HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 5, 1994 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chair Rep. Bill Williams Rep. Joe Sitton Rep. Brian Porter MEMBERS ABSENT Rep. Eldon Mulder Rep. Jerry Mackie COMMITTEE CALENDAR HB 301: "An Act prohibiting the sale of certain studded tires or the sale of certain studs to be installed in tires; and providing for an effective date." PASSED OUT OF COMMITTEE HB 388: "An Act establishing a comprehensive policy relating to human resource development in the state." HEARD AND HELD IN COMMITTEE *HB 458: "An Act relating to certain licenses and applications for licenses for persons who are not in compliance with orders, judgments, or payment schedules for child support." HEARD AND HELD IN COMMITTEE (* First public hearing.) WITNESS REGISTER REP. MARK HANLEY Alaska State Legislature State Capitol, Room 515 Juneau, Alaska 99801 Phone: (907) 465-4939 Position Statement: Prime Sponsor of HB 301 JAN HANSEN, Director Division of Public Assistance Department of Health and Social Services Alaska Office Building, Room 309 Juneau, Alaska 99811 Phone: (907) 465-3347 Position Statement: Testified on HB 388 ROBERT J. KROGSENG Legislative Aide Rep. Jerry Sander's Office Alaska State Legislature State Capitol, Room 414 Juneau, Alaska 99801 Phone: (907) 465-4945 Position Statement: Testified on HB 388 ARBE WILLIAMS Special Assistant Department of Labor 1111 W. 8th Street Juneau, Alaska 99802 Phone: (907) 465-2700 Position Statement: Testified on HB 388 DEBRA CALL Alaska Job Training Council 12342 W. Prince of Peace Eagle River, Alaska 99577 Phone: (907) 696-5786 Position Statement: Testified on HB 388 VINCE BARRY, Director Education Program Support Department of Education Goldbelt Building, Suite 200 Juneau, Alaska 99801 Phone: (907) 465-8689 Position Statement: Testified on HB 388 FAWN HELMS Legislative Aide Rep. John Davies' Office Alaska State Legislature State Capitol Building, Room 418 Juneau, Alaska 99801 Phone: (907) 269-6800 Position Statement: Presented HB 458 MARY GAY, Director Child Support Enforcement Division Department of Revenue 550 W. 7th, Suite 312 Anchorage, Alaska 99501-3556 Phone: (907) 269-6800 Position Statement: Testified in support of HB 458 ROBERT ARMSTRONG P.O. Box 542 Wrangell, Alaska 99929 Phone: (907) 874-3743 Position Statement: Testified in opposition to HB 458 PAT NEAL P.O. Box 2059 Wrangell, Alaska 99929 Phone: (907) 874-2519 Position Statement: Testified in opposition to HB 458 DOUGLAS O'BRIEN P.O. Box 81803 Fairbanks, Alaska 99708 Phone: (907) 479-7543 Position Statement: Testified in opposition to HB 458 PREVIOUS ACTION BILL: HB 301 SHORT TITLE: BAN SALE OF SOME STUDDED TIRES AND STUDS SPONSOR(S): REPRESENTATIVE(S) HANLEY,Finkelstein JRN-DATE JRN-PG ACTION 05/06/93 1665 (H) READ THE FIRST TIME/REFERRAL(S) 05/06/93 1665 (H) TRA, L&C, FINANCE 05/07/93 1695 (H) COSPONSOR(S): FINKELSTEIN 03/15/94 2813 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 03/15/94 2813 (H) TRA, LABOR & COMMERCE, FINANCE 03/22/94 (H) TRA AT 05:00 PM CAPITOL 17 03/22/94 (H) MINUTE(TRA) 03/23/94 2927 (H) TRA RPT 1DP 1NR 2AM 03/23/94 2927 (H) DP: MULDER 03/23/94 2927 (H) NR: HUDSON 03/23/94 2927 (H) AM: G.DAVIS, VEZEY 03/23/94 2927 (H) -FISCAL NOTE (DOT) 3/23/94 03/31/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 388 SHORT TITLE: STATE POLICY ON HUMAN RESOURCE DEVELOPMT SPONSOR(S): COMMUNITY AND REGIONAL AFFAIRS BY REQUEST JRN-DATE JRN-PG ACTION 01/21/94 2124 (H) READ THE FIRST TIME/REFERRAL(S) 01/21/94 2124 (H) LABOR & COMMERCE, HES, FINANCE 03/31/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 458 SHORT TITLE: CHILD SUPPORT NONPAYMENT/LICENSING BAN SPONSOR(S): REPRESENTATIVE(S) DAVIES JRN-DATE JRN-PG ACTION 02/09/94 2320 (H) READ THE FIRST TIME/REFERRAL(S) 02/09/94 2321 (H) L&C, JUDICIARY, FINANCE 04/05/94 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 94-31, SIDE A Number 001 CHAIRMAN HUDSON called the meeting to order at 3:09 p.m., stated there was a quorum present and announced the calendar. He said Rep. John Davies would be joining the committee via teleconference to address HB 458. He asked Rep. Hanley to present HB 301. HB 301 - BAN SALE OF SOME STUDDED TIRES AND STUDS Number 010 REP. MARK HANLEY, Prime Sponsor of HB 301, concurred with Chairman Hudson that the short title of the bill is misleading. He mentioned that the Department of Transportation has been doing road wear studies during the past few years and the results of these, as well as research done in other parts of this country and other countries, all indicate that studded tires cause significant wear to the roads. He mentioned that he introduced this bill last year to initiate discussion, and since that time he traveled to Finland and talked with people there about this issue. Also, during the past year the department has determined that there are light weight studs that fit into tires and that decreasing the weight of studs can reduce up to 50 percent of the road wear. He said the actual stud casing is either plastic or aluminum. He also pointed out that the bill prohibits the use of studs that are heavier than a certain weight. The availability of the lighter weight studs was initially a concern; however, Johnson's Tire Service, the largest dealer in Anchorage, might elect to use the lighter studs as soon as next year as a marketing tool, thereby signifying that availability is not as great a concern as was anticipated. The additional expense of using lighter weight studs is estimated to cost anywhere from fifty cents to two dollars per tire, and as production increases that cost might decrease. Studies over the past eight years show that it is the actual change in weight of the stud that affects the road wear, and with regard to stopping, the stud itself remains hard and does not wear out. Number 038 REP. SITTON said he