HB 193-UNEMPLOYMENT BENEFITS; PAID PARENT LEAVE  4:39:36 PM CO-CHAIR FIELDS announced that the next order of business would be HOUSE BILL NO. 193, "An Act establishing a paid parental leave program; relating to unemployment benefits; relating to the collection of child support obligations; and relating to the duties of the Department of Labor and Workforce Development." 4:40:17 PM LENNON WELLER, Economist, Department of Labor & Workforce Development (DOLWD), introduced himself for the public record and stated he was available for questions regarding the funding mechanism for HB 193. 4:40:48 PM The committee took a brief at-ease at 4:40 p.m. 4:41:18 PM CO-CHAIR FIELDS [set HB 193 aside to be taken up later.] HB 193-UNEMPLOYMENT BENEFITS; PAID PARENT LEAVE  4:55:47 PM CO-CHAIR FIELDS announced that the next order of business would be [a return to] HOUSE BILL NO. 193, "An Act establishing a paid parental leave program; relating to unemployment benefits; relating to the collection of child support obligations; and relating to the duties of the Department of Labor and Workforce Development." 4:56:16 PM PALOMA HARBOUR, Director, Division of Employment and Training Services, Department of Labor & Workforce Development (DLWD), as co-presenter, introduced herself for the public record. 4:56:25 PM LENNON WELLER, Economist 3, Division of Administrative Services, Department of Labor & Workforce Development, co-presented a document, titled "HB 193 Alaska Unemployment Insurance (UI) Trust Fund Analysis" [included in the committee packet]. He introduced himself for the public record. MS. HARBOUR began on page 4 of the document, drawing committee members' attention to a line graph representative of the current health of the UI trust fund. She noted that the line graph shows the balance of the fund as recently as November of 2024 of over $736 million. She reported that the target solvency level was approximately $550 million as of September 2024, noting that there is a significant balance in the trust fund above statutory targets. MS. HARBOUR moved to page 5, drawing committee members' attention to four line graphs representing baseline cost scenarios and the resulting reserve ratios. She reminded committee members that the target reserve ratio was between 3 and 3.3 percent. She explained that the dark blue line represented the growth of the reserve ratio with no changes between calendar year 2025 and 2030, noting that the trust fund would likely grow to $1 billion within the next five to eight years. She explained that the orange line implements only the maximum weekly benefit increase proposed under HB 193. She noted that the fund would continue to grow in this scenario. She explained that the green line was representative of the benefit cost increase and additionally diverts 0.15 percent of wages from the employees' trust fund to the parental leave program proposed by HB 193. She noted that the fund would continue to grow in this scenario. She explained that the purple line was representative of the benefit rate increase, the employee diversion of 0.15 percent and an additional employer contribution diversion of 0.25 percent to the paid parental leave program, and an additional reduction of employer contribution to the UI trust fund by 0.25 percent - an overall change of the minimum tax rate from 1 percent to 0.5 percent. She noted that under the fourth scenario, the fund would begin to decrease and that it would reach the target reserve ratio by 2037, assuming no major recession. 5:00:26 PM CO-CHAIR FIELDS emphasized that the legislators had the ability to reduce taxes and create a parental leave program without endangering the trust fund. 5:00:38 PM MS. HARBOUR, in response to a question from Representative Saddler, stated that currently in statute, there was a 1 percent minimum employer contribution to the UI trust fund. She explained that she was asked to model 0.25 percent reduction to the paid parental leave program and an additional 0.25 reduction of the employer tax rate. 5:01:21 PM CO-CHAIR FIELDS reiterated that the legislature could both reduce the employer tax rate and fund a parental leave program without endangering the trust fund. 5:01:43 PM MS. HARBOUR moved to page 6, drawing committee members' attention to four line graphs representing recession cost scenarios and the resulting reserve ratios. She noted that the different colors of the lines correspond to the same scenarios outlined in the previous slide. She stated that in all four scenarios, the trust fund could withstand an extreme recession, beyond anything that Alaska has experienced, historically. 