04/30/2002 08:05 AM House STA
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ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 30, 2002
8:05 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Peggy Wilson
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 340(FIN)(efd fld)
"An Act relating to public notice of information relating to
permanent fund dividends, and to treatment of permanent fund
dividends for purposes of determining eligibility for certain
benefits."
- FAILED TO MOVE HCS CSSB 340(STA)OUT OF COMMITTEE
HOUSE BILL NO. 327
"An Act relating to state employees who are called to active
duty as reserve or auxiliary members of the armed forces of the
United States; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: SB 340
SHORT TITLE:HOLD HARMLESS PROVISIONS OF PFD PROGRAM
SPONSOR(S): RLS
Jrn-Date Jrn-Page Action
02/22/02 2284 (S) READ THE FIRST TIME -
REFERRALS
02/22/02 2284 (S) FIN
03/04/02 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/04/02 (S) Heard & Held
03/04/02 (S) MINUTE(FIN)
04/03/02 (S) FIN AT 9:00 AM SENATE FINANCE
532
04/03/02 (S) Moved CS(FIN) Out of
Committee -- Recessed to 4:00
pm --
04/03/02 (S) MINUTE(FIN)
04/03/02 (S) MINUTE(FIN)
04/10/02 2708 (S) FIN RPT CS 4DP 1DNP NEW TITLE
04/10/02 2708 (S) DP: KELLY, GREEN, WILKEN,
WARD;
04/10/02 2708 (S) DNP: HOFFMAN
04/10/02 2708 (S) FN1: ZERO(REV); FN2: (REV)
04/10/02 2708 (S) FN3: (HSS); FN4: (HSS); FN5:
(HSS)
04/10/02 2708 (S) FN6: (HSS); FN7: (HSS); FN8:
(HSS)
04/11/02 (S) RLS AT 10:30 AM FAHRENKAMP
203
04/11/02 (S) MINUTE(RLS)
04/15/02 2775 (S) READ THE SECOND TIME
04/15/02 2775 (S) FIN CS ADOPTED UNAN CONSENT
04/15/02 2775 (S) ADVANCE TO 3RD READING FLD
Y12 N5 E1 A2
04/15/02 2775 (S) ADVANCED TO THIRD READING
4/16 CALENDAR
04/15/02 2774 (S) RULES TO CALENDAR 1OR 4/15/02
04/16/02 2791 (S) READ THE THIRD TIME CSSB
340(FIN)
04/16/02 2791 (S) PASSED Y12 N7 E1
04/16/02 2792 (S) EFFECTIVE DATE(S) FAILED Y13
N6 E1
04/16/02 2792 (S) ELLIS NOTICE OF
RECONSIDERATION
04/17/02 2814 (S) RECONSIDERATION NOT TAKEN UP
04/17/02 2815 (S) TRANSMITTED TO (H)
04/17/02 2815 (S) VERSION: CSSB 340(FIN)(EFD
FLD)
04/18/02 2997 (H) READ THE FIRST TIME -
REFERRALS
04/18/02 2997 (H) STA, FIN
04/18/02 2997 (H) REFERRED TO STATE AFFAIRS
04/25/02 (H) STA AT 8:00 AM CAPITOL 102
04/25/02 (H) Heard & Held
04/25/02 (H) MINUTE(STA)
04/27/02 (H) STA AT 10:00 AM CAPITOL 102
04/27/02 (H) Heard & Held
04/27/02 (H) MINUTE(STA)
04/30/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 327
SHORT TITLE:STATE EMPLOYEES CALLED TO MILITARY DUTY
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
01/16/02 1977 (H) READ THE FIRST TIME -
REFERRALS
01/16/02 1977 (H) MLV, STA
01/16/02 1977 (H) FN1: ZERO(ADM/ALL DEPTS)
01/16/02 1977 (H) GOVERNOR'S TRANSMITTAL LETTER
04/04/02 (H) MLV AT 3:00 PM CAPITOL 124
04/04/02 (H) Moved Out of Committee
04/04/02 (H) MINUTE(MLV)
04/05/02 2814 (H) MLV RPT 4DP 1AM
04/05/02 2814 (H) DP: KOTT, GREEN, HAYES,
CHENAULT;
04/05/02 2814 (H) AM: MURKOWSKI
04/05/02 2815 (H) FN1: ZERO(ADM/ALL DEPTS)
04/25/02 (H) STA AT 8:00 AM CAPITOL 102
04/25/02 (H) Heard & Held
04/25/02 (H) MINUTE(STA)
04/27/02 (H) STA AT 10:00 AM CAPITOL 102
04/27/02 (H) Scheduled But Not Heard
04/30/02 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
WENDY REDMAN, Vice President
University Relations
University of Alaska
PO Box 755000
Fairbanks, Alaska 99775
POSITION STATEMENT: Testified in support of HB 327 and answered
questions.
