Legislature(2023 - 2024)BELTZ 105 (TSBldg)
02/17/2023 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Workforce Challenges in Alaska from the Perspective of the Alaska Municipal League | |
| SB55 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 55 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 17, 2023
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Click Bishop, Vice Chair
Senator Elvi Gray-Jackson
Senator Kelly Merrick (via teleconference)
Senator Forrest Dunbar
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): WORKFORCE CHALLENGES IN ALASKA FROM THE
PERSPECTIVE OF THE ALASKA MUNICIPAL LEAGUE
- HEARD
SENATE BILL NO. 55
"An Act extending the termination date of the State Medical
Board; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 55
SHORT TITLE: EXTEND STATE MEDICAL BOARD
SPONSOR(s): SENATOR(s) WIELECHOWSKI
02/01/23 (S) READ THE FIRST TIME - REFERRALS
02/01/23 (S) L&C, FIN
02/17/23 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
NILS ANDREASSEN, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Presented a slideshow on attracting talent.
KALI SPENCER, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 55 on behalf of Senator
Wielechowski.
KRIS CURTIS, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the sunset audit during the hearing
on SB 55.
SYLVAN ROBB, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 55.
ACTION NARRATIVE
1:32:04 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Dunbar, Gray-Jackson, Bishop,
Merrick (via teleconference), and Chair Bjorkman.
^PRESENTATION(S): WORKFORCE CHALLENGES IN ALASKA FROM THE
PERSPECTIVE OF THE ALASKA MUNICIPAL LEAGUE
PRESENTATION(S): WORKFORCE CHALLENGES IN ALASKA FROM THE
PERSPECTIVE OF THE ALASKA MUNICIPAL LEAGUE
1:32:55 PM
CHAIR BJORKMAN announced a presentation on workforce challenges
from the Alaska Municipal League. He asked Mr. Andreassen to put
himself on the record and begin his presentation.
1:33:20 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), Juneau, Alaska, presented a slideshow on attracting
talent. He stated that he intends to approach workforce
challenges from a municipal and state government perspective.
MR. ANDREASSEN advanced to slide 2, "When Boomers Bail," which
is the title of a book by Mark Lautman. The book foresees
Americans having concerns about attracting talent in the coming
decades because there are insufficient new workers to replace
the baby boomers that age-out and retire. Slide 2 reads:
When Boomers Bail
As the industrialized world recovers from the great
recession, we face an even graver economic threat. A
structural shortage of qualified workers is creating a
zero-sum labor market that is forcing communities to
steal talent from each other in order to survive and
grow. The cause of this impending economic disaster: a
baby boom generation who didn't have enough kids to
replace themselves, and an education system that has
failed to properly prepare students for the new
demands of today's market. Add to that 78 million
soon-to-be-retired Baby Boomers who will go from high-
earning producers to resource-sapping dependents, and
the situation worsens. Any community unable to attract
and hold talent will join a growing number of
economically doomed places where economic development
is impossible. This suddenly makes deciding where to
live or invest a much higher-stakes game.
Mark Lautman Economic Architect 2011
1:34:54 PM
MR. ANDREASSEN reviewed a chart on slide 3, "Alaska Unemployment
by Industry - A Year Ago," categorizing employment by industry.
It shows a decrease in the number of employees from December
2019 to December 2021. He said Mr. Lautman called this issue out
over a decade ago, and many Alaskans responded. The Anchorage
Economic Development Corporation responded by developing the
Live, Work, Play approach to recruitment and retention, and the
Juneau Economic Council refocused its strategy on attracting
talent in a new kind of way. It is much more the case that
employers have had to go out of their way to attract talent
since 2011; no longer are there enough workers. An Alaska Small
Business Development Center (SBDC) chart indicates national job
postings have increased by 121.59 percent since February 2020.
MR. ANDREASSEN spoke to the graph on slide 4, "Alaska Government
Employment Trend." He said "pandemic rebound" was brought up at
the AML Conference in Juneau a year ago. State and local
governments experienced a greater variation and less rebound
than other sectors. It was evident to all attendees that there
is work to do. Over time there has been a decline in employment
in the public sector. The state has gone from about 85,000
employees to under 80,000 since 2012. The decline in employees
is a longer-term trend attributable to more than the pandemic,
the fiscal crisis, and the pension system. It is hard to unpack
causality because there are a lot of factors.
