Legislature(2021 - 2022)BARNES 124
04/14/2021 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Alaska Workers' Compensation Board | |
| Informational Hearing(s): State of Alaska's Infrastructure | |
| Alaska Workers' Compensation Board | |
| Informational Hearing(s): State of Alaska's Infrastructure | |
| Informational Hearing(s): Unemployment Insurance Software | |
| Board of Certified Real Estate Appraisers | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 14, 2021
3:18 p.m.
DRAFT
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage
Representative Liz Snyder (via Teams)
Representative David Nelson
Representative James Kaufman
Representative Ken McCarty
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Alaska Workers' Compensation Board
Dave Talerico - Healy
- HEARD
Board of Pharmacy
Justin Ruffridge - Soldotna
- CONFIRMATION(S) ADVANCED
Board of Veterinary Examiners
Rachel Berngartt - Juneau
- CONFIRMATION(S) ADVANCED
Board of Certified Real Estate Appraisers
Mae Hayes - Wasilla
- CONFIRMATION(S) ADVANCED
INFORMATIONAL HEARING(S): State of Alaska's Infrastructure
- HEARD
INFORMATIONAL HEARING(S): Unemployment Insurance Software
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DAVE TALERICO, Appointee
Alaska Workers' Compensation Board
Healy, Alaska
POSITION STATEMENT: Spoke as an appointee to the Alaska
Workers' Compensation Board.
MICHAEL PARTLOW, Capital Budget Coordinator
Division of Legislative Finance
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint during the
informational hearing on the State of Alaska's Infrastructure.
CHARLES MCKEE
Anchorage, Alaska
POSITION STATEMENT: Provided comments not on topic with the
published agenda.
NILS ANDREASSEN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
DON ETHERIDGE
American Federation of Labor-Congress of Industrial Organization
Juneau, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
DAVE O'DONNEL, Project Manager
Watterson Construction
Anchorage, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
CRAIG DAHL, Executive Director
Greater Juneau Chamber of Commerce
Juneau, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
JINNEL CHOINIERE, Chief Executive Officer
Greater Fairbanks Chamber of Commerce
Fairbanks, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
DAVID GAMEZ, Member
Alaska Professional Design Council
Anchorage, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
CHRISTINE O'CONNOR, Executive Director
Alaska Telecom Association
Anchorage, Alaska
POSITION STATEMENT: Gave testimony during the presentation on
the State of Alaska's Infrastructure.
PATSY WESTCOTT, Director
Central Office
Division of Employment and Training Services
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Gave testimony during the informational
hearing on unemployment insurance software.
JAMES DANNER, Technical Manager
Central Office
Division of Employment and Training Services
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the informational
hearing on unemployment insurance software.
ACTION NARRATIVE
3:18:52 PM
CO-CHAIR IVY SPOHNHOLZ called the House Labor and Commerce
Standing Committee meeting to order at 3:18 p.m.
Representatives Spohnholz, Fields, McCarty, and Schrage were
present at the call to order. Representatives Kaufman, Nelson,
and Snyder (via Teams) arrived as the meeting was in progress.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^ Alaska Workers' Compensation Board
Alaska Workers' Compensation Board
3:20:02 PM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be the confirmation hearing for consideration of the
governor's appointee to the Alaska Workers' Compensation Board.
3:20:17 PM
DAVE TALERICO, Appointee, Alaska Workers' Compensation Board,
said he has worked in the mining industry in various positions
from laborer to human resources and safety director. He said
he's been heavily involved in workers' compensation issues,
working with insurance and healthcare providers. He pointed out
that he's a retired Teamster and he emphasized the importance of
equality. He said he's been appointed to the at-large seat for
labor on the board and he expressed approval of several statutes
passed by the legislature.
3:22:02 PM
CO-CHAIR FIELDS commented that he's learned a lot about
workplace safety from Mr. Talerico and said, "It's hard to
imagine - impossible to imagine - a more qualified person."
3:22:24 PM
CO-CHAIR SPOHNHOLZ opened public testimony on the appointee to
the Alaska Workers' Compensation Board. After ascertaining that
no one wished to testify, she closed public testimony.
[The confirmation hearing for Mr. Talerico was resumed later in
the meeting.]
^INFORMATIONAL HEARING(s): State of Alaska's Infrastructure
INFORMATIONAL HEARING(S): State of Alaska's Infrastructure
3:22:46 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be an informational hearing on the State of Alaska's
infrastructure.