CAROL CARROLL, Director
Central Office
Administrative Services Division
Department of Military & Veterans Affairs
400 Willoughby Avenue, Suite 500
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 327.
DAVE STEWART, Personnel Manager
Central Office
Division of Personnel
Department of Administration
PO Box 110201
Juneau, Alaska 99811-0201
POSITION STATEMENT: Answered questions on HB 327.
ACTION NARRATIVE
TAPE 02-50, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 8:05 a.m. Representatives
Coghill, James, Fate, Stevens, Wilson, and Hayes were present at
the call to order. Representative Crawford arrived as the
meeting was in progress.
SB 340 - HOLD HARMLESS PROVISIONS OF PFD PROGRAM
CHAIR COGHILL announced that the first order of business would
be CS FOR SENATE BILL NO. 340(FIN)(efd fld), "An Act relating to
public notice of information relating to permanent fund
dividends, and to treatment of permanent fund dividends for
purposes of determining eligibility for certain benefits." [A
proposed House committee substitute (HCS), version P, 22-
LS1361\P, Cook, 4/24/02, was adopted as the work draft on
4/27/02.]
Number 0102
REPRESENTATIVE FATE commented that this bill has been
characterized as mean-tempered, but it's really not. Something
needs to be done about the spending in the state of Alaska.
This was just a method to try to find a solution by placing some
of the responsibility on the people that sometimes need the most
help and by trying to spread the burden of those who
predominantly need that help. He stated that he doesn't think
it is mean spirited; it is simply something that signals the
fact that expenses in the state need to be looked at [to see]
how they can be absorbed. This may not be the mechanism, but
the Finance Committee will scrutinize it.
Number 0230
REPRESENTATIVE FATE moved to report [HCS CSSB 340, version 22-
LS1361\P, Cook, 4/14/02] out of committee with individual
recommendations and the accompanying fiscal notes.
Number 0262
REPRESENTATIVE HAYES objected. He said that this bill takes
away the whole spirit of the permanent fund. Unless he is
mistaken, he said he thought the whole point of the permanent
fund was to make sure everybody was on equal footing. Now
people will be told that the system has been changed for welfare
reform, that they're getting a hand up, and then they're told
that they're not worthy of something that everybody gets,
including the millionaire and everyone else. He said he thought
that was problematic.
REPRESENTATIVE HAYES referred to comments that this bill should
just go to the Finance Committee to be scrutinized. He said
that he understood that the purview of the House State Affairs
Standing Committee is to look at statewide policy issues. If it
is a policy issue that the committee doesn't think should be
made at this time, it should be dealt with right here. He said
he thought this is a bad statement.
REPRESENTATIVE HAYES told the members that he came from a poor
family who had been on welfare, and he couldn't imagine them
driving to Alaska from Baltimore to get [a permanent fund]
check. He doesn't know of any poor people who could have done
that. Some of the premises of people coming up here to receive
this check is not very true. It might happen in some cases, but
he doesn't think there are a lot of folks moving up because of a
permanent fund check. A good job has been done on welfare
reform: giving people a hand up not a handout. He expressed
discomfort with this legislation and will vote against it.