1:38:12 PM
MR. ANDREASSEN spoke to the graph on slide 5, "PERS
Participation," stating state and local governments have fewer
employees today than a decade ago, which has been the case for a
while. The state is conscious of decreasing PERS participants.
He remarked that fewer participants mean fewer contributions to
the Public Employees Retirement System and fewer net pension
liability payments to pay down the unfunded liability.
Understanding what this does to the Public Employees Retirement
System (PERS) and Teachers Retirement System (TRS) is important.
MR. ANDREASSEN advanced to slide 6, "Systems Review." He spoke
about the book The Signal and The Noise. He said it is difficult
to know which recruitment and retention piece to focus on and
which will make a difference because there is a lot of noise
surrounding the issue. He reviewed slide 6:
Demographics Competition Boomers
Talent
Circumstance Public Health
Economic Crisis
Competition Public vs. Private
Infrastructure
1:40:43 PM
MR. ANDREASSEN reviewed slide 7, "AML Classifieds," stating
recruitment is challenging at the municipal level. He said AML
has run a classified page for years. There are two times as many
listings today as a year ago. There are four times as many
listings today as three years ago. A response to a recent survey
of members indicates that vacancy rates are 15 percent higher on
average at the municipal level and as much as 45 percent higher
in some communities. He said he knows of finance departments
with 11 vacancies and three employees. Competition is a reality
for many types of positions.
1:41:41 PM
MR. ANDREASSEN reviewed slide 8, "Not all jobs are equal." It
contains a diagram that explains competition does not apply to
all job types or positions the same way. The following Institute
of Social and Economic Research (ISER) excerpt describes the
diagram:
The figure shows how pay and total compensation
adjusted for characteristics of workerscompared among
state and local government workers and private workers
overall, and among workers in specific occupations, in
the period 2009-2013.
Government workers on average earned 8% less than
private workers. But because government benefits were
more valuable, there was no significant difference in
total compensation (wages plus benefits) among
government and private workers overall.
For a number of occupations in the lower- and mid-
ranges of the pay scale, government wages were lower
than or about the same as in private industry. But
government benefits were typically more valuable, so
total compensation for those occupations was equal to
or more than in private industry.
Health-care support jobs didn't fit that general
pattern: both wages and total compensation were
significantly higher among government workers.
In higher-paying occupationsfor example, physical and
social sciences and managementboth wages and total
compensation were considerably lower among government
workers.
"Overpaid or Underpaid? Public Employee Compensation
in Alaska," July 2016. Institute of Social and
Economic Research
1:43:18 PM
MR. ANDREASSEN advanced to slide 9 and reviewed "Public v.
Private" sector graphs, comparing wage and benefit data compiled
by the U.S. Bureau of Economic Analysis (BEA). The public sector
has not kept up in recent years. Though both sectors have scaled
up, the private sector has outpaced the private. The public
sector generally has a better benefit structure, but the private
sector has recently been outcompeting in wages and benefits. He
pointed out trends on the chart, noting that Alaska public
sector wages and benefits decreased or stagnated after 2006, but
the private sector increased over that same period.
1:44:39 PM
MR. ANDREASSEN reviewed the pie chart on slide 10, "Pensions
Perspective - Employers." He said it is important to understand
the different employer groups within PERS and that TRS is a
separate system. The State of Alaska and its component units
make the greatest payroll contribution. He said that 64 of 165
cities and boroughs participate in PERS; some have actively
sought to get out over the years. The pie chart shows an "other"
category of PERS participants, including housing authorities,
the National Marine Fisheries Service (NMFS), and others. The
University of Alaska (UA) makes up four percent of the system.
He said it takes 77 employers to make up one percent of the
system. They pay net pension liability, past service costs, and
their actual rate. This group is referred to as prisoners of
PERS because they cannot afford to stay in, and they cannot
afford to get out. It is a very small portion of the overall
annual payroll for PERS. This gives a better sense of employer
group within the overall system.
1:47:13 PM
SENATOR GRAY-JACKSON commented that she did not realize the
number of cities and boroughs participating in PERS was so low.
