Legislature(2023 - 2024)SENATE FINANCE 532
03/22/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Forthcoming Labor Contracts and Monetary Terms | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
March 22, 2024
9:04 a.m.
9:04:00 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Click Bishop
ALSO PRESENT
Paula Vrana, Commissioner, Department of Administration;
Kate Sheehan, Director, Division of Personnel and Labor
Relations, Department of Administration.
PRESENT VIA TELECONFERENCE
Memry Dahl, Chief Human Resource Officer, University of
Alaska.
SUMMARY
FORTHCOMING LABOR CONTRACTS and MONETARY TERMS
DEPARTMENT OF ADMINISTRATION
^FORTHCOMING LABOR CONTRACTS and MONETARY TERMS
DEPARTMENT OF ADMINISTRATION
9:04:31 AM
Co-Chair Stedman relayed that the committee would receive
an update on the pending labor contracts. He explained that
there were currently four bargaining units/unions in
contract negotiations, which would impact the budget. The
committee would hear a presentation from the Department of
Administration (DOA) and the University of Alaska (UA).
9:05:14 AM
PAULA VRANA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
explained that the Division of Personnel and Labor
Relations negotiated, coordinated, approved, and
implemented the 11 executive branch labor contracts. She
relayed that the division director Kate Sheehan was
involved in bargaining all state labor contracts; the
division was negotiating three in the current year
including the Supervisory Union (SU), Labor, Trades and
Crafts Unit, and the Alaska Correctional Officers
Association (ACOA). She noted that Director Sheehan would
present on the process for legislative approval of state
labor contracts, provide updates and timelines on various
contracts, and review the approval process for letters of
agreement. The department was working to roll out a new
automated workflow process for the letters of agreement and
the associated approval.
9:06:58 AM
KATE SHEEHAN, DIRECTOR, DIVISION OF PERSONNEL AND LABOR
RELATIONS, DEPARTMENT OF ADMINISTRATION, provided a
PowerPoint presentation titled "Alaska Department of
Administration 2024 - Labor Contracts," (copy on file). She
explained that the division was tasked with bargaining
contracts under the Public Employment Relations Act (slide
2). The negotiations included bargaining wages, hours, and
other terms and conditions of employment. She stated that
some of the items were clear in statute whereas some of the
items were set through prior legal decisions. She noted
that the state was not required to negotiate permissive
terms, which included classification. She added that
monetary terms had to be approved by the legislature. She
was required to submit a contract to the legislature within
10 days of reaching an agreement.
Ms. Sheehan stated that the department was currently
bargaining three contracts. She noted there were four
before the committee because at the time, the state had
still been bargaining with the Alaska Police and Fire
Officers Association. An agreement had been reached and was
in the operating budget. She shared that she was directed
th
to provide the monetary terms of a new agreement by the 60
day of session. She acknowledged that they were clearly
beyond that mark at present. She explained that the
legislature could decide to not review the monetary terms,
to put them in the operating budget, or elsewhere. She
noted that the legislature could opt to amend terms of the
conference committee to include them. She did not yet have
the monetary terms for the three outstanding contracts.
9:09:46 AM
Ms. Sheehan continued to review slide 2. She relayed that
once impasse was reached and mediation failed it depended
on which of the three strike classes was involved. The
first strike class included public safety and nurses and
was unable to strike. The second strike class included
teachers at Mt. Edgecumbe and equipment operators providing
snowplow removal. The third strike class included the
majority of state employees. She relayed that if an impasse
was reached the employees could strike. She added that
their contract expired on June 30.
Senator Wilson asked if DOA or the Department of Law (DOL)
negotiated on behalf of the state.
Ms. Sheehan answered that it was currently a mix. She
shared that she had great labor relations staff, but they
were new to the job. The division was currently using a
hybrid approach. She detailed that one of her deputy
directors was negotiating the agreements for Labor, Trades,
and Crafts and the Supervisory Union. The division had
outside counsel negotiating the ACOA contract.
9:11:26 AM
Co-Chair Olson considered lawyers negotiating on the
division's behalf and wondered about the strain on the
Department of Law, which he knew was understaffed. He asked
if DOL would need supplemental funding.
