SB 109-CRIM HIST CHECK: ST EMPLOYEES/CONTRACTORS  2:30:24 PM CHAIR COGHILL reconvened the meeting and announced the consideration of SB 109. 2:31:26 PM GENEVIEVE WOJTUSIK, Legislative Liaison, Department of Revenue, Juneau, Alaska, said SB 109 relates to background checks of state employees. The September 30, 2016 Internal Revenue Service (IRS) publication 1075 has new guidelines that requires individuals who have access to federal data to undergo a background check. The state is not in compliance with the fingerprinting requirement in that publication. She provided the following sectional analysis for SB 109: Section 1 Amends AS 12.62.400 by adding a new subsection. This will require an agency to submit the fingerprints of current or prospective employees or contractors whose job duties require access to federal tax information (defined in AS 39.55.015(e)(3) and 36.30.960(d)(3)) to the Department of Public Safety for submission to the Federal Bureau of Investigation to obtain a criminal history record. Defines "agency", "employee" and "contractor". Section 2 Amends AS 36.30 by adding a new section. This section establishes state personnel procedures for obtaining and submitting fingerprints for current or prospective contractors if a contract with the state requires access to federal tax information. Defines "agency", "contractor" and "federal tax information". Section 3 Amends AS 39 by adding a new chapter. This new chapter addresses state personnel procedures related to federal tax information. Adds AS 39.55.010 This section explains the purpose of the chapter-- to establish procedures to safeguard federal tax information which will apply to a current or prospective state employee whose job duties require access to federal tax information. Adds AS 39.55.015 This section requires current and prospective state employees whose job duties require access to federal tax information to provide information to an agency for a state and national criminal history record check. Defines "agency", "employee", "federal tax information", "return", and "return information". Section 4 Provides the effective date of July 1, 2017. MS. WOJTUSIK noted that the effective date will need to be amended to 2018. 2:34:24 PM CHAIR COGHILL asked what happened at the federal level that elicited this requirement. MS. WOJTUSIK said it came about in a routine review. SENATOR BISHOP asked if an employee who did not want to be fingerprinted would have the option of being reassigned to a different division or department. MS. WOJTUSIK said that hasn't come up. All the employees in the Tax Division and the Child Support Services Division of the Department of Revenue (DOR) have already had background checks. They receive federal data so they also need to be fingerprinted. SENATOR BISHOP said he understands that but wonders if they could transfer to a division that doesn't have that requirement. SENATOR WIELECHOWSKI asked if there is any other heightened scrutiny that employees could go through if they objected to giving their fingerprint information. MS. WOJTUSIK said the FBI said that fingerprints are needed as part of a full background check. They did not offer any alternative. CHAIR COGHILL said he'd asked the individuals who were online. 2:37:31 PM CAROL BEECHER, Director, Child Support Services Division, Department of Revenue (DOR), said her understanding from reading Publication 1075 is that there is no other option. CHAIR COGHILL asked if any employees objected that the requirement is too onerous. MS. BEECHER said there has been no pushback. SENATOR WIELECHOWSKI observed that the definition of "agency" covers the entire executive and then some. He asked if she has an estimate of the number of employees who would be required to give fingerprints. MS. WOJTUSIK said she didn't know. CHAIR COGHILL asked Ms. Wojtusik to do some research and follow up with the information. MS. WOJTUSIK said DHSS is affected and 300 employees within the Department of Revenue. SENATOR WIELECHOWSKI said he'd like more complete numbers. He asked what assurance Alaskans can have that their data will be safely maintained. 2:41:00 PM MS. BEECHER clarified that DOR doesn't receive the fingerprint information. When DOR has a background check done, the report is returned to the agency's Criminal Investigation Unit. She believes that information is destroyed if it doesn't have a nexus to the job. She offered to follow up and find out if her understanding is correct. CHAIR COGHILL asked Senator Wielechowski to clarify his question for Mr. Gaffney. SENATOR WIELECHOWSKI asked what kind of safety protections there are and what the plans are for the fingerprints after they are collected. 