Legislature(1999 - 2000)
05/04/2000 04:48 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
JOINT HOUSE AND
SENATE FINANCE COMMITTEES
THIRD SPECIAL SESSION
May 4, 2000
4:48 PM
TAPES
SFC-00 3rd SS #1, Side A and Side B
3rd SS #2, Side A and Side B
CALL TO ORDER
Co-Chair Sean Parnell convened the meeting at approximately
4:48 PM.
PRESENT
Senate Finance Committee Members
Co-Chair John Torgerson
Co-Chair Sean Parnell
Senator Al Adams
Senator Dave Donley
Senator Lyda Green
Senator Pete Kelly
Senator Loren Leman
Senator Randy Phillips
Senator Gary Wilken
House Finance Committee Members
Co-Chair Eldon Mulder
Co-Chair Gene Therriault
Vice-Chair Con Bunde
Representative Alan Austerman
Representative John Davies
Representative Gary Davis
Representative Richard Foster
Representative Ben Grussendorf
Representative Carl Moses
Representative Gail Phillips
Representative Bill Williams
Also Attending: REPRESENTATIVE TOM BRICE; REPRESENTATIVE
JOHN COGHILL, JR.; REPRESENTATIVE BETH KERTTULA;
REPRESENTATIVE BRIAN PORTER; REPRESENTATIVE HAROLD SMALLEY;
ROBERT POE, Commissioner, Department of Administration;
ALISON ELGEE, Deputy Commissioner, Department of
Administration; WENDY REDMOND, Vice President, University
Relations, University of Alaska;
Attending via Teleconference: From Fairbanks: MICHAEL
HOSTINA, Director of Labor Relations, University of Alaska
SUMMARY INFORMATION
SB 3001-APPROPRIATION: EMPLOYEE SALARY & BENEFITS
SB 3002-NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT
HB3001-APPROPRIATION: EMPLOYEE SALARY & BENEFITS
HB3002-NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT
The Joint House and Senate Finance Committee heard
testimony from the Department of Administration and the
University of Alaska. No action was taken on any bills.
SENATE BILL NO. 3001
"An Act appropriating amounts to cover the fiscal year
2001 monetary terms of the collective bargaining
agreements for employees of the University of Alaska
and the fiscal year 2001 salary and benefit
adjustments for university employees who are not
members of a collective bargaining unit; appropriating
amounts to cover the fiscal year 2001 monetary terms
of all executive branch collective bargaining
agreements and the fiscal year 2001 salary and benefit
adjustments for elected officials, officers, and
employees of the legislative, judicial, and executive
branches who are not members of a collective
bargaining unit; and providing for an effective date."
SENATE BILL NO. 3002
"An Act relating to the compensation of certain public
officials, officers, and employees not covered by
collective bargaining agreements; and providing for an
effective date."
HOUSE BILL NO. 3001
"An Act appropriating amounts to cover the fiscal year
2001 monetary terms of the collective bargaining
agreements for employees of the University of Alaska
and the fiscal year 2001 salary and benefit
adjustments for university employees who are not
members of a collective bargaining unit; appropriating
amounts to cover the fiscal year 2001 monetary terms
of all executive branch collective bargaining
agreements and the fiscal year 2001 salary and benefit
adjustments for elected officials, officers, and
employees of the legislative, judicial, and executive
branches who are not members of a collective
bargaining unit; and providing for an effective date."
HOUSE BILL NO. 3002
"An Act relating to the compensation of certain public
officials, officers, and employees not covered by
collective bargaining agreements; and providing for an
effective date."
ROBERT POE, Commissioner, Department of Administration gave
an overview of how the employee contracts were reached and
what they contained.
Mr. Poe said that before the department offered any package
to the unions, a study of employee compensation by other
employers was conducted. He noted that this study did not
include any information from the Lower 48 states because it
was felt that comparisons to the strong job market in the
Continental US would be skewed.