Ms. Sheehan replied that she anticipated a supplemental
budget request. She acknowledged that the work was a strain
on DOL. She detailed that the negotiations were heavily
using one attorney. She believed there were alternatives
that could be devised for the seven negotiations in the
following year. She confirmed that it was a legitimate
concern and problem that needed to be addressed.
Co-Chair Stedman commented that sometimes the legislature
received supplementals at the conclusion of the legislative
process and it almost always tried to incorporate them into
the budget.
Ms. Sheehan relayed that she had been director for 10 years
and had been deputy director for 7 years prior. She noted
that there had always been an extra funding source for
labor relations. She explained that the current situation
was not new, but the fund was about depleted; therefore,
she believed it was a needed conversation.
9:13:21 AM
AT EASE
9:13:38 AM
RECONVENED
Co-Chair Stedman relayed that the meeting needed to
conclude at 10 o'clock.
Senator Wilson asked if the division's current budget
request was reflective of current staffing levels and the
seven contracts up for negotiation in the coming year.
Ms. Sheehan replied that she did not believe increasing the
number of PCNs [position control numbers] would solve the
division's staffing issues. For example, the legislature
could give the division 20 PCNs but if there were not
qualified individuals to fill the positions it would not
help the situation.
9:14:39 AM
Ms. Sheehan addressed slide 3 titled "Letters of Agreement
(LOA)." She explained that letters of agreement modified
collective bargaining agreements and could be for
individual employees, a section, a division, a department.
She estimated that she approved and signed around 300
letters of agreement annually. She shared that Legislative
Legal Services and DOL had told her that if an agreement
required an appropriation, it had to come through the
legislature. She explained that statute required monetary
terms to be approved by the legislature. However, if an
agreement did not require an appropriation, she had the
authority to sign an agreement for that fiscal year. She
elaborated that when requests came in, she contacted the
Office of Management and Budget (OMB) to receive
confirmation there was available funding. She then looked
at the terms of the letter of agreement and decided whether
it complied with contract language and what the agency was
asking for. Once those things were determined, the
agreement was signed.
Co-Chair Stedman asked Ms. Sheehan to touch on the
reporting. He noted there was an interest with OMB,
Legislative Legal Services, and legislators keeping track
of the status of letters of agreement and their amounts.
Ms. Sheehan responded that the division had been providing
a courtesy copy of letters of agreement to the director of
the Legislative Finance Division (LFD). She did not think
it made a lot of sense to send everything the division was
currently sending; therefore, she had been working with OMB
to develop a report that would help the legislature
understand the monetary impacts. The division was also
working with the Division of Finance on updating its
systems with the goal of improved reporting.
Co-Chair Stedman communicated that there was an interest in
having the letters of agreement consolidated in a report in
order for the legislature to keep track of the totals
instead of receiving the information piecemeal.
9:17:40 AM
Senator Kiehl asked how the division came up with the
appropriate levels in the letters of agreement. He had seen
the letters include various levels including one step at
3.5 percent of pay, 30 percent of pay, $2,000, and five
figures. He considered that there had to be a method.
Ms. Sheehan replied that the 30 percent was likely within
Labor, Trades, and Crafts. She explained that Alaska
Airlines told the division it would discontinue service to
the Bethel airport unless the state could do something
about it. She believed the increase also was witnessed at
the Anchorage airport because cargo planes announced they
would not fly into the airport unless enough runways could
be cleared. She thought the higher levels were based on the
decision of DOA that a crisis mode had been reached. She
explained that letters of agreement that contained lower
levels were aimed at attracting new employees.
Senator Kiehl thought it made it sound like a crisis had
been hit and the state panicked and threw cash at the
problem. He asked how 30 percent had been decided upon as
opposed to 20 percent, 50 percent, or another number.
Ms. Sheehan thought the 30 percent was based upon what was
being done with other unions. She stated that their pay
rate was approximately 30 percent higher than "ours." She
used the example of the International Brotherhood of
Electrical Workers (IBEW), which had "a higher rate than
us" for trades; however, "we don't cap out and they don't
have the leave necessarily that we have." She stated it was
necessary to factor in wages, benefits, and leave when
proposing terms to unions. She stated that "we have pay
increments, so we don't cap out." She believed IBEW capped
out at seven years.
