04/12/2001 08:14 AM House STA

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

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ALASKA STATE LEGISLATURE HOUSE STATE AFFAIRS STANDING COMMITTEE April 12, 2001 8:14 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 HOUSE BILL NO. 17 "An Act relating to the capital projects fund, to distribution of money in the earnings reserve account of the Alaska permanent fund to the capital projects fund and to the dividend fund at the end of fiscal year 2001, and to increasing the amount of permanent fund dividends for calendar year 2001; and providing for an effective date." - MOVED HB 17 FROM COMMITTEE HOUSE BILL NO. 200 "An Act establishing July 3 as Drunk Driving Victims Remembrance Day." - MOVED CSHB 200(STA) FROM COMMITTEE CS FOR SENATE JOINT RESOLUTION NO. 17(STA) Relating to requesting that President Bush renounce and reverse Clinton Administration anti-gun-ownership policies and reorient the United States Department of Justice towards policies that accurately reflect the intent of the Second Amendment to the United States Constitution to grant individual Americans the right to keep and bear arms, was engrossed, signed by the President and Secretary and transmitted to the House for consideration. - MOVED HCS CSSJR 17(STA) FROM COMMITTEE CS FOR SENATE BILL NO. 65(FIN) "An Act requiring a study regarding equal pay for equal work of certain state employees." - MOVED HCS CSSB 65(STA) FROM COMMITTEE HOUSE JOINT RESOLUTION NO. 23 Advocating the retention of the electoral college system in its present form. - BILL HEARING POSTPONED TO 4/17 HOUSE BILL NO. 189 "An Act repealing statutory provisions relating to term limits and term limit pledges." - BILL HEARING POSTPONED TO 4/19 HOUSE BILL NO. 20 "An Act relating to state aid to municipalities and certain other recipients, and for the village public safety officer program; relating to municipal dividends; relating to the public safety foundation program; and providing for an effective date." - SCHEDULED BUT NOT HEARD PREVIOUS ACTION BILL: HB 17 SHORT TITLE:CAPITAL PROJ/DISTRIB. OF PERM FUND INC SPONSOR(S): REPRESENTATIVE(S)WHITAKER Jrn-Date Jrn-Page Action 01/08/01 0028 (H) PREFILE RELEASED 12/29/00

01/08/01 0028 (H) READ THE FIRST TIME - REFERRALS

01/08/01 0028 (H) MINUTE(STA) BILL: HB SHORT TITLE:DRUNK DRIVING VICTIMS REMEMBRANCE DAY SPONSOR(S): JUDICIARY Jrn-Date Jrn-Page Action REFERRALS BILL: SJR SHORT TITLE:FEDERAL GUN POLICIES SPONSOR(S): SENATOR(S) DONLEY Jrn-Date Jrn-Page Action REFERRALS Committee MINUTE(STA) 203 UNAN CONSENT REFERRALS BILL: SB 65 SHORT TITLE:PAY EQUITY FOR STATE EMPLOYEES SPONSOR(S): SENATOR(S) DONLEY Jrn-Date Jrn-Page Action REFERRALS MINUTE(STA) PEARCE, DAVIS; THERRIAULT, 532 532 MINUTE(FIN) 532 Heard/Scheduled WARD; HOFFMAN, OLSON, 532 Committee 203 203 UNAN CONSENT REFERRALS MCGUIRE STEVENS WITNESS REGISTER LORI BACKES, Staff to Representative Jim Whitaker Alaska State Legislature Capitol Building, Room 411 Juneau, Alaska 99801 POSITION STATEMENT: Testified on behalf of Representative Whitaker, sponsor of HB JIM KELLY, Director of Communications Alaska Permanent Fund Corporation P.O. Box 25500 Juneau, AK 99802-5500 POSITION STATEMENT: Testified on HB Number 0097 CHAIR COGHILL announced that the first order of business would be HOUSE BILL NO. 17, "An Act relating to the capital projects fund, to distribution of money in the earnings reserve account of the Alaska permanent fund to the capital projects fund and to the dividend fund at the end of fiscal year 2001, and to increasing the amount of permanent fund dividends for calendar year 2001; and providing for an effective date." Number 0133 LORI BACKES, Staff to Representative Whitaker, Alaska State Legislature, came forward to testify on behalf of Representative Jim Whitaker, sponsor of HB last committee meeting was available in both hard copy and on disk. She pointed out a correction needed on the slide titled "Capital Projects Fund." The figure on the second line, $160,712,500, should be changed to $211,500,000 to match the other updated amounts shown throughout, she explained. MS. BACKES said that 17 projects fund and the other half would be paid out as a supplement to the permanent fund dividend. She said the amount of that supplement would be about $360 per dividend. MS. BACKES added that some legislators have suggested using the money for a municipal dividend instead of supplementing the dividend, she said. That would require amending HB 20. MS. BACKES said what is being discussed was similar in concept, but that she did not know the particulars. CHAIR COGHILL asked how much would be provided per capita. MS. BACKES said she did not know how the money would be divided per capita if it were given out as a municipal dividend. "If it's a supplement to the dividend payout, it would be $360 per person," she said. CHAIR COGHILL asked if that was the amount anticipated in this year only. MS. BACKES said that was correct, emphasizing that billion, twice the size that