, the
department often works on settlement agreements in instances in
which the contractor can provide solid proof that the work was
specialized and the contractor could not find qualified Alaska
workers. He concluded that the department works to reduce or
eliminate penalties in instances in which a strong argument
could be made for nonresident hire. In response to
Representative Reinbold, he said the cases are not posted on the
department's website. He identified the Alaska hire penalty
statute: AS 36.10.150.
CHAIR OLSON asked whether it would be a deterrent to post the
violations.
MR. MITCHELL agreed it could be for contractors regularly doing
business in Alaska since these contractors would not want their
companies listed.
4:00:27 PM
REPRESENTATIVE JOSEPHSON asked for clarification on local hire
preferences. He understood the local hire preference would only
apply on public projects and not to private projects.
MR. MITCHELL agreed that the statutes apply to public projects
and exclusively to projects funded with state funding and not to
projects funded with federal funding.
REPRESENTATIVE JOSEPHSON asked whether it would be
unconstitutional under the privileges and immunities clause for
the state require Wal-Mart to hire residents of Anchorage or
Juneau before the corporation hires someone from Seattle.
MR. MITCHELL answered that the question is a legal question and
best answered by the Department of Law (DOL). He agreed
constitutional issues surround the resident hire requirements.
CHAIR OLSON remarked the legislature has considered this
numerous times, but none have held up with respect to the
aforementioned question.
4:01:54 PM
MR. MITCHELL turned to mechanical inspections [slide 16]. He
reported this DLSS's section pertains to inspections on boilers,
elevators escalators, trams, electrical, lifts, electrical, and
plumbing work. He stated this section is tasked to identify and
enforce code violations that represent hazards to life and
property. In FY 2012, the mechanical inspection section
conducted 5,760 inspections, a 16 percent increase in the number
of boiler inspections, but the backlog has increased by 25
percent. Although the number seems ominous, over the long term
the number has steadily reduced since ten years ago more than
7,200 units were overdue for inspections. In part, the FY 2012
backlog was due in part, to 529 new boiler units, with mandatory
inspections required in the same year as installation. He
reported a total 30,870 units exist and one to three percent is
the typical increase in a single year. In conclusion, he
reported that this section conducted approximately 90 percent of
the boiler inspections on a timely basis with a two-year
inspection cycle.
4:04:05 PM
REPRESENTATIVE REINBOLD asked about elevator inspections. She
asked whether any difference exists between a certification and
an inspection.
MR. MITCHELL answered that there is requirement for
certification after the inspection. That means any code
violations identified during the inspection have been corrected.
He pointed out the certificate posted in an elevator means it
has been inspected and any code violations have been corrected.
In response to another question, he said he was unsure of the
document, but typically a small certificate of inspection or a
notice is posted that a person can obtain a copy of the
certificate of inspection from the manager. In further
response, he answered that the certificate means the elevator
has been inspected.
CHAIR OLSON recalled the governor used to sign the inspection
forms.
MR. MITCHELL agreed. He reported elevator inspections were
increased by five percent. In FY 2012, this section conducted
562 inspections, with 44 new units added for a total of 1,100
units subject to inspections. He reported about 99 percent of
the elevator inspections are conducted timely. He further
reported only 61 of 1,100 units are overdue for inspection,
primarily due to travel issues. He compared this to 2008, in
which 306 elevator inspections were overdue. He stated this
section has maintained its electrical and plumbing code
inspections, conducting approximately 1,700 inspections per year
over the past two years. The mechanical inspection section also
assists the Department of Commerce, Community & Economic
Development (DCCED) in conducting site inspections. The section
assessed 80 contractors $1,000 each for a total of $80,000 in
contractor licensing civil fines for those contractors found in
violation of the law. He pointed out the division's goal is
compliance and this section also issued 227 cease and desist
orders issued last year.
4:07:49 PM
MR. MITCHELL turned to the Alaska occupational safety and health
component [slide 18]. This component consists of two primary
sections: consultation and training section and the enforcement
section. He offered his belief that the consultation and
enforcement section produces significant results. Currently the
youth safety coordinator is in Kodiak making presentations to
high school students. Over the past four years, the division
provided training to 16,000 students in 57 schools in Alaska.