Senator Kiehl thought it sounded like the broader market
and total picture was factored in. He asked if the letters
of agreement got "us to market," if the goal was to roll
the letters of agreement into the contracts. He asked if
the state should be looking in the contracts towards
something like the letters of agreement did.
Ms. Sheehan answered, "No." She thought many of the letters
of agreement were funded through current vacancy rates
through current budget. She explained that it was possible
to put them into the contract, but it would be part of what
DOA sent over to be funded; however, she did not know if it
was necessary.
9:21:15 AM
Ms. Sheehan turned to slide 4, "Bargaining Unit (BU)
Detail." The slide showed a table listing current and
future bargaining negotiations. The department was
currently negotiating with the Supervisory Union, ACOA, and
Labor, Trades and Crafts. There were seven contract
negotiations in the coming year, which was a heavy lift.
The following year included public safety negotiations,
which had been broken into two groups divided between the
Department of Public Safety (DPS) and the Department of
Transportation and Public Facilities (DOT) including
airport, police, and fire. The last section of the table
pertained to noncovered employees. She explained that
legislation had been passed that specified noncovered
employees would receive what the Supervisory Union received
through an appropriation by the legislature.
9:22:23 AM
Ms. Sheehan referenced slide 5 titled "State Personnel
Overview." A table on the slide showed what the state paid
for each union and employees including benefits and total
funding.
Co-Chair Stedman asked for detail about the column labeled
"Salary + Premium Pay." He asked if premium pay was
overtime pay.
Ms. Sheehan answered that premium pay included things like
travel pay and cellphone allowances.
Co-Chair Stedman asked Ms. Sheehan to get back to the
committee with a breakdown of costs pertaining to overtime
pay. He expressed concern about vacancy rates leading to a
substantial amount of overtime and expensive operations.
Co-Chair Hoffman asked Ms. Sheehan to break down the
premium pay figures between overtime and salary.
Ms. Sheehan agreed to provide the information.
9:23:51 AM
Ms. Sheehan addressed slide 6 titled "Summary of
Bargaining." A table showed the three unions currently in
the bargaining process with the state. She highlighted that
the cost of living allowance (COLA) was one of the largest
bargaining components. The department had made proposals to
two of the unions and was still working out some bargaining
dates with ACOA. The state also bargained health employee
contributions and work rules. She explained that bargaining
was internal and she could not go into exact details about
what the parties were proposing.
9:24:42 AM
Ms. Sheehan reviewed slide 7 titled "Sample Historical
COLAs & Anchorage CPI Comparison." A table showed what the
state had given every union compared to the Anchorage
Consumer Price Index (CPI).
Co-Chair Stedman asked for more details about the slide. He
observed that the column labeled "MEBA" showed a total of 3
percent at the bottom of the slide compared to 27 percent
for the Anchorage CPI. He asked what the column labeled
"MMP" was, which showed a total of 6 percent. He asked why
there were substantial differences between the totals.
Ms. Sheehan explained that some of the reason was that it
had been a couple of years without a contract agreement
[with some of the entities shown on slide 7]. She noted
that entities not under an agreement received no COLA.
Co-Chair Stedman asked what MEBA and MMP stood for.
Ms. Sheehan replied that MEBA was the Marine Engineers'
Beneficial Association with about 73 members. The Masters,
Mates, and Pilots entity had approximately 80 members.
Co-Chair Stedman stated that it was not the legislature's
role to get into the bargaining and it was tasked with
funding agreements worked out between the administration
and the labor force. He cited concern that the state was at
a competitive disadvantage with the State of Washington,
other nearby states, and even within Alaska. He remarked
that the state had trouble filling its roles and had higher
vacancy rates. He did not know what the base rate had been
at the beginning of the table in 2011 [on slide 7];
therefore, he did not have a starting point reference. He
highlighted the column labeled "ACOA" and observed there
was a significant difference [in the total at the bottom of
the table]. He pointed to the column labeled "PSEA," which
showed a total of close to 35 percent.