supports this bill, but questioned if tire retailers and marketers would if stuck with an inventory of tires that are illegal to sell, and he wondered if there would be any recourse with a manufacturer. Number 042 REP. HANLEY said the act takes effect in 1998 and he might suggest that it move to 1997. He said there was a concern to provide adequate time, but since they heard from Johnson's Tire Service in Anchorage, it appears that people have plenty of time to adapt. He said there are apparently only two plants in Europe that manufacture studs for snow tires and they are already going to be making these light weight designs. Number 050 REP. PORTER asked what the observed effect was on traction. Number 052 REP. HANLEY mentioned that in the more current European studies it appears that there is little if any difference. Apparently, from the studies being done in Sweeden and Finland, the stopping ability between the light and heavy studs is similar, but the road wear is different. He said it is only the casing that shows a difference and that is inside the tires so it does not actually affect whether you are stopping. He commented that it seems like a win-win situation. Number 060 CHAIRMAN HUDSON asked what the results were of discussions with the Department of Transportation. They had previously asked that the bill be amended to include an additional requirement regarding maximum stud hardness. Chairman Hudson also asked if there was anyone from the department to speak to this issue. Number 065 REP. HANLEY reported that there has been an on-going debate with the Department of Transportation. He said there is only one distributer of studs for snow tires in the United States, located in Florida, and he will be carrying the new lighter weight studs. He explained there are two manufacturing factories, both in Germany, that are apparently the only ones that make these items, and the softer metal studs are not being produced anymore. He commented that some people want to totally ban studded snow tires, and that evidence shows that with good tires you get as good a stopping distance. He stated that he does not want to go to this extent, that there are no studs with the "Rockwell scale" being made now and he does not want to put a back door route into the system to eliminate studded snow tires, especially since there is, seemingly, a win-win first step that can reduce up to 50 percent of the road wear at a cost not much more than the current one. Number 085 CHAIRMAN HUDSON asked if there were any further questions. He asked for the wish of the committee. (Chairman Hudson indicated that Rep. Green had arrived.) Number 087 REP. PORTER made a motion to move the HB 301 out of the committee with individual recommendations and zero fiscal note. After some discussion on the 1988 implementation date, CHAIRMAN HUDSON acknowledged that there had been no amendment regarding this date and Rep. Porter withdrew his motion. CHAIRMAN HUDSON stated that HB 301 was before the committee, capable of being amended. He noted that the prime sponsor's recommendation was to change the date from July 1, 1998, to July 1, 1997. He asked for the wish of the committee. It was so moved that the bill be amended with the implementation date changed to 1997. Hearing no objection, the amendment was so adopted. REP. PORTER then renewed his motion to move the bill. CHAIRMAN HUDSON indicated that there were no objections to moving HB 301 with the attached fiscal note. CHAIRMAN HUDSON announced the next order of business would be committee substitute (CS) for HB 388. HB 388 - STATE POLICY ON HUMAN RESOURCE DEVELOPMENT Number 118 JAN HANSEN, Director of Public Assistance, Department of Health and Social Services, indicated that she did not have a CS document before her and it was then brought to her attention that her concerns were actually addressed by the CS. Number 126 CHAIRMAN HUDSON determined, after some discussion with the staff, that CSHB 388, dated 3/18/94, did not include the amendments. The changes were then referenced at the following locations: page 1, line 10; page 1, line 12; page 1, line 13; page 2, a wording change on line 18; page 2, line 20; page 2 (f) on lines 22-24; and (h) on page 3. Number 147 CHAIRMAN HUDSON asked Ms. Hansen if she was satisfied with the changes between HB 388 and the CS for HB 388. Number 150 MS. HANSEN responded that she was satisfied with the changes, and in particular referred to the changes made to section (e) which resolved the problem that was of concern to the Division of Public Assistance. Number 157 CHAIRMAN HUDSON asked if someone from Community & Regional Affairs would speak to the bill. Chairman Hudson then asked Robert Krogseng to present the CS to HB 388. Number 165 ROBERT J.KROGSENG, Legislative Aide, Rep. Jerry Sander's Office, said the suggested changes were intended to coincide with changes that were made to Senate Bill 255. His understanding was that the Job Training Council spent over one year drafting this bill and the requirements, and this was an attempt to put those efforts into law. He said the council's comments have been made available to committee members and should be in the packets. Number 179 CHAIRMAN HUDSON asked, for the record, if the CS was crafted with the guidance of the chair of the House Community and Regional Affairs Committee to be in compliance with the Senate version. MR. KROGSENG said he thought this was correct. CHAIRMAN HUDSON asked if he had seen the amendment that was delivered. MR. KROGSENG was not sure if he had seen the amendment to which the chairman was referring. CHAIRMAN HUDSON referred to page 2, lines 25-27, and said this essentially deletes the first sentence of (g). He asked Mr. Krogseng for a response to the amendment. MR. KROGSENG said that he was not involved in the original crafting of this bill. He stated that