Mr. Poe told the Committee this study found that wages for
all private sector jobs increased by 4.9 percent between
1996 and 1998, federal wages increased by 16 percent, and
state wages increased by an average of .1 percent in
average earnings. He emphasized that the figures represent
an average.
Mr. Poe stated the study found that some positions are paid
higher in state employment, which tended to be the lower
range positions. As the length of service progressed, he
added, the state workers tended to earn less than
counterparts in the private sector.
Mr. Poe talked about the motivation factors for an
employee, such as controlling a project and seeing it
through to completion and the opportunity to affect changes
in the state. He spoke of the general fulfillment and
salary.
Vice Chair Bunde asked if the study had taken benefits into
consideration.
Mr. Poe answered that the study only considered wages
saying that private companies were unwilling to talk about
benefits in a public setting did not allow the public
discussions to consider benefits. He pointed out that the
study found that the comparison of benefits was actually
lower for state workers than for those in the private
sector and some other government positions such as the
municipality in Fairbanks.
Vice Chair Bunde emphasized the importance of health care
benefits. He noted that many people want to work for the
state in order to receive those benefits. He talked about
many private sector jobs that do not offer health care
benefits, saying that these businesses can not afford the
cost. He added that job security is another attraction to
state employment, saying that people are willing to accept
lower pay for secure positions because their private sector
job disappeared. He used a carpenter as an analogy, saying
that a carpenter is always looking for work because he or
she constantly is "working themselves out of a job."
Mr. Poe responded that state employees do work themselves
out of jobs and do in fact get laid off. He emphasized that
the fact that state employees see the legislature in this
special session arguing about contracts does not assure
much job security. He granted that many private sector jobs
do not provide health care, but stated that health care is
not an unreasonable expectation. He stressed that the
larger companies, which the state competes against for
qualified employees, all provide benefits. He added that
some companies, such as large oil companies offer benefits
packages that far outweigh what the state can offer.
Co-Chair Parnell interjected to point out that the study
specifically points out that no comparisons are made to
individually categorized positions. Therefore, he said
there is no statistical basis for either side of this
issue.
Co-Chair Therriault commented on the statement that state
employees were unsure of the stability of their jobs. He
disagreed that the same degree of concern was present as in
other fields. He noted that there would always be a state
government.
Mr. Poe acquiesced but qualified that he was simply
relaying the comments made by state employees. He told of a
situation where a water quality position was eliminated and
the impact to the private sector when there was not a
qualified employee to perform a service. He stressed that
the real issue is how to attract and maintain qualified
employees.
Mr. Poe stressed that people did not strive to work for the
state government. He noted that his predecessor and many
others were now earning significantly more in the private
sector. He stated there are currently 79 vacant engineering
positions in the Department of Transportation and Public
Facilities and that the department cannot find anyone
willing to accept those positions. He stated that the
consequence is road projects that have received funding can
not be constructed without competent engineering work. He
repeated that the entire increase in all private employment
was 4.9 percent and that the state increases were only two
percent.
Co-Chair Parnell asked the witness to detail the entire
contract package rather than focusing on the wage
comparison to the private sector.
Mr. Poe told of how the department presented the same
package to all of the bargaining units, and although the
unions were resentful of this approach, agreements were
reached quickly and smoothly. He talked about the
importance of making employer contributions to health
insurance consistent for all employees.
Mr. Poe continued and explained the differences between
some of the bargaining agreements and the special attention
paid to the costs of these programs.
Mr. Poe addressed the addition of a "G" step and explained
the annual merit increase process. He said that the General
Government Unit (GGU) had negotiated for the addition of
the G step giving up a portion of the overall salary
increases.
Co-Chair Parnell asked for the accumulative cost over the
three years of the contracts.
Mr. Poe clarified that his presentation included the
legislature, and the court system, but not the university.
Senator Phillips asked for clarification that the package
does not include the legislators but only legislative
employees.
Mr. Poe affirmed.
Mr. Poe continued detailing the accumulative costs. He
listed the executive branch cost of $68,823,000 for wages
and $49,779,000 for health insurance, totaling
$118,603,000. Of that amount he noted $36,810,000 wages and
$25,536,000 health benefits costs would be paid from the
general fund.