She asked which retirement programs are offered in place of
PERS.
MR. ANDREASSEN expressed his belief that cities that do not
participate in PERS offer other types of benefits or none at
all. Many of these communities operate from budgets that have
been diminished over the years. He said small communities do not
have the resources to contribute. Some may offer a deferred
compensation plan or an employee-only contribution plan.
SENATOR GRAY-JACKSON commented that she was the finance manager
for Akutan, which had about 50 employees, and the city was able
to enroll them in PERS.
MR. ANDREASSEN said AML conducts a yearly salary survey. AML has
greater detail on benefits and compensation for those cities
that respond.
1:49:09 PM
MR. ANDREASSEN reviewed a rate structure chart on slide 11,
"Pensions Perspectives - Rate Setting." The chart shows that a
PERS employer with one TIER IV employee pays the costs for the
defined benefit (DB) plan and the defined contribution (DC)
plan. He emphasized the employer pays the normal costs for both
plans even though, in this scenario, there is only one TIER IV
employee. He believed non-state employers paid for both plans to
prevent plan bias, so employers would not remove an employee
based on that municipality's preference for a given plan.
MR. ANDREASSEN said the "past service" DB pension plan shown on
slide 11 has the highest annual cost at 16.33 percent of the
total actuarial rate. This year, the Alaska Retirement
Management Board (ARMB) actuarial rate would have been 27.6
percent, but it was reduced 2.5 percent to 25.10 percent, saving
the state roughly $30.6 million. The reduction did not go below
22 percent so other employers aren't affected, but it's still
very high for most participating employers. The 2.5 percent
reduction for non-state employers is $24.3 million, which is
what it would take to reduce 22 percent to 19.5 percent for non-
state employees.
1:51:59 PM
CHAIR BJORKMAN asked Mr. Andreassen if he could make a finer
point about the relevance of the changes shown on the chart.
MR. ANDREASSEN replied that two things happen on this chart:
1. The ARMB proposed that the state no longer contribute to the
health plan, saving the state 2.5 percent. The board proposed
this because the health plan is overfunded and is projected to
be overfunded in the coming years. This reduction saves the
state $30.6 million.
2. In considering how the 2.5 percent reduction could have
benefitted the non-state employer rate, he calculated what it
would take to bring down the contribution to a more manageable
percentage than 22. A rough calculation shows it would take $10
million for a 1 percent reduction.
1:53:13 PM
CHAIR BJORKMAN sought confirmation that the state could have
paid in at last year's rate to buy down the non-state employer
PERS rate, reducing the amount of money local communities
contribute and decreasing the tax burden on local citizens.
However, the state chose not to do it.
MR. ANDREASSEN replied, exactly. It is a choice. The state could
do it this year; it could do it annually. The contribution has
been larger in the past to get the net pension liability down
and bring the rate down. The 22 percent rate is a cap, not a
floor. He said that buying it down could affect the tax base,
give more room for other types of benefits and compensation, and
provide other incentives for non-state recruitment and retention
efforts.
1:54:17 PM
SENATOR BISHOP commented that the state put a $3 billion deposit
into the retirement system in 2018. If the state had not made
that payment, then the general fund would have been looking at
about a $1.2 billion annual deposit into that fund. He said he
was a proponent of depositing the overage into PERS to pay down
the liability last year, getting communities closer to where
they want to go with city hall.
