HB 132-SCHOOL APPRENTICESHIP PROGS; TAX CREDITS  9:12:41 AM CHAIR HOLLAND reconvened the meeting and announced the consideration of CS FOR HOUSE BILL NO. 132(FIN) "An Act relating to technical education and registered apprenticeships." 9:13:55 AM REPRESENTATIVE ZACK FIELDS, District 20, Alaska State Legislature, Juneau, Alaska, sponsor of HB 132, recognized Ray Stevens and the Labor and Commerce Committee for the origination of HB 132 and Representative Claman, who assisted in carrying it across the House floor. REPRESENTATIVE FIELDS said Alaska has high-performing apprenticeship programs in traditional trades and new industries. The Alaska Primary Care Association is a new industry experiencing large-scale apprenticeship expansion. By expanding career and technical education (CTE) and school-to- apprenticeship program opportunities, HB 132 will benefit students who cannot afford college or need to remain in their communities. Apprenticeships are a vehicle for individuals to have a promising career and potentially earn a college degree without acquiring student debt. Making opportunities available supports employers looking for skilled workers to fill demanding jobs. Apprenticeships are expanding nationally. Good state policy positions Alaska to capture and capitalize on federal apprenticeship grants. 9:15:46 AM REPRESENTATIVE FIELDS moved to slide 2 and said HB 132 establishes an employer tax credit of $1,250 per apprentice and is based on a successful model used in South Carolina. He briefly explained South Carolina's apprenticeship expansion. Although Alaska is a leader in union apprenticeship programs, modeling South Carolina's apprenticeship program can diversify and expand Alaska's apprenticeships by embedding non-union apprenticeships into colleges. 9:17:00 AM REPRESENTATIVE FIELDS turned to slide 3 and said that HB 132 provides statutory direction to the Department of Labor and Workforce Development (DOLWD) and the Department of Education and Early Development (DEED) to collaborate in support of apprenticeships at no cost to the state. The goal is for DOLWD to determine ways federal apprenticeship grants can be used to partner with school districts to support CTE and school-to- apprenticeship programs since the Perkins funding stream is inadequate for Alaska's needs. 9:17:58 AM REPRESENTATIVE FIELDS advanced to slide 5 and said HB 132 was crafted using language that respects the Board of Regents and directs the University of Alaska (UA) to explore ways to expand dual credit for CTE courses and college credit for apprenticeship participants. There are already many types of apprenticeships that could receive college credit. Making a college pathway available to working-class students would help advance their careers while they work. He listed the broad range of union and non-union stakeholders that support HB 132. 9:19:08 AM REPRESENTATIVE FIELDS moved to slide 7 and said DEED is interested in expanding apprenticeships, and DOLWD is supportive. HB 132 has zero cost implications for either department. The sole financial implication centers on the tax credit. REPRESENTATIVE FIELDS summarized that HB 132 would incentivize employer participation and friendship, support cross- departmental collaboration, support school districts seeking CTE and apprenticeship programs, and expand dual-credit and post- secondary pathway programs. 9:20:08 AM SENATOR BEGICH stated that Senator Bishop and Stedman asked Commissioner Johnson how to fix Alaska's low-ranking national test scores when reviewing SB 111. Commissioner Johnson responded that focus should be on the five measures identified in Alaska's Education Challenge. Alaska is addressing those measures through several bills. He asked if HB 132 addresses a measure identified in Alaska's Education Challenge to increase career and technical education. REPRESENTATIVE FIELDS replied yes, HB 132 provides baseline policy support to state agencies by encouraging the search for apprenticeship and CTE opportunities. He said specific apprenticeship opportunities, such as teaching apprenticeships, should be sought after and necessary statutory baselines established. 9:21:41 AM SENATOR BEGICH stated that the Finance Committee is engaged in this process, and the Education Committee should take advantage of the moment. 9:22:03 AM SENATOR HUGHES asked if the university and DLOWD were given timeframes to submit proposals for CTE apprenticeships and pathways. REPRESENTATIVE FIELDS said no, the university and DLOWD have been investigating and developing proposals for some time. The legislature must inform agencies that it supports the work by providing statutory baselines. He suggested that Teri Cothren could provide insight into what the university has been working on, and he could give details on DLOWDs proposals. 