3:24:28 PM
MICHAEL PARTLOW, Capital Budget Coordinator, Division of
Legislative Finance, Legislative Affairs Agency, gave a
PowerPoint presentation titled "Alaska's Capital Budget" [hard
copy included in the committee packet]. He explained that the
capital budget is different from the operating budget; the
capital budget is for the state to purchase physical items,
while the operating budget covers areas necessary for keeping
the business of the state going, such as personnel. The minimum
amount of time allocated to a capital budget purchase is five
years, he said, and a capital budget item is an allocation or
appropriation for an asset with an anticipated useful life
exceeding one year and a cost exceeding $25,000. He gave
examples of capital budget items including technology upgrades,
new infrastructure, and land purchases. He explained that most
of the capital budget comes from federal funding, undertaking
projects requested by the federal government; with that comes
spending priorities for the State of Alaska to meet its own
needs, including the Undesignated General Fund (UGF). Examples
of UGF spending, he said, include new school construction,
building ferries, and community grants.
MR. PARTLOW introduced slide 2, "Historical Funding Trends,"
which displayed a bar graph of UGF capital budgets over the past
20 years compared to the average price per barrel of oil from
the North Slope. He pointed out that the largest source of
revenue for the state has historically come from oil. He said
that the largest cost for the operating budget has been school
funding, which can't be changed from one year to the next;
capital projects, however, can be adjusted quickly. He said the
legislature spends little on discretionary capital projects when
oil prices are low, but when oil prices are high, capital
projects that had been delayed can be started.
3:29:10 PM
MR. PARTLOW presented slide 3, "Capital Funding History," which
read as follows [original punctuation provided]:
• FY60-FY15 average of $1 billion UGF/ $2.3b total
• Peak year FY13 with $2b UGH/ $3.6b total
• FY16-FY21, average $123 million UGF/ $1.5b total
• Large portion of spending needs covered using
average $56m of Reappropriations until FY20. Old
money is much harder to find now
• $110m match requirement on the $1.16b in Federal
funding
MR. PARTLOW presented slide 4, "Main Areas of Federal Match,"
which read as follows [original punctuation provided]:
• Federal-Aid Highway Match- $71.2m match to $680m of
federal funds
• Federal-Aid Aviation State Match- $14.7m to match
$190m of federal funds
• Village Safe Water and Wastewater Match-
Infrastructure Projects $16.2m match of $52.3m of
federal funds
MR. PARTLOW explained that the Federal-Aid Highway Match can be
used for the state's transportation improvement plan and that
the Federal-Aid Aviation State Match is important due to the
number of small airports in the state.
3:31:51 PM
CO-CHAIR FIELDS asked whether Alaska is maxing out the federal
match, or whether adding to UGF would come with additional
federal matching funds.
MR. PARTLOW replied that the state is maximizing federal
matching funds.
3:32:12 PM
MR. PARTLOW presented slide 5, "FY21 Capital Budget," which read
as follows [original punctuation provided]:
• $1.2 billion Capital budget with only $120m UGF
• No funding for $2b in deferred maintenance needs
• "1% rule" says $97m in yearly maintenance needed for
property valued at $9.7b
• Reappropriations now down to $9.4m before vetoes
3:33:47 PM
REPRESENTATIVE MCCARTY asked whether the state receives revenue
from airports.
MR. PARTLOW responded that his understanding is that any revenue
from airports is used for operating needs and basic maintenance;
UGF is to match the federal money for major capital projects.
REPRESENTATIVE MCCARTY asked how much revenue airports generate.
MR. PARTLOW replied that he could find out.
REPRESENTATIVE MCCARTY expressed the belief that airports make
significantly more income than what is needed for operations.
3:36:01 PM
CO-CHAIR SPOHNHOLZ pointed out that the capital budget is
different from the operating budget.
3:36:12 PM
REPRESENTATIVE KAUFMAN discussed information technology (IT)
improvement projects and shared his belief that IT projects that
would usually be capital projects are transitioning to operating
expenses as IT is increasingly hosted "on the cloud" instead of
locally.
MR. PARTLOW replied that is correct. A subscription service is
usually paid out of the operating budget, and there is a legal
distinction between capital and operating expenses.
3:37:43 PM
CO-CHAIR SPOHNHOLZ offered that the State of Alaska uses
generally accepted accounting principles (GAAP).
