SENATE LABOR AND COMMERCE COMMITTEE January 18, 1996 1:35 p.m. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator John Torgerson, Vice Chairman Senator Mike Miller Senator Jim Duncan Senator Judy Salo COMMITTEE CALENDAR SENATE BILL NO. 202 "An Act relating to the State Board of Registration for Architects, Engineers, and Land Surveyors." PREVIOUS SENATE COMMITTEE ACTION SB 202 - No previous senate committee action. WITNESS REGISTER Senator Loren Leman State Capitol, Juneau, Alaska, 99801-1182¶(907)465-2095 POSITION STATEMENT: prime sponsor of SB 202 Catherine Reardon, Director Division of Occupational Licensing Department of Commerce & Economic Development P.O. Box 110806, Juneau, AK 99811-0806¶(907)465-2538 POSITION STATEMENT: opposes SB 202 Dick Armstrong Anchorage, AK POSITION STATEMENT: supports SB 202 Colin Maynard 1400 W. Benson, Ste. 500, Anchorage, AK 99517¶(907)274-3660 POSITION STATEMENT: supports SB 202 Merle Jantz 1648 Cushman St., #200, Fairbanks, AK 99701¶(907)451-9353 POSITION STATEMENT: supports SB 202 Mike Tauriainen 35186 Spur Hwy, Soldotna, AK 99669¶(907)262-4624 POSITION STATEMENT: supports SB 202 ACTION NARRATIVE TAPE 96-4, SIDE A Number 001 CHAIRMAN KELLY called the Senate Labor and Commerce Committee meeting to order at 1:35 p.m. Number 005 CHAIRMAN KELLY brought up SB 202 as the first order of business before the Senate Labor & Commerce Committee. The chairman called Senator Leman as the first witness. Number 008 SENATOR LEMAN, prime sponsor of SB 202, stated the legislation relates primarily to autonomy for the Board of Architects, Engineers, & Land Surveyors (AELS Board). It would also change the composition of the board: SB 202 would not require a position to be reserved for a mining engineer. The board would then consist of two civil engineers, one land surveyor, three engineers from other branches of the engineering profession, two architects, and one public member. Senator Leman noted that there are many more engineers in other fields than in mining. That would give other branches of engineering better representation on the board. In addition, it has been difficult to fill the mining engineer position on the board, which is currently vacant. SENATOR LEMAN informed the committee that the main reason for SB 202 is to give the AELS Board more autonomy, which he thinks will allow the board to function better. Number 065 SENATOR LEMAN stated the AELS Board would also like to see a more formalized process for giving the governor input on appointments to the board. That process is contained in Section 1, paragraphs (1) and (2) of SB 202. Number 075 SENATOR MILLER asked for a breakdown on the numbers of engineers in each field. SENATOR LEMAN replied he had a copy of that information. As of the end of the last fiscal year, there were 2,394 civil engineers, 474 electrical engineers, 542 mechanical engineers, 70 chemical engineers, 67 petroleum engineers, 44 mining engineers, 562 architects, and 714 land surveyors licensed with the AELS board. Senator Leman thinks it's important to have a mining engineer on the board, but thinks it is also important that other disciplines be represented on the board. CHAIRMAN KELLY called Ms. Reardon to testify. Number 110 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce & Economic Development, stated opposition to SB 202. Ms. Reardon said she understands the frustration of the AELS Board with the Division of Occupational Licensing. She knows the board has not always received the level of service from the division that the board has desired, but the division is not staffed to provide the level of service the board desires. More government, even if provided by user fees, is not the direction in which the administration, and probably the legislature, want to go. In addition, she doesn't think making the board autonomous from the Division of Occupational Licensing will resolve the concerns of the AELS Board. The AELS Board is part of government, not part of the private sector, so she thinks regulations should be reviewed by the Department of Law, and not by contracted attorneys. Regulations will at times be rejected. Number 160 MS. REARDON stated the department has no opposition to deleting the designated mining engineer seat. It is true that there are very few mining engineers, which has caused difficulties. Number 175 MS. REARDON stated the Governor's Office had expressed concern over the specification that the governor would consider names put forward by the professional society. It is the governor's intention to consider names from all sources, so it doesn't seem necessary to put that specification in statute. Number 185 MS. REARDON thinks, regarding the section on per diem and expenses, allowing a board to set its' own per diem rate would not provide the necessary checks and balances. She is also concerned that the AELS Board would be receiving compensation that none of the other boards currently receive. She stated that section would also result in an increased fiscal impact. Number 210 MS. REARDON noted that under SB 202 all AELS Board staff positions would go from being classified positions to being exempt positions. She stated SB 202 also raises the issue of contracting out for legal services. Ms. Reardon is not sure whether the board intends to contract out legal services, but she does not believe that would be manageable. Number 240 MS. REARDON stated the board would still fall under the Department of Commerce & Economic Development, but the board would have to perform its' own administrative and support duties. Since the board only meets four times per year, she thinks the staff for the board would not have much oversight. Number 290 CHAIRMAN KELLY asked Ms. Reardon how many boards and commissions