SENATE FINANCE COMMITTEE LOGNOTES February 3, 1999 GENERAL SUBJECT(S): Overview: Bargaining Units and Status of State Employee Contracts The following overview was taken in log note format. Tapes and handouts will be on file with the Senate Finance Committee through the 21st Legislative Session, contact 465-2618. After the 21st Legislative session they will be available through the Legislative Library at 465-3808. Time Meeting Convened: 9:02 am Tape(s): SFC-99 # 19, Side A & B PRESENT: Senator Parnell, Chaired the Meeting Senator Adams Senator Torgerson Senator P. Kelly Senator Donley Senator Green Senator Leman Senator Phillips Senator Wilken ALSO PRESENT: Bob Poe, Commissioner, Department Of Administration; Alison Elgee, Deputy Commissioner, Department Of Administration; David Koivuniemi, Assistant Commissioner, Department Of Administration; Chris Christensen, Special Council, Alaska Court System; Tammy Stromberg, Fiscal Analyst, Division of Legislative Finance. Tape: SFC - 99 #19, Side A 9:02 am CO-CHAIR SEAN PARNELL Introduction of members. Topic of the meeting is to hear a presentation on the state employee bargaining units contract negotiations. COMMISSIONER BOB POE Department of Administration. Introduce David Koivuniemi, Assistant Commissioner, Department of Administration. (Refer to two handouts before committee members showing breakdown of bargaining units and information regarding each one.) I plan to give a short overview and then turn over to Mr. Koivuniemi, who has been working on the negotiations. At this point there has been some negotiating going on with several of the bargaining units DAVID KOIVUNIEMI (List bargaining units currently in negotiation.) COMMISSIONER BOB POE We've laid out goals we would like to obtain including legislation passed the prior session. CO-CHAIR SEAN PARNELL Committee members don't wait until presentation is finished before asking questions. DAVID KOIVUNIEMI I will be going through the handouts. We have 12 collective bargaining units. Handout lists number of employees covered by each unit. Adds up to over 12,000 state employees covered by a bargaining unit. General Government Unit (GGU). We have met with them twice and have other meetings scheduled. We've entered into ground rules with them and have set a boilerplate. Supervisory Unit (SU). We have not yet entered into discussions with this unit. Interest Based Bargaining (IBB). We are trying this different approach to negotiating employee contracts. The premise is that parties don't come to the table with a list of demands, but instead have a list of issues and all work to brainstorm. The intent is to try to reach agreement by consensus. We are going through training on this method, which is free. We are not spending additional money on this. Labor Trades and Crafts (LTC). We are using the same IBB system with this bargaining unit. We have met with them several times and have other meetings scheduled. We are looking at pretty extensive portions of their contract. Negotiations have been very positive. As a side note, all negotiations have been going well with no major disagreements to date. We've been able to agree to disagree and set aside those issues to continue making progress. PSEA Troopers. Department itself is meeting with contractors to work on operations issues. They are making progress. PSEA Correctional Officers. Negotiations are proceeding well but I wouldn't say fast. We are being very cautious. They are all Class One employees who are not allowed to strike. Inland Boatman's Union (IBU). We are meeting with them today. Master, Mates and Pilots (MMP) and Marine Engineers (MEBA). We have not scheduled meetings with them yet. They usually watch and follow the agreements of the IBU. Confidential (CEA). We will also be using the IBB method and have scheduled training. Alyeska Central School (ACSEA) and Alaska Vocational Tech (AVTECTA). No meetings scheduled. Mt. Edgecumbe (TEAME). COMMISSIONER BOB POE We don't do negotiations for state employees working for the court system or the University of Alaska. SENATOR RANDY PHILLIPS Regarding the wage and hour study released a couple weeks ago, have you reviewed and are you using the information garnered from the findings in your negotiations? POE We have reviewed the report. We agree with some but not all of the findings. KOIVUNIEMI We are also considering the budget gap situation in our negotiations. SENATOR RANDY PHILLIPS Can we assume the bargaining units are also considering the recent loss of jobs in oil industry related private businesses? POE Not necessarily. KOIVUNIEMI We are conducting a classification study with the Local 71 to implement a lower wage grade classification for food service and custodial worker positions in the Pioneers' homes. We are very aware of the budget problems and want you to know that "we are not doing nothing." SENATOR RANDY PHILLIPS KOIVUNIEMI We haven't pinned a number of people down in all