HOUSE BILL NO. 219 "An Act relating to background investigation requirements for state employees whose job duties require access to certain federal tax information; relating to persons under contract with the state with access to certain federal tax information; establishing state personnel procedures required for employee access to certain federal tax information; and providing for an effective date." 1:56:45 PM Co-Chair Foster reported that the committee last heard the bill on March 28, 2018. The committee had one amendment before them. He invited Mr. Spanos to the table. BRANDON S. SPANOS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE, reported that Internal Revenue Service Publication 1075 listed all the requirements that states were obligated to follow to receive federal tax information. He elaborated that the requirement to do background checks and fingerprinting as part of a background check was in the publication and was the impetus of the bill. At the Department of Revenue (DOR) there were two divisions that received the data. The Tax Division wanted to continue to receive the data to verify information received by tax payers. The Division of Child Support received very limited information. A federal offset program allowed the division to capture money that would be refunded to tax payers to pay child support. He conveyed that he had misspoken at the last bill hearing. He had reported that the Department of Labor and Workforce Development (DOL) received data to verify wage information. He was incorrect on that point. The department also did the federal offset program and recaptured unemployment insurance that was paid out in error. Representative Wilson MOVED to ADOPT Amendment 1 (copy on file): Page 3, following line 19: Insert a new subsection to read: "(c) An employee shall pay to the state the fee established by AS 12.62.160 for the national criminal history record check or the date of hire, whichever occurs later, the fee must automatically be deducted from the employee's next paycheck." Reletter the following subsections accordingly. Representative Kawasaki OBJECTED. Representative Wilson read the amendment (see above). She commented that the state did not have a significant amount of money. She wanted to make sure the employee was hired before collecting the fee. Representative Kawasaki asked if an employee would have to pay the fee if they worked at DOR, for example. Representative Wilson replied that it was free at the Department of Corrections (DOC). She did not know when the federal law would change to include more employees. She noted that as part of employment a person many times had to have a drug test or had to fulfill other requirements. She suggested it should be the responsibility of the employee, rather than the state, to cover the costs. 2:00:26 PM Representative Kawasaki indicated in the health care setting fingerprinting was typically required. He recalled in his experience having to get fingerprinted within the first 30 days of employment. He did not remember having to pay for the fingerprinting costs; his employer paid the costs. He wondered if someone else could speak to the employer normally paying the fees. He also asked how the amendment might affect the labor unions. Representative Wilson responded that in her experience she was required to have a Tuberculosis test as a condition of employment. She paid the cost for the test. She imagined that some employers paid the fee, and some expected their employees to pay. She did not feel that the state was in a position to pay the fees. Representative Thompson agreed with Representative Wilson that many industries required their employees to be fingerprinted and to have a background check at the employee's expense. He referenced the liquor industry and employees having to pay for their own Techniques of Service Industry Alcohol Management (TAM) training. He would be supporting the bill. Co-Chair Foster reviewed the list of available testifiers online. Representative Pruitt relayed a personal example. Fifteen years prior when he worked for the Anchorage School District he was required to pay for his own fingerprinting. Representative Kawasaki directed his question to the Division of Personnel. He wondered about current collective bargaining agreements and whether the state paying for fees was part of negotiations. He wondered if fees should be built into future contracts. 2:04:44 PM KATE SHEEHAN, DIRECTOR, DIVISION OF PERSONNEL AND LABOR RELATIONS, DEPARTMENT OF ADMINISTRATION, responded that it was something that would need to be bargained with the unions. Co-Chair Seaton wondered if state insurance would pay the fees. He was considering the wording in the bill referencing the employee paying the fee. He wondered how much the fee was. He had heard that the cost of fingerprinting was about $47. He did not know the cost of the national criminal history record check. He wondered about additional expenses including the time it took to have a background check and fingerprinting done. Ms. Sheehan believed it involved more than the finger printing. She was not sure. Co-Chair Seaton asked the sponsor about the intent of the amendment. He wondered if it included the time and administrative time that went into the national criminal history check. He referred to line 4. He did not see anything about fingerprinting fee. Representative Wilson responded that the language came from the bill. She cited the section and lines. She responded that the fee was the same fee that the employee would be required to pay. Co-Chair Seaton was having a problem with line 19 on page 3. Representative Wilson explained that it was the place the amendment would be inserted. The line referred back to AS 12.62.160 listed in Section 1 on page 1. It was also her understanding that the fee was associated with the background check rather than the fingerprinting. She relayed that child care providers and school employees were required to have fingerprinting done. She suggested that since DOC had the ability to conduct fingerprinting, maybe the department could offer the service to other departments free of charge. 2:08:23 PM Co-Chair Seaton was trying to better understand the amendment. He read from the amendment which talked about fingerprints. He wondered if the amendment was only talking about fingerprinting. Representative Wilson read from the bill on page 1. It was her understanding that it would be the entire fee of approximately $47 as listed in the fiscal note. Representative Guttenberg asked Ms. Sheehan if the current contracts would have to lapse and be renegotiated to include the new provision. He wondered if the legislation would apply to people under current contracts. Ms. Sheehan responded that it would apply. The state's collective bargaining agreements contained a clause that stated that if there was something that did not comply with state or federal law the parties would meet and negotiate. If the provision became law, the state would have to meet with the unions and renegotiate prior to the contracts lapsing. Representative Guttenberg asked her to repeat her response. Ms. Sheehan indicated the department would have to meet and negotiate with the unions. It would not be automatic. Representative Guttenberg noted that the amendment talked about two things; fingerprinting and the national criminal history check. There was a cost for fingerprinting and for the history check. He asked if lost time getting fingerprints taken was factored or if the state would bring someone in-house. He asked about the process. Ms. Sheehan was unsure of the process. She did not know if