1:55:02 PM
MR. ANDREASSEN reviewed slide 12, "Pensions Perspective - System
Issues." He said all conversations about new pensions should
address these system issues, which are from the perspective of
the employer:
• Salary floor (2008) adds another $1.5 - 2.5 million
to employer costs
• No incentive for right-sizing or efficiency
• Employers in arrearages about $26.2 million
• Prisoners of PERS can't afford to stay in, nor
get out
• Employer delinquencies about $3.5 million
• Evaluate over time to see stressors on employers
• 11-15% penalty for late payment
• Termination studies apply only to non-State
employers
• By class, which for small employers could be one
employee
• Net pension liability follows employee, making
retiree hiring difficult
1:59:23 PM
MR. ANDREASSEN reviewed slide 13, "Current AML proposals." He
said AML proposed a number of items over the last four years to
address these issues:
• Update to 2008 floor move forward and rolling
average
• Termination studies for State and by employee
• Evaluate vacancy rates
• 22 percent a cap not a floor
• Pay down net pension liability by increased
additional state contribution = $10 million for
1%
• Retiree hiring ability without accrued liability
• Opt-out for small or stressed employers exit
strategy
• Five-year audit of terminated employer net pension
liability
• State contribution to avoid spread, based on % of
payroll
• Adjust high interest rate on past due payments to
reasonable amount
• Locked in net pension liability option, ability to
pay down, and exit date
2:03:41 PM
MR. ANDREASSEN advanced to slide 14, "In considering DB?." He
remarked that AML members are concerned and fairly divided about
whether there should be a new DB plan. He spoke to these points,
stating he could not offer the committee an AML position on a
new defined benefit program:
• AML members divided on question
• Real and valid concerns expressed by educators and
public safety employees
• Resolution expressing concern about liability
exposure
• If specific to employee group, opt in at employer
level
• For employers it applies to, ringfence liability
Fundamentally:
• Address systems issues
• Free up greater % of employer payrolls
MR. ANDREASSEN stated that as the legislature considers a new DB
plan, AML would like to see the following system issues
addressed: an attempt to bring down the net pension liability,
the needs of smaller employers within the system, and the
ability to compete and attract talent. The greater the amount of
payroll freed up, the greater the ability to offer better
benefits, compensation, and retention packages. He said more
employers could develop creative recruitment and retention
solutions if less of their payroll went to the net pension
liability.
2:07:04 PM
MR. ANDREASSEN advanced to slide 15, "Questioning Assumptions."
He said the issue of whether or not a new DB plan is needed
requires the legislature to wrestle with higher-level questions,
which he brought up on slide 15:
• What does employee need?
• Do all types of employees need the same thing?
• What does employer need?
• How do we differentiate between employers?
• What is the role of the State?
• Are there pension system issues to be addressed?
• How do we evaluate benefits and costs of DB and DC?
• What is fair allocation of liability, cost, and
benefit?
• What are the full suite of options available for How
does retirement fit into recruitment and retention?
retirement?
• How does retirement fit into recruitment and
retention?
• What are we missing?
2:08:06 PM
MR. ANDREASSEN advanced to slide 16, "Are Pensions the Answer to
Public Sector Worker Shortages?" He said the website Route Fifty
tracks what is happening in government nationwide. It posted
that 84 percent of millennials working in state and local
governments said their pension benefit was why they stayed in
the public sector. He said it is fairly compelling and part of
the conversation to attract talent. Slide 16 reads:
"Recently, state and local governments have offered
more incentives like sign-on bonuses and other
benefits in the hiring phase to get more applicants in
the door. But these are short-term fixes that may
temporarily help with attracting applicants but not
with retention. Given the high costs associated with
employee turnover, a long-term solution is needed."
2:08:42 PM
MR. ANDREASSEN advanced to a chart on slide 17, "Are we
competing for talent?" He said that Alaska is not competing. The
chart compared the difference between employment growth in the
U.S. and Alaska since 2015. The U.S. has almost recovered to
2015 levels after March 2020, but Alaska is falling short of
those. The chart shows Alaska has not been attracting talent
since 2015. He said the state has been losing public sector
employees since well before that.
2:09:21 PM
MR. ANDREASSEN advanced to slide 18, "Are we competing?" He said
the problem Alaska has attracting talent is bigger than
compensation and benefits. Alaska is last in the nation for
gross domestic product (GDP) growth from 2015 - 2018. Alaska is
last in the country in many categories, which explains why the
state cannot compete for talent. Alaska is not competing in
schools, health, childcare, growth, cost of living, or housing.
Alaska's population rose slightly in 2022, but more people
continue to leave than arrive for the tenth consecutive year. He
said all these factors explain why Alaska is not competing as a
state or as employers. It is not just a pension or compensation
issue; it includes quality of life. He said the state needs to
solve all these issues in some way if Alaska wants to compete
for talent in the coming years.
