SENATE BILL NO. 93 "An Act extending the unemployment contributions for the Alaska technical and vocational education program." 9:06:58 AM Senator Olson explained that The Technical and Vocational Education Fund (TVEP) authorized under AS 23.15.840 sunsets on June 30, 2014. He felt it was important legislation, because there were some capital projects that were considered, based on the passage of the legislation. DAVID SCOTT, STAFF, SENATOR DONNIE OLSON, stated that SB 93 extends the sunset date to June 30, 2024. In 2000 the Alaska Legislature created the Training and Vocational Education Program to provide financial assistance to support facilities throughout the state that provide technical and educational programs for industry specific training. Alaska was experiencing unemployment rates that were reaching to above 50 percent of the national average in 2008. With large projects on the horizon, there was a clear need for a trained, resident work force. The TVEP program was extended to provide training to Alaskan residents to help reduce the unemployment rate and put Alaskan residents to work. Figures released on March 14, 2013 by the Department of Labor and Workforce Development (DLWD) indicated that unemployment rates in Alaska for December of 2012 were 6.6 percent, while the national average was 8.1 percent. Alaska has had a consistent lower rate than the national average for the past forty-six months, indicating the effectiveness of this program. Funds for the TVEP program are appropriated from amounts the state collects in unemployment insurance contributions at a rate of 0.15 percent and are allocated according to statute. The more we can train our youth, as they enter the work force, the more we will re-enforce the desirability of staying in Alaska as part of a highly skilled, resident work force. The last five years has shown this Fund works. We can double the effectiveness with ten more years. He stated that there were three fiscal notes attached to the bill. He also noted some documents that were included in the members' files. Senator Dunleavy noticed that the sunset date was June 30, 2014, and wondered if the reauthorization would be the same date. Mr. Scott assumed that the bill would need to be amended to include an immediate effective date. Senator Dunleavy observed that there may be adjustments to the actual funding, if the effective date fell on a different fiscal year than the sunset date. Co-Chair Meyer wondered if the funding was strictly from the private sector. Mr. Scott responded in the affirmative. Co-Chair Meyer asked if the bill requested an increase in funding. Mr. Scott replied that the bill was only intended to renew the program. 9:11:29 AM KAREN CLEARY, PROJECT DIRECTOR, VOCATIONAL AND TECHNICAL EDUCATION CENTER, PRINCE OF WALES, testified in support of SB 93. She requested that the Prince of Wales Vocational and Technical Center be added to the list of qualified regional technical centers to receive the funding referred to in SB 93, in the same percentage as the other regional technical centers of 3 percent. Co-Chair Meyer wondered what percentage of funding that the Prince of Wales Vocational and Technical Center received. Ms. Cleary responded that they were not currently on the list, because it was a new center. Senator Olson queried the population of Klawock. Ms. Cleary replied that Klawock had 750 people, and Prince of Wales Island had approximately 5,500 people. The technical center served the entire island. Senator Olson wondered if Prince of Wales Island had jet service. Ms. Cleary responded that there was ferry service, and small commuter aircrafts. Senator Olson wondered if there was a dormitory to house students for the technical center. Ms. Cleary replied that the initial objective for the center was to offer courses for the residents of the island. She furthered that it was intended for the students to build a dormitory on site at a later date. Senator Olson queried the selection process for the teachers. Ms. Cleary replied that there were some teachers that were employed through the school district, and there were also some distance learning options through the University of Alaska (UA). Senator Bishop wondered what kind of courses were to be offered in the technical center. Ms. Cleary replied there was an extensive needs assessment before the building plans. She stated that there were courses for mining safety; welding; health care professions; and water and wastewater treatment certifications for municipalities. She stressed that the technical center would be tailored specifically to the needs of the municipalities and the industry on Prince of Wales Island. Senator Bishop wondered if there were industry partnerships. Ms. Cleary replied that there were many industry partners on the board of directors, and she explained that they were waiting for the 501 C3 authorization from the federal government to use the Alaska corporate tax structure to encourage industry partnerships. Co-Chair Meyer wondered what types of mining occurred in Prince of Wales Island. Ms. Cleary responded that there was intent to open gold and rare earth mines. She stated that the mines were in the permitting stages, and were already hiring personnel. 9:16:20 AM Senator Olson asked if the technical center was involved with the Ketchikan Technical Institute. Ms. Cleary responded the center was not directly involved with that institute, because they were a self-contained college. She furthered that there were plans to partner with the institute in the future. Vice-Chair Fairclough remarked that the percentages total to 100 percent, so adding another entity to the program would result in extracting percentages from other organizations. Co-Chair Kelly felt that there was a flaw in the list of technical centers. He furthered that the list included UA and UAS. He stated that the universities were included, because UAS did not have programs that included some programs that were offered on other campuses. He felt that removing UAS from the list would not impact their funding, because they would receive funding through the overall UA budget. Senator Olson stated that he remembered those political discussions. 