it is today. Meanwhile, you will have produced over that period of time something like $57 billion worth of total investment return. Number 1036 It's going to take $20 billion of that to keep the fund whole against inflation, just as in the past it's taken $7 billion to keep the fund whole to today. So that leaves $36 billion, which is about how much HB inflation proofing requires. There is additional money. The Permanent Fund Corporation estimates that there will be $175 million to $300 million a year available, and that number will grow as the market value of the fund grows. MR. KELLY said the way that money ought to be spent is not something the trustees [of the Permanent Fund Corporation] would ever get involved with deciding. "We're only interested in producing the money...," he said. REPRESENTATIVE FATE said what he wanted had to know was that the $423 million from which the other figures derive is a good figure for the income from the earnings reserve account. MR. KELLY confirmed that it was, [depending on what happens in the current, final quarter of the fiscal year]. Number 1324 REPRESENTATIVE FATE asked about the projected earning of about 8 percent on the earnings reserve account: "In light of the ... 'bear market' that we're having now, is figure?" MR. KELLY said it was, and explained how it is calculated. Number 1401 CHAIR COGHILL asked if, in light of the bad market year, 17 MR. KELLY said the projected earnings are based on December 31 [of 2000] numbers, and he thinks they are as good as anything the Permanent Fund Corporation could produce. Number 1448 REPRESENTATIVE JAMES asked a question related to a presentation the Permanent Fund Corporation had made at a Rotary Club meeting. There was a chart that showed the ups and downs [of the stock market] over the last 75 years, and Representative James understood that 8-8.5 percent is the historical amount of growth that can be expected from a fund over the long term. MR. KELLY said it is about 8 percent, including 3 percent for inflation and 5 percent for payout. REPRESENTATIVE JAMES asked if that was how the Permanent Fund Corporation came up with the 5 percent payout, "because you assume that the average is going to be 3 percent on inflation and that's going to keep it ... inflation-proofed over the long period of time?" MR. KELLY said that was correct, based on the asset allocation the fund has now. Number 1570 REPRESENTATIVE JAMES recalled that in the early 1990's, the rate of inflation was so high that legislators worried that if they first inflation-proofed, there would be nothing left for dividends, and might not even be enough for inflation proofing. "Could we get there again?" she asked. Number 1656 MR. KELLY said yes, and that is why the board is suggesting that statutory inflation proofing isn't the best way to go because it moves that money from the earnings reserve account, where it is available for appropriation, and puts it into the principal, where it's not. And in a year like this one, in which the Permanent Fund has lost $2 billion of money, that's not a problem because there is still $5 billion in the earnings reserve account. "But you have a year like this again and another year like that again, then you're into a situation where you do not have the ability to make a dividend payment, much less the payment that's envisioned in an HB 17. the earnings reserve," he said. "We're taking of it, unless you account for a small amount of that that might go back into the earnings reserve." He noted that "one-time deal" that provides much-needed funds for capital projects. How to divide the other portion of that revenue from the earnings reserve account, "whether it's going to go to the municipalities or whether it's going to go back into the dividend, is something that ... perhaps should be wrestled with a little bit" [in the State Affairs Committee]. From the public policy standpoint, he thinks HB "brings us a little bit closer." She further explained: The attorney general's opinion doesn't deal so much with how appropriate it is to set the appropriations limit through this amendment, and it really doesn't deal with the constitutional budget reserve. The question that Representative Whitaker has in the attorney general's opinion deals with just the sentence that says, "Within this limit, at least one- third shall be reserved for capital projects and loan appropriations." The attorney general believed that the statement within this limit was ambiguous enough to state in his opinion that if the legislature never reached that appropriation limit. That, by the way, I think would have been $6.1 billion last year for the legislature to appropriate.... If we never reach that limit, we don't have to appropriate a third for capital projects. That was his interpretation of this amendment, and that is the part of his opinion that Representative Whitaker disagrees with as well as in our legal opinion from Tam Cook. Number 2623 CHAIR COGHILL said he wanted to be very clear that asserting