3:37:54 PM
REPRESENTATIVE KAUFMAN commented on the possibility of changing
accounting processes within the state.
MR. PARTLOW said the distinction in this case is that the
capital project would be transitioning from a physical server to
a subscription service. He said that after the money has been
spent for the initial transition, future expenses would fall
under the operating budget, thus requiring annual appropriation.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^Alaska Workers' Compensation Board
Alaska Workers' Compensation Board
3:39:39 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be a return to the confirmation hearing for consideration
of the governor's appointee to the Alaska Workers' Compensation
Board.
CO-CHAIR SPOHNHOLZ reopened public testimony on the appointee to
the Alaska Workers' Compensation Board.
3:39:54 PM
CHARLES MCKEE provided comments not on topic with the published
agenda.
3:42:38 PM
CO-CHAIR SPOHNHOLZ, after ascertaining that no one else wished
to testify, closed public testimony.
^INFORMATIONAL HEARING(s): State of Alaska's Infrastructure
INFORMATIONAL HEARING(S): State of Alaska's Infrastructure
[Contains discussion of HB 104]
3:42:47 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be a return to the informational hearing on the State of
Alaska's infrastructure.
3:42:59 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
gave testimony during the presentation on the State of Alaska's
Infrastructure. He read a statement, which read as follows
[original punctuation provided]:
I want to say that Alaska's local governments own and
work to maintain the majority of Alaska's public
infrastructure. I can't say that outright because it
requires some fact-checking, but it's plausible:
? As many road miles as the Department of
Transportation
? 87% of Alaska's ports and harbors
? 75% of all schools ? 47 libraries
? 37 power utilities
? The majority of water and sewer systems
15 jails
? 109 municipal governments are responsible for
maintaining landfills
I think it's important to think about this as a
starting point for this committee's consideration, and
I encourage us all to think about more than what the
State owns or maintains. Together, we should think
about these systems of infrastructure that then
overlapping layers of jurisdiction provide or
contribute to. As part of this, we can think about the
goals of infrastructure.
A good starting place is the Constitution here there
are clear obligations of the state to maintain a
system of public education, the University system,
public health, and public welfare. Public safety
probably falls into the latter. Transportation and
energy infrastructure falls right on the line,
potentially, but squarely with economic development.
Where economic development itself might be a goal, the
provision of that infrastructure serves as a way to
reduce the transactional costs. Essentially what we're
trying to do is lower the costs of doing business in
Alaska, even as we contribute to quality of life.
Those goals are probably consistent across levels of
government, and at the local level infrastructure is
what keeps communities whole. Ensuring access and
affordability helps to maintain sustainable
communities and slows outmigration. That's a major
reason for localities to dedicate approximately or
well more than half their budgets to maintaining this
infrastructure.
I would say that local governments can't do this on
their own. Infrastructure development construction
and maintenance must be done in partnership across
federal, state, tribal, and local governments. When I
think of need, this becomes even more critical.
AML has estimated in recent months that Alaska's
infrastructure deficit stands at about $22 billion.
That's:
? $2.3 billion for school construction and major
maintenance
? $1.9 billion for rural water and sewer
? At least that much again for urban water and sewer
? Just for 40 or so of local governments about $4
billion in capital needs
? Roughly $400 million for port and harbor needs, with
$1.6 billion in planned projects
? We know that State's deferred maintenance stands at
roughly $2.7 billion
? The STIP has about $5 billion in projections
? Improvements to community and regional jails is
about $500 million
? Broadband we can posit a low estimate of $2 billion
That leaves things out. Energy infrastructure, for
instance we appreciate the Governor's proposal to
establish and energy independence fund and to
capitalize that with $10 million. What if the need is
more than $1 billion? What about housing
infrastructure, where by some measures the need to
address overcrowding in Alaska's households would
require a $7 billion investment? What about childcare,
where there are few funding sources available for
construction of adequate facilities? For broadband, as
many as 125 communities have speeds of less than 10
MBpS, when our statewide goal is 50.
Local governments are doing their part. On water and
sewer, we know that between 25 communities there is a
State Revolving Loan Fund debt of more than $200
million. 16 communities are carrying $800 million in
school bond debt. Infrastructure expenditures are
roughly 50% of a local government's budget. Local
governments carry roughly $3 billion in debt related
to infrastructure.
