SB 220-STATE EMPLOYEES: STATE RESIDENCY  3:35:07 PM CHAIR SHOWER announced the consideration of SENATE BILL NO. 220 "An Act relating to a residency requirement for permanent full- time state employees in the classified, exempt, or partially exempt service; relating to allowable absences for permanent fund dividend eligibility; and providing for an effective date." He noted that this was the first hearing. 3:35:23 PM SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau, Alaska, sponsor of SB 220, introduced the legislation speaking to the prepared sponsor statement. There is no current law that requires State of Alaska employees to be residents of Alaska. In the wake of the Covid-19 pandemic, accessibility to important technological resources accelerated rapidly, enabling many members of the state work force the ability to avoid the congregate office setting. But while the "remote work" options appeared necessary at that time, at least one negative consequence of those advancements may be a shift toward state employees moving to work from out-of-state, living away from the locales their work affects and spending their state- earned salaries Outside. Senate Bill 220 would mandate that Alaska's permanent, full-time state employees are residents of Alaska and would establish procedures to ensure that residency is maintained. Under this bill, employees who have maintained residency with a clear showingto the extent that they qualify for a Permanent Fund Dividendmay continue state service. Using PFD eligibility automatically incorporates allowable absences that are already established in statute. Nonresidents could still be hired for state positions but would have to demonstrate residency through the next full calendar year, at the first instance of possible PFD eligibility. The bill tasks the State Director of Personnel with annually verifying that employees are in good standing with the residency requirement by reviewing their PFD eligibility status or otherwise confirming that an employeedespite not applying for the Dividendwould meet the same eligibility criteria. The personnel director's duties should be relatively easy to carry out; in most cases she can simply verify whether the Department of Revenue, Permanent Fund Dividend Division, approved the employee's Dividend application. If they live and work in the state they serve, our public employees will experience higher morale, better productivity, improved collaboration, and will have more care for the tasks over which they are entrusted. This bill in no way restricts the ability of departments or agencies to offer work from-home arrangements within the state. This legislation provides necessary, reasonable, and important safeguards against an exodus of our talented and valuable state employees. I ask for your support for this commonsense legislation ensuring that Alaska's public employee services are performed by Alaskans. SENATOR WIELECHOWSKI relayed that the Senate Finance Committee recently learned that nearly 10 percent of the Permanent Fund Corporation employees had moved out-of-state in the last year. They must fly back to Alaska for quarterly meetings and the state is paying for that travel and per diem. He emphasized that this practice does nothing to help the state's economy or its unemployment rate. He opined that allowing state employees to live and work outside the state creates a host of problems and SB 220 offers a reasonable solution. 3:37:42 PM CHAIR SHOWER asked if he had explored the constitutionality of telling State of Alaska employees they could not work for the state if they didn't live in the state. He also asked if he was aware of any other states that had a similar requirement and if they had been challenged. SENATOR WIELECHOWSKI said he asked his staff that question and she directed him to a Legislative Legal Services memo that opined that this would not be subject to a constitutional challenge. He read the following quote and offered to provide the full opinion to the committee. Continuing residency requirements in order to maintain government employment have generally survived challenges alleging violations of various provisions of and rights guaranteed by the United States Constitution. SENATOR WIELECHOWSKI clarified that the bill was confined to state workers; it did not apply to private industry. CHAIR SHOWER said he'd like the opinion and it would be posted on BASIS. SENATOR REINBOLD commented that she did not support most telehealth because the provider sees more in a face-to-face appointment with the patient. She added that she wasn't a big fan of Zoom because there was much more value of meeting one-to- one. She asked the sponsor if he thought that was a good analysis of why he believes fulltime state employees should be present. 3:39:58 PM SENATOR WIELECHOWSKI said he shared that concern, but the bill does not address telework. SB 221 addresses [state employees] who work out-of-state. He restated the premise that Alaskans are better served when state employees work within the boundaries of the state. SENATOR REINBOLD offered her view that the bill did relate to telemedicine because the point is to prevent undercutting the workers in the state of Alaska. She noted that Legislative Budget and Audit (LB&A) recently addressed this issue and imposed tight parameters on auditors for the state. She opined that any exceptions should be well justified. SENATOR WIELECHOWSKI responded that he didn't disagree. 