Many people don't know about workplace safety and health and
what they often learn is often unstated and sends the negative
message that safety isn't important. He offered that this
section works to change attitudes about occupational safety and
health at an early age. He predicted this program will produce
results over time. In conclusion, he reported that from 2008 to
2011 workers' compensation incidents dropped from 169 to 24.
MR. MITCHELL reported that the division has a partnership with
Trident Seafoods. In the past five years, this section
inspected 10 of 11 of Trident's processing plants, with six of
those plants experienced accident reduction rates of percent 50
percent. He stated the division just renewed this partnership
and its new goal is to develop a 10-hour training course for
seafood workers, similar to the one used for construction
workers. While the course is not mandatory, industry can make
certain that workers are properly aware of hazards. This type
of training could help numerous transient workers who don't
speak English as their first language. He concluded that over
the past five years, from 2007 to 2012, Alaska's seafood
processing recordable injury rate was reduced from 11.7 to 5.4
percent. In response to a question by Chair Olson, he answered
that the focus is on all aspects of seafood operation, not just
on fish, forklifts or other devices.
4:11:21 PM
MR. MITCHELL said in 2012, the department conducted 706 work
site inspections, which represents a seven percent increase from
the prior year. He assessed that 60 of the department's effort
results in consultation while 40 percent is enforcement. In the
past year, the division has experienced a five percent reduction
in the loss time rate. He reported a 40 percent drop in the
total rate of loss time rates. He compared the current rate of
1.73 incidents per 100 employees for all industries to a rate of
3.24 incidents per 100 workers ten years ago.
MR. MITCHELL next turned to the fatalities and loss time rate,
which is at 38 [slide 18]. He said the overall fatality rate
has been more constant, but Alaska's jurisdiction has a much
lower number of fatalities than all jurisdictions for workplace
fatalities. He said that is somewhat confusing; however any of
fatalities that occur in the air are covered under federal
aviation and mining fatalities are covered through mining
safety.
4:13:57 PM
MR. MITCHELL then turned to the Alaska Safety Advisory Council
(ASAC) [slide 19]. He describe this component as the smallest
one, without any paid staff, comprised of 12 individuals
appointed by the governor and one commissioner designee - who
can break any tie votes. In 2012, the Governor's Safety and
Health Conference provided three days of focused safety training
to approximately 350 participants and 50 vendors. Each year, as
part of the ASAC's outreach efforts, it sponsors students from
the Anchorage King Career Center and this year approximately 60
sponsored students will participate at the Governor's Safety and
Health Conference. He reported that this program is completely
self-supporting, deriving its revenue from fees and
sponsorships. He offered his belief that some of the top
companies in Alaska are sponsoring the event.
4:15:24 PM
REPRESENTATIVE HERRON asked whether it is strongly encouraged
that people attend the conference.
MR. MITCHELL answered that the division provides significant
outreach to employers, in particular, during enforcement
informal conferences. He explained that efforts are made to
direct an employer who is having trouble - as identified by
onsite violations - to accept training voluntarily. He
emphasized that the enforcement program has been effective in
doing so, since employers facing penalties are often willing to
agree to training or to participate in a more extensive
evaluation consultation. He reiterated the division has found
these efforts to be very effective. He concluded his remarks by
announcing this year's conference will be held on March 18-20 at
the Egan Center in Anchorage. Although the timing might not be
good for legislators, he welcomed members to attend and observe
the exhibits or take in a keynote address.
4:17:09 PM
MICHAEL MONAGLE, Director, Division of Workers' Compensation
(DWC), Central Office, Department of Labor & Workforce
Development (DLWD), began his presentation by discussing the
activities of the Division of Workers' Compensation (DWC). He
stated that every employer with one or more employees must carry
workers' compensation insurance or be approved by the state to
self-insure their workers' compensation liability. In 2011, the
division wrote $234.5 million in workers' compensation
insurance, he reported. The division received proof of
insurance from 18,000 employers covering 230,000 employees. The
division approved 29 self-insured employers covering 74,000
employees. Under the Workers' Compensation Act injured workers
are entitled to receive benefits, medical treatment, indemnity
benefits - which is a wage continuation to replace lost wages -
reemployment benefits or in the case of a fatality - death
benefits to the surviving spouse or children.