At the same time, the State's making its own
contributions. It has funded on average about 8% of
school construction and major maintenance grants,
which means that local governments are often making up
the difference or these needs are unmet. The State's
contribution to ports and harbors often comes through
matching grants, which have hovered around $10 million
or so a year recently, when they're included in the
budget. Most importantly are the matching funds for
federally funded projects. The State's match for
Village Safe Water is critical to leverage federal
funds. The same is true for addressing needs within
the STIP.
When the State isn't able to make that investment in
infrastructure and in particular those investments
that it has some responsibility for that shifts the
expectation to local governments, which then have to
choose between their own competing priorities. This
means making capital improvements or making a
contribution to public education or public safety. It
also means that a limited tax base is trying to make
up for the State's, for infrastructure that's benefit
may extend well beyond that community.
I'll leave you with this. It seems like two things are
missing right now. First, we would recommend a way for
the State to effectively track and evaluate need
across the entirety of the infrastructure systems. In
a lot of ways, we just haven't been able to get our
arms around overall need. This makes it harder to
address. Second, we would recommend a mechanism within
the budget process for allocating funds to meet those
needs at a level that is making a difference, and to
have that as part of a long-term plan.
We encourage adequate State infrastructure investment
that corresponds to the State's interest in
contributing to economic development and meeting its
Constitutional obligations.
3:49:07 PM
DON ETHERIDGE, American Federation of Labor-Congress of
Industrial Organization (AFL-CIO), gave testimony during the
informational hearing on the State of Alaska's Infrastructure.
He spoke of the "boom-and-bust" cycle in Alaska, during which
already-trained workers from outside the state are hired into
jobs within the state, leaving again when the "bust" comes. He
expressed the importance of a home-trained population and said
Alaska can't afford to keep training workers from the Lower 48.
3:51:35 PM
CO-CHAIR SPOHNHOLZ expressed agreement with Mr. Etheridge's
comments and expressed her view on the importance of having a
sustainable budget to keep a steady supply of workers.
3:52:27 PM
DAVE O'DONNEL, Project Manager, Watterson Construction, gave
testimony during the informational hearing on the State of
Alaska's Infrastructure. He said he was testifying as a member
of the Alaska chapter of Associated Builders and Contractors
(ABC), which was founded in 1950 in Baltimore, Maryland, based
on the shared belief that construction projects should be
awarded to the most qualified and responsible low bidder. He
described the size of ABC and pointed out that it operates one
of the largest apprenticeship programs in the state. He stated
that ABC supports long-term planning for capital budgets that
meet Alaska's infrastructure needs and that offer relatively
consistent funding. Enacting large capital budgets during
election years and small budgets during non-election years makes
good political sense, he said, but it doesn't make good project
sense. He said the construction industry is inherently
unstable, and securing work is critical; adopting a plan with a
reliable, sustainable capital budget would help provide
stability. He encouraged the committee to exercise restraint in
making investments to stimulate the economy, as ABC doesn't
believe the purpose of capital budgets should be to create job
opportunities.
3:56:04 PM
CRAIG DAHL, Executive Director, Greater Juneau Chamber of
Commerce, said Juneau has always been reliant on federal, state,
and local government as the foundation of the local economy, and
diversifying the economy has always been a challenge. He said
that over 1,000 jobs, mostly state positions, have left Juneau
since 2003; over the same period of time, mining and the cruise
industry have made up the difference. He stated that the loss
of the cruise industry in 2020 means that 30 percent of the
local economy disappeared. He explained that the economic
damage to Juneau, and especially to the small businesses, was
"masked" by the Coronavirus Aid, Relief, and Economic Security
Act of 2020 ("CARES Act") grants, U.S. Small Business
Administration (SBA) loans, and the use of personal assets;
however, the loss of sales taxes and employment affected
everyone. "Now we're staring at the unbelievable loss of a
second full cruise season," he said, "and we know this impacts
other communities in the Southeast as well as all of Alaska."
He said that his remarks are meant to encourage the committee to
remember that capital projects directly benefit communities and
regions. The Greater Juneau Chamber of Commerce has promoted
capital projects such as a road down Lynn Canal, which would
connect Juneau with the rest of Alaska, as well as a second
bridge to Douglas Island, which would promote future development
and ensure access to emergency services. He discussed the
remodel and expansion of the convention center as well as
continued investment in Juneau's harbors and roads.