Number 0460
REPRESENTATIVE JAMES said she will allow this bill to move, but
this issue is problematic from the general public's concern.
She stated that there are those who have come to Alaska
specifically because of the benefits. The permanent fund
dividend is a draw to the state. She isn't saying that is good
or bad. She indicated that people should come to Alaska and
bring their money to invest in the state and create jobs so the
state won't funnel itself into some kind of a pit.
Number 0565
REPRESENTATIVE JAMES admitted that she likes her permanent fund
dividend; most everybody does. But something has to be done
about it; the state cannot go forward with the size and
calculation of the permanent fund today. Any leftover money of
the earnings reserve cannot be used until the way the dividend
is calculated is changed. It's based on the percentage of the
income or half of the earnings reserve, which ever is smaller.
She stated that there needs to be a rational way of doing the
permanent fund dividend. This issue is not going to go away.
If it isn't taken care of here, it's going to come back up
again. She would rather deal with the permanent fund first in
the fiscal issue; that is what has caused this issue. She
emphasized that the state cannot tax itself enough. Another
part of the issue is that the 18 to 44 year olds are leaving the
state.
Number 0793
REPRESENTATIVE JAMES said once people get that money, it is
difficult to take it away. People gear up to get that money.
She said she sees people who have Christmas presents that she
can't afford to buy. Because of the permanent fund, there are
people who wouldn't have the money to buy those things for
Christmas. She said she doesn't wish they didn't have Christmas
presents, but she wishes that they would be able to pay their
bills, pay other things, take better care of themselves, and eat
better. She reiterated that a rational solution needs to be
found or the state will never solve the fiscal issue.
Number 0880
REPRESENTATIVE CRAWFORD said he remembers when the debate first
started on whether the permanent fund dividend would be means
tested. It was decided that every man, woman, and child who was
an Alaskan would get a permanent fund dividend. It gives
everybody a leg up whether they're rich or poor. He takes
exception to a lot of the things that have been said about how
poor people are going to Hawaii or getting Christmas presents
that they shouldn't. It irritates him when he hears about
"those people." He said he is sure that there are always
exceptions. There are people who don't use their permanent fund
dividend wisely, but [the permanent fund dividend] has given
lots of people chances that they would have never had otherwise.
He expressed opposition to this bill and said it shouldn't go
any further than right here.
Number 0970
REPRESENTATIVE JAMES said Alaskans getting this huge dividend
causes a mentality of not earning their own way. When K-12
education, the university, and getting permits in the Department
of Natural Resources (DNR), and things that grow the state can't
be funded, then this is the wrong politics.
Number 1020
REPRESENTATIVE HAYES said he understood what Representative
James is saying, but this bill would take $11 out of everyone's
permanent fund check to have 7,000 parents and 10,000 children
not receive this check. He said that $11 is a miniscule amount
of money to afflict that type of damage to the poorest of the
population. Even though it was said that K-12, the university,
and DNR can't be funded, a bill in the House was just passed
that is going to give away $41 million a year that could do
those things.
Number 1088
REPRESENTATIVE WILSON agreed that some decisions have to be made
in this state. The fiscal mess needs to be dealt with.
However, this bill affects 66 people in her district, and she
said she is concerned about that. She indicated that she will
probably vote "no recommendation."
Number 1243
CHAIR COGHILL said this does not affect the permanent fund
dividend in any way. The people on temporary assistance and
food stamps still get the permanent fund dividend, it's just
that it's counted as income. Everybody has to count it as
income. This takes care of the safety net issue for those on
SSI [Supplemental Security Income] and APA [Adult Public
Assistance]. It does not disqualify people from the Alaska
Temporary Assistance Program, except for the months when they
have income. That would be true if they got a job. He
recognized that these are hard times. He said he thinks that
counting the permanent fund dividend as income is appropriate,
except for "in the true safety net issues."
