Legislature(2023 - 2024)SENATE FINANCE 532
01/25/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Fy 25 Budget Overview: Legislative Finance Division | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
January 25, 2024
9:02 a.m.
9:02:30 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
Senator David Wilson
ALSO PRESENT
Alexei Painter, Director, Legislative Finance Division
SUMMARY
^FY 25 BUDGET OVERVIEW: LEGISLATIVE FINANCE DIVISION
9:03:37 AM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
(LFD) discussed the presentation, "Update on State Employee
Vacancies and Other Budget Issues" (copy on file). He
looked at slide 2, "Outline":
• Updated State employee vacancy data
• How are vacancies addressed?
• Operating and capital budget crossover
Mr. Painter addressed slide 3, "State of Alaska Budgeted
versus Filled PCNs, 2015-2023." He stated that the slide
showed the positions from the state positions. He remarked
that the budgeted and filled positions had decreased since
2015. He remarked that the number of filled positions had
decreased more than the budgeted positions.
9:05:50 AM
Mr. Painter highlighted slide 4, "Percentage of Full-Time
State PCNs Filled, 2015-2023." He noted that there was a
decrease by nearly 3 percent, with only a slight
improvement form the all-time low. He stressed that the
slide only represented the executive branch positions.
Senator Bishop requested a ballpark total number of all
state positions.
Mr. Painter replied that it was difficult to do a straight-
line comparison.
Senator Kiehl wondered whether there was money for the
positions represented in the blue line.
Mr. Painter replied that generally there was a budgeted
vacancy factor when budgeting positions. He stressed that
sometimes vacancies caused increased cost, and sometimes
the vacancies caused decreased costs.
9:09:09 AM
Mr. Painter discussed slide 5, "Full-Time PCN Vacancy
Percentages by Agency, December 2022 and December 2023." He
stated that the agencies were sorted by the number of
positions, comparing the current year to the previous year.
He noted that overall there was a 14.5 percent vacancy rate
in December 2022 and a 13.8 percent vacancy rate in
December 2023. He noted that there was some improvement,
but it was not a universal improvement. He noted the
Department of Corrections (DOC) vacancy rate improvement.
He summarized the remaining departments represented in the
slide.
Mr. Painter addressed slide 6, "Vacancy Percentages by
Range, December 2022 to December 2023." He stated that most
positions were in ranges between 10 and 24. He noted that
there was not a clear pattern in the changes from year to
year. He remarked that the highest vacancy rates were at
either end of the spectrum of the ranges. He remarked that
the trend in wage growth happened in the last year at the
lower end of the pay range.
Mr. Painter looked at slide 7, "Position Titles with
Highest Vacancy Rates, December 2023." He pointed out that
the highest vacancy rate was for Unemployment Insurance
Techs at a vacancy rate of around 38 percent. He noted that
there had been a longstanding problem filling the public
health nurse positions.
9:15:52 AM
Mr. Painter pointed to slide 8, "Allocations with the
Highest Vacancy Rates, December 2023." He noted that the
highest vacancy rate increase went from 23.7 percent to
42.1 percent. He detailed the vacancy rate allocation
increases in the other agencies on the slide.
Mr. Painter displayed slide 9, "What Is the Impact of
Vacancies?"
• For some types of employees, the workload is fixed
so vacancies result in higher costs due to overtime.
Examples:
Correctional Officers earn time-and-a-half for
overtime, and overtime is often worked by more
senior employees rather than new recruits, so
vacancies increase costs substantially.
The work of two vacant actuarial positions in
the Department of Commerce have been filled by
contracts estimated to cost between $500.0 and
$1,000.0 in FY25.
• In other cases, vacancies result in work being done
more slowly, services being reduced, or employees
having unsustainable workloads. Examples:
The Alaska Marine Highway System has been
unable to run a full schedule in part due to
staffing shortages.
There have been delays processing retirement
paperwork, due to a shortage of Retirement
Technicians in the Division of Retirement and
Benefits.
Burnout appears to be a problem in Public
Assistance, Public Defenders, Public Guardians,
and the Division of Personnel, among others, due
to unsustainable workloads.
9:24:08 AM
Mr. Painter addressed slide 10, "How Are Vacancy Issues
Addressed?
• For issues that apply to a broad class of employees
(such as an entire bargaining unit), there can be
across-the-board raises.
Examples: Public Safety Employees Association
(primarily representing State Troopers) will
receive increases of 7 percent in FY24, 3 percent
in FY25, and 10 percent in FY26.
The legislature created a new salary schedule
for attorneys in 2022 that is 15 percent higher
than other partially exempt positions.
• For issues regarding a particular position type, a
classification study (conducted by the Division of
Personnel and Labor Relations in the Department of
Administration) can increase wages to match the
market.
For example, Public Health Nurse salaries were
increased in FY22 after completion of a salary
study.
However, there is currently a substantial
backlog of classification studies. The
legislature appropriated $1.0 million in FY24 for
a broader review of classification that is
expected at the end of the fiscal year.
• Narrower issues can be handled through regular
contract negotiations, but often are done through
Letters of Agreement (LOAs) outside the regular
contract.
For example, the Correctional Officers contract
includes a provision providing a permanent step
increase to employees who work at the Spring
Creek Correctional Institute due to long-term
vacancy issues in that institution.
So far in FY24, 13 LOAs with monetary terms
have been sent to the legislature, ranging from
applying to a single person to all AMHS
employees. These include bonuses, overtime pay,
and extra merit steps.
Senator Bishop requested a ballpark timeline to complete a
classification study.