bargaining units. We are working on establishing a boilerplate. Certainly economic factors are being considered. We will address at the table. SENATOR RANDY PHILLIPS Do you have a schedule (plan) worked out to address all the contracts together? KOIVUNIEMI All the contracts expire this year. We are working with all the bargaining units. However, the marine units tend to wait for the outcome of the IBU contract. We are doing something will all listed here in the handout. Local 71. We have been working on the reclassification of job position with them for about a year now. The same teams that have been working on reclassification are now working on bargaining, so we are farther along with them than others. We are doing them all right now. SENATOR JOHN TORGERSON Without breaching confidentiality agreements can you lay out where you are with some of these? Can you tell us about any increases in benefits and salaries? I want broad answer; you don't need to list specific units. POE Difficult to say without violating the Fair Bargaining Process. Some bargaining units are looking for increases some are not. SENATOR JOHN TORGERSON I assume you have direction from the Governor. Are you reopening the idea of privatizing some services such as day-boat ferry service? POE We have looked at some of this. I apologize for the need to be vague. CO-CHAIR SEAN PARNELL I will offer same amount of committee time to address University of Alaska and Alaska Court System contracts about to expire. Over the three years, what is the total cost of the increases? KOIVUNIEMI Every one-percent increase would cost $8.5 million. CO-CHAIR SEAN PARNELL My figures show a total increase excluding Alaska Court System and University of Alaska is $50million plus over the last three years. I want to confirm those amounts with yours. Earlier agreements made with legislature were done in much better budget times. Note other companies' layoffs due to the economy. We are going to be looking for reductions. Let us know if there is anything that we can do to help you in your negotiations. POE I have heard similar comments from other legislatures. SENATOR JOHN TORGERSON Regarding the Teacher Tenure Bill Sen. Green sponsored a few years ago. It opened negotiations up to the public. Can we do that with other bargaining units? I don't understand why the negotiators hide behind closed doors if what we are doing is all in good faith. Request you find out if we can statutorily mandate that all negotiations be made public. POE I'm not a lawyer, but I understand that the body can do a lot. SENATOR LOREN LEMAN A few years ago the Tier III Retirement benefits was part of the contracts. It left some items unfinished. POE Introduce Alison Elgee, Deputy Commissioner, Department of Administration. SENATOR LOREN LEMAN It would be helpful to get an idea of where healthcare costs are today. It would help to know about increasing the co-payment and other options. ALYSON ELGEE The Tier III retirement proposal was reviewed a couple years ago and all but one element was rejected. The one element that was accepted was a ten-year employment requirement before eligibility for retirement health care coverage. This is not required statutorily but part of policy. Heath care costs have risen. (Detailed ) In past contracts, employee contributions have been set and the employer made up the difference. SENATOR LOREN LEMAN My understanding is that all elements were not rejected, but just not acted upon. There was quite a bit of interest in them. Now is a different time. For today and the next 5-10 years, we need to understand what are the tools to allow us to take care of employees and keep within a budget package. SENATOR DAVE DONLEY Have you looked into the issue of pay equity for women working in the state system? We had done quite a bit of work five years ago. What has been done recently? ELGEE We've looked at classification process. We take job classes and look at their equality both internally within other state agencies and externally. We do this blind to gender. SENATOR DAVE DONLEY How long has it been since an outside study has been done to see if your processes are gender neutral? ELGEE About 1986. SENATOR DAVE DONLEY The current health insurance structure has been downsized to reduce cost. I don't think it's fair to cut benefits for employees below the Range 15 salary at the same level as those earning above a Range 15. There are a lot of single mothers working below those ranges. The wage and hour study shows that a pay Range 8 is below market value. I also want to comment of the loss of the wellness physical as part of the benefits package. I don't understand the public policy behind that. I believe it is a tremendous mistake as far as preventative health care is concerned. ELGEE The well-physical benefit in the past was a benefit provided in a SBS Supplemental that the employees had to pay for themselves. When we went to the new plan it became