4:01:14 PM
REPRESENTATIVE KAUFMAN asked for the top three industries in
Juneau.
MR. DAHL replied that the top three industries are mining,
tourism, and government.
REPRESENTATIVE KAUFMAN asked what percentage of the economy each
industry comprises.
MR. DAHL responded that the cruise industry accounts for 30
percent, government for 30 percent, and mining, with all other
smaller industries, the remaining portion. He said that 10 to
15 years ago government comprised closer to 60 percent of the
local economy.
4:03:05 PM
JINNEL CHOINIERE, Chief Executive Officer, Greater Fairbanks
Chamber of Commerce, said the Alaska Interior needs good state
infrastructure for commerce to flow effectively, since
businesses rely heavily on highways. She discussed the need to
include broadband internet access as capital infrastructure and
explained that many people, even those living close to town,
don't have the option of getting high speed internet, which
negatively affects commerce. She said the construction industry
is a significant portion of the economy in Fairbanks, noting
that the federal aid match, as illustrated by Mr. Partlow during
the PowerPoint presentation, is a significant part of the
capital budget. Due to extreme weather, she said, any delay in
receiving federal funds may result in a delay in the
construction season. She stated that passing a capital budget
to ensure healthy growth in the Interior is one of the
priorities for Fairbanks.
4:05:51 PM
DAVID GAMEZ, Member, Alaska Professional Design Council, gave a
brief overview of the American Society of Civil Engineers (ASCE)
and the Alaska Professional Design Council (APDC). He said that
civil engineers are responsible for clean drinking water and
functioning airports, roads, dams, and ports, as well as
ensuring the structural safety of hospitals and schools. He
said failing infrastructure impacts not only the economy but the
safety and livelihoods of all Alaskans. He said the report
released by ASCE in 2017 was a comprehensive evaluation of nine
infrastructure categories: airports, dams, roads, energy,
ports, harbors, the marine highway system, water and wastewater,
and solid waste. He said that over 40 volunteers pored over
countless cumulative reports and returned a grade of C minus for
Alaska's infrastructure. The common theme, he said, is that the
infrastructure is aging and needs repair. He said parts of
Alaska are suffering from thawing permafrost and coastal
erosion, and communities are literally falling into the ocean.
He noted that road and airport maintenance is being deferred due
to budget cuts, there are places where people don't have access
to clean drinking water, and there is a major port situated on
piles "in a state of such corrosion that it's structural
integrity is compromised." He said local engineers and
construction companies depend on capital funding to maintain a
staff qualified to design and engineer infrastructure in arctic
and subarctic climates; educating, employing, and retaining
professionals in engineering and architecture is integral for
communities and Alaska. He discussed HB 104, which would
increase the motor fuel tax to 16 cents per gallon and impose a
special registration fee for electric and hybrid vehicles, and
said additional measures would be necessary to generate revenue
for the long term.
4:11:10 PM
REPRESENTATIVE MCCARTY mentioned the Civilian Conservation Corps
during the Great Depression and asked Mr. Gamez whether he
believes similar programs could be implemented to boost capital
improvements and employability.
MR. GAMEZ responded that things like replacing drinking water
systems are some of the things included in the plan, and high
speed Internet access would create opportunities for people in
more rural areas.
4:14:23 PM
CHRISTINE O'CONNOR, Executive Director, Alaska Telecom
Association, informed the committee that members of the Alaska
Telecom Association (ATA) are Alaska-based telecom and broadband
providers. She said there is "tremendous momentum" right mow in
broadband infrastructure, and the infrastructure proposal by
President Joe Biden includes $100 billion dedicated to expanding
broadband access over eight years. She said there is a
consensus that broadband internet constitutes infrastructure and
she expressed confidence that significant resources will be
dedicated to Alaska, with enough funding to close the gap in
access in Alaskan communities. She said distribution should be
prioritized to truly underserved and unserved areas, and she
characterized Alaska's congressional delegation as "well aware"
of the need.
4:17:51 PM
REPRESENTATIVE MCCARTY summed up his understanding of technology
infrastructure and asked how the existence of technology
translates to more jobs in Alaska.
MS. O'CONNOR explained that the construction of the
infrastructure needs to be "boots on the ground," and companies
already have trained workers in Alaska ready to start building.
She said that with so much funding ready to be funneled into
broadband, there's a nationwide shortage in the fiber cable
necessary for the construction.