9:19:55 AM KATHY LEARY, TRAINING MANAGER, ILISAGVIK COLLEGE, BARROW, testified in support of SB 93. She requested that Ilisagvik College be included in the list of regional training centers to receive funding. She stated that the Ilisagvik College offered various forms of training, including 247 classes, which served a total of 1877 students. She stressed that the total included duplicate numbers, because some students took more than one certification to enhance employment capability. In addition to short-term classes, the college offered its regular vocational and technical education programs for heavy equipment, electrical, plumbing, welding, commercial driver's licenses, and other various certifications within the industry. 9:24:03 AM Co-Chair Meyer wondered if she had a recommended percentage Ms. Leary responded that she would like 10 percent for her program. Senator Olson remarked that UA did not have an operating budget that included Ilisagvik College. He wondered how many students were transfer students, and where from they were transferring. Ms. Leary responded that many students were from the North Slope villages, and much of the training was conducted in those villages. She announced that there were students from the Northwest Arctic region villages. She stressed that the college tried to consolidate the classes in order to leverage the cost of the classes. Senator Olson wondered if students must be native in order to be admitted to the college. Ms. Leary replied that admissions were open to anyone, and explained that the college received federal funds based on a number of native students attending the college. Senator Olson surmised that the college was open to native and non-native students. Ms. Leary agreed with that summation. Senator Bishop asked for a couple of examples of the college's industry partnerships, and if they were in-kind or cash partnerships. Ms. Leary responded that the college partnered with many companies in the industry, including Umiak and Arctic Slope Regional Corporation (ASRC) Energy Services and contracts with producers to provide personnel. She stated that the college provided instruction, and the industry usually provided travel and lodging, or vice versa. Senator Bishop queried the college's relationship with the North Slope Borough. Ms. Leary responded that there was extensive work with the borough and its employees whenever requested. 9:29:55 AM Co-Chair Meyer queried the employment success of the graduates of the center. Ms. Leary replied that the students were generally successful. The students that were in intended for the Alaska Trucking Association (ATA) industry were granted a Commercial Driver's License (CDL), so they had a better chance of placement. CHARLES EDWARDSON, SOUTHERN SOUTHEAST ALASKA TECHNICAL EDUCATION CENTER, KETCHIKAN (via teleconference), testified in support of SB 93. He remarked that the center was fully staffed and a strong current student base. He announced that the center had been in operation for over two years, and had $3.3 million state capital appropriation investment. The center was completed in 2010 with the construction academy trainees and apprentices. The center had served nearly 100 Ketchikan residents annually for the two prior years. The center was awarded a grant from the state to administer the Ketchikan Construction Academy. The first group of trainees from the center graduated in May 2013. The center was working collaboratively with UA in Ketchikan and local school districts. He stated that the center provided a continuum of services that included all Southeast Alaska learners who chose vocational training as a career path. The center's goal was to be included in the bill's funding at 3 percent. He stated that the inclusion would allow the center to spread the programs to the entire community. He announced that there would be a dormitory complete in April 2014, and was funded by a $2.2 million grant from the state through the capital budget. He stressed that the center worked with the industry. The industry had expressed challenges with recruiting and retaining residents because of workforce behaviors. He stated that the center's dormitory would have a fully staffed social services department that would address workforce behaviors. 9:38:30 AM Senator Olson asked if Mr. Edwardson would be in favor of including his center in the TVEP program, and wondered how that would be balanced with the private sector funding. Mr. Edwardson replied that the governor had a bill that would allow private industry to invest directly into vocational training centers for direct services. He stressed that the center currently had a federal funding stream that allowed the center to leverage with state funds. He felt that reallocating the funding formula was a delicate issue, but the history of the bill reflected expansion. He remarked that the unemployment tax increase was a direct result of vocational training. 