HB 46-CHILD CARE PROVIDER COLLECTIVE BARGAINING  4:16:16 PM CHAIR PRAX announced that the final order of business would be HOUSE BILL NO. 46, "An Act allowing child care providers that receive state aid to organize and collectively bargain with the Department of Health; and establishing the child care provider fund." [Before the committee was CSHB 46 (L&C).] 4:17:35 PM [Public testimony was opened.] 4:17:53 PM CANDACE RICHEY, Owner, Candi's Tot Stop, shared that she has been in business for 17 years. She said that child care providers have been asked about their needs; however, she expressed the opinion that "they are not heard." She stated that HB 46 would offer support to providers. She thanked members who helped pass similar legislation through the House last year; however, it was blocked in the Senate. She expressed hope that the proposed legislation would make it to the governor this year. She explained that the bill would cover topics of concern in the child care industry, including wages, benefits, and retirement. She said that the low wages earned in the industry are not a living wage, resulting in high staff turnovers. She shared that families on her waitlist for child care consists of many military service members, and she suggested that this lack of child care is impacting the [country's] preparedness. She explained that benefits are not possible because of the unaffordable insurance premiums for small businesses. She argued that the bill would give providers more of a say as to where the state funds marked for child care would go. 4:21:56 PM BRIAN HOLST, Executive Director, Juneau Economic Development Council, explained that child care is an important economic development issue for the state, as it provides a high return on public investment. He suggested that high quality early care for children is critical and pointed out the Heckman Curve, as it shows that investment has diminishing returns as children get older. He argued that the lack of child care hurts the economy, as data from 2019 has shown that $165 million is lost annually from the state's economy. He continued that 77 percent of Alaska parents missed school or work for child care in a three- month period; 36 percent of Alaska parents postpone school or training due to such issues; and 47 percent of families rely on other family members or friends for child care. He said that every state ranks child care readiness, and two-thirds of the state's students are not ready for kindergarten. He explained that the Journal of Education Psychology identified that if 50 first graders have problems reading, 44 of them would still have problems reading by the time they are in fourth grade. He argued that a lack of access to affordable high-quality child care has an impact on the workforce. While employers want more child care options, there are significant barriers, such as cost and scarcity. He explained that the current model of child care in the state is broken, as wages are uncompetitive, and workers can earn more in an entry level retail job. He pointed out that operators are small because of the cost of rent and the child- to-adult ratio requirements. He opined that these programs cannot raise wages without increasing prices. 4:27:19 PM REPRESENTATIVE RUFFRIDGE questioned whether businesses would offer child care services in regard to the added tax incentives for this in the proposed legislation. MR. HOLST answered that, when businesses were surveyed, they said they are interested in supporting child care operations, however; he expressed the understanding that the challenge would be in the size of the business, as smaller businesses would not be able to make these investments. 4:28:37 PM [Public testimony was closed.] 4:28:43 PM REPRESENTATIVE ZACK FIELDS, Alaska State Legislature, as prime sponsor, addressed CSHB 46 (L&C). He explained that the proposed legislation has three provisions: 1) it would establish the opportunity for child care providers to enter intersectoral bargaining with the state. Intersectoral bargaining is when employees and owners of businesses bargain with the state over terms and conditions of employment. This would include how federal and state child care funds are used, and it would give providers more of a voice concerning any regulation changes; 2) it would establish a child care trust fund, allowing savings to trickle out for child care when state revenues are low; and 3) it would provide tax credits to companies who participate in helping provide child care. 4:32:46 PM REPRESENTATIVE SUMNER questioned the experience other states may have had with intersectoral bargaining agreements. REPRESENTATIVE FIELDS explained that legislatures can only implement sectoral bargaining for child care or farmwork, as these are the only two areas excluded from the National Labor Relations Act. He said that 10 states have implemented this framework, with some being successful. He shared that last year the House Labor and Commerce Standing Committee heard from providers in Washington State, which have this bargaining. These providers described how, over time, the profession was built up to a living wage, which increased the supply of labor and child care. 4:35:28 PM EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State Legislature, on behalf of Representative Fields, prime sponsor, gave the sectional analysis for CSHB 46 (L&C) [copy included in the committee packet], which read as follows [original punctuation provided]: Section 1: This section amends AS 23.05.360(f) to allow the Alaska Labor Relations Agency board in the Department of Labor & Workforce Development the authority to include workers in the child care sector for the purpose of holding hearings. This is a conforming change to language added in Sec 4. Section 2: This section amends AS 23.05.370(a) to direct the Alaska Labor Relations Agency to serve as labor relations agency for workers in the child care sector covered by the new language added in Sec. 4. Section 3: This section amends AS 23.05.380 to give Department of Labor & Workforce Development the authority to update regulations pertaining to collective bargaining rights for workers in the child care sector. This is a conforming change to language added in Sec 4. Section 4: This section amends AS 23.40 to give child care providers the right to self-organize, join, or assist an organization to bargain collectively and engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection. This section prohibits the Department of Health from engaging in unfair labor practices, and it provides a process for investigation and conciliation of complaints. This section also provides definitions. Section 5: This section establishes a child care provider fund as a separate fund in the state treasury. This section also establishes a child care stakeholder group to recommend disbursements from the fund. 4:41:59 PM CHAIR PRAX mentioned that New Mexico has a $2 billion trust fund for child care. He asked if such a fund is designated or dedicated. REPRESENTATIVE FIELDS said he does not know if New Mexico has the same designated fund restrictions as Alaska. He expressed the understanding from Legislative Legal Services that the key phrase is "funds do not last". He said there were hundreds of millions of additional dollars last year, and there were $400 million put towards capital funding, as an example. CHAIR PRAX pointed out that the fiscal note contemplates just an annual appropriation. 4:43:57 PM MR. ANDERSON explained that the bill's two fiscal notes, one from the Department of Health and another from the Department of Revenue, clearly lay out protected deficits around the tax credit program. 4:44:56 PM BRANDON SPANOS, Deputy Director, Tax Division, Department of Revenue, answered that on the fiscal note there would be three parts that would reduce the revenue: 1) broadening what is allowed to be an expenditure on credits and how many companies would take advantage of this; 2) expanding the program to $3 million from the capped $1 million. He added that companies often contribute more than they can take as a credit; and 3) extending the sunset date. CHAIR PRAX suggested that this would be the only anticipated loss for the tax revenue, and this is because the companies would donate money to the program. MR. SPANOS responded in the affirmative. CHAIR PRAX asked whether it would be a one-to-one tax credit. He also asked whether the money would go into the child care fund. MR. SPANOS explained that the tax credit in current statute has changed over the years, but in the first year and after the first $100,000, 50 percent would be applied to the credit; therefore, it is a 5:1 ratio. CHAIR PRAX inquired as to whether the proposed $15 million initial appropriation would have sufficient interest earnings to maintain the fund. 4:48:39 PM REPRESENTATIVE FIELDS expressed the opinion that a $15 million fund could be managed, but it would not be large enough to make a difference in the sector; however, it could be something to establish and be built up over time. 4:48:55 PM CHAIR PRAX announced that CSHB 46 (L&C) was held over.