he did not have any problems with the amendment, and noted that it appears to leave the supervisory responsibility, but takes the planning and monitoring responsibilities away from the council. REP. SITTON questioned the rationale for this amendment. Number 230 ARBE WILLIAMS, Special Assistant, Department of Labor, said she was not representing the Job Training Council, but was present to ask that the amendment be accepted as proposed, to delete the sentence, "to plan, monitor and coordinate the program systems..." She stated the administration felt that with the inclusion of ten state departments, a number of programs are not addressed by the council, and the council's membership only includes the membership of two departments. She added that the Department of Labor was one of those departments, so she was not saying that they are not represented. She expressed the administration's concern that the responsibilities assigned to the council could not be fulfilled because membership was not broad enough. REP. SITTON asked who would be the designee if this amendment were adopted. Number 248 MS. WILLIAMS responded that the administration felt this issue should be addressed separately as it was not properly addressed under the council. She said the governor was committed to coordinating state training efforts and can work within his cabinet to ensure that those programs are coordinated. She said a coordinated report by the council would not be inappropriate, but requiring the council to plan, coordinate and monitor programs that are not in their purview may be counterproductive. Number 257 REP. SITTON commented that he was trying to be supportive of the Department of Labor, but thought the governor could essentially accomplish this item as a matter of policy. He said the fact that ten departments are involved in human resource development is mind-boggling and needs to be addressed. He said he is concerned with who is in charge and what is being accomplished. Number 266 CHAIRMAN HUDSON referred to page 2 of the work draft and said the bill had expanded and now includes a great deal more than it did previously. He said his understanding is that the Department of Labor is saying that the governor shall use the council as the recognized state job training coordinating council, and they are simply removing that because of the implications relating to other departments. Number 279 DEBRA CALL, Alaska Job Training Council, testified via teleconference and said the need for a state policy was a point well-taken. She said this was the council's first attempt and it has been under development for five or six years, although the efforts have been more concentrated during the past year. She said there was a need, in light of the budget crises, to have a state policy to provide direction. She stated that the council was advisory to the governor and does plan, monitor, and coordinate certain programs. She said there needed to be an entity in charge of delivering a report and actually being able to give advise to the governor that will produce some results. She mentioned that the council was composed of a variety of members, including Jan Hansen in today's meeting, members from the private sector, the oil industry, and others who share the vision of Alaska having a world-class work force. She concluded her remarks by suggesting that the sentence be modified to include "...as identified by the federal government", but she advised that the sentence not be eliminated altogether. Number 323 REP. PORTER said, "if they don't, there isn't anybody else that can." He asked if line 26 could be changed to use the word "may". Number 332 MS. WILLIAMS said this modification would be fine and the governor would determine if this was the appropriate method or if another method like a mini-cabinet would be preferable. She said the administration had asked for this sentence to be deleted to clarify that the council does not function for those ten departments. She said the council does not fully address issues like economic development or business proposals because those programs do not have full representation on the council. Number 345 CHAIRMAN HUDSON said he understood that this legislation involved not taking the full measure, and that keeping the language under (g) and leaving this up to the governor's discretion indicated that the purpose was to create an overall coordinated effort, which meant that over time, the council would be able to work with various departments, the university, and other outlets to try to pull together a common plan. He said the change from "shall" to "may" still maintained a strong statement, but leads in the right direction. REP. GREEN posed a question about what needed to be in statute that could not be done by regulation. He asked if the problem was that this pertained to various departments. Number 365 MS. HANSEN said she might regret her comments, but perhaps could shed some light by responding to Rep. Green's query. She said it was her opinion that this could be done by regulation. She offered some background information, given that she was a member of the council as well as part of the administration, and said it was a desire of the council to have a stronger human resources development policy adopted by the state. She stated that this was the current draft of a statement of policy, and it had been through many permutations. She said from the administration's perspective there was some problem regarding the idea of coordinating state agencies to achieve the goal of a successfully trained, competitive, Alaskan work force. She said those are goals that can be set as a policy statement by a mini-cabinet or an executive order or by regulations or by a policy within statute; there are many options. MS. HANSEN said she would like to respond a little more specifically to