it was an option to bring someone in. She was aware that DOC did fingerprinting in-house for employees on their first day of work. She was uncertain if there was an operation that came into the workplace or if an employee would need to leave work. She was also unsure if an employee could do the check on work time or if they would have to do it in their free time. Representative Guttenberg asked about employees having to do the checks outside of work time and whether that would have to be part of negotiations with the bargaining group. Ms. Sheehan replied, "Not necessarily." She elaborated that there were things employees were required to do in their free time. 2:12:31 PM Representative Kawasaki noted that for continued employment there was currently a clause within the collective bargaining agreement that stated that if there were changes to federal law, the entities could go back to the table to negotiate. The legislation would force it. If the amendment was added, it would require an employee in the Tax Division to be fingerprinted and, because of federal law, it would have to come out of the employee's paycheck. He asked if that was what would be negotiated. Ms. Sheehan thought there would be several things that would have to be addressed. She noted that the employee would be required to pay for their fingerprinting and for the background check. She was uncertain the state would be able to deduct the fees from their pay under the federal fair labor standards act. Some employees were paid each hour or minute they worked. It would have to be discussed at the table. If a current employee were to fail a background check the state would have to do a type of effects bargaining. Representative Kawasaki had a problem with implementing the standard for a current employee. He thought it made more sense for future employees. Vice-Chair Gara was unclear which employees would have to undergo background checks. It was now a condition of employment to comply with federal law. For an employee who worked for the state, the issue could be handled in two ways; The state could pay for it or the employee could pay for it. In his view, employees went through 2 years of wage freezes. It was not a luxury item; it was something an employee was required by their employer to do to comply with federal law. He asked if he was accurate that the checks were a condition of employment. Ms. Sheehan responded, "Yes it would be." Vice-Chair Gara did not support the amendment for charging the fees to perspective employees applying for a job. He did not agree with such a condition of employment. Representative Wilson asked why state employees could not go through DOC. She wondered if anyone had investigated the option. Ms. Sheehan had not looked at the option. She reported reaching out to as many agencies as possible. The Department of Corrections and Department of Public Safety (DPS) did fingerprinting and background checks in- house because of the nature of their work. She was unsure DOC could extend the service to other state employees. Representative Wilson thought it would be worthwhile looking into the idea. She was fine with the suggestion of the amendment applying only to new employees. She understood that $47 was not very much. However, she believed every little bit added up. She wanted to make sure an employee had been hired before requiring the checks. 2:17:34 PM Representative Guttenberg thought the committee was talking about state employees. He wondered about state background checks versus federal background checks. He asked about the difference. He spoke of privacy matters. Mr. Spanos responded that the state's background check was fairly current in response to the IRS publication. The publication had been around for a long time but was updated in 2017 and contained the background check and fingerprinting requirement. The department created a new policy for the state's background check. Currently, a local background check was required which included all of the states. If a person committed a crime and was convicted at the state level, it would show up on the background check. The national background check was a federal level screening. If a person was convicted of a crime at the federal level, it would show up on the national background check. The fingerprinting and the federal background check were the things the state needed to start doing. Representative Guttenberg asked, if someone committed a federal crime, if the state's background check would find the record. Mr. Spanos responded that the record would not show up in the local background check. The state was doing a limited federal background check. Sometimes federal crimes showed up. However, to do a thorough background check, the state needed fingerprints that were submitted to the FBI run through their database. Representative Guttenberg had never been charged for urine tests in his days working in construction. He thought the state should be paying for these checks. He would be opposing the amendment. 2:20:40 PM Representative Kawasaki MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Ortiz, Pruitt, Thompson, Tilton, Wilson OPPOSED: Guttenberg, Kawasaki, Gara, Grenn, Foster, Seaton The MOTION to ADOPT Amendment 1 FAILED (5/6). Co-Chair Foster asked Vice-Chair Gara to review the fiscal notes for HB 219. Vice-Chair Gara indicated there were 6 fiscal notes. The first zero fiscal note from DOC had an appropriation of administration and support and an allocation of administrative services. The OMB component number was 697. The second zero fiscal note was from DOL. The appropriation was employment and training, and the allocation was unemployment insurance. The OMB component number was 2276. The third zero fiscal note from DPS had an appropriation of statewide support and an allocation of criminal justice information systems program. The OMB component number was 3200. The fourth fiscal from DOR had an appropriation of taxation and treasury and an allocation of tax division. The OMB component number was 2476. The fiscal note had an impact of $4,800 in FY 19, and in the out years the fiscal impact went down to $500 per year. The fifth fiscal note was from DOR. The appropriation was child support services, and the allocation was child support services division. The OMB component number was 111. The fiscal impact in the first year was $6,600 in federal money and $3,400 in state costs. In the out years the funding went down to $1,000 in federal funds and $500 in state costs. The last fiscal note from the Department of Health and Social Services (DHSS) had an appropriation of department support services and an allocation of administrative support services. The zero fiscal note had an OMB component number of 320. The costs he had referenced were all for the background check the committee had discussed. Representative Wilson asked if DOR could check to see if there was a way for DOC to do the background checks for other agencies. Co-Chair Seaton MOVED to report CSHB 219 (JUD) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. Co-Chair Seaton had received a note that the FBI waived the fee for law enforcement agencies including corrections. Apparently, the background check would include an additional fee from the FBI. CSHB 219 (JUD) was REPORTED out of committee with four "do pass" recommendations, four "no recommendation" recommendations, and three "amend" recommendations and with six previously published fiscal notes, four with zero impact: FN6(COR), FN7(DHS), FN8(LWF), and FN9(DPS); and two fiscal impact notes: FN10(REV) and FN11(REV). Co-Chair Foster reviewed the agenda for the following day.