2:11:28 PM
MR. ANDREASSEN advanced to slide 19, "Tackling Competition." He
reviewed slide 19, stating local governments are part of the
answer when it comes to tackling competition and is part of the
solution for components, like:
1. Incentivize and support solutions to address childcare
deficit
2. Incentivize and support solutions to address housing
affordability and sufficiency
3. Right size education funding, including to address
maintenance backlog
4. Lifecycle approach for community and economic development
5. Lower energy and healthcare costs transactional costs
of living and doing business
6. Establish consistent fiscal policy that envisions growth
7. Ensure public sector employers have capacity to increase
compensation packages
8. Maximize ability to leverage federal infrastructure
investment
2:14:28 PM
SENATOR DUNBAR drew attention to the sixth point, asking for a
finer point on that statement. He wondered whether AML supports
a broad-based revenue source and, if so, what revenue source AML
members prefer.
MR. ANDREASSEN replied AML has a resolution supporting a broad-
based tax. The resolution speaks to a preference for income, and
AML would want certain factors considered for a sales tax. AML
proposed an Eight Stars of Gold plan consisting of revenue and
other fiscal pieces. He distinguished between a consistent
fiscal policy that grows the budget and the finer point of one
that envisions the future of Alaska with families living here,
attracting a workforce that contributes to the community and
economic development. The state needs a government that
addresses the needs of Alaskans.
CHAIR DUNBAR said he agrees with that to a point. However,
education is the key to attracting and keeping Alaskans in the
state. Young families are attracted to good schools, one of the
state's largest expenses in most localities. He asked how to
link up the idea of more families here and a growing education
budget when Alaska does not have a revenue source to support it.
MR. ANDREASSEN answered revenue is critical to that piece, or at
least a budget that adequately supports the needs. Revenue is
the way to do that.
2:17:58 PM
MR. ANDREASSEN reviewed slide 20, "An Alaska that Will Grow."
This excerpt is from a resolution adopted by the Alaska
Constitutional Convention delegates and talks about an Alaska
that will grow:
We bequeath to you a state that will be glorious in
her achievements, a homeland filled with opportunities
for living, a land where you can worship and pray, a
country where ambitions will be bright and real, an
Alaska that will grow with you as you grow.
We trust you; you are our future. We ask you to take
tomorrow and dream; we know that you will see visions
we do not see.
We are certain that in capturing today for you, you
can plan and build.
You are Alaska's children...
MR. ANDREASSEN said this resolution inspires him, and he wants
to live in a state that grows with its citizens and meets their
needs.
MR. ANDREASSEN spoke to a chart on slide 20 that compared the
number of people that turned 18 years old to the number that
turned 65 years old between 1990 and 2021. The chart shows that
in 1990 the number of people turning 18 was almost four times
greater than the number turning 65. The number of people turning
65 grew steadily over the years so that by 2020 they were
practically equal to the number of people turning 18.
2:20:02 PM
SENATOR BISHOP drew attention to the question on slide 18, "Are
we competing?" He said part of the solution is on the slide deck
right in front of the committee, pointing out the cost of living
in Alaska. He said this is a target; the goal is to reduce the
cost of living in Alaska.
2:20:40 PM
CHAIR BJORKMAN drew attention to ringfencing on slide 14. He
harkened back to the legacy retirement tiers. He asked if there
had been conversations about ringfencing them and how the state
arrived at an unfunded liability rate of 22 percent for
municipalities.
MR. ANDREASSEN replied he would offer his understanding but that
the Division of Retirement and Benefits and the Department of
Revenue could articulate that history better. He believed the
original setup in the 80s and 90s was an individual accounting
of employers. However, the system shifted to a cost-sharing
pension after Mercer grossly articulated what should have gone
into the pension system. Ringfencing and individually
identifying how much net pension liability should be attributed
to a single employer became impossible within the cost-sharing
pension system. Even today, the Government Accounting Standards
Board (GASBI) does a net pension liability accrual because it
would be hard to unpack whose liability is whose. It does not
follow the employers; it is shared across employers and creates
a lot of messiness. The state's mismanagement of the plan during
those decades ultimately led to the net pension liability. The
state took responsibility for contributions above 22 percent in
a negotiated agreement between the state as an employer, the
plan sponsor, and non-state employers. He contended the state is
positioned to think differently about lowering the 22 percent.