Ms. William's statement regarding the proposed modification that the governor "may" use the council. She pointed out that this may be problematic because the council was required to be used by the governor for certain coordination activities in order for federal monies to be made available for those activities and that, in fact, this bill brings in departments that go beyond the required activities of the council. She said the council must review certain plans in her department and other departments as well, and from that perspective, in order to get federal monies, the governor must use the council as the coordinating entity for those functions. She wanted to point this out so as to not create a conflict. She said the concern is that it is beyond the current purview of the council to have planning and monitoring authority for all of the departments that are mentioned in the first section. She said she could not offer an immediate suggestion, but was trying to point out areas of concern. REP. PORTER asked about the intent to eliminate the words "plan and monitor" based on his understanding of Ms. Hansen's testimony that the council is required to "coordinate". Number 420 MS. HANSEN responded that the council has a responsibility to plan and to some degree monitor within the purview of those programs over which it has federal responsibility. She said there must be a way of wording that would resolve this concern. Number 427 REP. GREEN referred to section 1 and asked if he understood correctly that if there was just regulation, then the other departments would have the option of voluntary interaction, and therefore statute was necessary. Number 431 MS. HANSEN responded that this was not actually what she intended. She said, in fact, it was the position of the administration to coordinate among all of these departments whenever necessary whether it be for economic development, job training, educational components or whatever. From her perspective, the administration performs this function of "cooperating and coordinating." Number 441 REP. GREEN said he was not being argumentative but he did not quite understand why the statute was necessary. Number 444 MS. HANSEN responded that a statute was not required, but would elevate this to a greater (indiscernible). She said the coordination that was being requested does not require a statute, but placing it as policy in statute gives it greater visibility, and it was her understanding that the council's desire was to have it as a more publicly established policy. Number 454 REP. HUDSON asked, "But you are doing it anyway?" MS. HANSEN replied, "Yes, from my perspective, as part of the administration, I think that we are doing it, and of course we can do it better and more. But I believe it is being done." REP. SITTON referred to page 2, line 9, and asked about the reference to "public officials" and wondered if this was applicable to local school boards. MS. HANSEN replied that this was an excellent comment and she did not have a response concerning what was intended. Number 466 CHAIRMAN HUDSON referred to page 2, line 26, and asked about the substitution of the word "may" for "shall". He said he did not understand how this fails to assure compliance with federal requirements. He said it was not that the governor would not use the council to comply with federal law; the governor would have to do that, because that law would precede anything in a public policy of this nature. But, he continued, this rewording might result in the governor's use of the council as a coordinated effort to develop a more specific plan. He stated, for the record, that this committee would not do anything to preclude the governor's responsibility of using the council in compliance with federal law or regulation. Number 489 MS. HANSEN said this was going a little beyond her purview. She was trying to assist in informing the debate and wanted to raise this as an issue for discussion. Number 497 MS. CALL said even though she respected Ms. Hansen's opinion on coordination, one problem she has seen is the lack of an over-riding policy in Alaska, and a policy is necessary because Alaska is facing a budget crises. She added that she had no problem using the word "may". She said she represented a company and an industry that hire from outside the state and she questioned why there continues to be hiring from outside when Alaska has an excellent university system. She added that Alaskan industries other than oil need to be developed and this document addresses the fact that now is the time to develop some goals and objectives for the next ten years. Number 516 REP. PORTER moved that the committee adopt CSHB 388, dated 3/18/94 J. CHAIRMAN HUDSON, hearing no objections, stated that CSHB 388, dated 3/18/94 J, was properly before the committee. REP. PORTER moved that on page 2, line 26, the deletion of the word "shall" and replacement by the word "may". CHAIRMAN HUDSON, hearing no objection to that amendment, declared the amendment adopted. The chair then withdrew the amendment that had been prepared. Number 523 VINCE BARRY, Director, Education Program Support, Department of Education, said the department disagreed with the idea that the council should plan, coordinate, and implement these programs. He said he wanted to make it very clear that the department supports the concept of a comprehensive policy, and he pointed out that currently the ten departments and the university do collaborate on dozens of activities. He suggested, as an example of a possible comprehensive policy statement, that this committee direct the ten departments and the university to plan, coordinate, and implement their programs. He said, "as soon as you give it to some entity, you are involved in a program, as opposed to a policy." He added that this was simply too phenomenal of an undertaking