SB 297-NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT  SB 294-RCA POSITIONS AND SALARIES  4:04:18 PM CHAIR ELLIS announced SB 297 and SB 294 to be up for consideration and that a proposed CS combines the two. DANA OWEN, staff to Senator Ellis, explained the proposed CS [referred to as CSSB 297(L&C) 25-GS2011\E] consolidates SB 294 , which pertained only to the Regulatory Commission of Alaska (RCA) and SB 297 and some of the changes are fairly significant. CHAIR ELLIS said version E contains consolidated RCA salaries into one vehicle so as to have an overarching approach to pay and benefits. MR. OWEN added in order to accomplish that the title was broadened. CHAIR ELLIS noted that was fine because the bill is in the body of origin. MR. OWEN continued saying sections 1-4 had not been changed and clarified that the reference to the commissioners is to the Commercial Fisheries Entry Commission. Section 5 on page 2, line 15, places the executive director of the RCA, which is enacted in section 12 of the bill, into the exempt service. Section 6 on page 2, line 17, corrects terminology that exists in RCA statutes; currently "hearing officers" is used, but "hearing examiners" is more correct. CHAIR ELLIS noted that Senator Stevens joined the committee. 4:07:02 PM MR. OWEN said sections 7-10 on page 2, line 20 - page 3, line 30, are from the original bill and are the new pay schedule and the three-year raises from 2008-10. One of the sections establishes a longevity pay system for employees who reach step F of the pay schedule. Section 11 on page 4, line 14, sets all RCA commissioner salaries including the chair's at step F, range 30. Under the bill, the chair would no longer have administrative duties, but further in the bill an executive director's position is created that would assume those duties. As a result all commissioners will get the same pay. CHAIR ELLIS remarked that was reflective of recommendations from the RCA task force. 4:08:23 PM MR. OWEN said section 12 on page 4, line 20, establishes the position of the RCA executive director, clarifies that the commission hires the executive director and administrative law judges (judges report to the commission and not to the executive director). It further sets out the responsibilities, powers and limitations of the executive director position. Sections 13-14 on page 5, lines 4-18, are conforming amendments that result from creation of the executive director's position. Sections 15- 16 on page 5, line 19 - page 6, line 3, are not changed from the original bill. Section 17 is an amendment from the court system saying that court employees not covered by a collective bargaining unit including magistrates, but excluding judges and justices, and are under the same section 7-9 pay schedule and two-year increases as the executive branch non-covered employees. In other words, it brings the judicial branch into the same structure as the executive branch. Additionally, the court may adopt the longevity pay increment formula in section 10, but that is not mandatory. 4:10:19 PM CHAIR ELLIS asked if language on page 6 addressed the two concerns of the court system that look back on pay and the magistrate issue. MR. OWEN answered yes with one exception; judges were added to the retroactivity provisions later in the bill. The magistrate issue is resolved. He continued that sections 18-20 on page 6, line 22 - page 7, line 14, had no changes from the original bill. Section 21 has the new retroactivity clause, and that is the same except that justices and judges were added. Section 22 on page 7, line 23, makes the longevity formula for executive branch employees (enacted in section 10) contingent upon the administration formally offering the same benefit to all state employee bargaining units. Section 23 has the immediate effective dates for the new pay schedule and judges were brought into it. The sections of the act covering exempt branch, judicial and university employees are part of the retroactive provisions. Section 24 has the effective date of July 1, 2008 for all the other sections. 4:12:13 PM SENATOR BUNDE asked if the additions means a new fiscal note is needed. MR. OWEN replied yes. 4:12:57 PM TONY PRICE, Commissioner, Regulatory Commission of Alaska (RCA), encouraged committee members to review the RCA's presentation to the task force, because it provide insight as to how the RCA fulfills its statutory obligations within the recently imposed statutory timelines. He said the members care about the RCA and believe it has an impact on every citizen in the state, whether they turn on a light, heat their house with gas or flush a toilet. He said over 1,700 orders were issued by the RCA in 2007 and those required the review of volumes of filings and testimony. The reviews found a critical lack of people in technical advisory positions and the inability to hire people with knowledge and experience at state pay levels. He advised that the personnel have to be grown from within the system over an expensive two-year training process and that would produce only a minimally productive advisor that the commission could rely on for advice, but they are still not experts. MR. PRICE remarked: So, what is the benefit of addressing the pay and staffing problems of the RCA separately from those existing statewide? Can't this wait for a fix that fixes all these statewide pay problems all at once, down the road at an undefined future date? Some view this as a perfect solution. My advice is it's impossible to achieve. The problem is too big. It's a Mount McKinley-sized personnel issue. If you want to climb Mount McKinley, you do it one step at a time, not in one giant step. RCA commissioner pay is one step on the state's journey. The next step is for the unions and administration to begin immediately to work together to remedy the compensation and related attraction and retention of RCA advisory staff during the next fiscal year. I do not desire to be a commissioner at a broken RCA unable to retain and hire staff, perform its duties and meet its statutory deadlines. The Administration, Senate and House should feel the same way. An ineffective RCA will lead to rates too high. Single parents, elderly on fixed income and others living at the lower margins will be economically damaged the most. They have few resources to spare.... 