MR. MONAGLE reported that in 2011, the division received 21,200
reports of injury, of which 14,300 were no time loss claims, and
6,700 were time loss claims. He also reported that in 2011
insurance companies or self-insured employers paid out $260.7
million in workers' compensation benefits, of which $60.8
million for indemnity benefits, $164 million for medical
benefits: $14 million for reemployment benefits, and an
additional $15 million for legal costs. The majority of injured
workers receive their benefits seamlessly; however six percent
result in disputes, which are handled by the adjudication
section. In FY 2012, the adjudication section processed 1,200
claims for benefits for injured workers, held 2,400 pre-
hearings, and 340 hearings [slide 20].
MR. MONAGLE said the workers' compensation division administers
three funds that provide wage replacement: the Benefits
Guaranty Fund, the Second Injury Fund, and the Fishermen's Fund
[slide 21]. In response to Representative Saddler, Mr. Monagle
confirmed that workers' compensation includes death benefits.
In further response to Representative Saddler, Mr. Monagle
responded that an employer can offset benefits to the injured
worker and his or her dependents if the dependents are receiving
a pension, social security benefit, or social security
disability benefit.
REPRESENTATIVE SADDLER asked whether the reduction is a one-to-
one reduction.
MR. MONAGLE answered the reduction is based on a percentage of
benefits the employee is entitled to receive, but it is
basically a dollar-for-dollar reduction.
4:21:35 PM
REPRESENTATIVE HERRON asked whether a threshold that must be
met. He acknowledged that if a worker loses a finger it would
require a thorough investigation; however, he wondered if a
minor slip or fall was covered in the aforementioned statistics.
MR. MONAGLE answered yes; the law has a presumption of injury.
For example, if an injured worker tells the employer, "I hurt my
back. I slipped and received a strain," the presumption would
be that is in fact what happened. The employer can rebut that
presumption through substantial evidence, which is typically
done when the employer requires a doctor's visit. He explained
that the employee would see a doctor and the doctor would opine
the type of injury could not have happened as the employee
described it. Perhaps other coworkers would advise the employer
they observed the employee sustain the injury at the ball field
the previous evening.
4:23:00 PM
REPRESENTATIVE HERRON asked for the percentage of investigation
determinations for slips and falls. He speculated that serious
injuries would comprise a much smaller percentage of injuries.
MR. MONAGLE answered that the division does not have statistical
information on soft tissue strains. He advised that the
division produces an annual report, which does break down injury
by type, such as back, leg, or knee injuries, but the report
does not indicate how many soft tissue strains employees
sustained.
REPRESENTATIVE HERRON understood slips and falls represent the
biggest loss control for all businesses.
MR. MONAGLE responded that the most common types of injuries are
back strain, shoulder strains, finger cuts and abrasions to the
hand. He did not believe the division's report captures the
nature of accidents.
4:24:17 PM
REPRESENTATIVE JOSEPHSON surmised an employer challenging a
worker's injury would do so to keep the premiums low. He asked
whether that would be the only incentive.
MR. MONAGLE answered that is correct. He elaborated that an
employer's premium is factored by classification. For example,
the office clerical rate costs about $1 per hundred of payroll;
however, depending on the type of construction, the premium
rates could be as high as $25-30 per hundred of payroll. He
related the classification would also be adjusted by the
employer's actual experience. For example, an employer of one
size might have 10 injuries per year; however, if the company
sustained 20 injuries per year, the company would be outside the
norm. Then a modification rate would be assessed, which would
inflate the premium, he said. Conversely if the average is 10
injuries and the company has 5 injuries, the modification rate
would lower the rate. Thus, the modification rate could either
raise or lower the employer's rate. He acknowledged that it
would be in the employer's interest to reduce workplace injuries
since it would lower the employer's premium. As Director
Mitchell stated earlier workplace safety plays an important
role, he said. He indicated the department has seen the injury
frequency rate - during the pipeline timeframe - of 40,000
workplace injuries decrease to the 21,200 workplace injuries
mentioned earlier. He pointed out that employment in Alaska has
risen, but the overall number of injuries has been reduced.
4:26:10 PM
REPRESENTATIVE JOSEPHSON asked whether an employer who learns of
an accident must file a report.
