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. Co-Chair Meyer reminded the Committee of the status of the bill and described the fiscal notes. Representative Gara recapped previous questions regarding employee shortages the State is facing due to the salary schedule and salary review system. He had asked Commissioner Kreitzer the conditions under which it would possible to go from step A to F in order to hire someone. 2:25:36 PM KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION (DOA), replied that currently there is not a mechanism for granting advanced steps based on a shortage in a job classification. Representative Gara thought the system was arcane. He thought HB 417 should be able to do something about the situation. He wanted a provision saying an employer can go between steps if needed to fill a position. Co-Chair Meyer was not sure HB 417 was the right bill for the change. Representative Gara thought the bill was the right place to change the hiring system to allow a department to exercise discretion rather than having the Legislature telling them what to pay people. Mr. Brooks acknowledged Representative Gara's point, which addressed the primary reasons for the creation of the Administrative Workgroup on Recruitment and Retention. The Department of Administration has found different impediments in the hiring system in different departments. The goal is to look at the entire system, including geographical differences, the classification system, and the pay system. The situation is complex, but the Department is committed to working through the problems. 2:29:11 PM Mr. Brooks added that there is some flexibility through using the criteria of recruitment difficulty, exceptional qualifications, or both. Recruitment difficulty is the factor that addresses shortages. Some departments are limiting themselves by doing State-only recruitments, and he worried that that limited candidate pools. Representative Gara stated that sometimes the problem is that the salary offered is inadequate, regardless of other criteria. He wanted to address the issue of the ability to pay more in those situations. Mr. Brooks promised that DOA is looking at where there is a shortage of workers, and said in those cases there is some ability to offer a higher step. 2:33:34 PM Representative Joule thought there might be two different discussions. Mr. Brooks said similar issues do exist for both union and non-union groups, but the bill addresses non- covered employees. In many cases the solutions will be the same, including adjusting pay. Co-Chair Meyer asked if there were classifications with flexibility to go above the normal grade range. Mr. Brooks replied that there were fully exempt classifications, oil and gas positions specifically, paid on salary overrides; they get paid what the market will bear. Co-Chair Meyer wondered if similar strategy could be used in the departments. Mr. Brooks replied that would mean moving classified employees to the exempt service, from union representation to non-union representation, with accompanying challenges and issues. Representative Gara turned the discussion to the non-union employee issue. He said there are still shortages. He thought a provision could be put into the bill along the lines of: "The commissioner of an agency may offer any of these step ranges if needed to fill an open position." He wanted give the agency commissioner the authority to make the decision as needed. Mr. Brooks believed that the authority already exists for non-classified, non-union, fully or partially exempt employees, where there are shortages. 2:37:54 PM Representative Gara asked if the agency could offer up to an F step if needed to fill a shortage. Mr. Brooks responded that there is nothing that simple. Criteria are set to try and maintain consistency in the pay system. The typical criteria used are recruitment difficulty, as demonstrated by a lack of qualified candidates, or exceptional qualifications, or both. Representative Kelly commented that the difficulty with making it too easy to go to an F step is that supervisors can do it for the wrong reasons and throw the whole system off. He thought it would be difficult to make such a complex change with an amendment. Co-Chair Meyer pointed out that there was not an amendment yet. 2:40:34 PM Representative Gara asked if the ability to move from an A to an F because of a shortage applied to union employees. Mr. Brooks answered that an agency can and does offer up to an F, using the same criteria. Co-Chair Chenault MOVED to REPORT CSHB 417(FIN) out of Committee with individual recommendations and attached new fiscal note by the Alaska Court System, new fiscal note by the Legislative Affairs Agency, and new fiscal note by the Office of Management and Budget. Representative Gara OBJECTED for discussion. He stated that there are major shortages and that he was very dissatisfied with the Administration's answers. He thought the attempt to keep the budget down resulted in a refusal to address the reality that many people are being underpaid. The bill will help non-union employees get pay increases as they get older and their expenses go up. The bill will not help union people if the union isn't powerful enough to get the same thing into a labor contract. He did not agree that people should be treated differently because of being union or non- union. A human being should not be left at the same salary level, especially taking into consideration cost of living changes. Representative Gara WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. CSHB 417(FIN) was REPORTED out of Committee with "no recommendation" and attached new fiscal note by the Alaska Court System, new fiscal note by the Legislative Affairs Agency, and new fiscal note by the Office of Management and Budget.