for one single entity. TAPE 94-32, SIDE A (NOTE: TAPE 94-31, SIDE B, BROKEN) Number 001 CHAIRMAN HUDSON referred to page 2, section (g), and said that the governor's power and responsibility was, in effect, being maintained by this legislation. Number 014 MR. BARRY pointed out that this was not as simple as it seemed because the Department of Education and other departments were not members of the council, so if the council were to become the entity, other issues would then be created. He reiterated that a policy statement was included in Section 1. Number 027 CHAIRMAN HUDSON mentioned that perhaps the council could be expanded to include the Department of Education. He said the current language leaves the selection of a coordinating entity as being discretionary with the governor and he asked Mr. Barry if he felt very strongly about "planning, moderating, and coordinating through the council." Number 041 MR. BARRY restated that this would be an impossible task under these circumstances. He said he found it difficult to imagine all the reports that would be necessary to bring the information into a meaningful format. He said he did not mean to be disrespectful, but other than paying lip service to the fact that people need to be trained and educated, he did not want to be misleading and say that passage of this legislation "would effectively bring things together." Number 055 CHAIRMAN HUDSON said there seems to be a need for a coordinating aspect between the different departments, possibly similar to the Telecommunications Information Council (TIC). He added that he really was not sure, but possibly the council was not the right entity for this function. Number 068 REP. GREEN referred to page 3 and read, "the council shall submit a report every year to the governor and the legislature, and every four years there will be an audit" and expressed his concern that this does seem to be a major job, and yet there was a zero fiscal note. Number 077 MR. BARRY said as soon as you insert any entity, even if it is a benign approach, then you are off of the policy issue. He said that deleting the issue on lines 25-27 allows this to be a comprehensive policy relating to human resources and development in the state. Number 098 REP. PORTER said he did not have a problem with the legislature stating a policy and making suggestions for implementation; indeed that was the role of the legislature. He pointed out that the council has better access to private sector involvement than other departments and this facilitates the coordination of job training. He said his interest was in training pertaining to private jobs rather than training pertaining to public jobs. He mentioned that the council already has this set up and coordinated. He added that perhaps the role of the council would be expanded, and this would be fine. He asked, "What would we have if we took this statement out?" He said, "We would have a policy, but with no direction at all." He concluded by saying he was comfortable with reducing the language to "may" but stated this was the work of the council. Number 119 CHAIRMAN HUDSON said that a slightly amended CS was before the committee. He asked if there was any further discussion. Number 123 REP. SITTON said he agreed with the idea of having a unified work policy, but his personal view was that this piece of paper did not accomplish anything, that the governor already has the power to gather together the commissioners and the university, and that this was simply "clogging up the lawbook and will not accomplish anything in the end." Number 131 CHAIRMAN HUDSON asked for the wish of the committee. REP. PORTER emphasized that a year and a half of work had gone into this. CHAIRMAN HUDSON stated that HB 388 would be held over. CHAIRMAN HUDSON brought CS for HB 458 to the attention of the committee and noted that Rep. John Davies was no longer able to be on-line. HB 458 - CHILD SUPPORT NONPAYMENT/LICENSING BAN Number 151 FAWN HELMS, Legislative Aide to Rep. John Davies, Prime Sponsor of HB 458, stated that child care enforcement can attach to wages to collect back child support, but unfortunately this has not taken care of the back child support owed to both custodial parents and to the state in lieu of Aid To Families With Dependent Children (AFDC). She explained that before issuing a licence, the licensor must check the applicant's name against a list compiled by the Child Support Enforcement Division (CSED) that lists people who are substantially not in compliance. In the CS, "being not in substantial compliance" means not having made a payment in the last year or being $2500 in arrears. She said once this mechanism is triggered, as long as the person otherwise qualifies for the license or certificate, a 150- day temporary license would be issued. During that time there would be an opportunity to work with the CSED to either show that the CSED's records were in error, or to make arrangements to be in compliance. Following this, the regular license or certificate would be issued. She referred to an informal survey, "State Responses On Licensing Restrictions And Revocations" in the packets, conducted by the federal office of Child Support Enforcement. She said they checked with other states that had implemented similar programs and indications show that this has helped in collecting back child support. She said there have actually been very few instances where they have had to resort to denying a license or certificate. She added that this was basically a way to get people's attention to the fact that they need to tend to their payment responsibility. Number 190 CHAIRMAN HUDSON asked for the specifics to be reiterated. MS. HELMS confirmed that $2500 in arrears was on the bottom end, and she read the definition located on page 7, line 17. Number 202 CHAIRMAN HUDSON asked, for