MR. MONAGLE answered that is correct. He explained that an
employee has 30 days to report the injury; however, if the
employee does not report the injury the presumption can shift to
say the injury was not related. Still, employees have two years
from the date of injury to make the claim. Once the workers'
compensation claim in reported to the employer, the employer
then has 10 days to report it to the state and to the insurance
company, he said.
REPRESENTATIVE JOSEPHSON said if the employer doesn't report he
assumed the employee can make a claim.
MR. MONAGLE agreed. He said the employee could make a claim and
typically that is how claims happen. For example, an employee
reports an injury to the employer and the employer fails to
report it to the insurance or the state. In fact, in those
instances the reason the injury isn't reported is likely because
the employer probably doesn't have insurance. At that point,
the employee would contact the state; the state will confirm no
report of injury has been filed; and the state will advise the
injured worker to file a claim for benefits. In summary, that
represents how the injured worker initiates the dispute or the
adjudication process.
4:28:04 PM
MR. MONAGLE next turned to workers' compensation [slide 22]. In
2005, the legislature created a fraud unit, which the division
refers to as special investigation unit. He pointed out the
unit's work involves more than just fraud investigations.
Primarily, the unit responds to complaints the division receives
on uninsured employers. In FY 12, the unit invested 387
employers for failure to carry workers' compensation insurance,
and of those, 120 employer were penalized for illegally
operating without workers' compensation insurance. The
aforementioned employers were subject to $862,000 in penalties,
he said.
CHAIR OLSON remarked some employers have advised that the
penalties are onerous for employers who let their workers'
compensation insurance lapse.
MR. MONAGLE reported the Alaska legislature enacted a potential
penalty that, at the time, was the highest civil penalty in the
nation. He offered his belief that Alaska's penalty is still
the highest at $1,000 per uninsured employee, per day. Since
2005, the department has adopted regulations to put in place
consistency in how the penalties are applied. He reported the
division has had civil penalties well in excess of $1 million in
some instances against egregious employers with multiple lapses
in insurance involving unpaid uninsured workers' injuries.
However, the difficulty lies in collecting the judgment, he
said. In addition to the failure to insure workers, the special
investigation unit investigates fraud. He detailed that in the
event an insurance company or an employer believes the worker is
obtaining benefits fraudulently, the division can investigate
the matter either by pursuing civil penalties through the
Workers' Compensation Board (WCB) or the agency can pursue the
case criminally through the Department of Law (DOL), Office of
Special Prosecutions and Appeals (OSPA). Since the threshold
for criminal penalty is quite high, as is the workload, the
division tends to pursue these matters using the civil process,
he said. Since, 2005 the division has received one actual
charge by OSPA, he added.
4:31:16 PM
MR. MONAGLE related that the Workers' Compensation Appeals
Commission is a component within the DWC [slide 23]. He
provided the history, such that prior to 2005, a decision of the
Workers' Compensation Board was appealed to the regional
Superior Court, but the decisions were not binding on the board.
In 2005, the Workers' Compensation Appeals Commission (WCAC) was
created, which is the appellate body. Thus if a person were to
appeal a decision of the Workers' Compensation Board the
commission's decision is binding; however, an employer can
appeal a decision by the WCAC to the Alaska Supreme Court.
4:32:19 PM
REPRESENTATIVE JOSEPHSON asked whether the system works since
his sources say the system doesn't work. He said his sources
indicate the WCAC tends to side with the employer and the appeal
becomes the conduit to the ASC.
MR. MONAGLE answered, anecdotally, it has worked. He offered
his belief that the WCAC provides a more consistent body of law.
One issue is that workers' compensation cases is such a narrow
body of law so frequently the Alaska Superior Court simply did
not have experience with that body of law. He characterized the
Alaska Superior Court's decisions as being all over the board.
Since the decisions were not binding, the WCB could choose to
ignore the court's ruling. He opined that the WCAC, with only
two chairs, thus far, has done a much better job in providing
consistent decisions. He was unsure how many cases have gone to
the ASC on appeal than with the Alaska Superior Court system's
approach. He offered to research this and provide it to the
committee.