Co-Chair Parnell clarified that this did not include the
matter of the leave cash-in and asked the cost of the leave
cash-in.
Mr. Poe stated that the anticipated amount of leave cash-in
was insignificant and that an appropriation was not even
being requested.
ALISON ELGEE, Deputy Commissioner, Department of
Administration explained that when the leave conversion for
the GGU was offered, the administration reviewed the sick
leave balances outstanding. She said that 50 percent of
that balance qualifies and could be for cashed out. She
said the total value of the eligible sick leave is $22
million were the entire amount to be cashed out. However,
she said the department estimates that only $4 million
total would be cashed in over the course of the current
employee's employment.
Co-Chair Mulder noted the uniqueness of the situation and
asked how the witness could make such an assumption.
Ms. Elgee explained the research into past programs that
showed no spikes in expenditures.
Co-Chair Parnell clarified that of the $22 million of total
leave available, the department only anticipated a cash-in
of $4 million.
Mr. Poe clarified that the administration does not believe
the entire $22 million is "exposed" for cash-in, saying
this figure is the extreme hypothetical situation. He said
that the 75-hour cap prevents the cash-in to reach that
amount.
Co-Chair Mulder countered that the 75-hour cap is only in
place for two years, but that this was a three-year program
and therefore in the third year much more leave could be
cashed in.
Mr. Poe said that in theory that could happen, but that
history demonstrated that it would not.
Mr. Poe talked about the benefits of reducing sick leave
balances for some positions, such as pioneer home staff,
where the post must be covered.
Co-Chair Parnell directed attention to the proposed merit
increases and asked for the cost.
Mr. Poe replied that merit increases are addressed annually
through the normal budget process and amount to
approximately $3 million per year. He stressed that only
one-third of state employees receives a merit increase in
any given year, due to job changes, longevity or other
reasons. He gave examples of some situations relating to
merit increases and how the administration allows the
managers to make determinations as to how the merit costs
are absorbed into the budget.
Senator Phillips again stressed upon the fact that the
legislators would not be affected by any salary or benefit
increases.
Mr. Poe agreed.
Senator Phillips asked if the Department of Transportation
and Public Facilities engineering positions could be
contracted out.
Mr. Poe answered the work could be contracted out but that
the department is having a difficult time with this as
well. He emphasized that it is also important for the state
to retain knowledge and that contracting out services is
not always the best solution.
Senator Phillips referred to the packet of information
distributed by the Department of Administration and noted
the absence of municipal employees in the data.
Mr. Poe noted all the data was supplied by the Department
of Labor and Workforce Development. He said the earnings
were an average of $150 less for municipal employees than
state employees between 1997 and 1998.
Mr. Poe pointed out percentage increases in employment and
earnings by industry 1997-1998. He compared the large
increases of private industry to the small increases for
government.
Senator Phillips wanted a notation on the chart to ensure
the comparison of "apples to apples" that includes local
public employees.
Mr. Poe responded that the matter was now on the record
thanks to Senator Phillips's comments.
Vice Chair Bunde stressed the importance of remembering
that state workers are neighbors and others in the
community. He understood the moral boost of the one-time
$1200 payout. However, he noted three years later when the
contracts are up for another re-negotiation, the absence of
$1200 in the salary base would be considered a reduction.
Mr. Poe respectfully disagreed noting that the payment
would not be considered mandatory in future negotiations.
He admitted that the bargaining units may argue for another
bonus payout, but was assured that the salary schedule,
including the five-percent increase instituted in the
second and third year of this contract, would be considered
the base.
Senator Leman asked the chair which spreadsheet the joint
committee was working from.
Co-Chair Parnell said the information provided by the
Department of Administration was the same as earlier
information although it had been updated on May 3, 2000.
[Copy on file.]
Senator Leman asked about job reclassifications and how the
costs of these changes are integrated.