the record, if there were a lot of people in major noncompliance. MS. HELMS responded that the division would be better able to speak to this issue, but it was her understanding that there was at least $300 million in arrears in Alaska. Number 215 MARY GAY, Director, Child Support Enforcement Division (CSED), Department of Revenue, said there are $330 million in unpaid child support, a large portion of which is owed to the state for AFDC money because the money was given to families because the absent parent was not providing support. She said this legislation would substantially increase CSED collections because it would make the nontraditional wage earner, the self-employed person, address the situation of either paying child support or losing a license. She said last year the CSED collected $50 million in child support from only 46 percent of the cases, leaving 54 percent of the cases as having paid nothing. She said somebody was taking care of those families and she thought it was the state. MS. GAY explained that a portion of the 54 percent would be self-employed and she referred to a national statistic which states that 46 percent of the population is employed in nontraditional wage earning jobs. She said if they estimated that 25 percent of all the cases were in that category, they would be able to increase their collection by $16 million. Of that amount, one and one half million dollars would be returned to the general fund because that would be the portion of AFDC collected. She said that about three million dollars in AFDC is collected and 50 percent of that would go to the general fund and 50 percent would go back to the federal government. MS. GAY said that child support's funding comes from the federal government at a 66 percent match. She mentioned that the licensing entities involved in helping the agency would be able to submit their expenditures to the division and there would be a 66 percent match on the efforts put forth in helping the CSED. Number 256 REP. GREEN noted that this was an astonishing amount of money and asked, "How much do you have a feel for approximately how many of these deadbeats are outside of Alaska that would not be pressured by this loss of licenses?" MS. GAY responded that it would probably be less than ten percent. REP. GREEN commented that most of them are in Alaska. He then asked, "Can you give us an overview of what kind of a person this is, that is in arrears in child support?" MS. GAY responded that the person is usually a male, in the age range of 25-45, and that there are quite a few that have multiple cases. She explained that some conceal their assets, and some work in a cash economy. REP. GREEN explained that the reason he was asking was because he wondered if that kind of person was likely to be thwarted by the loss of a license. MS. GAY gave the example of a trucker who would be affected if he did not have his commercial driver's license. She said a truck driver can be considered as a subcontractor and is not necessarily employed; he is paid a check and taxes are not taken out. She said he might send in his tax return, but he might not send in child support checks. Number 296 REP. GREEN asked if it would enforce the intent of the legislation if this were expanded to include other types of licenses, such as limited entry permits, fishing licenses, etc. MS. GAY said she was happy to see this legislation because it would be helpful, but as she did not write it, this question would better be directed to Rep. Davies. Number 306 REP. GREEN reiterated that he was wondering if the threat of not having a driver's license would influence somebody to pay what they obviously owe, and furthermore, he questioned if expanding this to other mechanisms would amplify the pressure to respond. MS. GAY said yes, if the categories were expanded, then the collections would also be increased. Number 313 REP. GREEN asked what portion of the collection on the $330 million in arrears would then go to the state. Number 317 MS. GAY explained that of the $330 million in unpaid child support, there is a portion that is uncollectible, and they guesstimate that 30 percent is collectable. She said they have not touched it very well as yet because they only collect one and one half percent of that unpaid amount, and it is growing because there is interest accruing on it. She said if they could collect 25 or 30 percent of it, that would be very helpful to the state. Of that portion, she figured 74 percent would go to the custodial parents and 24 percent would go to the state. She added that 50 percent of the state's portion is federal. Number 329 CHAIRMAN HUDSON figured that the state would get 12.5 percent. Number 331 REP. PORTER asked if someone could beat the system by paying one dollar a year. MS. GAY replied, "and not owing more than $2,500." She added that in a lot of these cases the amount was much more than that. REP. PORTER said that if more than $2500 was owed, this law could still be beat by paying one dollar a year. MS. GAY pointed out that the wording is "and". REP. PORTER pointed out that a person is in compliance if they have made one payment or a partial payment during the past twelve months. MS. GAY said if a person owes $2,499 and has submitted a one dollar payment, that person could slip under the wire. She said they do not want to be chasing people unless the back payments are large because it causes more work for the division. Number 361 REP. PORTER said when someone owes that much money, it is wise to try to get it, and if that person was using the help of an attorney, "that attorney reading this would see that hole quicker than I did." Number 365 MS. GAY said she did not know what the average child support amount is. She guessed that maybe it was about $300 or $400 and therefore it does not take very long for the amount to