Number 1350
A roll call vote was taken. Representatives Fate, James, and
Coghill voted in favor of moving the bill. Representatives
Crawford, Hayes, Stevens, and Wilson voted against it.
Therefore, HCS CSSB 340(STA) failed to move out of the House
State Affairs Standing Committee by a vote of 3-4.
[Representative Wilson later reconsidered her vote.]
HB 327 - STATE EMPLOYEES CALLED TO MILITARY DUTY
Number 1440
CHAIR COGHILL announced that the final order of business would
be HOUSE BILL NO. 327, "An Act relating to state employees who
are called to active duty as reserve or auxiliary members of the
armed forces of the United States; and providing for an
effective date."
Number 1439
REPRESENTATIVE FATE commented that the issue is whether or not
university employees are state employees. In the past there
have been times when the university has been accepted by the
executive branch of government as an agency of the state.
Actually it is not; it is a constitutionally authorized
corporate body, and it is run by a board of regents, also
authorized by the constitution. It is separate.
Number 1505
WENDY REDMAN, Vice President, University Relations, University
of Alaska, testified in support of HB 327. She explained that
the university is in an ambiguous situation relative to being
state employees. It is clearly an entity of the state; it is
part of the executive branch, but university employees are not
considered state employees. They are not covered by the state
Personnel Act. Whenever a statute refers to state employees,
unless it specifically delineates that it includes the
university or not, it gets into a situation. She told the
committee that the intention of the governor's office is that it
not cover the university because it talks about the issuance of
administrative orders from the governor. The governor doesn't
normally issue administrative orders to the university; the
board of regents sets policy and is defined in law and in the
constitution as the body that sets policy.
MS. REDMAN indicated that the pending amendment is sufficient to
clarify that the governor will issue the administrative orders
to state employees of the executive branch offices and
departments. That clearly delineates what is intended and does
not include the university, the railroad, and the judicial
branch.
Number 1630
REPRESENTATIVE STEVENS noted that this is not a bill about who
is a state employee, this is a bill about allowing some benefits
to people in the reserves. His question is how the university
is covered, not whether it should be. He asked if university
employees are treated in a similar fashion as state employees in
this bill.
Number 1673
MS. REDMAN said she isn't sure what the present policy is when
the National Guard is called up. University employees are
generally treated similarly to the state employees. They do
fall under PERS [Public Employees' Retirement System] and TRS
[Teachers' Retirement System], although the university also has
its own defined benefit program. If this law passes and it was
the position of the State of Alaska that it would pay all salary
and benefits for people who are called into active duty, it is
highly likely that the board of regents would take the same
action. At the present time, paid leave is provided for people
who are doing their guard duty.
REPRESENTATIVE STEVENS asked what would happen if someone was in
a command that was called up, became a regular member of the
U.S. Army, and was sent off somewhere. He wondered how the
university would treat its employees in that case.
MS. REDMAN answered that she didn't know. She wasn't sure if
the university has dealt with that issue yet. She said she
assumes that the university would take precisely the action in
this legislation to do everything it could to cover all expenses
and benefits for those individuals.
MS. REDMAN told the committee that should this bill pass, she
will take it to the June meeting of the board of regents and ask
that it develop a policy that would be similar to what the state
has done.
Number 1910
REPRESENTATIVE FATE made a motion to adopt Amendment 1, which
read:
Page 1, line 10:
Delete "state"
Page 1, line 10, after the word "employees":
Insert "of executive branch offices and departments"
Page 2, line 14:
Insert "(d) in this section, executive branch offices
and departments are those listed in AS 44.17.005"
REPRESENTATIVE FATE noted that the intent of Amendment 1 is to
exempt employees of the University of Alaska, The Alaska
Railroad Corporation, the Judicial Branch, and the Legislature
from HB 327.
