CS FOR SENATE BILL NO. 259(FIN) "An Act relating to the compensation of state employees; relating to the salary of the chief administrative law judge; and providing for an effective date." 12:27:09 PM SENATOR ELVI GRAY-JACKSON, SPONSOR, explained that SB 259 was a technical cleanup bill unanimously approved by Legislative Council on February 28, 2024, to be introduced as a committee bill. She delineated that HB 226 (Pay Increases For Certain State Employees, Chapter 50 SLA 22, 08/01/22) passed in 2022, sponsored by Representative Andy Josephson and included an amendment by the former Representative Steve Thompson. The amendment granted certain state employees not covered by a bargaining unit to receive salary adjustments in line with the Supervisory Bargaining Units negotiated agreement. Unfortunately, the Department of Law (DOL) argued that the bill language did not allow the Department of Administration (DOA) to implement the salary changes for 2,800 exempt and partially exempt employees across the legislative, executive, and judicial branches. She noted the legal memo from Legislative Legal Services dated March 4, 2024 (copy on file) was included in member's bill packets. Senate Bill 259 clarified and confirmed the original intent by providing clear authority to DOA to adjust salaries as intended. The legislation amended AS 39.27.011(m) to ensure the salary adjustments would happen without legislative intervention. She continued that some substantial changes were made in the Senate Finance Committee: retroactive pay provisions were removed that eliminated the need for supplemental funding. Additionally, the bill included a section that removed the existing salary cap on the pay scale of the Chief Administrative Law Judge. She furthered that the adjustment was necessary in order to attract and retain qualified individuals. She informed the committee that there was a letter of support from the DOA commissioner [Commissioner Paula Vrana]. She shared that recently, the supervisory bargain unit reached an agreement with the state. She indicated that based on the agreement the Office of Management and Budget (OMB) included a new fiscal note. She concluded that the bill fulfilled a commitment the legislature made to state employees and the bill "stood as a testament to fairness and equity" and reflected appreciation for their service to the state. She listed the invited testifiers available to answer questions. 12:30:48 PM Co-Chair Foster OPENED public testimony. Co-Chair Foster CLOSED public testimony. 12:31:54 PM LAURA B. TIMKO, CHIEF POLICY ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained the OMB fiscal impact for all branches of government [Various] and all fund sources. The fiscal note total was $22.220.9 million, which was broken down on the analysis on the second page. Co-Chair Foster indicated that there was an amendment to the bill. 12:34:40 PM Co-Chair Foster MOVED Amendment 1. Representative Cronk OBJECTED for discussion. BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER, explained Amendment 1 was sponsored by Co-Chair Foster. He communicated that the amendment identified as 33-LS1475\R.1 better reflected the final agreement that was accepted by the Supervisory Unit. The bill was written before the negotiations were completed. The unit included a step increase for its employees, but due to the difficulty of translating the increase into the same amount of increase for the exempt employees an amendment was necessary. The amendment calculated a 3.38 percent increase that reflected the step increase received by the Supervisory Unit employees. The current bill reflected a 5 percent increase on July 1, 2024. On July 8, 2024 the step increase would be implemented as per Amendment 1. In addition, subsection (o) and subsection (p) included the negotiated increases in 2025 and 2026. He summarized that the Supervisory Unit agreement was reflected as closely as possible in the bill with the adoption of Amendment 1. Co-Chair Foster felt that Amendment 1 was a technical amendment but also substantive. 12:37:48 PM PAUL LABOLLE, STAFF, REPRESENTATIVE NEAL FOSTER, summarized that the amendment mirrored the final negotiation of the Supervisory Unit agreement, and the substantive effect was the 3.38 percent step increase. He elaborated that historically, the exempt employees did not participate in contract negotiations and salary adjustments had to be handled through legislation that was typically based on the Supervisory Unit negotiated agreement. Representative Coulombe asked for clarity regarding the total wage increase. Mr. Anderson responded that the overall increase would be an 8.3 percent increase calculated by the 5 percent included in the original bill and the step increase of 3.3 percent. Mr. Labolle clarified the difference between a step and range increase. He explained that a range increase was in the underlying bill and the step increase was in the amendment. Senator Gray Jackson stated her support for the amendment. Representative Cronk REMOVED his objection. There being no objection, Amendment 1 was adopted. 12:40:29 PM Co-Chair Edgmon MOVED to REPORT HCS CSSB 259(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 259(FIN) was REPORTED out of committee with ten "do pass" recommendations and with one new indeterminate fiscal note from the Office of the Governor for Various. 12:41:03 PM Senator Gray Jackson thanked the committee. Co-Chair Foster recessed the meeting to the following day at 9:00 a.m. 12:41:26 PM RECESSED