4:34:02 PM
REPRESENTATIVE JOSEPHSON said although he does not have much
knowledge about this part of the law, the Alaska Superior
Court's judges have general jurisdiction over almost everything
in the statutes so daily the court is required to delve in an
area not familiar to them. He questioned how unique the
workers' compensation law would be, noting it is usually divided
between civil and criminal cases. He acknowledged the judges,
just as legislators, must be nimble.
MR. MONAGLE further explained that the WCAC also has
representatives from labor and industry so it is not just the
chair deciding the appeals. Thus, members on the panel also
decide the case. He acknowledged that a number of times the
panelists have overridden the chair. He recalled part of the
requirements of the panel is that the members must be
experienced in workers' compensation with at least three years
serving on the WCB as a panelist prior to joining the WCAC. He
characterized the WCAC as very specialized dealing strictly with
workers' compensation matters, which gives the panel a certain
amount of subject matter expertise.
CHAIR OLSON related the DCCED has a breakout of the WCAC and the
process used. He characterized it as a good tool.
4:36:23 PM
REPRESENTATIVE SADDLER asked whether it is difficult to get
people to serve on the WCAC.
MR. MONAGLE responded it is very difficult to locate quality
people to serve on the WCB and the WCAC. He related the WCB
members must commit to a minimum of 12 hours a month as a
panelist, plus attend three board meetings typically spanning
two to three days each.
4:37:14 PM
REPRESENTATIVE SADDLER asked for the amount of compensation for
WCB members.
MR. MONAGLE answered the WCB members receive a stipend for per
diem and travel while the WCAC members receive about $400 per
day including prep time, he said. He reported the WCAC has a
statutory requirement to produce an annual report, which is
posted online and includes statistics.
4:37:58 PM
MR. MONAGLE turned to discuss the three funds, beginning with
the Benefits Guaranty Fund [slide 24]. Prior to 2005, injured
workers had very little recourse if their uninsured employer
chose not to pay benefits. The injured workers could go to
court, but that process is a lengthy and expensive one. The
injured workers could also file claims with the WCB, and the
board could order the employers to pay; however, the employers
could simply choose to ignore the orders. In 2005, the
legislature reformed workers' compensation and the Benefits
Guaranty Fund (BGF) was established. He reported the BGF is
funded from civil penalties assessed against uninsured
employers. To access the BGF, once a worker is injured and the
uninsured employer fails to pay benefits, the employee would
file a claim with the BGF and receive benefits. The fund is
subrogated and works to recover from the employer any funds it
has paid to the injured worker.
MR. MONAGLE reported that in FY 12, the BGF had 29 new claims
filed, and paid $329.1 thousand in benefits, with the fund
balance currently at $1.5 million. He acknowledged that a
single substantial claim could easily wipe out $1 million in the
fund. The statute allows the fund to be depleted, and if that
happened the division would track claims not paid, and pay
benefits once it can; however that has not yet happened. The
division hopes the fund will not be depleted, he said.
Subsequently, the legislature funded a collections agent and
thus far, the division has assessed $15 million in civil
penalties against employers and collected about $3 million to
date. In fact, the division has collected civil penalty dollars
at twice the rate that it did last year. In all probability,
the division expects collections will continue to grow, which
would add to the $1.5 million in the fund.
4:40:41 PM
MR. MONAGLE turned to the Second Injury Fund (SIF) [slide 24].
He explained the SIF is a fund that predates statehood. At one
point, all states had an SIF, whose purpose is to pay an
employer who hires someone with a disability or who retains a
disabled person. In FY 12, the SIF had 12 new claims and paid
out $3.2 million in benefits to employers on behalf of 95
claimants. He reported the fund has a year-end fund balance of
$5.2 million.
4:41:33 PM
REPRESENTATIVE SADDLER asked for actual loss. He asked whether
the SIF would protect the employer if the injured worker is
injured again.
MR. MONAGLE responded that to be reimbursed from the fund the
employer must establish the employer was aware of the employee's
preexisting qualifying condition, such as heart disease,
diabetes, or a ruptured disc. Typically, the employer would
establish this through a post-hire questionnaire, he reported.