Number 1915
REPRESENTATIVE WILSON objected. She said she understands the
intent of the amendment is to exempt the employees mentioned,
but wondered why.
REPRESENTATIVE FATE answered that it clarified the status of
university employees compared to the executive branch.
Number 1946
CHAIR COGHILL explained that the university has been given
constitutional authority for the board of regents to run the
policy. The Alaska Railroad Corporation operates independently
of the State of Alaska, and the Judiciary Branch has its own
policy.
Number 1973
MS. REDMAN added that because of the constitutional
establishment of the university and the railroad, the state and
therefore the legislature, does not have any participation in
establishment of salary or benefits for university employees.
State employees are actually in statute; that's not the case for
employees of the university and railroad.
MS. REDMAN explained that the university is also a separate
corporate body that is set up in the constitution of the state
for the governance of the university system. This legislation
establishes a compensation benefit for state employees
specifically by the governor's administrative order. It's the
board of regents' prerogative by law to establish and direct the
pay and compensation for university employees. In that case,
she said she thinks it is inappropriate and maybe not even legal
for the governor to direct through administrative action what
would be a significant benefit; that really is by law assigned
to the board of regents.
Number 2122
REPRESENTATIVE JAMES explained to Representative Wilson that the
amendment doesn't necessarily exclude the University of Alaska,
the railroad, judicial branch, or legislature, it just doesn't
cover them. That is the intent of the legislation.
Number 2168
REPRESENTATIVE STEVENS said he would like to know what the
policies are of these exempt agencies.
Number 2228
CAROL CARROLL, Director, Central Office, Administrative Services
Division, Department of Military & Veterans Affairs (DMV),
testified that from the DMV's perspective, treating people of
the same class differently, if that were to occur, would not be
something that the committee would like either. It wouldn't be
a good idea to have members of the National Guard treated
differently if they worked in the executive branch or if they
worked for the university or legislature. She agreed that it
would be good to know the policies of the other entities.
REPRESENTATIVE JAMES said currently the legislature does give
the university money. If this were to go into effect, it'd be
obligated to give the university a line item for pay; the
railroad doesn't get any money from the legislature, and it
doesn't want to start doing that now. She said she thought if
the legislature was going to tell the railroad to provide this
benefit to its employees, then it should probably pay the
railroad in the budget too.
Number 2272
MS. CARROLL indicated that the executive branch is leading on
this concept of making sure that the state employees are held
harmless when they are called to active duty. It is the
department's opinion that it would be a good policy for others,
but it isn't under the purview of this bill to force that policy
on those different branches of government.
REPRESENTATIVE JAMES commented that since this bill provides for
people to get paid and get their benefits while they're gone, it
could be a very expensive piece of legislation. She said that
she would rather not go for such a deep step at the beginning.
She would simply hold the position for them, but she
acknowledged that would be difficult to do when many of the
employees are politically appointed. If they were to come back,
they might not be able to return to the same position because
there may be another administration. People don't know how long
they would be gone. She said she sees some problems with this
legislation because right now those people would be able to
continue to receive the pay and benefits until whatever time,
and she wondered if this bill should be that broad.
CHAIR COGHILL asked Mr. Stewart if he considered how this
amendment might affect things.
Number 2542
DAVE STEWART, Personnel Manager, Central Office, Division of
Personnel, Department of Administration, told the committee that
the fiscal note was prepared based on the members of the
executive branch staff whose salary would have been
supplemented. If the legislation goes into effect the way it's
written, it is retroactive to September 11. Assuming that the
governor issued an administrative order covering pay and health
insurance for the 41 employees called to active duty, the fiscal
note for 2002 shows $44,000 for that.
CHAIR COGHILL asked if any employees of the university,
railroad, judicial branch, or legislature had been called to
active duty.
