HOUSE BILL NO. 417 An Act relating to the compensation for certain public officials, officers, and employees not covered by collective bargaining agreements; relating to pay increments for longevity in state service; and providing for an effective date. KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, introduced HB 417 by section. The bill addresses pay issues for non-covered state employees, including employees in the executive, judicial and legislative branches. The bill restates the salary schedule to reflect a 5.5% retroactive increase and identifies several positions that need adjustment. · Sec. 1 adjusts pay for the members of the Limited Entry Commission from range 26, step C to range 27 with no step designation. · Sec. 2 conforms HB 417 to the Alaska State Defense Force statute. · Sec. 3 adjusts pay for the chief procurement officer position, which has been functioning in dual roles, from range 24 to range 27, consistent with other directors. Senate Bill 171 does the same. · Sec. 4 removes a step designation for deputy commissioners upon appointment. · Sec. 5 restates the salary schedule effective July 1, 2007 to reflect a 5.5% increase. · Sec. 6 provides language adjusting the schedule by 3% for FY 09. · Sec. 7 adjusts the schedule another 3% for FY 10. · Sec. 8 creates pay increments computed at a rate of 3.75% for employees who have attained step F. A person could be eligible for a merit increase every two years. A subsection allows the same for legislative staff. · Sec. 9 moves the Regulatory Commission of Alaska commissioners from range 26C to 27 without steps. · Sec. 10 repeals longevity steps and replaces them with pay increments. · Sec. 11 clarifies executive branch pay. Anyone currently receiving a salary override, as well as commissioners whose pay was adjusted three years ago, would not receive the 5.5% or the 3%. There are mechanisms in place that compensates those individuals adequately; the intent is to close the gap. · Sec. 12 provides for increments for the judicial branch. · Sec. 13 gives employees of the University salary increases in accordance with the compensation policy of the Board of Regents. · Sec. 14 stipulates that the salary increments identified earlier are prospective. · Sec. 15 provides transition language so that no individual is harmed by the bill, but credited for time served. · Sec. 17 makes the first 5.5% adjustment retroactive. 1:59:31 PM Representative Gara referred to Sec. 5 and asked how many steps were currently in place. Mr. Brooks answered A through F. Representative Gara asked if the only additional step was the 3.75% every two years. Mr. Brooks explained the current longevity steps and said the bill removes limits on how far a person can go. There was a discussion regarding details of how the steps can be used to address recruitment difficulty. Representative Gara did not think the longevity allowance addressed the difficulty. 2:05:46 PM CHRIS CHRISTENSEN, DEPUTY ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM, pointed out that the judicial branch has the largest and lowest paid group of non-covered employees in state government outside the University. Approximately 70% of employees are range 15 or below. This means a high turnover rate, which translates to high training costs and other inefficiencies. In spite of this, the employees are hardworking and committed. He noted that over the past three years, court employees have received cost of living adjustments (COLA) substantially lower than the actual rate of inflation. He thought the change in longevity pay would help the courts keep mid-level workers longer. Mr. Christensen spoke to two provisions in the bill that the court system is not in accord with. First, while the bill gives COLA to magistrates and judges, it does not give them the retroactive pay raise for the current fiscal year, nor does it give magistrates longevity changes. The majority of magistrates are underpaid compared to similar workers in the executive branch. Second, he was concerned about grouping judges together with political appointees in the executive branch. Judges do not get longevity increases, unlike regular state employees, who can get step increases equal to around 35% of their salary over an 18-year career. A judge working for 18 years earns as much as a new judge, making judges uniquely dependent on COLA. In two decades, Alaskan judges have gone from being the highest paid state court judges in the country to next to last. It has become difficult to retain judges and to recruit new ones. He wanted the salaries to keep up with inflation (Statement on File). 2:12:13 PM Representative Crawford thought the same story could be told across all state employment. BRUCE LUDWIG, BUSINESS MANAGER, ALASKA PUBLIC EMPLOYEES ASSOCIATION (APEA/AFT), spoke for two groups within state government, the state supervisors and the confidential employees. The supervisory unit recently completed negotiations, which he described. He referred to a handout (On File) showing average state service. Supervisors are the employees with the highest longevity. Mr. Ludwig added that APEA/AFT would like to see the bill amended so that it would not be effective for executive branch employees until offered to classified employees as well. The second handout (On File) shows who the bill targets; APEA/AFT proposes amending it so that many more people are affected. 