He related the statute refers to the threshold for the combined
effects of the preexisting condition injury and subsequent
injury in which the recovery is prolonged. Again, this is
typically determined by a medical evaluation, he said. Thus,
when an employer hires a person with a ruptured disc and the
employee subsequently injures his/her back - and the threshold
is met - the employer can obtain reimbursement from the SIF for
indemnity benefits only, but not for medical costs, or re-
employment costs. However, the employer can request wage
continuation costs being paid to the injured worker, he said.
4:43:11 PM
REPRESENTATIVE JOSEPHSON asked whether the state adequately
incentivizes employers to take on injured workers, which he
assumed would be considered good public policy.
MR. MONAGLE responded that nearly half the states have sunsetted
their SIFs due to the advent of the Americans with Disabilities
Act (ADA). Incidentally, employers cannot refuse to hire
someone or retain someone with a known disability. He said that
all 50 states provide economic incentives these types of funds
provide; however, the SIFs have been replaced by the federal ADA
law, as amended. Thus, numerous states have been in the process
of sunsetting their SIFs so from this point forward no new
claims can be made; instead states will pay off the existing
claims, but will use the ADA for any new claims.
4:44:13 PM
REPRESENTATIVE REINBOLD highlighted her constituents' concerns,
who indicate that workers' compensation [rates are] killing
their businesses. She reiterated that business owners in her
district have expressed concern about the high cost of workers'
compensation insurance. Although she understood the workers'
compensation costs have been reduced beginning in January -
although she was unsure of the amount - many small businesses
remain concerned that they need to meet the threshold to carry
workers' compensation insurance - she was unsure whether the
threshold was two or three employees. Thus, these businesses
have decided not to hire people and have limited their employees
to perhaps one or two other family members. She understood
Alaska is one of the worst places in the nation [for workers'
compensation rates]. She expressed her interest in improving
the business climate in Alaska.
MR. MONAGLE acknowledged Alaska has the unfortunate distinction
of being number one in the U.S. for the highest workers'
compensation premium rates. He reported that Oregon conducts a
biennial survey that is considered the gold standard. Since
2006, Alaska has been rated either number one or number two,
trading this ranking with Montana. As a matter of fact, he
reported the threshold is actually one, explaining that an
employer with one or more employees must carry workers'
compensation insurance with a few exceptions, such as part-time
babysitters, real estate agents, and taxi drivers. Further,
Alaska does not exempt family members, although he acknowledged
some states have carve-outs to exempt family members. He
cautioned that small employers who do not carry workers'
compensation insurance are rolling the dice that the employee
will be injured and significant liability exists that the
injured employee will litigate due to a substantial injury. He
recalled instances of Benefit Guarantee Fund cases, in which
employers without workers' compensation insurance sustained
injured workers. While initially, an employer would be willing
to do the right thing and cover the employee's medical expenses;
once the bills reach $10,000 - $20,000 the employer cannot
absorb the costs any longer.
MR. MONAGLE said the department has been holding ongoing
discussions to find ways to improve the climate; however, the
elephant in the room for high workers' compensation rates is
medical costs. For example, he reported $.59 of every dollar
paid on claims nationwide is medical; however, in Alaska that
cost is $.76 per dollar. Additionally, the average nationwide
cost for medical treatment on an indemnity claim is $23,000,
whereas the cost in Alaska is $48,000. In conclusion, medical
costs for health care in Alaska represent the biggest cost
driver for workers' compensation premiums. While Alaska can
tweak the workers' compensation insurance somewhat, he predicted
it is unlikely premium rates will drop until medical treatment
costs are reduced.
4:48:51 PM
REPRESENTATIVE JOSEPHSON acknowledged Mr. Monagle has really
answered the question since it is really a health insurance
driver. He understood that if employers with fewer than three
employees were to opt out of workers' compensation insurance, it
would result in employees having the option to sue their
employers.
MR. MONAGLE agreed to the social bargain workers' compensation
provides, which represents a tradeoff. Employees who got hurt
in the 19th and 20th century sued their employers. A hundred
years ago, employers agreed to pay injured workers through
workers' compensation insurance and, in turn, workers gave up
the right to sue their employers.
CHAIR OLSON reiterated that employees can't sue for liability
claims but could receive indemnity and the medical costs.
MR. MONAGLE acknowledged that the system is a no fault system.
In the event the employee is goofing off at the time the
employee is injured, the employer still must pay, even though
the employee could be terminated for violating a safety rule.