REPRESENTATIVE MCCARTY asked whether Ms. O'Connor envisions
production of fiber cables in Alaska.
MS. O'CONNOR replied that she's not aware of fiber cable being
manufactured in Alaska, but that it's produced on a massive
scale for worldwide markets, thereby rendering it difficult to
pull a market for production into Alaska.
REPRESENTATIVE MCCARTY asked whether it's feasible to
manufacture the cable within the state.
4:21:31 PM
CO-CHAIR FIELDS explained that many employers moved to remote
work during the pandemic, some of them permanently. Having
broadband access means having the ability to recruit and retain
workers that would otherwise need to live near where their
company's physical structure. With functioning broadband
infrastructure, he said, people can work for an out-of-state
business while paying property taxes and eating in restaurants
in Alaska. Attracting highly productive people to Alaska, he
said, is the key to economic prosperity instead of investing in
individual facilities.
4:22:26 PM
CO-CHAIR SPOHNHOLZ discussed the benefits of living in Alaska
while working for an out-of-state company, then noted the need
to improve access to broadband Internet, education, and
healthcare in remote communities.
4:23:53 PM
CO-CHAIR SPOHNHOLZ commented on opportunities for the state.
^INFORMATIONAL HEARING(S): Unemployment Insurance Software
INFORMATIONAL HEARING(S): Unemployment Insurance Software
4:24:58 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be an informational hearing on unemployment insurance
software.
4:26:03 PM
PATSY WESTCOTT, Director, Central Office, Division of Employment
and Training Services, Department of Labor and Workforce
Development, explained that the current unemployment insurance
(UI) software is a system that went into production in 1994 and
administers all aspects of UI. She said that the system works
well under normal circumstances, but current circumstances are
not typical; therefore, the system cannot easily be configured
to accommodate anything other than regular UI. She explained
that only one program can be implemented at a time, so every
Coronavirus Aid, Relief, and Economic Security (CARES) Act
program had to be built from scratch, creating programming
complexities. She pointed out that UI program requirements
changed midway through the pandemic, requiring changes to the
program. She said the new UI software is a good fit for Alaska
and will be able to respond to changes in requirements quickly
and efficiently.
4:36:27 PM
REPRESENTATIVE MCCARTY asked for the name of the new software.
MS. WESTCOTT said the vendor is called Netizen and noted that
Alaska's UI system will be part of a consortium with other
states, which will allow Alaska to take advantage of resource
leverage to ensure cost-effective implementation. She explained
that, when entering into a consortium, it's important to
consider the ability for smaller states to advocate for their
own needs; entering into a consortium with other small states
will enable the UI system in Alaska to respond efficiency to
unexpected situations while maintaining fiscal responsibility.
4:41:45 PM
CO-CHAIR SPOHNHOLZ asked for a comparison of costs between
purchasing a UI system and entering into a small-state
consortium.
MS. WESTCOTT replied that there are no upfront costs for
entering a consortium; implementing the software, along with
vendor costs and fees, would be nominal.
4:43:47 PM
CO-CHAIR SPOHNHOLZ commented that many information technology
(IT) systems are moving to a cloud-based model. She then asked
what the approximate cost would be for fiscal year 2022.
MS. WESTCOTT replied that it would be 3 percent of the annual
base grant.
CO-CHAIR SPOHNHOLZ asked how long it took the programmers to
implement every change that came through the current UI program
during the pandemic, and how many changes needed to be
implemented.
MS. WESTCOTT responded that the CARES Act created multiple new
programs which each took a minimum of eight weeks to implement.
She said that the response time of the new system is two weeks.
4:48:34 PM
MS. WESTCOTT shared that the price of the new system would be
approximately $700,000 per year.
CO-CHAIR SPOHNHOLZ commented that the price is much more
sustainable than the $60 million needed to buy a new system.
4:48:48 PM
REPRESENTATIVE MCCARTY asked whether the state is under contract
to the current program for a minimum amount of time. He also
asked what happened to the program the state was in the process
of implementing when the pandemic hit, and whether the state had
committed time or funds to that program.
MS. WESTCOTT responded that the groundwork was started before
the pandemic to migrate from the current system, but that there
has been no cost to doing so; there is also no commitment to
continue using the current program and no cost for choosing to
migrate to a new system.
REPRESENTATIVE MCCARTY asked for further clarification on the
programs and costs.