that the legislature should get as close to one-third as it can, and that it is not going to challenge the attorney general's opinion because it does not appropriate more than one- third. MS. BACKES said she did not see and certainly hasn't heard anything from the attorney general's office to indicate that there would be a challenge on HB Number 2778 CHAIR COGHILL announced that the next item of business before the committee would be HOUSE BILL NO. 200, "An Act establishing July 3 as Drunk Driving Victims Remembrance Day." He put before the committee a committee substitute [Version C]. REPRESENTATIVE FATE moved the adoption of [Version C] as the working document before the committee. Number 2807 CHAIR COGHILL said he took out the portion of HB to make a proclamation to commemorate Drunk Driving Victims Remembrance Day, and the governor can lower the flag as he or she wishes. Number 2869 REPRESENTATIVE CRAWFORD objected to adopting the CS. He said he thinks the flag lowering does not diminish anything and raises awareness, and that the original bill is the proper way to memorialize the victims of drunk driving. Number 2895 CHAIR COGHILL said his intent was not to dishonor anybody, but to raise the level of honor by making the governor do it by proclamation. He said he thought that would result in better publicity than doing so by statute. REPRESENTATIVE JAMES said she tended to agree with Chair Coghill. She said she did not wish to demean the people who have worked so hard on 200. There being no objection, SJR Number 2661 CHAIR COGHILL announced that the next order of business before the committee would be CS FOR SENATE JOINT RESOLUTION NO. reverse Clinton Administration anti-gun-ownership policies and reorient the United States Department of Justice towards policies that accurately reflect the intent of the Second Amendment to the United States Constitution to grant individual Americans the right to keep and bear arms. SENATOR DAVE DONLEY, Alaska State Legislature, came forward to testify as sponsor of 17 part of the Justice Department and "to more accurately recognize the true meaning of the Second Amendment of the United States Constitution." CHAIR COGHILL asked Senator Donley if he thinks the resolution is being sent to enough people. He noted that it lists the members of Congress, the President, and the Vice President. SENATOR DONLEY said he thought it was the correct list of people and that he also was going to send it to state legislatures around the nation because he thinks it is a national issue and that it is appropriate to stick up for the rights of all Americans. CHAIR COGHILL asked him if that was a commitment. SENATOR DONLEY said yes, that it was his intent to send it to the presiding officers of all the state legislatures. If the House State Affairs Standing Committee wished to add that, he thinks it would be appropriate. Number 2514 REPRESENTATIVE JAMES moved to adopt that as a conceptual amendment. CHAIR COGHILL stated the conceptual amendment as: "to send it to the presiding officer of each legislative body in every other 49 states." REPRESENTATIVE JAMES said she thought it should refer to "officers". There was no objection to the conceptual amendment to 17(STA). Number 2588 REPRESENTATIVE HAYES moved to report CSSJR 17(STA) Committee. [Although the motion that carried should have moved 17(STA) 17(STA) from the committee.] CHAIR COGHILL declared a brief at-ease at 9:15 a.m. The committee was called back to order at 9:17 a.m. SB Number 2457 CHAIR COGHILL announced that the next order of business before the committee would be CS FOR SENATE BILL NO. 65(FIN), "An Act requiring a study regarding equal pay for equal work of certain state employees." SENATOR DAVE DONLEY came forward to testify as sponsor He explained that SB equity study to determine if its current classification of state employees is in any way in violation of existing state or federal law regarding equal pay for equal work. He noted that almost every year, there are news stories reporting that the annual study by the Department of Administration shows that women who work for state government are paid less than men. "But what we don't know is why," he said, "and there is some improper reason why women are being paid less than men on the average with state government." He said there are many other reasons why, as an average, women might justifiably be paid less than men, "but we will never know whether the reason is an improper reason unless we actually do a pay equity study." Such studies already have been done by 24 other states and the District of Columbia. Alaska's Department of Administration believes that its classification system is a good one and that there is no discrimination based on gender, he said. SENATOR DONLEY said SB be performed by a contractor through the Department of Administration to specifically examine whether there is any discrimination going on that would be in violation of existing requirements of equal pay for equal work. He noted that he is