3:41:46 PM SENATOR HOLLAND said he could see the use of telehealth if it is a cost saving but it struck him as improper for state employees to receive per diem to travel back to Alaska to do their work. He asked if that was actually happening. SENATOR WIELECHOWSKI replied that is what the Senate Finance Committee was told about permanent fund employees. He wasn't aware of what other departments might do, but he was shocked to learn that the state pays for travel, food, and lodging expenses for state employees who choose to live out-of-state. SENATOR HOLLAND asked if he had other examples of this practice. SENATOR WIELECHOWSKI relayed that his office asked Legislative Research Services to look at how widespread this might be. They reported that the state personnel director was unresponsive to their multiple requests for this information, which was a concern. He noted that Legislative Research Services also reached out to the Alaska Gasline Development Authority (AGDC), Alaska Housing Finance Corporation (AHFC), Alaska Industrial Development and Export Authority (AIDEA), Alaska Energy Authority (AEA), and the Alaska Mental Health Trust (AMHT) and each reported that none of their employees worked from outside the state. 3:44:31 PM SENATOR HOLLAND asked if there were qualifying standards other than eligibility for the permanent fund dividend (PFD). SENATOR WIELECHOWSKI responded that there are any number of ways to check residency, but using PFD eligibility seemed to be an easy way to verify. SENATOR HOLLAND shared that he didn't qualify for a dividend the first year he was eligible because of a technicality, and he'd hate to think that somebody's employment could be at risk due to a technicality. 3:45:47 PM SENATOR SHOWER asked the sponsor to send a request for the employee information to the committee and he would forward it to the Department of the Administration (DOA) personnel director as a committee request. SENATOR WIELECHOWSKI agreed to do so. CHAIR SHOWER asked Ms. Kawasaki to present the sectional analysis. 3:46:22 PM SONJA KAWASAKI, Staff, Senator Bill Wielechowski, Alaska State Legislature, Juneau, Alaska, presented the sectional analysis for SB 220 on behalf of the sponsor. Section 1 State Employee State Residency Required;  Determination; Termination; Regulation Authority  Section 1 creates three new sections in law: Sec. 39.25.025 establishes the requirement that a full-time employee of the state in a classified, exempt, or partially exempt position must be, or become, a resident of the state, for continued state employment. Sec. 39.25.027 provides that the State Director of Personnel must annually determine whether state employees who are subject to the residency requirement and who have been employed for the entire previous calendar year are not eligible for a Permanent Fund Dividend in the current year, which links an employee's eligibility for continued state service to the employee's right to receive a PFD. An employee who would qualify for a PFD but who is ineligible because the employee did not actually apply for a PFD, or an employee who does not quality due to certain criminal convictions that do not prevent state employment but disqualifies the employee for a PFD, may still be eligible for continued employment. The director must notify affected departments of an employee who is not eligible for a PFD and who is not otherwise excepted from the requirement, and the employee shall be terminated. Sec. 39.25.029 authorizes the Commissioner of Administration to adopt regulations to implement these provisions. 3:48:10 PM Section 2 Clarifying Language Added for Employees  Who Must Work Out-of-State  Current law provides limitations on the duration that a PFD applicant may be absent from the state and still be eligible for a PFD. An exception exists for state employees who work in "a field office or other location"; the bill adds clarifying language that the employee's presence in the location that is out-of- state must be necessary to fulfill the employee's job duties. 3:48:39 PM Section 3 Applicability to Collective Bargaining  Agreements  The new residency requirement does not apply to collective bargaining agreements entered into before the bill's effective date. Section 4 Transition Provision for Applicability to  Current State Employees  A current state employee may continue state employment until January 1, 2024, despite ineligibility for state service under the new residency requirement. Section 5 Effective Date  The Act is effective July 2, 2022. SENATOR HOLLAND asked if any state corporation employees were required to live outside the state, specifically AGDC positions in Texas. MS. KAWASAKI relayed that AGDC communicated to Legislative Research Services that their employees are not considered employees of the state but that they all live in Alaska. SENATOR HOLLAND clarified that his question was whether any state corporations might have a requirement that certain employees live outside the state. SENATOR WIELECHOWSKI said he was only aware of the congressional delegation for which there is an exception in the PFD statute, the individual the governor hires to work in Washington, DC, and congressional staff. SENATOR HOLLAND said he brought it up to ensure the bill would provide "carve outs" to protect those employees. MS. KAWASAKI relayed that the carve outs were in the permissible absence statutes for the PFD and SB 221 would link to those statutes. The bill clarifies that employment out-of-state must be necessary for the performance of the job duties. CHAIR SHOWER conveyed information from his staff that the eight PCNs for the Alaska Seafood Marketing Institute (ASMI) that were in Seattle had all moved back to Alaska. SENATOR REINBOLD said she would like to see proof that no AGDC employees work out-of-state. She added that the bill was intriguing because she also recalled that US Senator Dan Sullivan talked about the number of federal employees who work on behalf of Alaska but reside in Washington state. 3:53:00 PM SENATOR WIELECHOWSKI restated that his office requested the information from Legislative Legal Research Services and the response from AGDC president Frank Richards was: We are not State of Alaska employees. All our employees work in Alaska. CHAIR SHOWER said he would be curious to hear whether the Department of Law agreed with Legislative Research Services or had a different opinion. 3:54:09 PM CHAIR SHOWER held SB 220 in committee.