SB 160 - EXCLUSIONS FROM UNEMPLOYMENT COVERAGE CHAIRMAN KOTT announced the next order of business was SB 160 am, "An Act excluding certain employment by students from the definition of 'employment' in the state employment security laws." MARY JACKSON, Legislative Staff to Senator John Torgerson, sponsor of SB 160 am, informed the committee members they have a zero fiscal note in their committee packet. She also noted that included in the packet is the sponsor statement, sectional analysis, etc. The history of the bill is straight forward. A constituent in Senator Torgerson's district called him after having written a letter to the Department of Labor regarding unemployment insurance for their college age daughters. The constituent's concerns were that their college age children were in school nine months out of every year, they work seasonally in their "mom and pop" business. They are required to pay unemployment taxes but they are not eligible to receive unemployment. From their point of view, it is an unfair tax and Senator Torgerson agreed. The constituent then wrote a follow-up to the department and received a response from the commissioner, the gist of which was, "Yes, a full-time employee pays a potential of $119 and some odd cents per year." If they are a part-time student, they pay even less. She said he recognized that if you pay anything towards what you don't get a benefit from, it's not fair, but he said there is a benefit. Ms. Jackson said there is not. The regulations are very specific. It is in the Alaska Employment Security Act which says, "However, and uninsured worker who has been pursuing an academic education for at least one school term and who was working at least 30 hours a week during a significant portion of the time that the worker was pursuing an academic education, would not be disqualified for the unemployment insurance if the worker's academic schedule does not preclude or prevent full-time work in the worker's occupation and if the worker of student became unemployed because the worker was laid off." Ms. Jackson said the constituent asked how many full- time students do you know that could possibly fit under that scenario. Senator Torgerson's response was none. The constituent then noted that the real issue, in their opinion, was whether or not the student is supporting themselves. If they're full-time employees, they obviously are supporting themselves. If they have full-time student status and only part-time with a seasonal adjustment, they're not supporting themselves. Mom and dad are. MS. JACKSON pointed out that the statute exempts service that is performed by an individual in the employ of the individual's son, daughter, spouse and service performed by the child under the age of 18 and in the employ of the child's mother and father. What SB 160 does is it expands that to service performed in the employ of the parent or legal guardian for 21 or under who are also full-time students. Ms. Jackson said she doesn't know what the department's position is on the amended bill. Number 849 DWIGHT PERKINS, Special Assistant, Department of Labor, came before the committee. He informed the committee that in the amended version of SB 160, page 1, line 7, is different in that it starts off by saying, "parent or legal guardian if the individual was under the age of 21 years and full-time student during the eight of the last 12 months and intends to resume full-time student status within the next four months;". In the original version of SB 160 it says, "if the individual was a full-time student during eight of the last 12 months and intends to resume full-time student status within the next four months;". CHAIRMAN KOTT asked if there was a title change. MR. PERKINS indicated there wasn't. CHAIRMAN KOTT asked Ms. Jackson if a title change was considered. MS. JACKSON indicated there wasn't any discussion regarding a title change, and in fact it still conforms because the statute was for full-time students, but now they're under the age of 21. MR. PERKINS stated the Department of Labor opposes SB 160 am, for the following reasons: "The Employment Security Act already goes far enough in excluding employment of children by their parents and excluding employment of students by educational institutions. Coverage of student workers should not be further eroded. "The terms of the exclusion are vague, and there is no feasible way to base tax liability on a worker's `intention' to remain in school. "The bill has a disparate impact on one subset of workers on the basis of family relationship, exempting these workers from contributing to unemployment insurance, but also denying these workers from collecting benefits should they quit school or become eligible for receiving benefits while in school. "The existing tax burden on affected students is minimal. As Mary stated, a full-time employee working the entire calendar year, you and I, pays a maximum of $119.50 in unemployment insurance contributions. A student employed only between school terms would pay substantially less. "The unemployment insurance system is just that, it's an insurance system. Coverage and payment of contributions is no more based on the likelihood of collecting benefits than payment of automobile insurance premiums under the state mandatory insurance law is based on the expectation of getting in an accident in any given year. A chipping away at the inclusiveness of the system by exempting employers or employees who don't want to pay into the system will ultimately damage the viability of the program and the health of the UI Trust Fund." MR. PERKINS asked what will be the next category to be exempted. He thanked the committee for listening to him. Number 1168 CHAIRMAN KOTT asked how many people would fall within this category. MR. PERKINS explained he didn't have that information. He said he didn't want the committee to think he is speaking for a silent majority of people out there. He said he could get the numbers for the committee. REPRESENTATIVE PORTER asked if it would be a reasonable statement to say very few people that fit into this category really would have the benefit of coverage. MR. PERKINS said he would hesitate to give a number only because he doesn't know. The department's concern would be that to keep exempting groups of people because they simply don't want to pay is maybe a wrong direction to go. Is there another group out there? He said he doesn't know. Mr. Perkins said he is sure there is a lot of constituencies out there that would not want to pay the mandatory insurance either, but they do. That doesn't mean they're going to run out and get in an accident so they can claim on that either. Number 1358 MS. JACKSON pointed out that the fiscal note from the Department of Labor is zero. CHAIRMAN KOTT pointed out that the bill was introduced last year and questioned if the problem still exists. MS. JACKSON indicated it does. Number 1445 REPRESENTATIVE PORTER made a motion to move SB 160 am, out of the House Labor and Commerce Committee with individual recommendations and a zero fiscal note. REPRESENTATIVE SANDERS objected. He said he doesn't feel comfortable moving the bill. It is a very small number of people and a minimal amount of money. He said he would love to support his senator, but he doesn't think it is right to move the bill. REPRESENTATIVE ROKEBERG said he would probably vote to move the bill. He noted he isn't too worried about any other "tom cats coming out of the bag." REPRESENTATIVE PORTER said he doesn't look at the bill as being a bill that would result in a tweaking of the unemployment insurance fund because there is a zero fiscal note. He said he thinks it fits within the stated public policy of the statute which says there are exemptions for these kinds of things. Representative Porter said he doesn't think, considering the zero fiscal note, the bill is a raid on the unemployment account. REPRESENTATIVE ROKEBERG referred to the $119.50 collected over the entire year and said the act of having to fill out the forms could, in certain areas of time evaluation, be more costly than the actual payment for a small business person. CHAIRMAN KOTT said he believes the purpose of unemployment insurance is to provide that bridge of a person leaving a job and seeking another. It probably does not apply or is not applicable to college students. REPRESENTATIVE ROKEBERG said these people are paying in but can't collect. He asked if that is right. REPRESENTATIVE SANDERS said if that situation should change, they could collect. We all know it changes often, they go to school one year and don't go the next. He said you pay in, but you're collecting off of a total pool for the state. Number 1712 REPRESENTATIVE SANDERS said he might change his mind, but if he ever sees another bill similar to SB 160, he is not voting for it. Representative Sander withdrew his objection. CHAIRMAN KOTT said he generally isn't supportive of a measure that is directed toward a specific small group. He said this could be a lot larger group than he is envisioning. This takes care of a single person. It is correcting an inequity dealing with one family and one son or daughter. Number 1755 CHAIRMAN KOTT said since Representative Sanders withdrew his objection, there is a motion to move the bill out of committee. Hearing no further objection, SB 160 am was moved out of the House Labor and Commerce Committee.