a covered service. The annual physical exam is now covered by the state. The difference is that it is now subject to the same deductible as for other services. GGU is looking at an option of having the state cover the cost of this service, which will raise their costs. I agree that reduced employer contributions hit lower paid workers harder because it effects a larger portion on their salary. We share that concern. SENATOR DAVE DONLEY The option of the wellness physical gets bad if someone is healthy, doesn't go to doctor, then gets a physical and gets hit with $400 bill because they haven't met their deductible. This will discourage people from getting physicals. I believe wellness physicals result in a lower cost in the long run. ELGEE There is no empirical data to support that outcome. I happen to agree that preventive care is better. Under the old plan, if employee chose the SBS Supplemental option they paid an extra $40 per month. It is actually cheaper now to employees. SENATOR DAVE DONLEY Private sector employers with collective bargaining units seem to be delivering better health care compared to state. Have you looked at them for guidance? ELGEE Our LTC unit participates in a union benefits package that the state contributes to. This costs us a higher amount for this package than others do. SENATOR DAVE DONLEY ELGEE SENATOR DAVE DONLEY I ask you to sit down with them and hear their experiences. I understand that they deliver very good health care packages and their costs are below $400 per month. They have offered to help the state. CO-CHAIR SEAN PARNELL Thank presenters. Other business. Recess 9:43 am / 9:49 am CO-CHAIR SEAN PARNELL SENATOR DAVE DONLEY (Speak to proposed resolution he handed out during break.) It addresses the single subject rule. I would like members to consider over next several weeks. This would provide us with another tool. SENATOR LOREN LEMAN I think it's an idea worth taking up. However, it won't be a tool available to us for two years because we'll have to vote on it. CO-CHAIR SEAN PARNELL I'm planning to open a discussion on subcommittees. I will be appointing subcommittee membership soon officially. We need to incorporate the fiscal gap into our subcommittee discussions. I think this is a great opportunity to make some changes to make Alaska a better-run state. All Alaskans need to come to grip with the situation. We must look 20-30 years out. I encourage the committee to look at Alaska's future. I don't want us to get locked into looking at the short-term horizon before May when we have to. We need to make meaningful reductions. We are going to look for ways to consolidate services and functions. I ask for subcommittees to look at that and think about the long-term state of the economy. I'm excited at the opportunity to work through this process. List subcommittee chair positions. Department of Administration: Senator Gary Wilken Department of Commerce and Economic Development: Senator Lyda Green Department of Community and Regional Affairs: Senator Pete Kelly Department of Corrections: Senator Sean Parnell Alaska Court System Senator Gary Wilken Department of Education: Senator Gary Wilken Department of Environmental Conservation: Senator Loren Leman Department of Fish and Game: Senator John Torgerson Office of the Governor: Senator Sean Parnell and Senator John Torgerson Department of Health and Social Services: Senator Pete Kelly Department of Labor: Senator Lyda Green Department of Law: Senator Dave Donley Legislature: Senator John Torgerson and Senator Sean Parnell Department of Military and Veterans Affairs: Senator Randy Phillips Department of Natural Resources: Senator Randy Phillips Department of Public Safety: Senator Dave Donley Department of Revenue: Senator Loren Leman Department of Transportation and Public Utilities: Senator John Torgerson University of Alaska: Senator Loren Leman List will be available later today showing committee memberships. Tape: SFC - 99 #19, Side B 12:38 PM CO-CHAIR SEAN PARNELL Ask for comments or suggestions. SENATOR PETE KELLY I agree with you assessment that this is an opportunity to address the problems. I want to look back and say, "thankfully someone changed the way they funded state government." SENATOR AL ADAMS Before we talk about the future, I'd like to talk about the present. The current deficit we need to look at that very closely. The Administration has thrown out a plan that we should address and we should set a deadline for reaching a decision about that plan in March. If we come up with our own plan, we should release it early to the public for comment in time for responses and suggestions rather than wait until the very end of the session when we just draw from the CBR. SENATOR LOREN LEMAN Agree. However, the governor hasn't put out a plan, just an outline. I'm anxious to see the entire plan. CO-CHAIR SEAN PARNELL Adjourn 10:00 am SENATE FINANCE COMMITTEE LOG NOTES 02/03/99 Page 1