Mr. Poe replied that reclassification is done on occasion,
and that some positions increase in range and others go
down. He explained that those positions that are reduced
are grand-fathered for current employees but lowered for
any new employees. He continued that in these cases, those
employees who are grand-fathered would not receive the
$1200 bonus payment.
Ms. Elgee added that when the characterization of work a
particular employees is performing changes to such a degree
that the employee is working "out of class," the
administration is required to recognize the situation and
compensate the employee according to the work performed.
Senator Leman asked for a cost of job reclassification.
Mr. Poe responded that the reclassification cost is net
zero because managers work within their budget to account
for the increased costs for certain positions by holding
vacant positions empty or by other means.
Co-Chair Therriault argued that the absorbed merit
increases actually do cost the state, and that state
employees took home $3 million more each year. He asserted
that this money is lost to the state. He talked of how the
departments approach the legislature saying that their
vacancy rate is too high on account of budget restraints.
Co-Chair Parnell said there may be some misunderstanding
and that he understood that the $3 million is in addition
to the amount that was absorbed.
Ms. Elgee said the offsetting factor to merit increases is
the turnover in staff. She explained that if a employee at
an "F" step quits, a new employee is hired at an "A" step
and the state is able to use the saved funds to pay for
other employees' merit increases. Therefore, she concluded
there is no net increase for merit increases.
Mr. Poe affirmed and gave further details about the
changing composition of the workforce.
Co-Chair Therriault clarified that the merit increases are
funded by turnover rather than shifting funds, holding
vacant positions open, etc.
Mr. Poe answered it is a combination of all these factors.
He stressed that the managers are responsible for managing
personal costs within the budget.
Representative Davies attempted to restate the matter by
saying that the only way merit increases would have a net
increase on the total compensation package is if the
average longevity of the workforce continues to rise.
Ms. Elgee also pointed out that not every union has merit
increases built into their salary schedule.
Senator Phillips asked which unions had merit increases and
the number of employees that receive annual increases.
Ms. Elgee listed those unions that do not have merit
increases as Labor Trades and Crafts, the marine units, and
three teacher units.
It was established that approximately 10,000 employees are
eligible to receive merit increases.
Senator P. Kelly referred to the comments on absorption and
stressed that the balance is maintained because some
employees leave but not because employees were laid off or
the work is contracted out.
Mr. Poe affirmed.
Co-Chair Parnell reviewed the cost of wage increases and
the cost of health benefit increases that total $118
million over the three year contract. He reiterated that
the extreme exposure for leave cash-out is $22 million but
that the administration predicts only $4 million would
actually be cashed in. He concluded that the merit
increases total $3.6 million, come of which would be
absorbed into the existing budgets.
Co-Chair Parnell asked if any other costs imbedded in the
contracts were not reflected in the spreadsheets with the
exception of the University of Alaska and non-covered
employees.
Mr. Poe replied that some unions purchased certain benefits
in exchange for other negotiated items. He gave as examples
of the Department of Public Safety employees obtaining a
geographical cost of living differential for those
stationed in smaller communities. He added that the
Department of Public Safety took part of the proposed $1200
bonus payment for each employee and applied it to a health
trust. He emphasized these are not increased cost, but
rather shifts.
Tape: SFC - 00 #SS1, Side B 5:35 PM
Co-Chair Parnell asked for the cumulative cost of contracts
for the University of Alaska for the next three years.
MICHAEL HOSTINA, Director of Labor Relations, University of
Alaska testified via teleconference from Fairbanks. He
broke down the figures by each bargaining unit within the
University of Alaska system. He stated that the only new
contract under negotiation this year is the ACCFT, which
represents two-year faculty, and would cost $2,618,000 over
the three years of the contract. He continued that the
three-year cost for the United Academics contract is
$8,367,000, the Classified Employees Association contract
is $995,000, and the United Academics Adjunct is
$1,508,000.
Co-Chair Parnell asked if there are any non-covered
employees at the university.
Mr. Hostina said there were some that were not covered by a
bargaining unit.