Ms. Sheehan explained that ACOA was the Alaska Correctional
Officers Association and PSEA was the Public Safety
Employees Association. She detailed that both entities were
able to do interest arbitration. She elaborated that
interest arbitration was under statute and if agreement
could not be reached, the union and the state presented
their sides to the arbitrator and the arbitrator made a
decision. She remarked that they were slightly skewed. She
relayed that there were multiple issues associated with the
marine unions over time including a failure to reach
agreement. She relayed that MEBA had a pension fund funded
by the state that was separate from the Public Employees'
Retirement System (PERS). She elaborated that when looking
at numbers associated with MEBA, the funding appeared in
their pension instead of wages, which is what the entity
wanted. She believed the reason MMP was skewed was due to a
lack of an agreement with the state.
9:28:46 AM
Senator Kiehl stated that the table [on slide 7] only
showed a comparison of what it cost to live in one town in
the state [Anchorage]. He asked how the long-term pay
trends compared to what the state's competitors paid.
Ms. Sheehan noted that the slide did not factor in the five
different geographic differentials, which was based on
where a person lived. She explained that the geographic
differential was 60 percent higher in either Bethel or Nome
when compared to Juneau (employees in Juneau received 5
percent). The marine unions had a cost of living
differential for living anywhere in Alaska. She relayed
that the state's biggest competitor was the federal
government that had a cost of living differential to live
in Alaska. The state considered the geographic location for
the majority of state employees. She noted that the
geographic differential was still based off of a study
conducted by the state in 2009.
Senator Kiehl thought the chart showed that the state's
goal in bargaining was not to match the cost of living
because that only happened in two of the columns reflecting
different unions. He asked if the state was matching
anything else. For example, he asked if the state was
matching what the State of Washington and the federal
government paid correctional officers or what the private
sector paid equipment operators. He asked if the principle
was to pay as little as the state could get away with. He
asked what the real comparators were.
Ms. Sheehan answered that the legislature had appropriated
funding for a statewide salary study, which would be final
on June 30, 2024. She reported that the objective was to be
th
the 65 percentile of what everyone was paid. The study
looked at the federal government, private sector, other
states, and municipalities. The goal was for the salary
study to reflect what the state was paying in contrast to
what others were paying.
9:31:48 AM
Ms. Sheehan reviewed slide 8 titled "Benefits." She
explained that some benefits were a part of the bargaining
process and others were not. Other than the Marine
Engineers' Beneficial Association, the state did not
bargain anything with pension. She noted that the state
bargained the employer contribution for health trusts. She
elaborated that if an individual was not in a health trust
and was in an Alaska select plan, the state bargained the
employee contribution.
Ms. Sheehan turned to slide 9 titled "State's Contribution
to Health Trust / Health Insurance." The slide included a
table showing what the state was currently paying for
employee health insurance. Ms. Sheehan noted that most of
the contracts specified a percentage paid versus an exact
dollar amount. For example, a percentage could be 10 or 15
percent depending on the contract. She remarked that the
percentage varied based on what the administration decided
the state was paying into healthcare.
Co-Chair Stedman remarked that when the slide was redone in
the future it did not need to include anything under the
one dollar mark when listing the cost per employee.
9:33:30 AM
AT EASE
9:34:06 AM
RECONVENED
Co-Chair Stedman relayed that it was a struggle to put
parameters on the budget because the budget would stay
within its projected revenue for FY 25. He elaborated that
it meant no draw exceeding 5 percent on the Permanent Fund
Earnings Reserve Account (ERA) and no draw from the
Constitutional Budget Reserve (CBR). He asked if the
division could privately provide a range of expectations
because there was a high likelihood all of the available
funding would be expended. He suggested it would be prudent
to set aside funding to ensure the state would meet the
obligations negotiated with employees, so they did not have
to wait until the following January.
Ms. Sheehan relayed that the division's goal was to reach
an agreement with all three unions prior to the end of
legislative session. She explained that the division was
tying numbers to the CPI and at present it was necessary to
look at historical numbers; the lookback was at
approximately 5 percent. She thought the CPI was probably
going down, so it was difficult to do outlying years. She
noted that under statute, the division presented the data
in the budget every year.