2:42:56 PM ERIC GAFFNEY, Records and Licensing Supervisor, Criminal Records Identification Bureau, Department of Public Safety, Anchorage, Alaska, explained that the fingerprints would be placed in the archive that is maintained by the state for other civil and criminal fingerprint submissions. Alaska is a member of the Western Identification Network with other Western states and criminal justice agencies in those states can access that archive. The prints would also be conveyed to the FBI to be used for comparison and then destroyed. SENATOR WIELECHOWSKI asked how much it costs to obtain the fingerprints and who would be responsible for paying. MS. WOJTUSIK said DPS charges $47 to take the fingerprint and the state will pay. SENATOR WIELECHOWSKI asked if there is a fiscal note. MS. WOJTUSIK said it's forthcoming; it's being updated from 2017. CHAIR COGHILL updated Mr. Spanos on the discussion and asked if the House had questions about the security of the information. 2:46:44 PM BRANDON SPANOS, Deputy Director, Tax Division, Department of Revenue (DOR), Juneau, Alaska, confirmed that the other body did have concerns about the security of the information. He explained that DOR has policies in place for security and they take this seriously, but that isn't part of the bill. SENATOR WIELECHOWSKI asked if other states have complied with this requirement and what the consequences are if the bill doesn't pass. MR. SPANOS said the IRS has been talking about this a long time and it has been discussed with the states. When the publication was finalized, the new requirements were background checks and fingerprinting. To date, 26 states have passed legislation to allow fingerprinting and background checks, 14 states - including Alaska - have legislation under consideration, and 8 states have no legislation pending. Some of the latter states may be able to comply without a bill. SENATOR WIELECHOWSKI asked if there is a deadline for complying. MR. SPANOS said if the bill doesn't pass, the IRS will likely have a finding on the May 2018 audit that notes that the legislation hasn't passed. He suspects that the IRS would eventually stop sharing federal tax information with the division. For the Tax Division that means the loss of about $2 million a year from federal fee back audits. The division would also lose the ability to get federal tax information on certain taxpayers like tobacco, mining, and alcohol to use in their audits. Child support services would lose the ability to collect the federal refunds of taxpayers who owe child support. They would also potentially lose the funding they receive from the federal government, which is 66 percent of their budget. He said he wasn't aware of a deadline to pass the legislation. 2:51:08 PM SENATOR COSTELLO said she would like to look at the form an individual would fill out. She asked if the form asks for a Social Security Number and what the state does with those numbers. MR. SPANOS said the Tax Division has slimmed the form to one and a half pages. It requires name, age, aliases, former names, Social Security Number, places of residence for the last 10 years, conviction dates and the classification of the crime, the punishment, and a signature authorizing the department to run the background check. The questionnaires go to the Criminal Investigation Unit to run the background check and the results come back they give the division a clean sheet that says the person passed the background check or that there were concerns due to crimes of dishonesty. The division would review those to determine whether they would retain or potentially hire or not hire the prospective employee. The division keeps a record that the background check was run but the results are retained by the Criminal Investigation Unit. SENATOR COSTELLO asked what happens to the Social Security Number that's on the form. MR. SPANOS said DOR's Criminal Investigation Unit would retain it in a locked file behind a locked and secure door. SENATOR COSTELLO related her personal experience of having her identity stolen. She emphasized that public servants need to be on the lookout to protect Alaskans when they're asked to provide this type of information. 2:55:43 PM MR. SPANOS said the department is very concerned about privacy and confidentiality. Forms with Social Security Numbers are handled by very few people in the department. There is a chain of custody and the forms are always secured under lock and key. 2:57:00 PM SENATOR WIELECHOWSKI asked if he is aware of any state employees misusing federal tax information. MR. SPANOS said the Child Support Services Division terminated several employees who were accessing information they had no business reason to access. That information potentially had federal tax information. He was aware of one breach of information within the Tax Division that resulted in discipline and termination. Other breaches were mistakes; information was sent to the wrong email that involved state tax information, not federal. The division has a procedure to address that. 2:58:12 PM CHAIR COGHILL asked if the companion bill in the House is moving. MR. SPANOS said the intention is to take amendments and potentially move the bill on Friday. CHAIR COGHILL held SB 109 in committee.