HOUSE BILL NO. 105 "An Act relating to the state training and employment program; and providing for an effective date." 10:59:51 AM RYNNIEVA MOSS, STAFF, REPRESENTATIVE JOHN COGHILL, SPONSOR, explained that the State Training Employment Program (STEP) was established in 1989 and had been re-authorized by the legislature seven times. The seventh time, the legislature asked the Department of Labor and Workforce Development (DLWD) to improve the program, especially addressing concerns about training given to non-residents and a lack of participation with private enterprise. A task force was formed to study the program and make recommendations. Ms. Moss noted that the taskforce recommended taking the politics out of the program by empowering the Alaska Workforce Investment Board to become an active partner in the STEP process, including annual supervision over the scoring of projects and who would obtain the training grants, and oversight of regulations adopted by DLWD. Provisions were also added requiring Alaskan residency to participate, strengthening partnership with private business, and limiting how much money could be spent on administration costs. Finally, the bill requires the adoption of regulations to implement an appeal process for applicants who have been denied a grant. DAVID STONE, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, MEMBER, ALASKA WORKFORCE INVESTMENT BOARD, and CO-CHAIR, STEP TASKFORCE, reported the bill was a result of recommendations from the STEP taskforce. He detailed that the taskforce was composed of ten people representing employers, employees, the U.S. Department of Labor, the University of Alaska, and Alaska Workforce Investment Board. Taskforce recommendations include: · Offering services to an expanded pool of workers who may be displaced; · Clarifying the Workforce Investment Board's oversight and accountability; · Supporting resident hire through targeted projects and services; · Increasing input from local businesses and regional advisory councils; · Streamlining the grantee application reporting process; and · Making STEP a permanent program. 11:03:58 AM Mr. Stone added that STEP has been the most successful job- training program in Alaska. The program is funded by unemployment insurance (UI) employee contributions at the rate of 1/10 of 1 percent. The program has worked for Alaskans seeking training, and unemployed or underemployed workers; by reducing the amount of time workers are employed, the program has reduced the amount of UI benefits paid out. Vice-Chair Thomas pointed to page 7, line 20 referring to residency and queried adding language such as being eligible for the permanent fund dividend. Ms. Moss did not think the language would be a problem but did not know what the ramifications would be. Co-Chair Stoltze cautioned that the criteria for the two programs are different. Vice-Chair Thomas noted that people are allowed to vote as residents of Alaska when living out-of-state or moving back and forth. He opined that people should receive a permanent fund check or be eligible for one before spending money on them through STEP. Ms. Moss suggested conferring with Legislative Legal Services and offering an amendment on the floor if applicable. Representative Joule referred to life-long residents who do not apply for the permanent fund dividend for various reasons, but may want to participate in STEP. He stated concerns about citizens who would be cut off. 11:07:11 AM Vice-Chair Thomas clarified that he meant the person may either be eligible or receive the dividend; he did not mean the person had to receive the dividend. Representative Kelly queried the balance between union and non-union and rural and non-rural access to the program as per earlier concerns. Ms. Moss responded that the sponsor was confident that the concerns had been addressed. Representative Gara pointed to page 4, line 12 of the bill, and wondered if it unintentionally excluded people from STEP. The provision protects people who have had a job and who run out of UI benefits or are receiving UI benefits, but may not allow people without a job history to participate. Ms. Moss did not think the status would change with the legislation. Section 4 removes language setting a six-month limit on employees liable to be displaced under existing statute; however, because the funds come from UI benefits, STEP participants must have contributed to UI. Representative Gara queried expanding the program to people who were new to the work force. Ms. Moss thought the issue was a policy question. 