2:23:55 PM
CHAIR BJORKMAN sought clarification that local municipalities
were to be responsible for their own costs and liabilities at
one point in time, but the state co-mingled contributions, and
it became unclear who had paid what for whom.
MR. ANDREASSEN answered that is how he understands it, but there
might be differences of opinion about it.
2:24:38 PM
SENATOR MERRICK (via teleconference) referred to a statement
that AML supports a broad-based tax. She asked whether AML has
taken a position on the size or the formula for the permanent
fund dividend (PFD).
MR. ANDREASSEN replied that this is one of the eight points AML
made on fiscal policy, but AML has not taken a position on the
size of the PFD. He expressed his belief that AML has a
resolution that states the legislature should work toward
consensus on this issue. He added that AML also has a resolution
on the percent of market value and its sustainability as a
revenue source.
2:26:24 PM
At ease.
SB 55-EXTEND STATE MEDICAL BOARD
2:29:53 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 55 "An Act extending the
termination date of the State Medical Board; and providing for
an effective date."
He invited Kali Spencer to present the bill on behalf of Senator
Wielechowski.
2:30:28 PM
KALI SPENCER, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, gave a brief overview of SB 55 and
its purpose. She paraphrased the sponsor statement:
[Original punctuation provided.]
SB 55 will extend the termination date of the State
Medical Board to June 30, 2031.
The State Medical Board (board) effectively licensed
physicians, osteopaths, and podiatrists. However,
emergency courtesy licenses for physician assistants
were not issued in accordance with state law during
the COVID-19 pandemic. This was remedied in November
2021 when corrective action was taken by sending
letters to non-compliant licensees. Furthermore, the
board developed and adopted regulations to protect the
public, improve the licensing process, and expand
access to care during the COVID-19 public health
emergency.
2:31:23 PM
The last extension of the board was in 2020 when the
Division of Legislative Audit proposed a termination
date that was three years less than the eight-year
maximum allowed per statute. The Senate Labor &
Commerce Committee then amended the bill to reduce the
termination date by an additional two years for a
sunset date of June 30, 2023. Since 2020, the board
has addressed all recommendations from the previous
audit by adopting regulations to guide the process for
registering with the Controlled Substance Prescription
Database (CSPD); developed procedures to ensure
licensees with a Drug Enforcement Administration (DEA)
number register in the CSPD; and worked with the
Division of Corporations, Business and Professional
Licensing's (DCBPL) director to establish and
implement procedures to ensure the board reports
disciplinary actions in accordance with state law.
As a result of these successful implementations, the
Division of Legislative Audit proposed in July 2022
that the legislature extend the board's termination
date to June 30, 2031, which is the maximum extension
allowed per statute.
I respectfully request support from my colleagues to
pass SB 55 in a timely manner.
2:32:47 PM
CHAIR BJORKMAN invited Kris Curtis to put herself on the record
and begin her review of the audit.
2:33:03 PM
KRIS CURTIS, Legislative Auditor, Division of Legislative Audit,
Alaska State Legislature, Juneau, Alaska, reviewed the sunset
audit during the hearing on SB 55. She paraphrased the following
prepared statement:
The Division of Legislative Audit conducted a sunset
audit of the State Medical Board. The audit is dated
July 2022. A sunset audit determines whether a board
or commission serves the public's interest and should
be extended.
The audit concludes that the board serves the public's
interest by developing and implementing regulations to
protect the public, improve the licensing process, and
expand access to healthcare during the pandemic.
Further, the board serves the public's interest by
effectively licensing physicians, osteopaths, and
podiatrists; however, emergency courtesy licenses for
physician assistants were only sometimes issued in
accordance with state law.
2:33:48 PM
The Division of Legislative Audit found the board's
workload increased significantly during the audit
period due to the COVID-19 pandemic. The board met
frequently, sometimes weekly, to consider pandemic-
related regulations. Further, the number of licensing
applications that the board considered increased by
approximately 28 percent when compared to the prior
2019 sunset audit. The increase was the result of
practitioners moving to Alaska to help meet the need
for healthcare services and out-of-state practitioners
providing services via technology (commonly referred
to as telehealth). The dramatic increase in workload
occurred immediately after the governor replaced all
the board members. Board turnover and vacancies were
common during the audit period.