Conversely, if the employer violates a safety code, which
subsequently results in an employee injury, the employer must
pay [and the employee can't sue].
4:50:28 PM
REPRESENTATIVE REINBOLD related a scenario in which an employer,
of 100 employees, with a good safety record still must pay
astronomical workers' compensation premiums. She asked whether
any incentive or help is available for such businesses.
MR. MONAGLE answered that as previously mentioned insurance
companies can reduce premium rates for employers who have a low
injury rate through the modification (mod) system. He pointed
out that employers who do not receive the modification (mod)
rate or believe their rates are too high can seek recourse
through Department of Commerce, Community & Economic Development
DCCED's, Division of insurance (DOI). The agency has a
regulatory body that will review the case, he said. Further,
Mr. Mitchell has been holding discussions with the DOI on
premium reductions. He explained that insurance companies have
the ability to reduce premiums for employers who use workplace
safety programs. Thus, Mr. Mitchell has been working with
insurance companies in an effort to obtain discounts for
policyholders who use the workplace safety programs.
4:52:20 PM
MR. MONAGLE next turned to the Fishermen's Fund [slide 25]. He
explained that the Fishermen's Fund program predates statehood.
This unique program provides medical benefits to commercial
fishermen who suffer occupational injuries or illnesses due to
commercial fishing activities. To qualify, the person must be
commercial fisherman permit holder or crewmember, he said. He
pointed out commercial fishermen are exempt from benefits under
the Workers' Compensation Act. The Fishermen's Fund can pay
benefits up to $10,000; however fishermen can request additional
benefits by submitting a claim to the Fishermen's Advisory
Council. The council has the authority to pay any amount for
substantial injuries. For example, some claims have been in
excess of $200,000 for substantial injuries. In FY 12, the
Fishermen's Fund had 670 claims and paid $866,000 in benefits,
with a year-end balance of $11.6 million. In response to a
comment, he agreed the fund is in good shape. While some people
were concerned when the legislature increased the benefits from
$2,500 - established at statehood - to $10,000 several years
ago, the division has not seen any negative impact on the fund.
CHAIR OLSON understood additional coverage for seamen is
available through an indemnity insurance policy.
MR. MONAGLE interjected that the Fishermen's Fund is not an
exclusive remedy. He said crewmembers can still can file a
claim under the [Merchant Marine Act of 1920 also known as the]
Jones Act against the vessel owner. In fact, most vessel owners
insurance against that by carrying a protection indemnity
insurance policy, he said.
4:54:48 PM
PAUL DICK, Director, Employment Security Division (ESD),
Department of Labor & Workforce Development (DLWD), stated that
he would focus on unemployment insurance (UI) under income
replacement [slide 26]. He asked to briefly touch on the adult
basic education (ABE) program, which provides instruction to
adult learners without a high school diploma or general
educational development (GED). He reported the total budget for
the ABE at $3.2 million, of which $2.1 million represents
general fund monies with the remaining $1 million funded from
federal funds. He pointed out the general fund portion is
primarily directed at the GED program. Last year, 1,500 GED's
were issued. Additionally, the English as a second language
program is part of the ABE, which is designed to help people
obtain basic skills necessary for employment.
MR. DICK turned to the pie chart to Employment and Training
Services (ETS), or basically the 21 job centers located from
Barrow to Ketchikan, although several other programs are
administered through ETS. Last year, approximately 255,000
people were served at job centers, with 93,000 or 40 percent
served in Anchorage at one of its three centers - including at
the job center in Muldoon and the King Career Center.
Additionally, the ESD maintains the ALECSYS system, which is an
online labor exchange people use to connect to jobs. In
addition to providing job information, the system offers labor
market information and job center staff helps them navigate the
system. He indicated 1.7 million kids accessed the system last
year so the system is widely used. Additionally, all
unemployment insurance beneficiaries are required to post their
resume on the ALECSYS prior to receiving unemployment insurance
benefits. In response to a question, Mr. Dick answered that the
division issued 1,500 GED diplomas.
4:58:16 PM
CHAIR OLSON remarked that the ETS division has done a wonderful
job. He reported that his district lost 350 jobs when Agrium,
Inc. closed its plant on the Kenai Peninsula. He reported the
division opened an office within a week or ten days to retrain
and to relocate people to take new jobs.