WENDY REDMOND, Vice President, University Relations,
University of Alaska gave further information on the non-
covered employees noting that a three-year accumulative
total is not available since there is no contract for these
employees. She stated that $3,176,300 is the total general
fund cost for one year for the 2,500 non-covered employees.
She established this figure could be multiplied to reach an
estimate of the cost of wages and benefit increases over
three years.
Ms. Redmond stated that the total general fund cost of the
increases is $5.2 million and includes both covered and
non-covered employees.
Co-Chair Parnell asked for a cost of the increases for non-
covered employees in the Executive Branch.
Mr. Poe directed the Committee's attention to the
spreadsheet noting the figures were included. He cited the
total general fund cost of the $1200 bonus for non-covered
employees in the first year is $870,000 and $1,886,000
total funds. He continued that the health care benefits
increases cost is $307,600 general funds and $724,800 total
funds. The total general fund cost, he summarized is
$1,108,000 general funds and $2,611,000 total funds. He
noted this includes the courts and legislative employees.
Co-Chair Mulder wanted to know the total funds cost for
non-covered university employees over three years, beyond
just the general fund cost.
Ms. Redmond totaled the cost at $4,326,400, of which
$3,176,300 is general funds, $875,800 is university
receipts, $174,800 is federal funds, and $99,500 is
auxiliary.
Co-Chair Parnell restated the figures as totaled between
the executive, judicial and legislative branches and the
university. He calculated the grand total to be over $145
million excluding the leave cash-in provision for the GGU.
Co-Chair Parnell and Mr. Poe discussed the details of the
sick leave and vacation leave accrual system of the GGU. It
was clarified that the contract would allow sick leave to
be transferred to annual, or vacation leave.
Co-Chair Parnell asked what is the current limit for annual
leave cash-in.
Ms. Elgee answered that a balance of 75 hours must remain
after a leave cash-in.
Co-Chair Parnell then proposed if an employee chooses to
not participate in the sick leave cash out, their leave
balance would continue to accumulate, their salary would
continue to increase and the state's exposure would become
greater as well.
Mr. Poe replied there would be no cap imposed on the amount
of sick leave an employee could cash out.
Co-Chair Parnell asked if the current exposure is $22
million and the department's data shows that this entire
amount would not be cashed out, if the exposure would
continue to grow.
Co-Chair Mulder felt the exposure would be even greater
over time because the leave balance would be cashed out
upon termination.
Mr. Poe explained that half of the GGU employees have less
than 200 hours of sick leave accrued and that those
employees would be less likely to cash out because they
utilize their sick leave. He stated these employees are
most often single mothers and parents who take a day of
sick leave when their kids are sick. The other half of the
employees, he said never use any sick leave whatsoever and
those are the people this provision would apply to. He
stated this was to show appreciation to those workers with
a strong work ethic. He surmised these employees would not
convert a large number of sick leave hours. He noted that
this program would increase productive work hours.
Co-Chair Mulder stated that the state ultimately must pay
out the money for sick leave balances either in leave taken
or a cash-out at the end of employment.
Mr. Poe explained the process where 50 percent of an
employee's sick leave could be converted to vacation leave.
He predicted that some of this leave would be cashed out
and that the remainder would be used for vacation time.
Senator P. Kelly took exception to the classification of
these employees as ethical, moral and hardworking, basing
this assumption on a system where employees do not have the
ability to ethically and morally receive a $40,000 payment.
He asserted that this provision creates a system where
these employees can receive such a payment and he did not
know why they would not participate.
Mr. Poe responded these situations would be the exception
rather than the rule based on past experience. He also
noted there are very few employees that have substantial
sick leave balances.
Co-Chair Parnell excused himself from the meeting as he had
a previous obligation. He turned the meeting over to Co-
Chair Mulder.
Co-Chair Mulder calculated the total funds over the three-
year period equal $145 million. He asked the total general
fund costs and total costs for the first year of the
contract.