Co-Chair Stedman asked for the division to follow up with a
range for the committee to pencil in to ensure the money
was set aside. He remarked that the other body was in the
process of wrapping up the operating budget and the Senate
could include the funding in its version of the operating
budget, which gave more time. He still needed a rough idea
of the amount.
Ms. Sheehan replied that over the years she had seen the
cost [for negotiated contracts] go into the capital budget
and she had seen rules changed in conference committee. The
division's goal was to get the numbers to the committee as
soon as possible.
Co-Chair Stedman encouraged the negotiating bargaining
units to come to agreement as soon as possible. He
recounted that there had been times when the deadline had
been missed. He highlighted that the University of Alaska
(UA) missed the deadline a couple of years back because an
agreement had not been reached prior to the finalization of
the budget. He stated that the sooner an agreement had been
reached, the higher the probability it would get funded.
Ms. Sheehan could not speak for the unions, but the
administration's goal was to reach agreement as soon as
possible.
9:37:42 AM
MEMRY DAHL, CHIEF HUMAN RESOURCE OFFICER, UNIVERSITY OF
ALASKA (via teleconference), provided an update on the one
contract it currently had in negotiation with the newly
formed Alaska Graduate Workers Association (AGWA). In late
October [2023], the bargaining unit held an election, which
was certified in November and negotiations had begun in
January. The negotiations were still underway, and UA was
committed to reaching an agreement that met the needs of
the University and the graduate students. She detailed that
the union had been officially formed about five months back
and less than 60 days had passed since negotiations had
begun. She elaborated that the UA bargaining team was
continuing to work and conduct research as articles were
passed back and forth. There was substantial work going on
behind the scenes to respond to information and analysis.
She explained that negotiations were closed to the public.
She relayed that UA did not typically set a deadline or
timeline for negotiations, but it always wanted to be
timely in submitting agreements to the legislature for
approval and appropriation. She communicated that UA
believed negotiations were proceeding well and were
generally on track. She reported that currently three
articles had been tentatively agreed on. The University was
committed to reaching a fair contract for all parties
involved whether or not agreement was reached in time for
inclusion in the FY 25 budget.
Co-Chair Stedman stated that his previous comment had also
been directed at UA and the bargaining union. He
communicated that the committee wanted to honor the
negotiated agreements with labor unions and other employee
groups, but there were a limited amount of funds and many
funding requests. He relayed that the budget would be tight
for FY 25 and would likely be tighter the following year.
He explained that the sooner an agreement could be reached
and provided to the legislature, the easier it would be for
the committee to ensure there were resources available for
inclusion in the budget. He did not want to see the
bargaining agreements come in at the last minute making it
necessary to back other items out of the budget or to be
faced with funding the agreements in a supplemental the
following year. He encouraged everyone at the bargaining
table to wrap up agreements as soon as possible.
Ms. Dahl understood Co-Chair Stedman's comments and relayed
that UA was working towards completing a contract sooner
rather than later.
Co-Chair Stedman asked Ms. Dahl to provide a rough idea
offline of what the committee should prepare for by
providing a dollar range. He thanked DOA and UA for the
updates. He thanked DOA for working with OMB and LFD as the
legislature worked to get a handle on the letters of
agreement. He remarked that there were many letters of
agreement that added up to a substantial amount of money.
He noted that the current structure made it difficult to
keep track of the entire magnitude. The committee
appreciated DOA trying to come up with some consolidated
documents in order for OMB and LFD to have a good handle on
what was going on.
Ms. Dahl thanked the committee.
Co-Chair Stedman discussed the schedule for the following
Monday.
ADJOURNMENT
9:44:48 AM
The meeting was adjourned at 9:44 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 032224 DOA Labor Contracts Presentation Senate Finance 03.22.2024.pdf |
SFIN 3/22/2024 9:00:00 AM |
|
| 032224 FY24 LOA Language.pdf |
SFIN 3/22/2024 9:00:00 AM |