MR. DICK acknowledged the division has a rapid response team,
which is a program help laid off employees and employers. The
program provides assistance to help employees find re-
employment. Finally, the employment training services also
provides training for people who need to get reskilled or
improve their skills to get better jobs or obtain a sustainable
wage.
4:59:45 PM
MR. DICK turned to the unemployment insurance (UI) program
[slide 27]. He reported the UI component provides two major
functions. First, the UI component collects taxes from
employers, which is calculated annually, and is collected
quarterly. Last year, the UI component collected $173 million,
he said. Alaska is one of three states in which the employee
pays a portion of the tax at a 73/23 employer/employee ratio.
He reported that the division designates part of the employee
taxes to training programs through the state training and
employment program (STEP), which is funded from the general
fund. Additionally, the division assists employees by using a
portion of the employees' taxes for the Technical Vocational
Education Program (TVEP). He said the division is very proud of
timeliness of UI payment and benefits. The state ranks very
high in the nation and this month, the appeals section was rated
number one in the U.S. for timeliness in appeals.
CHAIR OLSON remarked this is a good number one.
MR. DICK reported that the UI division is in the top ten, but
has consistently ranked in the top three in the U.S.
5:01:50 PM
REPRESENTATIVE REINBOLD congratulated Mr. Dick on the successes.
She pointed to the figures on slide 27 and related that in FY
12, $146,231.9 million was paid by the state. She asked how
many people received unemployment insurance benefits in Alaska.
MR. DICK answered that 32,000 people currently collect
unemployment insurance benefits, with approximately 26,000
receiving state benefits from the aforementioned tax collected,
with the remaining portion of unemployment insurance benefits
paid from federal funding, including from the extended
unemployment compensation program in which Alaska participates.
Thus, approximately 6,500 employees currently receive extended
benefits. He recalled that last year the state paid 56,000
people. He characterized the UI benefits as being a constant
churn of employees in and out of the programs.
5:03:06 PM
REPRESENTATIVE REINBOLD asked whether Alaska falls within the
national norm.
MR. DICK answered that Alaska's rate of 6.8 percent ranks 18th
for unemployment insurance rate. He reported North Dakota's
rate is 3.2 percent, but other states also trail Alaska. He
also reported the UI trust fund is solvent at $269 million,
which is not at the high-water mark of $350 million. Since the
great recession of 2009, the division has seen overall
decrements in the fund balance until this year, which has seen a
slight increase. This reflects the number of benefits being
claimed and the improved economy. He related that 2010 to 2011
were high work load years for UI benefits. Although the figures
are still higher than in 2009, the division has found the claims
are beginning to edge back down and go in the right direction.
The UI has three claims centers in the state in Fairbanks,
Anchorage, and Juneau receiving approximately 319,000 calls.
The state has 20 different class rates for employers, with the
average rate at 3.32 percent, he said. Since the employers and
employees each pay the tax, he provided the ratio: with 2.64
percent as the employer rate and .68 as the employee rate. He
summarized the benefits, noting the state pays interstate
benefits for people who worked in Alaska but currently out of
state, and the reimbursable employers, which are self-insured
employers who are reimbursed for their costs. He concluded his
presentation by stating the division has been focused on
addressing fraud. In FY 12, the penalties were $2.8 million and
the division collected $1.5 million, he said.
COMMISSIONER BLUMER thanked the committee and offered to provide
requested information to the committee.
5:06:30 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:06 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB62 ver U.PDF |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| HB62 Fiscal Note-DCCED-CBPL-02-01-13.pdf |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| HB62 Sponsor Statement.pdf |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| HB62 Supporting Document-Alaska Power Association Resolution 12-2012.pdf |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| HB62 Supporting Document-Alaska Power Association Support Letter.pdf |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| HB62 Supporting Document-Letter Chugach Electric Association 1-11-2013.pdf |
HL&C 2/6/2013 3:15:00 PM |
HB 62 |
| House L&C DOLWD Overview 2-6-13.pdf |
HL&C 2/6/2013 3:15:00 PM |
Dept of Labor & Workforce Development Overview-revised |