11:10:15 AM GUY BELL, ASSISTANT COMMISSIONER AND DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, agreed with Ms. Moss's answer. Representative Gara offered language for a third category of people: "or are seeking employment." Mr. Bell thought that would be a policy call for the legislature, since the funding is derived from employee contributions to UI. He noted that the policy in the past has been to limit the program to those who have contributed to UI. Co-Chair Stoltze pointed out that the legislature has made policy calls in the past with direction from the department. He asked if the department had an opinion. Mr. Guy responded that the department has funds for youth training that are separate from STEP, providing other options for youth. Representative Gara asked whether STEP had training not provided in other programs that would be beneficial to youth. Mr. Stone replied that STEP is a funding mechanism for funding training specifically for underemployed or unemployed workers who have contributed through the UI fund; there are other funds that can be used for youth. Representative Gara queried STEP job training services that would be beneficial to youth. Mr. Bell answered that there were services, and added that the STEP demographic includes youth as young Alaskans have contributed to UI. 11:14:08 AM Representative Gara wondered the downside of allowing youth without a job history accessing STEP training. Ms. Moss thought the downside was that STEP is designed for people who have worked and are about to lose work or are unemployed or underemployed. She stressed that the program is unique for an existing workforce; there are many other programs for youth. Representative Gara gave the example of another program with limited funds and spoke of young people who cannot get jobs. Ms. Moss emphasized that STEP was a limited pool of money that the sponsors wanted to protect. Representative Joule reported experience related to youth vocational education and financial aid through the Bureau of Indian Affairs. He stated that there are funds for many rural young people coming out of high school, as well as local scholarships. He noted that people in rural areas are supportive of vocational and technical training for youth. He recalled deciding to use the UI funds for the program and thought the bill accomplished what it meant to. 11:19:27 AM DOUG WARD, DIRECTOR, SHIPYARD DEVELOPMENT, ALASKA SHIP AND DRYDOCK, and MEMBER, WORKFORCE INVESTMENT BOARD and STEP TASKFORCE, KETCHIKAN (via teleconference), testified in support of the legislation. He listed membership in several groups working to employ and train people. He stated that Alaska Ship and Drydock participates in STEP. He reminded the committee that in 2007 the commissioner directed the board to provide for oversight. He reported that the board has successfully done the job, as has the STEP taskforce. He urged passage of the legislation. Mr. Ward spoke to programs for youth. He noted individual training accounts at job centers that can be accessed by youth seeking employment. 11:23:14 AM LINDA HULBERT, MEMBER, ALASKA WORKFORCE BOARD, FAIRBANKS (via teleconference), testified in support of the legislation. She listed extensive involvement with employment and training programs in Alaska. She echoed the comments of those supporting the provision. She emphasized that the fund is for a specific group of people not normally funded by other federal employment training funds. Research and analysis by DLWD has consistently shown the effectiveness of the program in getting people back into the workforce. She noted the importance of Alaskans being able to control the funds and urged passage of the unique program. DON ETHRIDGE, ALASKA WORKS PARTNERSHIP AND ALASKA AFL-CIO, spoke in support of the bill. He pointed out that rural areas were targeted by Alaska Works. He addressed youth training and stated he preferred not to use STEP funds. Co-Chair Stoltze referred to the fiscal note. Co-Chair Hawker asked how funding levels shown on the fiscal note compared with the current funding level for the program. Mr. Bell responded that the levels were equivalent. Vice-Chair Thomas asked whether there was a GED or high school requirement to participate in STEP. Mr. Bell did not think there was the requirement. 11:28:10 AM Vice-Chair Thomas noted GED or high school graduation requirement for the apprenticeship program. Mr. Bell replied that there were entrance criteria set by various training programs; the criteria are not set by STEP. He added that often a training component is added for persons who need to get to a certificate level. Vice-Chair Thomas stated concerns that with the high rate of dropout, there might be more incentive to quit school. He suggested a side bar requiring a GED or high school equivalency. Co-Chair Stoltze read the legislation another way. Ms. Moss noted that a GED is not required for the program. She stated concerns that the requirement could be a problem for someone who has been working for years without a GED. Vice-Chair Thomas reiterated concerns regarding drop-out rates. Ms. Moss thought the point should be brought up with Department of Education and Early Development, as part of the problem could be youth who do not get vocational training in high school. She gave an example of a North Pole school with a program that kept youth from dropping out. 11:31:10 AM Representative Gara queried DLWD involvement with Education and Training Voucher (ETV) funds provided to youth at the Office of Child Services (OCS) and wondered if there was a way to ensure the funds are not cut off. Mr. Bell promised to get more information. Co-Chair Hawker MOVED to report CCSS HB 105(L&C) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSSS HB 105(L&C) was REPORTED out of Committee with a "do pass" recommendation and with attached fiscal note 1 by Department of Labor and Workforce Development and fiscal note 2 by Department of Labor and Workforce Development.