9:42:31 AM FRED VILLA, UNIVERSITY OF ALASKA, FAIRBANKS (via teleconference), explained that that the University of Alaska Technical Education program provided grants for high demand career and technical education for industry specific on-the-job and classroom training. The TVEP funds were managed as a single allocation to initiate or enhance high priority workforce development programs. The funding must meet the following criteria within UA's allocations: 1) high demand or regional workforce needs; 2) increased access and flexibility of training delivery; 3) improved persistence of educational progress associated with workforce development; and 4) formal collaboration across the university system by expanding partnerships. The three priority areas that UA specifically provided through educational pathways which included dual credit; technical preparation for students transitioning from high school, military, or other walks of life; economic development; and addressed the high demand jobs identified by the Alaska Workforce Development Board as state priority industries. The funding distribution was such that any application within the university and university partnerships must meet the criteria vetted through the university campus; ranked and tiered; and then presented to a committee that discusses, negotiates, and evaluates the program to determine the state, university, and regional priorities. Those recommendations were presented to the president, who then authorizes the allocations. Co-Chair Meyer referred to a question from Co-Chair Kelly, and felt that the 5 percent allocation for UAS was properly addressed. Co-Chair Meyer CLOSED public testimony. 9:52:11 AM GREY MITCHELL, ASSISTANT COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced himself. WANETTA AYERS, DIRECTOR, DIVISION OF BUSINESS PARTNERSHIPS, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced herself. Mr. Mitchell announced that the Department of Labor (DLWD) supported the reauthorization of TVEP. He remarked that DLWD did not want to participate in the discussion regarding who should share in the fund. He stressed that DLWD would like to see some elements in the governor's proposed legislation that included articulation agreements for dual credits and reporting accountability requirements for TVEP recipients. Co-Chair Meyer noted that there were many new groups that asked to be a part of TVEP, and queried DLWD's viewpoint on those additional groups. Mr. Mitchell responded that DLWD did not have a position with respect to those parties' request. He stressed that DLWD was in a precarious position, because AVTEC, which is part of DLWD, is a TVEP recipient. He remarked that DLWD was careful to distance itself from the discussion, because of the possible conflict of interest. Vice-Chair Fairclough looked at the fiscal note and remarked that flat funding was anticipated. She wondered if DLWD had anticipated additional revenues from the unemployment tax. Mr. Mitchell replied that the fiscal note assumed no changes in the unemployment contributions. He furthered that it was difficult to calculate exact unemployment contributions, so rather than determine an inaccurate calculation, the fiscal note assumed no changes from the FY 14 level. Vice-Chair Fairclough requested that DLWD provide more accurate proposed numbers. She felt that the increase in wage and income should be reflected in the fiscal note. Mr. Mitchell replied that DLWD was currently composing a chart that would display accurate numbers. 9:58:12 AM Senator Bishop agreed with Vice-Chair Fairclough, and wondered if there could be an analysis of projected job growth for Southeast and the North Slope. Co-Chair Meyer wondered if the training areas were adequately covered across the private and public training centers. Mr. Mitchell responded that DLWD had an inventory of the training providers in the state. He stressed that training was critical to a strong workforce in Alaska. Ms. Ayers announced that the issue of training infrastructure in new places was the reason for the increase in requests for funding. She stated that part of the oversight was to advise the governor and legislature. Co-Chair Meyer desired to see the report. He wanted to be sure that the state was getting value from the technical education training centers. Senator Hoffman noted that the total training participants had been identified, and saw that those participants were employed in Alaska just one year after training. He wondered if the additional reporting requirements specifically for TVEP, and asked if the requirements included better information to evaluate the existing programs that were receiving funds. Mr. Mitchell replied that there would be a report for the dual-credit arrangements that the training providers would have. He stressed that high school students should have the opportunity to participate in the vocational training programs to earn college or high school credit. He remarked that, in Alaska, four out of five jobs do not require a college degree. 10:04:32 AM Senator Olson inquired the administration's position on changing the rate. He remarked that the rate was reauthorized to curb some of the former unemployment rates. Mr. Mitchell replied that the administration wanted to maintain the rate as it was currently producing information to show what the impact would be. Senator Olson understood that the program had been fully funded, but then was suspended because of the current unemployment rate. Mr. Mitchell responded that Senator Olson may be referring to the reduction in the unemployment insurance tax that occurred during the previous legislative session. He agreed that the Unemployment Insurance Trust Fund was healthy, and stated that the formulas from the previous legislative session allowed for some refunds to employers. Senator Bishop stated that the refunds were issued to employers and employees. Senator Olson announced that TVEP was a successful program. He felt their success should be rewarded with more success. SB 93 was HEARD and HELD in committee for further consideration.