CS FOR HOUSE BILL NO. 337(JUD) "An Act relating to claims against permanent fund dividends to pay amounts owed to the Department of Labor and Workforce Development under the Alaska Employment Security Act and to fees for processing certain claims against permanent fund dividends; and providing for an effective date." RON HULL, Deputy Director, Division of Employment Security, Department of Labor, explained that his work included the collection of taxes from Alaska's employers and the paying out of benefits to Alaskans who are temporarily out of work. Last year over $129 million dollars were paid out in benefits. Inherent in the responsibility of administering the program is the protection of the Unemployment Insurance (UI) Trust Fund. By protection, Mr. Hull indicated that he meant detection, prevention, and the collection of improperly paid benefits. Mr. Hull continued, as of 12/31/99, the overpayment balances were as follows: *Fraud $4,912,384 *Non-Fraud $1,516,688 *Penalty $3,145,620 (penalty for fraud) He noted that the bill would speed the recovery of overpaid UI benefits that are currently a debt to the State. The overpaid benefits would be returned to the Trust Fund, which have a beneficial effect on the employers' UI tax rates. The penalty amount would be deposited into the General Fund. Mr. Hull added that with passage of the legislation, the Department estimates in the first year a return of over $1.5 million dollars to the Trust Fund, and over $750 thousand dollars to the General Fund. Every year thereafter, it is estimated between $700 - $800 thousand dollars would be returned to the Trust Fund and between $400 - $500 thousand dollars would be deposited in the General Fund. Mr. Hull concluded that passage of the bill would be good for the UI Trust Fund, the General Fund and for Alaska's employers. Co-Chair Torgerson asked what currently happens with the debt. Mr. Hull noted that much of the balance goes uncollected. The method most used for collecting is in the case of someone reapplying for benefits in the future, then they can be tracked. Co-Chair Torgerson asked why it is not taken to Small Claims Court. Mr. Hull advised that sometimes it is taken to Small Claims Court and from time to time to Criminal Court. Senator Adams pointed out that the limit had been raised to $20 thousand dollars. He asked if that could be used for the State's advantage. Mr. Hull did not know. He reminded members that this work is labor-intensive and the problem continues of getting the money to the Trust or General Fund. Co-Chair Torgerson countered that if the case went to court, the judgement could be taken and filed against the Permanent Dividend check. Co-Chair Torgerson observed that then the bill would provide for no court action, and instead, go directly to the attachment. Mr. Hull explained that it would but the Department wants to be in the same category as other State agencies so as to levy these funds. Co-Chair Parnell questioned the need of the State to continue to expand the scope of the State's ability to assume action on the PFD. Mr. Hull stressed that arrangement is "good" for all State Divisions. Co-Chair Parnell questioned what is "good" State policy, while not going through "due process". Mr. Hull replied that all agencies are required to go through that process, referencing the Child Support Enforcement Agency (CSEA). Mr. Hull questioned why it was not "good" policy to collect State debt. Senator Parnell repeated his question of why the State should be allowed to take action without going to court. Mr. Hull responded that it was a debt to the State. Senator Wilken asked how it was determined who would file against the PFD for money in dispute. Mr. Hull stated if any amount was in dispute, the agency would not be allowed to move forward as written in current statute. He noted that there exists an administrative appeals process for court actions. Co-Chair Torgerson referenced Page 2, Lines 9-13, asking if those actions would be addressed through the use of social security numbers. He questioned the "broad based" language used. Mr. Hull explained that the language would bring the Department in compliance with requirements that the Department of Revenue had established. Co-Chair Parnell pointed out that for PFD purposes, often a birthdate is needed. Some people do not have social security numbers yet and that alternate forms of identification can be used. Co-Chair Torgerson assumed that the people referenced in the legislation would be old enough to be working; otherwise, the provision would not apply to them. Co-Chair Torgerson inquired if the notices were sent registered mail. Mr. Hull replied that they are sent through regular mail. Senator Parnell asked if the State indicates notice of the "right to appeal". Mr. Hull explained that there are a number of documents sent. The first document is send to the claimant and the employer. If funds are owed, the claimant receives a letter of determination, which contains that document. Senator Parnell reiterated his question, if the claimant received notice of the right to appeal for any decision. Mr. Hull advised that the claimant does receive such a packet, which explains how to place those appeals. Senator Leman offered three minor technical amendments. Page 3, Line 26, delete "interpret"; Page 3, Line 29, transpose the words "only include"; Page 4, Line 6 & 7, delete "interpret for". Senator Leman MOVED to adopt those language changes. There being NO OBJECTION, the amendments were incorporated. Co-Chair Parnell MOVED to report SCS CS HB 337 (FIN) out of Committee with individual recommendations and with fiscal notes by Department of Revenue and Department of Labor and Workforce Development. There being NO OBJECTION, it was so ordered. Co-Chair Torgerson stated that SCS CS HB 337 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by Department of Revenue dated 2/8/00 and Department of Labor and Workforce Development dated 1/12/00.