trying to be very clear about equal pay for equal work because there is terminology used in this area that can get very confusing. He called attention to an analysis of terminology in committee packets and said there are three phrases commonly used. There is "equal pay for same work," which is actually what he is trying to say, he said. There is "comparable work," which refers to a theory of overall equivalent value to society, which is more complicated but has been studied by some other states. There is "equal pay for equal work," and that principle requires equal compensation for jobs that require substantially the same skills, effort, and responsibility. That is actually what Alaska law and federal law requires. He emphasized that the proposed study would not be a comparable work study, but an equal pay for equal work study [which would encompass equal pay for same work] to make sure that Alaska is complying with federal law. SENATOR DONLEY said he thinks it is the right thing to do. "We have a perception that we may have a problem," he said. "The Department of Administration is confident we don't have a problem, but ... the only way to let the public know for sure that we're not improperly discriminating against women in state employment is to perform this study." Number 2251 CHAIR COGHILL said based on his observation around the legislative halls, "it seems like some of us men may be in trouble." Number 2240 REPRESENTATIVE STEVENS observed that the [written] description of SB 65 litigation against the state. SENATOR DONLEY said there had been a case alleging that nurses in state employment were being discriminated against unfairly. The facts of the case were that most of the nurses were women, and that the state had another job called "physicians' assistant" in which most of the employees were men. The physicians' assistants were paid more than nurses, but they were doing virtually identical work, he said. The Human Rights [or Equal Rights] Commission found in favor of the nurses. The case was appealed to the courts and the Supreme Court of the state ruled in favor of the state, saying that they found distinguishing elements that justified differing pay rates. Number 2168 SENATOR DONLEY noted that the decision had been controversial, and found it interesting that in the approximately eight years since then, the number of women physicians assistants has increased and the pay of nurses has been raised so that it is more comparable. He said the Department of Administration found "that nurses had a pretty good argument." SENATOR DONLEY said that is the only lawsuit in Alaska state employment of which he knows; however, the issue has been "very problematic" elsewhere. He described two types of states, those which have "just refused to do anything and their classification systems weren't probably as a good as ours and they got sued and it cost them a lot of money." He directed attention to an example in the packets comparing Minnesota to Washington State. In the latter, there was a suit that the state lost and "it cost the state a lot of money," he said. Other states have done pay equity studies and moved in a progressive way to solving the problems they identified, and it's cost a lot less, he said. He emphasized that Alaska's Department of Administration is confident about its classification system and that he hopes the study will put to rest the idea that there is discrimination in the state system. Number 2050 CHAIR COGHILL noted that the annual reports come from the Department of Labor, and he wondered if those reports addressed the area of pay equity. SENATOR DONLEY said they talk about the difference between what men and women on average are making working for the state. CHAIR COGHILL asked, "Just a general rule? SENATOR DONLEY replied, "Yes, just on the average, the gender difference." He called attention to a one-page enclosure on the gender gap in the packet. CHAIR COGHILL asked if the proposed study would look at the gender gap in different categories. SENATOR DONLEY explained that the study would identify those job classes that are dominated by one gender or the other, as those are the suspect classes. It also would look for job classes that are doing much the same type of work and compare the job descriptions with what employees actually are doing to see if there is any discrimination based on gender. Number 1931 REPRESENTATIVE CRAWFORD said when his wife was working as a nurse in a hospital operating room in Louisiana, one of the things they talked about was that the male nurses who came through the operating room seemed to be on the "fast track." Only about one in ten of the nurses was male, and most of them stayed just a short time before being promoted to an administrative job. That seemed to him to be a way of discriminating as well. He wondered if this study would address that sort of thing. SENATOR DONLEY said it is unlikely that this study would catch that kind of a problem, as that was a different area of the law. He said he