Mr. Poe broke down the first year costs by each group. He
listed the general fund costs as $11,121,000 executive
branch, $5,161,000 University of Alaska, $1,154,000 Alaska
Court System, $706,000 legislative employees, plus an
additional marine highway bargaining unit.
Ms. Elgee spoke to the $980,000 marine highway
stabilization fund appropriation noting this represents 60
percent of marine highway employee unit costs. She
explained that general funds must be appropriated to the
marine highway fund as a subsidy.
Mr. Poe cited the total of general funds in the first year
at $19,123,100 for covered and non-covered employees. He
added the total cost incorporating all fund sources is
$32,214,300.
Representative Alan Austerman asked for further explanation
of the marine highway stabilization fund.
Mr. Poe detailed how this fund was established to better
account for the revenues and expenditures of the Marine
Highway System.
Co-Chair Mulder spoke of concerns of Representative
Rokeberg and Representative Brice regarding the health care
costs and health savings. He wanted to know if the
arrangement that 50 percent of the savings went to the
employee and 50 percent went to the state was explicitly
stated.
Mr. Poe referred to an analysis that found leeway in the
50-50 stipulation. He said the administration then returned
to the union and obtained a signed letter of agreement to
specify the allocation of any realized savings. He stated
that he would share the report with the joint Committee.
Co-Chair Mulder expressed concern about separating out a
large portion of state employees - over 7,000 - from the
existing health care system and the bargaining power of the
entire state's workforce. He wanted to know what happens to
those employees not transferred.
Mr. Poe stressed it is important to understand that other
unions already have successful health trusts. He detailed
the factors used by insurance companies to determine the
number of lives insured. He noted that smaller groups were
able to obtain good insurance. He spoke of his previous
experience in negotiating health care benefits with various
union groups. He referred to earlier conversations he had
with Representative Rokeberg and his subsequent efforts to
talk with insurance experts in the state.
Mr. Poe went into further detail about health care benefits
and how insurance charges are established. He ascertained
that the reason for the large increase in the health care
industry in the state is because Alaska is the "last
bastion of full indemnity." He stated that health care
plans that pay 80 percent of health care costs while the
insured pays 20 percent is not longer practiced elsewhere.
He explained that managed care providers have replaced the
full indemnity method of health care.
Mr. Poe continued saying that the intent of encouraging
unions to choose health trusts, is because employees are
more willing to make tough decisions about their health
care coverage than let management make those decisions. He
shared that federal employees in Alaska have health care
benefits under a preferred provider system managed by Blue
Cross.
Co-Chair Mulder was certain more discussion on health care
coverage would be held. He warned of the consideration
needing to be given to the increased health care costs to
the state and how they would be paid for over time. He
asked if the administration had developed a strategy for
paying for the increased costs in the future.
Mr. Poe responded that, by law, his job is to negotiate the
contracts and that the Office of Management and Budget's
responsibility is to address the matter of paying for the
costs. He added that operating state government is a multi-
billion matter and that employees cost money.
Mr. Poe than talked about the importance of state employees
to the economy.
Co-Chair Mulder asked if it was fair to say that the
Department of Administration did not address the funding
mechanism necessary to fund the new contracts.
Mr. Poe stated that was correct.
Co-Chair Mulder asked about a provision in the GGU and
other units' contracts stipulating that a strike could
occur within ten days if the legislature fails to fund the
negotiated contracts.
Mr. Poe affirmed such a provision is contained in some of
the contracts.
Co-Chair Mulder asked if special legislation would be
required each year to fund remaining portions of the
contracts.
Mr. Poe cited that statute and resolutions accomplish such
appropriations and that the legislature would have to
decide what mechanism to follow.
Co-Chair Mulder asked if the increased costs could be
included in the overall operating budget in the future, and
the legislature would have to take specific action to
reject contract increases.
Mr. Poe affirmed.
Co-Chair Mulder then asked if the legislature were to make
reductions to personal services items, but still fully
funded the contract obligations, if the administration
would honor the contracts rather than shift the funds to
cover the other personal services shortfall.