4:16:38 PM MR. PRICE explained if regulated utility and pipeline rates are just 10 percent too high, monopoly utilities and pipelines would collect an additional $95 million per year. "There are winners and losers if the RCA is broken. Monopolies are winners and consumers are losers." He said he supported SB 294 because he believed compensated commissioners at range 30 gives the state a chance to attract and retain highly qualified and experienced candidates. The creation of an executive director creates continuity of management and administrative efficiencies. He also encouraged the legislature to perform the necessary studies to recognize RCA professional advisory staff as rare and compensate appropriately. It needs to be done at the completion of the study, but not later than the beginning of FY 2009. 4:17:59 PM BRUCE LUDWIG, Business Manager, Alaska Public Employees Association, said he represents two state bargaining units, the state supervisors and the confidential employees. They just completed negotiations on an almost 12-percent raise compounded over the three years contract. But, he said, that does little to help the current recruitment and retention problems facing the state. A number of positions go unfilled every year because the state can't find people who will accept the salaries and Alaska's high cost of living. Exacerbating that is the fact that about 45 percent of state employees will be eligible to retire within five years. MR. LUDWIG remarked that Commissioner Kreitzer made some changes to the personnel system in lowering the qualifications and said this is not "dumbing it down," but rather giving people an opportunity to apply for a job. Using that philosophy, you basically grow your own employees. To do that, you need experienced mentors. The original bill would only apply to 8 percent of the entire state workforce; adding section 20 makes it apply to 92 percent. 4:20:45 PM MR. LUDWIG said the state needs some kind of incentive to get senior supervisors to stay because the system now tops out at step N. The only other variable is cost of living increases, which have not been that forthcoming. Another benefit is that the state saves money in the PERS system by not having to pay health benefits for people who retire by keeping them in service longer. 4:22:34 PM KEVIN BROOKS, Deputy Commissioner, Department of Administration (DOA), said the department is not opposed to including SB 294 in with SB 297. His approach was to place the commissioners at a range 27 without reference to steps; the philosophy being that steps become a limiting factor over time. Not having them provides flexibility. Currently department commissioners are placed by statute anywhere from a range 28 to a range 30 and this measure would put them at the upper level. On the 27 salary schedule one can get to the equivalent of a 30F without the step designation. 4:25:00 PM CHAIR ELLIS said this was a recommendation of the RCA Task Force and the bill has a further referral to the Finance Committee. MR. BROOKS said the pay would be comparable either way. He then went to section 20 and encouraged the committee to consider that collective bargaining is best done at the bargaining table, not in legislation like this. A number of factors led to the offer that was made and accepted by the SU bargaining unit along with the package for non-covered employees. Bargaining is a dynamic process and there were many offers on the table; ultimately one of them was chosen and ratified. He said it was important to note that a few years ago the SU bargaining unit negotiated for service steps to replace longevity steps. In doing so, they eliminated one of the items they are trying to accomplish in the bill - the requirement that someone have continuous service for seven years and an F step before they can move. This is important as the state hires people from outside and make promotions because someone could be placed at an F step and not be eligible for any kind of pay adjustment for seven years. The SC bargaining unit received that already several years ago and they don't have the seven-years of continuous service and F step restriction. MR. BROOKS again emphasized when there is a price associated with everything that is on the table and an N step was added for the SU bargaining unit that doesn't exist for the other bargaining units. Similarly, he explained, the GGU unit has negotiated a G step that doesn't exist with other units. Another example, he said, was the LTC unit that front-loaded their steps where after six months an individual goes from a step A to a step B, about a 20 percent raise. Then they don't see another one for five to seven years. So, he said they are taking a disparate group of contracts and trying to apply something standard, but what they offer to one group isn't necessarily what they would offer to another group. 4:28:20 PM MR. BROOKS also pointed out that the step provisions in the bill for non-covered employees will not be reflected in a fiscal note. The administration decided that state agencies would absorb those costs ($1.5 million to $2 million/year). So, he encouraged them to not adopt section 20 and leave collective bargaining at the table where it belongs. 4:29:37 PM CHAIR ELLIS said he looks at this as a conversation starter and all the issues in this bill will be revisited in the Finance Committee. SENATOR DAVIS moved to adopt CSSB 297(L&C), version E. There were no objections and it was so ordered. SENATOR BUNDE said he agreed that combining the two bills was basically wise, but he also agreed with the administration that section 20 handicaps collective bargaining. So he moved to delete section 20 on page 12, lines 6-14, as conceptual Amendment 1. 4:32:50 PM CHAIR ELLIS objected to adopting Amendment 1. A roll call vote was taken: Senators Bunde and Stevens voted yea; Senators Davis and Ellis voted nay; therefore Amendment 1 failed to be adopted. SENATOR Davis moved to report CSSB 297(L&C) version E from committee with individual recommendations and accompanying fiscal notes. SENATOR BUNDE objected saying this is a commendable effort, but section 20 needs to be deleted. SENATOR STEVENS also said he has a big problem with putting collective bargaining anywhere other than on the table. Anything else was an attempt to go around the bargaining table to get something. 4:35:32 PM CHAIR ELLIS said he didn't want to follow through on the motion to move the bill if it would fail. SENATOR STEVENS said he thought it would be wise to hold the bill. So, the chair said he would hold the motion to pass CSSB 297(L&C).