SB 195-PAY INCREASES FOR EXEMPT EMPLOYEES  4:26:10 PM  CHAIR SHOWER reconvened the meeting and announced the consideration of SENATE BILL NO. 195 "An Act relating to the compensation of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." 4:26:31 PM SENATOR JESSE KIEHL, Alaska State Legislature, Juneau, Alaska, sponsor of SB 195, described the legislation as a pay catchup bill for exempt and partially exempt employees. He explained that this refers to public workers who are not represented by a union. This includes the civil attorneys, prosecutors, administrative clerks, and paralegals at the Department of Law; many of the people who work at public corporations such as the line employees at the Alaska Industrial Development and Export Authority (AICEA) who do the investment analysis; the employees at the Alaska Seafood Marketing Institute (ASMI); political appointees within departments, other than commissioners; legislative staff; all employees at the Alaska Court System, including judges; and the nonpartisan staff at the Legislative Affairs Agency. In total, the bill applies to about 2,400 state workers. Historically, when the General Government Unit, which is represented by the Alaska State Employees Association, negotiates a contract for a pay increase, the legislature has applied those same pay increases to exempt and partially exempt employees. The legislature did not do that when the last GGU pay increase was negotiated so the pay for these employees is a full contract cycle behind. SB 195 makes up that five percent difference in pay over the course of two years. SENATOR KIEHL noted that the Commissioner Designee of the Department of Administration talked about the difficulties with recruitment earlier in this meeting. He said this applies across all departments and in the private sector and it does not make it any easier when comparable jobs have a pay difference of five percent. It will also feed into the retention problem because it doesn't make sense to stay and get paid less. Similarly, it doesn't make sense for the legislature to not catch up the pay for those employees who are not in a union to the pay for those who are represented. SENATOR KIEHL said his staff Cathy Schlingheyde would present the sectional analysis and the director of Personnel and Labor Relations was available to answer more technical questions. 4:30:30 PM SENATOR COSTELLO requested a copy of the salary schedule. SENATOR KIEHL directed attention to Section 1 of the bill that reflects the 2.5 percent increase for the first year. He offered to provide the schedule for the following year that would reflect the second 2.5 percent increase for a total of five percent. 4:31:18 PM SENATOR KAWASAKI asked if he had an analysis of the effect this would have on the retirement system. SENATOR KIEHL replied he did not have a standalone analysis, but it is well within the actuarial assumptions the Alaska Retirement Management (ARM) Board has made for funding the Public Employees Retirement System (PERS) for defined benefits. CHAIR SHOWER requested the sectional analysis and an explanation of the fiscal note. 4:32:07 PM CATHY SCHLINGHEYDE, Staff, Senator Jesse Kiehl, Alaska State Legislature, Juneau, Alaska, presented the sectional analysis for SB 195 that read as follows: Section 1: 2.5% salary increase for classified and partially exempt employees in the executive branch not covered by a collective bargaining unit and for all legislative employees in FY 23. Section 2: An additional 2.5% salary increase for classified and partially exempt employees in the executive branch not covered by a collective bargaining unit and for all legislative employees in FY 24. Section 3: Repeals a defunct section of statute which changed salaries in 2015. Section 4: The salary increases in sections 1 and 2 apply to exempt employees in the executive branch. Section 5: The salary increases in sections 1 and 2 apply to employees in the judicial branch not covered by a collective bargaining unit. Section 6: The salary increases in sections 1 and 2 apply to employees of the University of Alaska not covered by a collective bargaining unit. Section 7: The initial 2.5% increase takes effect for FY 23. 4:33:15 PM CHAIR SHOWER asked which University of Alaska employees would be covered by Section 6. MS. SCHLINGHEYDE replied she would follow up with the information. CHAIR SHOWER said he would appreciate the information. SENATOR KIEHL clarified that this would not apply to the university employees who are represented by the three bargaining units at the university. CHAIR SHOWER asked the sponsor to review the fiscal note. 4:34:16 PM SENATOR KIEHL explained that the fiscal note includes the cost estimates for the affected employees in all three branches of government. The cost in year one will be $8.6 million and an additional $8.8 million the second year. Of that, about $5.8 million is unrestricted general fund (UGF), a little is designated general fund (DGF) and the rest comes from interagency receipts. CHAIR SHOWER asked if cost increases in program receipts were anticipated to make up some of the revenue that will be required. SENATOR KIEHL offered his understanding that the Office of Management and Budget (OMB) included the university in its fiscal note, but he would double check. CHAIR SHOWER said he would like to know whether any of the cost increases for wages would be passed along to the public. He also asked if this would be the only fiscal note. MS. SCHLINGHEYDE replied this is expected to be the final fiscal note. CHAIR SHOWER asked if he expected the director of Personnel and Labor Relations to testify. SENATOR KIEHL replied he did not believe the administration had prepared any testimony. 4:36:50 PM CHAIR SHOWER held SB 195 in committee for future consideration.