Mr. Poe stated the administration would use the funds to
pay the contract costs.
Vice Chair Bunde addressed communications he and other
legislators received from state employees expressing
frustrations with the legislature. He reviewed the process
where representatives of the unions met with the
administration to prepare a contract, then returned to the
members for a vote of approval. He asked if the legislature
therefore served as the "membership" of the administration
and had the ability to accept or reject contracts prepared
in these meetings.
Mr. Poe assured that rejection by either party is not
"unfair labor."
Vice Chair Bunde asked if the contracts were fairly
negotiated.
Mr. Poe expressed that he thought the current agreement was
fairly negotiated and he restated the process of ratifying
or rejecting the proposed contracts.
Vice Chair Bunde understood the value of the employees but
asserted it is a matter of whether the state can afford the
increased costs. He expressed that while the employees
could choose to go on strike, the legislature is not
driving them to that position should it not fund the
contracts.
Mr. Poe commented that the agreements contain increases
much lower than what the bargaining units asked for.
Co-Chair Mulder addressed a provision that grants paid
leave to employees performing court service. He wanted to
know if this applies to situations where an employee might
be pursuing civil charges against another person or even
the state.
Mr. Poe replied he would have to research and provide an
answer at a later time.
Representative Austerman took a different tact noting that
on one side, unions are negotiating for state employees and
on the other side the governor is negotiating for the
legislature. He asked if the unions ever discuss the on-
going negotiation process with each other.
Mr. Poe answered that the unions do discuss the progress
each is making.
Representative Austerman asked if a mediator is ever called
upon to work with the union and the administration.
Mr. Poe stated that a mediator was utilized during this
process.
Representative Austerman then asked if during this time,
there were ever discussions between the administration and
the legislature. He asserted that the manner in which the
unions worked together is different than how the
administration shares information with the legislature.
Mr. Poe spoke of his efforts to meet with the Legislative
Budget and Audit Committee to discuss the process and
receive input. He said he was quoted the law and told that
his job is to negotiate and the legislature's job is to
approve or reject the contract.
Representative Austerman made the point that the unions
were cooperating with each other while the legislature is
not involved in the process although it has the ultimate
authority.
Co-Chair Mulder noted a resolution adopted the previous
year that clearly stated any new contract could have no net
cost to the state.
Representative Davies restated that the legislature is on
record expressing that it did not intent to fund contracts
that include increased costs.
Ms. Elgee relayed that the contract provisions stipulate
that court leave applies to jury duty and subpoenas to
testify. She noted that the employee is paid administrative
leave and any compensation paid by the court is returned to
the state.
Co-Chair Mulder said that issue would be checked because he
had received contrary information.
Senator Phillips asked if this applied to federal and state
court duty.
Ms. Elgee affirmed the provision does not differentiate
between which court the employee is serving.
Co-Chair Mulder commented that if the legislature were to
not approve the contracts, the GGU has indicated a
willingness to strike. He wanted to know if the
administration has identified which positions are critical
and those employees who would be required to continue
operating state government.
Mr. Poe explained the process of classifying employees and
identifying those not allowed to strike. He added that the
Y2K readiness plan could be applied to a strike situation
and that the administration would be prepared.
Co-Chair Mulder asked how prepared the administration is
for a strike.
Ms. Elgee noted if a strike occurred the next day, the
administration would not be prepared, but if given some
time, would be prepared. She noted the steps required
before a strike could begin, including returning to
negotiations for ten days before an impasse declaration
could be made.
Co-Chair Mulder asked the timeline and how soon a strike
would begin.
Ms. Elgee answered that some unions could move faster than
other unions based on the size of their memberships. She
speculated a minimum of 30 days would be required.
Co-Chair Mulder wanted to know if the administration would
be ready in 30 days.
Ms. Elgee listed those not able to strike, such as Class 1
employees at the Pioneer Homes and correctional facilities.
Class 2 employees, she continued work at the airports and
could be called back to work after a period of time.
