CS FOR SENATE BILL NO. 170(FIN) "An Act modifying the Alaska unemployment insurance statutes by redefining the base period for determining eligibility for unemployment benefits; relating to contributions, interest, penalties, and payments under the Alaska Employment Security Act; and providing for an effective date." MAX HENSLEY, STAFF, SENATOR JOHNNY ELLIS, explained that SB 170 would make two minor amendments to the unemployment insurance statutes. The first change, found in sections 13 and 20, would update eligibility standards for unemployed workers receiving benefits front the Unemployment Insurance Trust Fund. Current eligibility is based on employers meeting a minimum earnings standard in the first four of the previous five calendar quarters. The change would allow workers failing to meet the standard to recalculate their eligibility using the last four completed quarters. This would expedite the receiving of unemployment benefits. The change would make the state eligible for $15.6 million in federal stimulus funding to the trust fund, and $1.1 million in administrative costs. He stressed that, as long as a portion of the federal stimulus dollars were deposited into the trust fund, there would be no increase in the unemployment insurance taxes paid by businesses and workers that support the fund. Any additional funds would be spent on targeted job training. He referred to letters of support for the bill in committee members' packets (copy on file). The second change is the addition of federally recognized tribes to the list of reimbursable employers. Alaska has been out of compliance with federal law since 2002. The language would require the state to treat tribes like non- profit employers and municipalities, and would allow tribal entities to reimburse the unemployment trust fund for the benefits drawn by employees, after the funds are drawn, rather than before. He referred to the letter from the State of Alaska Department of Labor (DOL) to the federal DOL (copy on file). The letter notes that most tribal entities will not take advantage of the change, but must be offered the option to do so, in order for the state to be in compliance with federal law. He cited a list of tribal entities that would be affected by the legislation (copy on file). 7:23:34 PM GUY BELL, ASSISTANT COMMISSIONER AND DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, reported that the administration was neutral on the bill, but the preference of the administration was that the two sections be separated. Co-Chair Hawker asked if the administration had a position on either section. Mr. Bell related that the governor sponsored the Native Entity Compliance component of the legislation. He added that the state would be subject to federal sanctions, if the provision was not adopted. Co-Chair Hawker wondered why the other portion of the legislation had not been endorsed by the administration. Mr. Bell referred to the administrations belief that there were strings attached to the federal stimulus dollars. 7:25:55 PM Co-Chair Hawker asked what the attached strings might be. Mr. Bell thought there was a required statutory change that would have an impact on the systems liability. Co-Chair Hawker wondered what the benefit to the state would be if the statutory changes were made. Mr. Bell reported that the state would be eligible to apply for and receive $15.6 million in the Unemployment Insurance Trust Fund. 7:27:00 PM Representative Gara asked how much of the federal funds would be available for the general fund in FY 2010 and FY 2011. Mr. Bell explained that the money would go automatically into the Unemployment Insurance Trust Fund. He stated that there were over $1 million general fund dollars being invested in the trust fund. A future legislature could make the determination to exchange some of the $15.6 million in federal funds for the $1 million general fund dollars. 7:28:37 PM Mr. Hensley added that the stimulus dollars were available for a limited time, but once procured, could be spent at any time going forward. He noted that it was Senator Ellis' intent that employees and employers be held harmless on the increased liability. Representative Gara wondered if there would be enough in the $15.6 million to replace $1 million of the general fund in other areas. Mr. Bell concluded that he did not know. Co-Chair Hawker ruminated that the actuarial calculation was fairly sophisticated. 7:31:08 PM Co-Chair Hawker opened public testimony, none being offered, public testimony was closed. 7:33:24 PM Co-Chair Hawker commented that there was a zero fiscal note. 7:33:48 PM Vice-Chair Thomas MOVED to report CSSB 170 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSSB 170 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new zero fiscal note by the Department of Labor and Workforce Development. 7:35:16 PM