reach $2,500. She added that payment due is figured as a percentage of one's income and also on the number of children involved. She said it is 20 percent for one child and 27 percent for two children. Number 377 REP. PORTER said he could circumvent the entire bill by paying one dollar a year. MS. GAY repeated that this pertains only to the situation of the back payments ALSO being under $2,500. She said she thought the CSED would keep busy focusing on those who had accumulated more than $2,500. MS. GAY said something she found interesting was the inclusion that the CSED would report back to the legislature in the following year. She suggested that time might possibly be used to try something different. REP. GREEN asked exactly what the $330 million represented. MS. GAY said that $330 million was in arrears, and 50 million was paid. REP. GREEN reiterated that if $330 million had accumulated as unpaid, he wondered what was the percentage of deadbeats and he asked, "Was it five percent or ten percent? How many people legitimately paid?" MS. GAY replied that of the 50 million that was paid, those payments came from 46 percent of the obligers, so 54 percent did not pay anything. Number 416 REP. GREEN brought up the point that the CSED would not have a record of a person who had been paying all along. Number 427 MS. GAY clarified that they do not have records of all the child support cases. She said when someone goes on AFDC, they have to have a case with the CSED or sometimes the court says a person has to go the CSED. She agreed that there are a portion of the cases that the division never sees. She said the CSED does not see the people who pay their child support and have arrangements that are working out. Number 440 REP.GREEN posed a question about the process of divorce and asked if it was more likely that payments were made through the courts or through the CSED. MS. GAY said, more likely than not, payments are made through the CSED. Number 445 REP. GREEN asked, "And you said that any number of these people have two or three sets that they are responsible for?" MS. GAY said in many of these instances there was never a marriage, and when the child is born, there may not be a father listed on the birth certificate because there was not a marriage. She said blood testing is involved and they determine who the father is. Number 460 REP. GREEN asked about the current collection efforts, not including the proposed legislation. Number 462 MS. GAY said the division currently has a staff of 170 people and approximately 24 people work in the enforcement section and they are just beginning a new section called the investigator unit intended to pursue people who are concealing their assets. She said there is also a locate section and an employer reporting program that has been under statute for the past three years. Number 483 REP. PORTER asked if the payments collected were generally monthly collections. MS. GAY said they are very effective with the traditional wage earners because wages are with-held with every paycheck. She said they have a problem with nontraditional wage earners. Number 497 REP. GREEN presented the theoretical situation of a mother and her children, with the mother having a settlement that is due her on a monthly basis from her ex-husband, but that goes in arrears. Meanwhile, if the state provides AFDC as a means of support, then when the collection process begins, who has the rights to that money? Who has the first draw? Number 500 MS. GAY responded that as long as the mother is on AFDC, the money goes to the state except for a 50 dollar pass-through amount that goes directly to her. Number 501 MS. GAY presented a scenario where a mother had been on AFDC for five months, receiving $800 a month. Because the man does not make very much money, it is figured that he can pay $200 a month, so over a period of five months he owes $1,000 of the $2,000 total that is owed to the state. The amount is calculated on how much he earns, not on how much the state gave to the family. She said if he won a $10,000 jackpot, $1,000 would go to the state, she would get the other $9,000, and she would be able to go off of AFDC. REP. GREEN asked if her past due would be diminished. MS. GAY said the state's portion would be paid and she would receive the rest of the money. If she were not receiving AFDC and he suddenly had access to $10,000 and he owed her money, then she would be paid first and the state would be paid later. Number 511 CHAIRMAN HUDSON said he would hold this bill over; that he would like to have the prime sponsor present before moving on this bill, and added that it needs to be tightened up. Chairman Hudson asked Ms. Helms to relay to Rep. Davies that "there is at least one section in here that we believe a good, or not even a good, but maybe even a bad attorney could probably get all the way through." Number 515 REP. PORTER suggested eliminating the phrase "or partial payment" on page 7, line 20, and then adding some other verbiage so that it would read, "and has made at least one payment in the past 12 months that represents at least one twelfth of the required annual payment." Number 523 MS. GAY said they would prepare a fiscal note for the committee and mentioned that the costs from the licensing entities would impact the CSED's costs. CHAIRMAN HUDSON announced they would address the teleconference calls. Number 527 ROBERT ARMSTRONG testified from Wrangell and said he has been involved in child support since 1976 when he got his first divorce. He began by saying that they did not have the current bill in Wrangell. TAPE 94-33, SIDE A Number 000 MR. ARMSTRONG continued by asking if he would be in compliance (indiscernible). MS. HELMS responded to Mr. Armstrong's question and said that he would be in compliance because he would be making regular payments and he