Mr. Painter agreed to provide that information.
Senator Bishop noted the permanent step increase for Spring
Creek Correctional Center, and wondered whether the
increase was because it was a maximum security prison.
Mr. Painter replied that there were some various issues
with the facility. He remarked that it being a maximum
security prison was a factor in that permanent step
increase. He stressed that housing was limited in Seward.
9:30:26 AM
Mr. Painter looked at slide 11, "More about LOAs":
• LOAs including a monetary term are required to be
approved by the legislature. In the FY23 and FY24
budgets, the legislature has included language that
approves all LOAs provided that they are sent to the
Legislative Finance Division (ensuring that the
legislature can review them).
• Agencies can often absorb the costs of LOAs due to
the vacant positions. However, this is not a
sustainable way to fix the problems because LOAs tend
to be temporary measures.
The Division of Finance had an LOA in FY23
providing bonuses to Human Resources Technicians.
In June 2023, the vacancy rate for these
positions was 30.4 percent. The LOA did not
continue into FY24. By August 2023, the vacancy
rate for these positions was up to 41.1 percent,
and in December it was 46.4 percent. The
Governor's FY25 budget includes funding for
bonuses again in FY25.
If positions are subsequently filled, vacancy
can no longer pay for these extra measures.
9:35:18 AM
Senator Kiehl wondered who was working in the systemic
solutions.
Mr. Painter replied that that he did not know the actions
of the administration.
Senator Kiehl appreciated the work on the issue, but wanted
to explore the issue to determine the root of the problem.
Senator Bishop wanted to ensure that help was provided on
issue of payroll payments.
Mr. Painter discussed slide 12, "Operating Items in Capital
Budget":
• AS 37.07.120(4) states:
"capital projects" and "capital improvements"
mean an allocation or appropriation item for an
asset with an anticipated life exceeding one year
and a cost exceeding $25,000 and include land
acquisition, construction, structural
improvement, engineering and design for the
project, and equipment and repair costs
• Operating budget items in the numbers section lapse
at the end of the fiscal year. Capital project
appropriations last the life of the project, some
spanning many years. This makes capital appropriations
more flexible for agencies than operating items.
• When operating items are placed in the capital
budget, it can distort the true size of the State's
ongoing budgetary obligations. Keeping a clear
separation between the two budgets is important for
maintain a transparent budget and for enabling fiscal
planning.
• The line between capital and operating items is not
always clear; items such as funding for maintenance
can be found in both budgets.
9:42:00 AM
Senator Bishop agreed that the capital item was an asset
until it becomes a liability through deferred maintenance.
Mr. Painter looked at slide 13, "Potential Operating Items
in the FY25 Governor's Capital Budget."
9:51:12 AM
Senator Kiehl wondered whether there was a way to automated
way to put the ongoing cost into the operating budget.
Mr. Painter replied that there were various efforts, but
were not necessarily "smooth."
Mr. Painter noted that there were slides included in the
presentation in the appendix.
Co-Chair Stedman asked for an overview of those slides.
Mr. Painter looked at slide 15, "Appendix":
The following slides are repeated from a March 9,
2023, presentation to the Senate Finance Committee and
are included at the chair's request.
9:53:41 AM
Mr. Painter discussed slide 16, " Historical Retention Data
About the Data Source":
• The Division of Retirement and Benefits provided
data on employee retention from FY03-22.
• The data shows whether employees hired in a given
fiscal year are still employed by the same PERS
employer in subsequent years.
• The data is broken out by employer in three
categories: the State as an employer, other SBS
employers, other non-SBS employers.
• It's further broken out for TRS, PERS public safety
and fire employees (PERS P/F), and all other PERS
employees. This presentation will only cover PERS
"non-P/F" employees.
• Finally, it distinguishes between employees in a DB
or DC system.
• One limitation of this data: if an employee leaves
and comes back, they show up as a new employee when
they return. This may skew the comparisons for the
early years of the DC system if returning employees
and new employees have meaningful differences in
retention.
Mr. Painter pointed to slide 17, "Retention Rate by Class
Year, PERS Non-P/F, State Only."
9:57:11 AM
Mr. Painter discussed slide 18, "Year 6 and 11 Retention,
PERS All Others, State Only."
Mr. Painter pointed to slide 19, "Non-State Employers in
Social Security/SBS":
• In addition to the DB or DC system, all State of
Alaska employees are in the Supplemental Annuity Plan
(SBS), which is a defined contribution plan with a
6.13 percent employee contribution, matched by 6.13
percent employer contribution. This system essentially
replaces Social Security for these employees.
• Non-State PERS employers have varied supplemental
plans. Of the 14,163 non-State, non-P/F PERS employees
in the DC system, 7,473 are in Social Security, 1,645
are in SBS, and 5,045 are in neither plan.
Mr. Painter displayed slide 20, "Retention Rate by Class
Year, PERS Non-P/F, Non- State, Non-SBS Only."
Mr. Painter highlighted slide 21, "Year 6 and 11 Retention,
PERS Non-P/F, Non-State, Non-SBS Only."
10:00:32 AM
Mr. Painter addressed slide 22, "Retention Rate by Employer
Type, PERS Non-P/F FY03-06 (DB) only."
Co-Chair Stedman discussed housekeeping.
ADJOURNMENT
10:04:28 AM
The meeting was adjourned at 10:04 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012524 LFD SFIN Additional Issues 1-25-24.pdf |
SFIN 1/25/2024 9:00:00 AM |
LFD FY25 Budget Overview |