9:23:26 AM SENATOR HUGHES said she was excited about expanding broadband in Alaska and the online coursework capabilities it will provide to villages off the road system. She opined that Alaska should be gearing up now to offer individuals the ability to train for high-paying jobs that might be of interest and fit off road communities. She stated her belief that the expansion of broadband pairs well with CTE and apprenticeship expansion because it can provide job opportunities to areas that struggle to have an economic base. She opined that marrying the two concepts could be a game changer for Alaska. 9:24:48 AM REPRESENTATIVE FIELDS agreed. He said that the Alaska Primary Care Association (APCA) apprenticeship model plus college credit shows potential because distance-delivered instruction to rural community health centers is only possible when the two concepts of apprenticeship and video instruction are connected. Other organizations will have the ability to replicate the APCA model and benefit more people as broadband expands to other communities. 9:25:18 AM SENATOR HUGHES said schools and clinics provide state jobs that are wonderful, and she supports training Alaskans for those positions. However, job opportunities outside of state funding bring dollars to grow and strengthen the economy. She stated her desire for broadband expansion and apprenticeships to bring new opportunities into the state. 9:26:16 AM TERI COTHREN, Associate Vice President, Workforce Development, University of Alaska, Anchorage, Alaska, stated that the university supports HB 132 and expanding apprenticeship pathways. The workforce development office also encourages existing and continued partnerships between UA, DOLWD, and DEED because it helps the state be responsive to workforce needs while expanding access to education. She opined that federal infrastructure funding ties in nicely with apprenticeships to help address workforce needs. The university wants to partner with DOLWD and DEED to expand the pathways between dual enrollment opportunities in secondary education and apprenticeship pathways for apprentices and journeymen to continue their education for career advancement. She provided examples of university partnerships and how they assist students and employers. Growing a solid workforce is core to the university's mission. She stated that the university wants to provide Alaskans pathways for upward mobility by earning certifications and degrees that lead to employment and advanced careers. 9:30:24 AM MARIKO SELLE, Workforce Development Director, South Central Alaska Health Education Center, Alaska Primary Care Association (APCA), Anchorage, Alaska, stated she fully supports HB 132 and its potential to open doors into health and human services careers for youth and adults through registered apprenticeships. The Alaska Primary Care Association has been a multi-agency sponsor of registered apprenticeships since 2017. Being a multi- agency sponsor means working with various healthcare employers, including but not limited to federally qualified health centers. APCA has healthcare apprentices learning and working throughout Alaska. Currently, apprenticeships offered are: • Medical Assistant • Medical Secretary • Electronic Records Specialist • Direct Support Specialist • Pharmaceutical Technician • Billing and Coding Specialist • Community Health Worker • Dental Assistant MS. SELLE stated that apprenticeships are an innovative way to recruit and retain workers critical to the healthcare field. When Alaska has strong apprenticeship policies, it puts the state in a better position to garner federal funding. The model works well for rural Alaska but also in urban areas where mentors are training staff. The recruitment pool for entry-level jobs is the people who live in the community, which means people are hired without experience and are trained by staff. An apprenticeship model provides structured formal education for individuals to learn needed skills through a didactic related technical instructor (RTI) while being locally mentored. The University of Alaska (UAA) career ladder is open to the apprentices at APCA to create a partnership with UA. APCA also partners with Alaska Pacific University so apprentices can earn an undergraduate certificate after completing an apprenticeship program. She stated that the programs are well suited for youth pursuing a career track versus a college track. APCA works with school districts to provide pathways to career-minded high school students to earn college credit while following a career path. 9:36:03 AM ALICIA MALTBY, President, Associated Builders and Contractors (ABC), Anchorage, Alaska, said ABC is the voice of Alaska's construction industry. It advocates free enterprise ideals, develops workforce training, and provides contractors with the resources required to compete in an ever-changing business environment. ABC operates one of the largest apprenticeship programs in Alaska through its member employee companies and self-study. She stated that ABC believes training is integral to Alaska's economy. Too often, public entities debate policies that attempt to pick winners and losers among training opportunities available to Alaskans. She opined that policy around training should promote all opportunities, including federally approved apprenticeship programs for on-the-job training, self-study, and robust vocational and technical options, including secondary education. ABC supports the passage of HB 132 because it is a responsible, collaborative, and positive step in promoting more training opportunities for Alaska but will remain neutral on the apprenticeship tax credit provision. She stated her appreciation for Representative Fields' work and partnership on HB 132. 