SENATE BILL NO. 170 "An Act modifying the Alaska unemployment insurance statutes to comply with the requirements of the federal economic stimulus bill by redefining the base period for determining eligibility for unemployment benefits; and providing for an effective date." 9:13:00 AM Senator Ellis addressed the legislation and the importance of quick action. He opined that the millions of dollars available to the state would strengthen the state's unemployment trust fund protecting business and providing money for one time job training for Alaskans who are unemployed. This legislation creates a minor change updating the unemployment law. Alaska has modernized the unemployment system for the state. MAX HENSLEY, STAFF, SENATOR ELLIS, spoke to the legislation. Senate Bill 170 updates Alaska's unemployment insurance statutes to conform to the federal unemployment insurance modernization provisions included in the American Recovery and Reinvestment Act of 2009, commonly known as the federal stimulus bill. ARRA provides over $16 million in funding to support these changes, which includes just over $1 million in administrative assistance. This funding is conditional on making the changes included in SB 170. Of the three provisions necessary to receive this funding, Alaska is already in compliance with the two more difficult requirements. The bill meets the final requirement by creating an alternative base period to determine an unemployed person's eligibility for unemployment insurance. Thirteen Governors (including seven Republicans) from across the country have expressed their intention to make these changes, and four states already comply. Iowa and South Dakota have already passed legislation to modernize their UI systems and accept their share of the federal money, and Georgia is in the process, with the support of each of their Governors. Any funding sources Alaska chooses not to take advantage of will be re- allocated to the federal UI program that will put it to use rather than being used to reduce federal deficit spending. The Alaska Department of Labor estimated that the alternative base period would make approximately 1,300 more Alaskans eligible for unemployment insurance compensation each year. This change will help low-income Alaskans weather the national economic downturn without placing an undue hardship on employers and small businesses that support the UI trust fund. The estimated impact on the UI trust fund in calendar year 2008 had this change been in place would have been approximately $1.9 million in additional payments (on top of the $121 million paid out already). This amount is small enough in comparison to the overall size of the fund's corpus - $351 million at the end of 2008 - the annual investment returns, and the additional federal funds which would become available, that the impact on business taxes would be negligible. 9:18:07 AM Co-Chair Hoffman MOVED to ADOPT CSSB 170 (FIN) LS0762/S. Co- Chair Stedman OBJECTED for discussion purposes. Mr. Peterson addressed the CS and the Amendment. Alaska law must comply with the Federal Unemployment Tax Act as a condition of certification for federal unemployment compensation administrative grants totaling approximately $20 million. If Alaska were decertified due to a failure to enact this legislation, the state risks loosing the full federal unemployment tax act credit of 5.4 percent translating to a loss of $111 million in annual tax credits for Alaskan employers. The Alaska unemployment security act stipulates that the state complies with federal law for the administration of the unemployment insurance program. Tribal entities' services require coverage and federally recognized tribes require the choice to become federally recognized employers for the payment of unemployment insurance taxes. He discussed the letters available (Copy on File) describing the need for this legislation and citing the prevailing federal law. He addressed one letter in particular by the Clark (Click) Bishop, Commissioner, Department of Labor and Workforce Development Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Senator Huggins stated that he assumed that a representative from the administration would come forward before the bill moves. 9:22:57 AM Senator Ellis MOVED to ADOPT Amendment 1. Co-Chair Stedman OBJECTED for discussion. Senator Ellis explained the change, which clarifies the title. Page 1, lines 1 - 2: Delete "to comply with the requirements of the federal economic stimulus bill" Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. 9:24:30 AM Senator Huggins informed about concerns from the administration regarding the federal stimulus funds. He opined that most Alaskans appreciate information concerning the administration's position on the stimulus money. Co-Chair Stedman proposed that representation from the administration is encouraged when the bill returns to the finance committee. Senator Ellis stated his thorough understanding that the money is available one time only. He concluded that money placed into the unemployment trust fund to aid employers is helpful because it remains in the trust fund contributing to the fund's health. The job training money is allocated for job training centers. SB 170 WAS HEARD AND HELD IN COMMITTEE FOR FURTHER CONSIDERATION. 9:25:51 AM AT EASE 9:28:22 AM RECONVENED