MR. STEWART replied that he didn't know.
REPRESENTATIVE WILSON removed her objection.
There being no further objection, Amendment 1 was adopted.
REPRESENTATIVE HAYES said he didn't think the committee needed
to hold the bill to get further information. He said that
information could be gotten before it was voted on later in the
process.
CHAIR COGHILL agreed to have his staff write some letters and
get an official position for the committee members.
Number 2661
REPRESENTATIVE WILSON said this is a policy under the purview of
this committee, and some more facts are needed.
Number 2671
REPRESENTATIVE JAMES commented that the more she thinks about
it, she isn't as comfortable with this bill. She is concerned
that it is pretty broad.
Number 2750
REPRESENTATIVE STEVENS agreed that there are a lot of issues
that need to be looked at carefully. The idea of holding people
harmless when they are called to serve in the military is a good
idea. Currently, people in the military can buy their time back
at the university. He suggested maybe having people buy into
the system instead of just granting it to them.
Number 2801
REPRESENTATIVE CRAWFORD indicated that this is a fairness issue
for him. He said he's not sure if it's the right policy call to
give this benefit to state employees when National Guard people
in the private sector don't get these benefits. He said he
wished all of them could get it, but he can't see making small
business owners responsible for it. He said he was torn on this
bill.
CHAIR COGHILL agreed. He said he thought this bill would get
Finance Committee referral.
MR. STEWART responded to a question by Chair Coghill on the
executive order and explained that the intent of the legislation
was to allow the drafting of an administrative order that would
specify a group or groups of employees either by status,
department membership, or position, and the nature of the
supplementation: whether they would receive just the difference
in their state and military wage, - this is only for individuals
whose military wage is less than their state salary - and it
would specify whether there would be health insurance or
retirement contributions paid, and it would specify a duration.
REPRESENTATIVE WILSON said she doesn't have a problem with what
this bill does. The principal of going out and doing something
for the country shouldn't set someone back financially, but no
one knows know what is coming down the pike. She commented that
this isn't wise just for the simple reason that there isn't a
fiscal policy in place and the fact that this is so open ended.
TAPE 02-50, SIDE B
Number 2967
REPRESENTATIVE STEVENS asked for an explanation on hold
harmless.
Number 2922
MR. STEWART said that the legislation was intended to lead not
to direct the other entities discussed earlier. The number of
individuals called to active duty since September 11 was 41
state employees. Only 8 of those had military salaries less
than their state salaries. There were 34 people who had a
higher military rate of pay, so the rate of supplementation
would have been zero on the fiscal note for those employees in
2002. That cost only includes the employer contribution of
health insurance. In deciding whether the out-year fiscal
impact could be determined, a list of all state employees who
are members of the National Guard was looked at, and roughly 10
percent of those had lower state salaries than military
salaries. He indicated that the supplementation equals out with
the other costs.
Number 2854
REPRESENTATIVE STEVENS asked about the other benefits in
compensating someone.
MR. STEWART replied that the cost of health insurance is a fixed
cost. It is established either by union contract or law as far
as the employer contribution. The retirement contribution is a
percent of salary, and there would be a definition in the
administrative order about whether the employer would pay the
employer's contribution or both the employer and employee
contribution. There is some protection afforded for retirement
credit. If an individual, state employee or otherwise, is
called by presidential order to active service, there is a
distinction in the Uniformed Services Employment and
Reemployment Rights Act that requires the state to provide the
service credit based on time served or absence from work and not
the financial benefit.
The committee took an at-ease from 8:57 a.m. to 9:01 a.m.
Number 2718
REPRESENTATIVE FATE asked Mr. Stewart for a copy of the list of
employees who are in the National Guard.
CHAIR COGHILL announced that HB 327 would be held over.
REPRESENTATIVE WILSON announced that she would like to
reconsider her vote on SB 340.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at
9:03 a.m.
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