MS. WESTCOTT replied that the department has not committed to
any new costs.
4:51:03 PM
CO-CHAIR SPOHNHOLZ explained that there has been no commitment
made and that the system under discussion is the same system
that was being prepped before the pandemic.
REPRESENTATIVE MCCARTY asked whether an internet-based system
could facilitate easy data transfer.
MS. WESTCOTT deferred to Mr. Danner.
4:52:27 PM
JAMES DANNER, Technical Manager, Central Office, Division of
Employment and Training Services, Department of Labor and
Workforce Development, responded that it would take
approximately a year and a half to migrate to the new system,
noting that the timeframe would be the same regardless of which
system was implemented.
4:53:43 PM
CO-CHAIR SPOHNHOLZ discussed House Bill 308 [passed during the
Thirty-First Alaska State Legislature] under which changes were
made to several areas of UI, and asked Ms. Westcott how long it
took for the changes to be implemented.
MS. WESTCOTT replied that the waiting week provision was a
little easier to implement than the change to the dependents
allowance, which she characterized as an "extremely complex and
much more difficult provision" to implement. She then deferred
to Mr. Danner.
MR. DANNER answered that the changes took at least two and a
half months to implement.
MS. WESTCOTT added that the current system wasn't designed to
make changes to UI in the midst of disbursement or for only a
specific time period. She said the new system will allow a more
efficient and timely response to the types of changes
experienced in the past year.
4:58:25 PM
CO-CHAIR SPOHNHOLZ asked whether the new system could also help
in the reduction of errors, referring to those who received
benefits and later were asked to repay the money.
MS. WESTCOTT explained that the federal guidance was that UI
qualification be based on self-certification of earnings;
clients would then have 21 days to provide wage documentation.
If clients didn't present the information the state was required
to reduce the weekly benefit amount; this resulted in
overpayments. In addition, she said, because the pandemic UI
program presented a nationwide opportunity for fraudulent
activity, the U.S. Department of Labor (USDOL) rescinded its
initial guidelines and provided new guidelines for documentation
and requirements for states to adhere to, and the guidelines
were to be implemented retroactively. As a result, she said,
there now exists a team dedicated to reviewing every pandemic UI
overpayment for accuracy, reaching out to individuals and
applying the guidance that was given to the states with regard
to waiving of overpayments. She said that, if an overpayment
was through no fault of the individual, the team will work with
the individual to arrange a waiver. She stated that the
department is taking an "extremely liberal and flexible" stance
on overpayments.
5:04:25 PM
CO-CHAIR SPOHNHOLZ commented that people had used UI benefits to
pay rent, utilities, and groceries, then received letters saying
the money needed to be repaid. She expressed that it's
important to avoid making the same mistakes in the future and
also to avoid making those who are already in financial crisis
repay that assistance.
MS. WESTCOTT expressed agreement.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^Board of Pharmacy
Board of Pharmacy
^Board of Veterinary Examiners
Board of Veterinary Examiners
^Board of Certified Real Estate Appraisers
Board of Certified Real Estate Appraisers
5:07:33 PM
CO-CHAIR SPOHNHOLZ announced that the final order of business
would be confirmation hearings for consideration of the
governor's appointees to the Board of Pharmacy, the Board of
Veterinary Examiners, and the Board of Certified Real Estate
Appraisers. [The confirmation hearings commenced on 4/12/21.]
CO-CHAIR SPOHNHOLZ stated that the House Labor and Commerce
Standing Committee has reviewed the qualifications of the
governor's appointees and recommends that the names be forwarded
to a joint session for consideration: Justin Ruffridge, Board
of Pharmacy; Rachel Berngartt, Board of Veterinary Examiners;
and Mae Hayes, Board of Certified Real Estate Appraisers. She
said that signing the report regarding appointments to boards
and commissions in no way reflects an individual member's
approval or disapproval of the appointee, and the nomination is
merely forwarded to the full legislature for confirmation or
rejection.
5:08:50 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| David Talerico Board Application_Redacted.pdf |
HL&C 4/14/2021 3:15:00 PM |
HL&C Confirmations 2021 |
| Presentation - Alaska's Capital Budget, LFD 4.14.21.pdf |
HL&C 4/14/2021 3:15:00 PM |
|
| Infrastructure Testimony - AML, 4.14.21.pdf |
HL&C 4/14/2021 3:15:00 PM |