SENATE BILL NO. 182 "An Act relating to salary differences in collective bargaining agreements subject to the Public Employment Relations Act that are based on a difference in the cost of living outside the state and the cost of living in the state; and providing for an effective date." 9:27:50 AM Vice-chair Fairclough MOVED to ADOPT the proposed committee substitute for SB 182, Work Draft 28-LS1432\O (Wayne, 3/19/14). There being NO OBJECTION, it was so ordered. Ms. Marasigan explained the two changes made in the CS. She noted the first change found on page 2; section 3 where additional language was included under "transition, salary differences and collective bargaining agreements." The change allowed a person eligible on June 30, 2014 to receive a cost-of-living differential under AS 23.40.210 that shall remain eligible on and after July 1, 2014. She noted that the second change included a new effective date of July 1, 2014. Co-Chair Meyer understood that the changes in the bill would only affect new employees. Ms. Marasigan concurred. She stated that additional testimony was available from the Department of Administration. Co-Chair Meyer asked the sponsor for comments about the CS. SENATOR FRED DYSON (via teleconference), commented that the bill caused angst for employees of the Alaska Marine Highway System. The perception was the employees would lose a significant portion of their salary benefit package. He hoped that the CS would lessen the anxiety for the existing employees. He opined that the changes resulted in an improvement in the legislation for existing employees. 9:31:03 AM Senator Olson asked about the fiscal impact of the changes made in the bill. Senator Dyson stated that he did not have an updated fiscal note for the CS. He stated that the administration brought the problem to the attention of his office. He mentioned an anomaly in the state law; three bargaining units had established the Cost of Living Differential (COLD) in statutes based on the difference in the cost of living of Alaska to Seattle. The administration pointed out that the differential was obsolete and the intention was for all Alaskan bargaining units utilized the same differential. He mentioned anomalies that were unjustified by the differences in the cost of living leading to greater state expense. He noted that bargaining with renewable contracts were in process. Senator Dyson acknowledged that employees were concerned with the loss. He expressed confidence that the administration would provide a competitive salary/wage benefit package. He discussed various measures of good management. He believed that North America realized great competition for employment in the maritime industry. He discussed the large amount of freight moving by sea to Alaska. He noted that the current statute was obsolete and differed greatly from other bargaining units. 9:35:20 AM Senator Olson requested an example of an antiquated statute. He assumed that COLD displayed that living in Alaska was more expensive than Seattle. Senator Dyson concurred. He noted that using Seattle as a base was no longer valid. Senator Olson asked for an example of an antiquated statute. Senator Dyson replied that the bill addressed the law in statute on the basis for the regional COLD. 9:36:37 AM NICKI NEAL, DIRECTOR, DIVISION OF PERSONNEL AND LABOR RELATIONS introduced herself to the committee. NANCY SUTCH, DEPUTY DIRECTOR, DIVISION OF PERSONNEL AND LABOR RELATIONS, DEPARTMENT OF ADMINISTRATION introduced herself to the committee. Ms. Neal replied to Senator Olson's questions regarding a comparison between Seattle and Alaska. She mentioned the most recent geographic differential study in 2008 that determined no significant difference between Anchorage and Seattle. 9:37:57 AM Vice-Chair Fairclough asked about a presentation about the benefit package to compare different mechanisms of the proposed contracts. Ms. Neal replied that she was happy to provide a presentation if requested by the committee. Vice-Chair Fairclough revealed that the CS would garner less opposition if greater explanations occurred. She recalled recent presentations used to educate the committee and public. She requested further details for the contracts and how they compare to other state collective bargaining contracts. She believed that the committee was responsible for reviewing all payrolls to better understand statewide collective bargaining agreements and obligations. 9:39:50 AM Ms. Neal offered to provide presentations for the committee. Co-Chair Meyer believed that the concerning aspects of the bill were altered with the most recent CS. Senator Olson asked about the reason for the initial statute. Ms. Neal replied that language in the current statutory provision spoke to creating the differential between Seattle and Alaska. At the time of the statute's creation, the cost of living between Seattle and Alaska was significantly different. Senator Olson asked how many employees of the Alaska Marine Highway System lived in Anchorage. Ms. Neal replied that she was unable to give exact figures. 9:41:16 AM Senator Olson asked where most Alaska Marine Highway employees lived. Ms. Neal replied that approximately 29 percent of members of the Marine Engineer Beneficial Association lived out of state, while 71 percent lived in state. In the Masters Mates and Pilots Union, approximately 23 percent lived out of state, while 77 resided in state. In the Inland Boatmen's Union, 91 percent of the members lived in Alaska, while 9 percent lived out of state. Senator Dunleavy asked if the fiscal note would be adjusted with the CS. Co-Chair Meyer stated that a new fiscal note would reflect the CS. 9:42:48 AM Senator Bishop discussed the art of collective bargaining. He understood that the administration was undergoing negotiations. Ms. Neal concurred that the administration was negotiating with all three bargaining units. Senator Bishop observed that the bill might stress the good faith efforts made in the negotiation process. Co-Chair Meyer asked how the negotiations were proceeding. Ms. Neal discussed proposals made to each union including grandfathering in current employees. She stated that agreements had not yet been reached. She appreciated Senator Bishop's observations. 9:44:43 AM Senator Dyson addressed the question about the state having a law in process that changed the rules. He mentioned that a lawyer from Department of Law specialized in labor law spoke about federal employment laws. He recalled that there was no problem with the state changing statutes in the midst of negotiations. He recalled that contract dates would be completed in negotiations before the law was in effect. The law in place when the contracts were signed was most applicable. He discussed the question of COLD in state statute as a fair method of establishing the geographical cost-of-living differentials. JOSHUA BANKS, STAFF, SENATOR DYSON, stated that an opinion letter from the Department of Law civil division was provided in members' packets. He stated that the assistant attorney general provided a letter. He offered to provide additional copies. 9:47:36 AM AT EASE 9:49:23 AM RECONVENED Co-Chair Meyer apologized that public testimony would be rescheduled for next week. He explained that committee members had been called to the Senate Floor. He wished to continue public testimony for SB 182 on Monday of the following week. He hoped that committee member concerns were addressed in the CS. SB 182 was HEARD and HELD in committee for further consideration.