9:37:40 AM CHAIR HOLLAND asked if HB 132 was based on North Carolinas model. REPRESENTATIVE FIELDS replied that the tax credit portion of HB 132 was based on South Carolina's successful tax credit. CHAIR HOLLAND asked whether HB 132 was based entirely on South Carolina's model. REPRESENTATIVE FIELDS responded that only the tax credit portion of HB 132 followed the South Carolina model. The policy structure for HB 132 was inspired by the incredible expansion of APCA's apprenticeship program that started in 2017. He stated that he worked for DOLWD when the program started and noticed gaps in statutory support for cross-departmental collaboration. He also saw gaps in support for school districts trying to ready students for apprenticeships. He provided an example of statutory change and said he worked with several school districts to determine how the legislature could support school efforts and scale up school-to-apprenticeship programs. 9:39:39 AM CHAIR HOLLAND said that usually tax credits are given to spur activity. He questioned whether a tax credit was necessary since employer demands were not being met. He asked whether the tax credit was integral to HB 132. 9:40:13 AM REPRESENTATIVE FIELDS replied that HB 132 would be beneficial even without the tax credit. However, it is more potent with the credit because employers have startup costs, and the tax credit alleviates risk. He said that more employers would try apprenticeships if the risk were reduced. He provided APCA as an example. He opined that employers would continue to use apprentices because of the internal rate of return. 9:41:27 AM CHAIR HOLLAND asked if it is a one-time credit per apprentice or employer. REPRESENTATIVE FIELDS responded that it is a one-time credit per apprentice. 9:41:38 AM SENATOR BEGICH stated he wanted to emphasize that the tax credit is ongoing. However, once a tax credit is applied to an apprentice, the employer does not continue to apply it yearly to that apprentice. 9:41:51 AM SENATOR HUGHES said that giving a tax credit means the state collects less revenue. She asked if an employer incentive payment of $1,250 could be set up using untapped federal dollars instead of reducing state revenues through a tax credit. 9:42:58 AM REPRESENTATIVE FIELDS answered that federal apprenticeship funds are being used. He opined that strong statutory support for apprenticeships puts Alaska in the best position to capture additional apprenticeship opportunities that arise. The US Department of Labor announced a new round of apprenticeship grants one month ago. He stated his belief that DOLWD could incentivize new employers who start an apprenticeship program by offering $1,250 to offset the program costs. However, he would want to talk to DOLWD about opportunity costs compared to the current allocation of the American Apprenticeship Initiative grant, which is the main ongoing funding stream. The Alaska State Hospital and Nursing Home Association (ASHNA), in partnership with APCA, is applying for one of the new grants. If successful, it will significantly scale up apprenticeships in healthcare. He concluded that he is hesitant to suppose $1,250 could universally be issued as an incentive without fully understanding funding. 9:44:20 AM SENATOR HUGHES said it is worth exploring because many organizations, such as community health clinics, do not pay taxes. She opined that everyone should be motivated without impacting state revenue if it is feasible. 9:44:50 AM REPRESENTATIVE FIELDS noted that the Finance Committee amended HB 132 to make the credit refundable so that it is equal for non-profit and for-profit organizations. For-profit C Corporation taxpayers get a tax credit. Non-profit organizations, like APCA, would be paid $1,250 because the cost impact to the organization would be the same. 9:45:28 AM GRACE KUBITZ, Staff, Representative Zach Fields, Alaska State Legislature, Juneau, Alaska, read the sectional analysis for HB 132: [Original punctuation provided.] Sectional Analysis for CSHB 132 ver N  Section 1: This section names the bill the Alaska Apprenticeship Expansion Act. Section 2: AS 14.07.020(a). Duties of the department. Adds to the duties of the Department of Education and Early Development that they must collaborate with the Department of Labor and Workforce Development to provide financial and technical support to school districts creating or expanding school to apprenticeship programs or concurrent secondary education and apprenticeship programs. DEED must also provide