would have been making at least one payment a year. MR. ARMSTRONG asked if this meant that anyone with a wage garnishment would be in compliance. MS. HELMS said, yes, as long as they were employed and the CSED was receiving payments through the employer. MR. ARMSTRONG asked if this would also apply if he were a seasonal worker and went on unemployment during the winter months. MS. HELMS replied this was correct because unemployment was also attached by the CSED, so he would still be in substantial compliance. Number 012 MR. ARMSTRONG said his biggest concern was judicial in nature. He referred to the 14th amendment in the constitution and read, "No state shall make or force any law which shall abridge the privileges or..." and then stated that taking away the privilege of a driver's license is, in effect, violating the 14th amendment. He added that this bill would be obstructing his "pursuit of happiness" which is mentioned in the Declaration of Independence. He said this bill does the opposite of what is needed because what is needed are business and productive incentives for the person who has to make child support payments. He pointed out that if someone was in noncompliance and their license was taken away, they could not even drive to work. He restated that he had major problems with this legislation and it seems to have some strongly negative connotations. He questioned the efficiency of the agency and its ability to use the tools it already possesses and he voiced his opinion that the legislature should think twice before giving the agency more tools to work with. He said, "Don't blame everything on the obligor out there. Look at the agency and see what they are doing." He concluded by pointing out that the "pass through" payment remains $50 even if a person's monthly payment changes significantly. Number 057 REP. PORTER commented that it was unfortunate that the CS for the bill was not available to Mr. Armstrong. He said his understanding was that this legislation supplied the agency with the additional tool of reaching the self- employed person who is otherwise unavailable for garnishment. He mentioned that the 14th amendment does not guarantee such things as life, liberty, and the pursuit of happiness, but rather that a person will not be deprived without due process. He said most of these orders are the result of a court process, and that is due process. Number 067 CHAIRMAN HUDSON thanked Mr. Armstrong and said if he had information to submit to the committee, they would be happy to receive it and to pass this on to the prime sponsor so they would have a better answer in the future. Number 071 PAT NEAL testified from Wrangell and said she is married to a noncustodial parent who has been in compliance with child support payments. She said she has kept a log of her dealings with child support enforcement during the past one and one half years and it does not paint a very good picture of the CSED. She said both she and her husband have been treated rather badly by the CSED and the division's unprofessional and ineffective treatment is frightening to her in light of the current legislation. She said the CSED does not need another tool because much of what is covered in this bill is already covered under present law. She said if the CSED would do their job, this bill would be unnecessary. She pointed out that the CSED has 50 percent garnishment, places liens on personal property and vessels, intercepts IRS and permanent fund dividend payments, and has access to lists of directors from organizations and companies that incorporate. She stated she did not feel there was a need for this bill and that it would generate a bureaucratically created deadbeat problem that would be worse than it is now. Number 092 DOUGLAS O'BRIEN testified from Fairbanks and stated that child support is composed of physical and financial support and also emotional support or visitation. He said Alaska, unlike successful states that have high compliance rates, does not enforce visitation. He noted that in Michigan, which he understands has the highest compliance rate, there is enforced visitation. He said this bill is built on the myth of the deadbeat dad and this is a misnomer. He suggested that they not go forward with this bill until they achieve a better understanding of how the system works. He explained that the CSED is almost impossible to deal with and the legislature has empowered the agency to go back ten years to investigate compliance history. He mentioned that people have problems with the IRS and the IRS only goes back seven years unless fraud is proven. He said the CSED's requirement for producing ten year's worth of records was a mistake on the legislature's part, and with the attached penalties and interest, it becomes totally prohibitive. He asked if there was time to continue with his testimony. CHAIRMAN HUDSON responded that Mr. O'Brien was offering some meaningful information, but he wanted to be sure that he had access to the current bill copy and he wanted the prime sponsor to be available to respond to Mr. O'brien's comments. MR. O'BRIEN interjected that Rep. Davies had been sitting right next to him and they had talked at length for about 30 minutes. He added that people are not aware of what the CSED is all about and they assume that this is about deadbeat dads and the collection of real and viable past payments. Number 142 CHAIRMAN HUDSON agreed that this was the viewpoint of some of the legislators and indicated that they are open to being educated. He suggested that Mr. O'brien submit any written information that he cared to, and said they would try to give Mr. O'brien more time when this legislation is brought up again. He thanked Mr. O'Brien for testifying. CHAIRMAN HUDSON said HB 458 would be carried over. CHAIRMAN HUDSON adjourned the meeting at 5:00 p.m.