Co-Chair Mulder questioned if Class 1 and Class 2 employees
would go to arbitration automatically.
Ms. Elgee replied some would go to arbitration.
Representative Austerman questioned if the Inland Boatman's
union is on a different schedule.
Ms. Elgee noted that there are a variety of things that
confuse the issue. She noted that contracts have different
time lines. She explained that there was a court ruling
that was specific to a strike vote by a marine unit and
that impasse does not have to be found before a strike
vote. She noted the state is appealing the decision and
would challenge the action of a strike vote before impasse.
Senator Wilken voiced concern of the exposure of the state
general fund for sick leave conversions. He reviewed the
proposal of converting sick to personal leave.
Tape: SFC - 00 #SS - 2, Side A 6:22 PM
Senator Wilken and Mr. Poe clarified the actual amount of
time the state and employee accrues by the leave
conversion. It was established that time converted from
sick leave to vacation leave is calculated at 50 percent of
the original amount.
Mr. Poe stressed that employees have a right to take time
from work if that employee is ill.
Senator Wilken asked what rules apply to the cash out of
converted leave.
Mr. Poe explained an employee must utilize all personal
leave before using sick leave. He explained the rules
pertaining to the use of sick leave that stipulate no more
than 75 hours can be cashed in for the first two years and
there must be a balance of 37.5 hours.
Senator Wilken pointed out that it is the employee's money.
Senator Phillips questioned if the general public supports
the contracts.
Mr. Poe responded that people are fair and that given the
facts they will make reasonably fair choices. He felt that
many people would not know or care about the contracts. He
stressed that the contracts are reasonable. He observed
that there have not been letters to the editors decrying
the contracts. He emphasized that the increases are fair.
Senator Phillips questioned the funding source.
Mr. Poe responded that the Office of Management and Budget
would have to speak to the funding source.
Representative Davies asked when the deadline was for
employees to chose to convert their sick leave.
Mr. Poe replied that employees would have to choose by
December 16, 2000. He expected that only half of the
employees would participate, based upon a GGU poll.
Senator P. Kelly asked if the 75-hour sick leave cash-in
limit is in addition to the existing allowance for vacation
leave cash-in.
Mr. Poe clarified that if 50 percent of sick leave is
converted to annual leave and only 75 hours of the
converted hours can be cashed out in any given year.
Co-Chair Mulder clarified that 150 hours can be converted,
but that only 75 could be cashed out. The other 75 hours
could be cashed the next year.
Mr. Poe referred to the two-year cap on the sick leave
conversion provision.
Senator P. Kelly noted that health benefits have become a
property right.
Representative Foster asked if the Cost of Living Allowance
(COLA) would be affected.
Mr. Poe clarified that the COLA is already included in the
calculations.
Representative Foster noted that 99 percent of his
constituents do not work for the state and questioned the
comparison of retirement packages.
Mr. Poe responded that the objection is not to bring state
employees down to the level of other compensation packages
around the state. The goal, he asserted is to attract and
retain employees.
Representative Foster reiterated that retirement benefits
have not been included.
Ms. Elgee pointed out that local government and school
districts participate in the same retirement packages.
Senator Phillips stressed the need to compare to the
private sector. He pointed out that SBS and PERS are
valuable benefits.
Mr. Poe responded that it is difficult to compare apples to
oranges and added that the private sector can offer profit
sharing and other benefits.
Senator Phillips stressed that job security is an issue in
the private sector.
Mr. Poe noted that government is market driven. The
government is having a hard time getting and keeping
employees. He stated that the number of employees not
making their probation has gone up as the quality of the
candidate has gone down.
Mr. Poe stressed that that there are many factors
pertaining to the decision to work for government.
Senator Phillips emphasized that there are trade-offs.
Senator Wilken expressed concern that there would be a $10
to $20 million bill presented to the legislature in the
next year. He asked for an estimate of future costs.
Co-Chair Torgerson asked for information on the fiscal
note.
ADJOURNED
Co-Chair Mulder adjourned the meeting at 6:40 PM.
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