thought that in a situation like the one Representative Crawford described, there would be a strong possibility of a case for the Equal Rights Commission based on discrimination in promotion. Number 1807 REPRESENTATIVE JAMES observed that many times, there are more women or more men in a particular job because more people of that gender apply for those jobs, and that doesn't mean that there is discrimination. SENATOR DONLEY said that is correct. "But let's say there was a female dominated class called Secretary One, and then there was a male-dominated class called Secretary Two. And we take a look at it and we find that the Secretary Twos are doing the same job as the Secretary Ones, then you've got a case for gender discrimination." CHAIR COGHILL noted for the record that at this point, the administration is saying that does not happen, yet there is a public perception that it does. He thought what Senator Donley was addressing was the public perception. SENATOR DONLEY said that is correct. CHAIR COGHILL asked if the study would be more of a blind study than self-examination. SENATOR DONLEY said yes, if he correctly understood Chair Coghill's terminology. CHAIR COGHILL clarified that he meant a study by a disinterested party. SENATOR DONLEY said yes. REPRESENTATIVE JAMES asked if while the study was comparing employees' jobs are and the pay that they get, will it also look at the qualifications required for the job. She has encountered requirements, such as education, for particular jobs that were not really required for the work being done. SENATOR DONLEY said she was absolutely correct. What the law requires is equal pay for equal work, and if there is some illusory hurdle before a person gets into a particular job, that's not right. It's what you're doing while that is significant. That is part of what this study could examine. CHAIR COGHILL asked if there was anyone else to testify 65. Number 1538 REPRESENTATIVE FATE REPRESENTATIVE moved to report SB sponsor was amenable to it. He explained the amendment as follows: Page 1, line 8, after "sexes", Insert "races" Page 1, line 8, Delete "female" Insert "worker" Page 1, line 9, after "paid to", Delete "male" Insert "another" Page 2, line 4, after "gender", Insert "or race" Page 2, line 9, after "gender", Insert "or race" Page 2, line 10, after "gender", Insert "or race" Number 1402 CHAIR COGHILL said the amendment seemed to him to significantly change SB 65. REPRESENTATIVE JAMES asked if the "equal pay for equal work" area of the law also includes bias between races. SENATOR DONLEY replied, "Yes." REPRESENTATIVE JAMES asked what if anything the amendment would do to the fiscal note. SENATOR DONLEY responded, "We have been working with the Department of Administration for about 9 to 10 months on this bill and developing the fiscal note and the study. This is totally different than anything they've seen before. so it's very hard for me to predict what this will do to the fiscal note...." REPRESENTATIVE JAMES observed that SB administration do about the fiscal note by the time the bill reached the Finance Committee, to which it has a referral. She said she wanted to make sure that committee had a true picture of the financial impact. MR. STEWART replied that in that case, the administration would have to go back and adjust the fiscal note to reflect the increased scope. REPRESENTATIVE JAMES asked if he had any idea what the increase might be? MR. STEWART replied, "I sure don't." In response him to estimate, he said it would likely double. REPRESENTATIVE JAMES said that is what she would guess because, "It's a whole new scope." But as long as she is the fiscal note will be revised, she has no objection to the amendment. Number 1135 REPRESENTATIVE WILSON commented that she thinks what Representative Hayes wants to do is wonderful, and should be looked at. However, he could introduce a new bill to study racial discrimination, which might be done in conjunction with the gender study proposed by HB 65. scope would mean the study wouldn't start until the next legislative session. He asked Senator Donley what he expected as a timeline. SENATOR DONLEY responded, "I wanted to give the administration time to put together and do it right, so we've got a pretty liberal time frame in the bill, so I don't think the time factor is a problem...." CHAIR COGHILL suggested moving things along. He asked if the amendment was maintained. REPRESENTATIVE HAYES said yes. Number 0133 REPRESENTATIVE FATE called for the question on the amendment. A roll call vote was taken. Representatives Crawford, Hayes, Stevens, and Wilson voted for Amendment 1. Representatives Fate and Coghill voted against Amendment 1. Representative James was absent. Therefore, Amendment 1 was adopted. Number 0215 REPRESENTATIVE HAYES moved to report 65(STA) ADJOURNMENT There being no further business before the committee, the House State Affairs Standing Committee meeting was adjourned at 9:59 a.m.

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