Even with these challenges, the board operated
effectively, and the division recommends the maximum
extension, which is eight years.
2:34:47 PM
She walked the committee through the standard audit
information, stating page 8 of the audit report has
the schedule of licensing activity. As of March 2022,
there were 5,878 active licenses and permits. Licenses
increased by 28 percent compared to FY 2019. The
schedule of revenues and expenditures is on page 10.
The prior 2019 audit found that at the end of FY 2018,
this board had a deficit of approximately $800,000.
Licensing fees increased in FY 2019, and the deficit
decreased to approximately $488,000 by the end of FY
2020.
License revenues increased substantially due to the
increased number of applications during FY 2021. The
board was allotted approximately $215,000 in general
funds to replace revenue lost due to the licensing fee
freeze that the governor mandated to help mitigate the
financial impact of the pandemic. Due to the increase
in revenues and the general fund allocation, this
board had a surplus of approximately $506,000 as of
March 2022. The board's schedule of fees is on page
11.
2:36:13 PM
The audit makes two recommendations that begin on page
14. First, the Division of Legislative Audit
recommends the board's executive director ensure all
board meetings have adequate public notice. The
division reviewed 32 meetings held during the audit
period and found six were either not public noticed or
not public noticed correctly. Second, the audit
recommends the board ensure emergency regulations
comply with statute. The Division of Legislative Audit
found the courtesy license regulation for physician
assistant emergency failed to require the applicants
have a collaborative plan with the supervising
physician as required by statute. DCBPL identified
this deficiency within seven months of its effective
date and took corrective action.
Management's response to the audit begins on page 25,
and general management concurred with the report's
conclusion and recommendations.
2:37:30 PM
CHAIR BJORKMAN invited Sylvan Robb to put herself on the record
to answer questions.
2:38:06 PM
SYLVAN ROBB, Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community and
Economic Development, Juneau, Alaska, introduced herself.
2:38:10 PM
CHAIR BJORKMAN asked whether DCBPL had the number of staff
necessary and the infrastructure in place for this board to
handle the increased workload throughout the pandemic.
MS. ROBB replied that the division suffered severe staff
shortages during the pandemic, especially the professional
licensing team, with up to a 35 percent vacancy. The division
was short-staffed, and it was very challenging to get licenses
out.
CHAIR BJORKMAN asked if the situation is substantially fixed.
MS. ROBB replied that the division has made great strides in
getting back to adequate staffing levels. The professional
licensing team has gone from a high of more than 35 percent to a
20 percent vacancy rate. The division has about a 14 percent
vacancy rate today and is hiring people daily. She said that the
division is getting on top of it.
2:39:25 PM
CHAIR BJORKMAN asked if she sees interstate telehealth services
substantially changing the division's workload and license
processing as it relates to the State Medical Board.
MS. ROBB answered that the division has not seen a huge change
recently. The division is gathering baseline data to see how the
telehealth bill the legislature passed last year affects DCBPL
over time.
2:40:20 PM
CHAIR BJORKMAN held SB 55 in committee.
2:40:50 PM
At ease.
2:41:10 PM
CHAIR BJORKMAN reconvened the meeting. There being no further
business to come before the committee, Chair Bjorkman adjourned
the Senate Labor and Commerce Standing Committee meeting at 2:41
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 02.17.23 AML Presentation to SL&C.pdf |
SL&C 2/17/2023 1:30:00 PM |
AML Presentation to SL&C 02.17.23 |
| SB 55 Version A.PDF |
SL&C 2/17/2023 1:30:00 PM |
SB 55 |
| SB 55 Sponsor Statement Version A.pdf |
SFIN 3/7/2023 9:00:00 AM SL&C 2/17/2023 1:30:00 PM |
SB 55 |
| SB 55 Fiscal Note-DCCED-CBPL 01.10.23.pdf |
SL&C 2/17/2023 1:30:00 PM |
SB 55 |
| SB 55 Supporting Document - State Medical Board Audit, July 2022.pdf |
SFIN 3/7/2023 9:00:00 AM SL&C 2/17/2023 1:30:00 PM |
SB 55 |