5:02:27 PM CO-CHAIR FIELDS noted that if such a model were adopted, DLWD would retain the ability to change the contribution rate should the solvency necessitate it. 5:03:12 PM REPRESENTATIVE SADDLER asked if the presentation presumed the same duration of benefits laid out in the proposed legislation. MS. HARBOUR replied that scenarios are oriented around revenue to the trust fund. She noted that there was less focus on the paid parental leave benefit program in her presentation. REPRESENTATIVE SADDLER asked for confirmation that the presentation illustrated how much money could be diverted elsewhere and still leave the fund solvent. MS. HARBOUR confirmed that that was correct. MS. HARBOUR, in response to an additional question from Representative Saddler, stated that the write-up speaks to some money figures associated with the line graphs. She spoke to the last scenario, noting that it includes diversions from both employer and employee contributions. She stated that it would generate approximately $15 million in revenue from the employee contributions and approximately $25 million in revenue from the employer contributions to the paid parental leave program. She further reported that the fourth scenario would also result in a tax cut for employers of approximately $25 million. 5:05:20 PM CO-CHAIR FIELDS facilitated a brief discussion on amendments to the proposed legislation. 5:07:10 PM REPRESENTATIVE COULOMBE stated that the presentation from the Alaska Children's Trust (ACT) during the last hearing reported that there was not enough money for the program envisioned under HB 193. She asked whether that presentation was incorrect with its numbers. CO-CHAIR HALL offered her understanding that the ACT presentation included paid parental leave, paid family leave, and paid family and medical leave. She stated her preference for limiting the proposed legislation to only paid parental leave and later expanding the program should it be successful. 5:08:10 PM CO-CHAIR FIELDS offered his belief that ACT was correct in stating that an employee-only contribution of 0.15 percent was likely insufficient to provide for the parental leave program long-term. 5:08:38 PM CO-CHAIR HALL spoke to an amendment in the drafting process that envisioned different increments of paid parental leave at varying degrees of compensation to allow more flexibility for families in planning paid parental leave. CO-CHAIR FIELDS remarked that the amendment Co-Chair Hall spoke to was in response to the presentation from ACT, noting that 50 percent wage replacement was not feasible for everyone. 5:09:45 PM REPRESENTATIVE SADDLER asked whether there was any modeling to predict how many people would take advantage of the program proposed under HB 193. CO-CHAIR FIELDS deferred to Mr. Weller. 5:10:28 PM MR. WELLER noted that it was difficult to pinpoint the exact cost of the program with no historical experience. He stated that Alaska experienced around 9,000 births [in 2023], and the maximal cost of the program could be a couple hundred million dollars. He stated that, historically, individuals collect about 10 weeks of parental leave on average, and that the current average weekly UI benefit collected was approximately $240. He estimated that there would be 1,500 to 2,000 initial claims in a calendar year, which was representative of an uptake of 10 percent. He spoke to other states, noting that wages are typically taxed at a rate of 1 percent and the costs of similar programs in other states are high. He spoke about a potential range of costs, suggesting that it could start at $8 to $10 million. 5:14:30 PM CO-CHAIR FIELDS spoke to the importance of adjustment mechanisms and tracking the uptake of the proposed program under HB 193. REPRESENTATIVE SADDLER noted that HB 193 could be very costly for Alaska. He requested more hard data. 5:15:32 PM MR. WELLER replied that, due to confidentiality issues, conjuring hard data on the subject would be difficult, but he would follow up with more information when available. REPRESENTATIVE SADDLER requested information from other states that have passed similar legislation. 5:16:55 PM CO-CHAIR FIELDS offered his belief that the earned benefit would work as a first in a system that could be tapped out, like other states with similar legislation. He asked Ms. Harbour if his interpretation was correct. 5:17:30 PM MS. HARBOUR noted that there was statutory language in the workers' compensation benefit guaranty fund that states if benefit claims exceeded revenue funds, then claims would be paid in a "first in, first out" manner as soon as funds were sufficiently available. She commented that she was unsure if that type of language would be beneficial under HB 193. 5:18:05 PM REPRESENTATIVE SADDLER stressed the importance of real data when discussing and modifying the proposed legislation. He suggested delaying the pay of benefits for one year after implementing the revenue-collecting mechanisms of HB 193. CO-CHAIR FIELDS offered his agreement with Representative Saddler. He set an amendment deadline. [HB 193 was held over.]