technical support to school districts seeking to provide science, math, and engineering credit for career and technical education courses, and provide opportunities to participate in concurrent vocational education, training, and on-the- job trade experience programs to students over 14 years of age enrolled in public secondary schools. Section 3: AS 14.40.190(c). Duties and powers of Board of Regents. Adds to the duties of the Board of Regents and their designee. It requires they give a presentation to the proper legislative committees in the first year of a legislative session on their work with Department of Labor to provide credit programs for concurrent secondary education and registered apprenticeships. Section 4: AS 43.20. Chapter 20. Alaska Net Income Tax Act. Adds a new section to AS 43.20. The new section is described below: Sec. 43.20.055. Registered apprentice tax credit. Creates a registered apprentice tax credit. This section clarifies that a taxpayer that hires a registered apprentice and employs and trains the registered apprentice in the state is entitled to a credit. This section also specifies other requirements related to the registered apprentice tax credit: ? To qualify as a registered apprentice for the purposes of the credit, a person must participate in a registered apprenticeship program recognized by the Department of Labor and Workforce Development; ? The amount of credit that may be applied by a taxpayer for each qualifying registered apprentice is $1,250. ? The tax credit may be applied against the tax for the first tax year ending on or after the end of the employment period. The credit may not be used to reduce a person's tax liability below zero for any tax year, and any credit or portion of a credit not used may be applied in a later tax year. It is refundable. A taxpayer must keep a record of the name of the registered apprentice whose employment and training is the basis for a credit, and the registered apprentice's hours employed and period of employment. The department may by regulation specify the documentation that must be maintained to support a claim that an employee qualifies as a registered apprentice. 9:48:27 AM SENATOR HUGHES asked what the process is for registering an apprentice program and having it recognized by DOLWD. She wondered if there were statutory guidelines. 9:48:51 AM REPRESENTATIVE FIELDS replied that apprenticeship is regulated by the federal government under the National Apprenticeship Act. Every registered apprenticeship is registered with the US Department of Labor. States have some options regarding how they work with the federal government. The Alaska Department of Labor and Workforce Development is unique because it works alongside the US Department of Labor in registering an apprenticeship. The actual registration is filed with the US Department of Labor. There is an Office of Apprenticeship in Anchorage. Federal law requires apprenticeships to be transparent. 9:49:36 AM SENATOR HUGHES asked for a description of the criteria and process that a new employer would go through to establish an apprenticeship. REPRESENTATIVE FIELDS replied that there are four types of sponsors single employer, multi-employer, educational training institution, and self. He stated that if a person does not want to sponsor themself, they can ask a single employer to be a sponsor, such as a mom-and-pop plumbing shop or hospital. Multi- employers, like associations and unions, pool resources to offer apprenticeship programs. Educational institutions can also sponsor apprenticeships in partnership with an employer who provides the training. 9:52:14 AM SENATOR HUGHES questioned whether there is more to an apprenticeship program than filling out a form to train someone properly. She asked if there would be paperwork with detailed criteria to meet. REPRESENTATIVE FIELDS replied yes. The detailed criteria are called standards of apprenticeship. There is a wide diversity of apprenticeships, and each has detailed standards. Every apprenticeship is a full-time job with training. One hundred and forty-four is the minimum number of related technical instruction hours per year for an apprenticeship. Additionally, there are 2000 hours of on-the-job training with a mentor. The US Department of Labor oversees the entire process and will attempt to bring a program not being implemented correctly back into compliance. The US Department of Labor can cancel the apprenticeship if corrections are not made. 9:54:52 AM CHAIR HOLLAND stated that career and technical education is essential to Alaska's education and landscape. The committee previously worked on a bill to create a middle college to help university-bound students get a head start. He foresees the committee working to provide similar opportunities for students pursuing trades instead of college. He opined that HB 132 is one piece of that puzzle. 9:55:45 AM REPRESENTATIVE FIELDS thanked the committee for the opportunity to discuss HB 132. 9:55:50 AM CHAIR HOLLAND held HB 132 in committee.