2:18:00 PM Representative Harris asked if the members of the groups Mr. Ludwig listed were represented through union negotiations and contracts. He asked if the people talked about in HB 417 had a bargaining unit. Mr. Ludwig answered that their bargaining unit was the commissioner. He said the longevity increases had been denied in bargaining because it was not authorized. Representative Harris surmised that the only way the people classified under HB 417 would get increases is through statute. 2:20:03 PM Co-Chair Chenault sought clarification regarding the offering and denying of the longevity steps. He asked if APEA/AFT had gone to arbitration and accepted the decision. Mr. Ludwig replied that they bargained it with the State. 2:21:07 PM FRED YATES, SELF, testified in favor of the bill. He thought the people covered deserve what is being offered. He asked for the longevity steps to be included as incentive to retain people. 2:23:14 PM ANNETTE KREITZER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION, described the two tracks for state employees: those represented by collective bargaining and those who are not. The bill is for the later group. Commissioner Kreitzer clarified some of Mr. Ludwig's remarks. She said the entire offer had to be accepted, which is what the union did. There are many components to a labor contract; it's dangerous to separate one out. The State has the same challenges as any other employer dealing with recruitment and retention. The Department wants to be equitable. Representative Gara talked about the difference between union and non-union employees. He understood that collective bargaining governs union pay and the bill should govern non- union pay. He stated that the place where the two groups are the same relates to longevity, and thought it made sense for everyone to have a two year increase after reaching the final step. Commissioner Kreitzer described her job as looking at the full cost of each negotiated contract and judging whether the cost was sustainable. Representative Gara restated his concern regarding longevity as a problem that applied to union as well as non-union employees. He wanted the bill to address the problem for both groups. Commissioner Kreitzer maintained that she would not separate out one piece of a contract. Representative Gara asked if union employees had the same problem with getting stuck after reaching the final step. Commissioner Kreitzer acknowledged that they did. 2:30:35 PM Commissioner Kreitzer commented that the union had accepted the agreement. Representative Gara questioned whether the employees meant to convey that they were satisfied with the longevity situation. Commissioner Kreitzer reiterated that she had to keep union and non-union issues separate. Representative Kelly pointed out that union members pay dues to get someone to bargain. He thought it would be a serious mistake to legislate that process. 2:33:55 PM Representative Hawker tried to find a broader perspective. Although he thought non-union employees deserved the recognition proposed in the bill, he understood the State had to prioritize financially. He talked about important human service workers who have endured pay freezes for many years and wondered how Commissioner Kreitzer prioritized giving a raise to the highest paid state employees. 2:37:17 PM Commissioner Kreitzer disagreed that the people targeted in the bill were the highest compensated employees. She stressed that the bill is about non-covered employees. She described the aging of the workforce and the pressures to solve the retention and recruitment problems as soon as possible. She suggested moving one step at a time. She thought HB 417 was a reasonable step forward. 2:39:53 PM Representative Hawker stated that he was not comfortable with the legislation, given the resources available to the State in relationship to the State's greatest needs. Representative Kelly said he could support a bargaining/non- bargaining wage freeze, but he could not support saving money on just one group. He did not want the Legislature to interfere with union activity. 2:43:23 PM Representative Crawford asked about the 40-hour work week and wondered if what was given up for that. Commissioner Kreitzer responded that many state employees are already working more than 40 hours. The service steps were the inducement for the 40-hour work week. Her goal was to move towards the 40-hour work week for non-union employees and later for management, although it would be expensive. 2:47:06 PM PUBLIC TESTIMONY CLOSED. Co-Chair Meyer MOVED to ADOPT Amendment #1. Page 5, line 3: Following "employees", Insert "and magistrates"; Page 5, line 4: Following "than":, Delete "magistrates and judicial officers", Insert "justices and judges"; Page 5, line 11: Following "employees", Insert "and magistrates"; Following "than":, Delete "magistrates and judicial officers", Insert "justices and judges"; Page 5, line 13: Following "courts":, Insert "and"; Page 5, line 14: Following "courts":, Delete ",and magistrates"; Page 5, line 16: Following "AS 22.15.220":, Delete "(b) and". Representative Hawker OBJECTED. Mr. Christensen said the Amendment would allow the judicial branch magistrates to get the retroactive pay and to participate in the longevity step increases. Co-Chair Chenault asked if the new fiscal note would be adjusted to the Amendment. Mr. Christensen said the size of the note would increase by $217,000. 2:49:16 PM Representative Thomas asked for clarification regarding the Amendment. Representative Hawker WITHDREW his OBJECTION. There being no further OBJECTION, Amendment #1 was ADOPTED. Co-Chair Meyer referred to the changes needed in the fiscal notes. HB 417 was HEARD and HELD in Committee for further consideration. 2:51:33 PM