actually pay their own way. MS. REARDON responded that the boards and commissions are required by statute to pay their own way. DCED is required by AS 08.01.065 to review the regulatory costs for the past two years and set fees to cover those costs. When it is found that an area did not cover its' cost, the fees are raised. If too much money has been collected, then fees are lowered. Number 305 CHAIRMAN KELLY asked Ms. Reardon if boards with small numbers of licensees, such as naturopaths and concert promoters, carry their own weight in terms of licensing fees. MS. REARDON replied that they do. She stated that licensing fees are more impacted by disciplinary action and litigation than they are from processing for licensure, which is the reason marine pilots licensing fees are so high. CHAIRMAN KELLY asked if there was any legislation this year relating to marine pilots. MS. REARDON responded there wasn't. CHAIRMAN KELLY asked for testimony from people on line via teleconference. Number 350 DICK ARMSTRONG, P.E., Chairman of the AELS Board, testifying from Anchorage, supports SB 202. Mr. Armstrong read written testimony, which was submitted to the committee. He raised issues regarding disciplinary action, automation, personnel, costs, and responsiveness. In Summary, Mr. Armstrong stated SB 202 would reduce government and costs, and be more responsive and effective. Number 390 COLIN MAYNARD, Alaska Professional Design Council, testifying from Anchorage, supports SB 202. Mr. Maynard thinks SB 202 will make the board more efficient, will continue with necessary discipline action, and will make the AELS Board a better and a cheaper board. Number 400 MERLE JANTZ, Vice-Chairman of the AELS Board, testifying from Fairbanks, supports SB 202. Mr. Jantz informed the committee that many other states have a semi-autonomous board, their fees are lower than Alaska's, and that their level of service is higher. He stated Oregon's board is an example of the type of board he would like to see in Alaska. Number 415 MIKE TAURIAINEN, Member of the AELS Board, testifying from Kenai, stated though he is not testifying on behalf of the board, he supports SB 202. He said other states currently give their boards more autonomy than SB 202 would provide for the AELS Board. In addition, other states require lower fees, and yet provide a higher level of service. Mr. Tauriainen stated that he has had to travel at his own expense to attend meetings of the board. SB 202 would allow reimbursement for expenses. He does not think the intent of SB 202 would be to allow the board to just set rate "willy-nilly". To add language to the bill stating the rate would not exceed the state's allowable per diem rate would be acceptable to all concerned. CHAIRMAN KELLY asked Mr. Tauriainen if the board currently receives a per diem. MR. TAURIAINEN responded that members receive per diem for the regular quarterly meetings, but not necessarily for other committee meetings. CHAIRMAN KELLY asked what the current per diem rate is. MR. TAURIAINEN replied it currently is the state rate. MS. REARDON added that the allowance for food is $42 per day and members are reimbursed for their hotel bill. Number 453 MR. TAURIAINEN continued, saying that the board has had difficulty retaining licensing examiners. This has caused problems in maintaining continuity and a historical perspective. Mr. Tauriainen thinks SB 202 would reduce overhead and increase efficiency. He realizes that the division is hampered in the work it can do with the funds available to it. Number 480 MR. TAURIAINEN stated, regarding legal support for the board, he does not agree that the board has received consistent and unified legal support from the Department of Law. Number 490 CHAIRMAN KELLY asked Ms. Reardon if, under SB 202, employees of the board would continue to be state employees. MS. REARDON responded it is her understanding that the positions would be in the exempt service and could be hired and fired at the will of the board. Number 500 CHAIRMAN KELLY asked if there would be more state employees for the board under SB 202 than there currently are today. MS. REARDON replied that SB 202 is permissive in that the board may hire staff as needed. But the AELS Board's budget authorization will ultimately determine that. We anticipated in the fiscal note that the two existing positions dedicated to the board's functioning, a range 12 licensing examiner and a range 8 clerk, would be moved over to the autonomous board, and that the board would probably want to hire three additional positions: an executive secretary at a range 18, an accounting clerk III at a range 10, and an investigator at a range 18. SENATOR SALO asked Ms. Reardon if there are other semi-autonomous boards. MS. REARDON responded there are none in her division. APUC is a semi-autonomous board that is still under the jurisdiction of the Department of Commerce & Economic Development. Ms. Reardon thinks the AELS Board would be similar to APUC under SB 202. SENATOR SALO asked how it would compare with AHFC. MS. REARDON does not think the AELS Board would be that autonomous, because SB 202 would not exempt them from the APA or the centralized licensing statute that says the department shall set fees. However, she would need to research that issue to give a more thorough answer. Number 532 SENATOR TORGERSON asked Ms. Reardon the breakdown between existing costs of operating the board and new costs. He also asked if licensing fees will be raised accordingly to cover additional costs. MS. REARDON responded that additional costs would be recovered through higher licensing fees. However, fees would probably not have to be raised very much, because last years' licensing fees were only $67,000 less than the amount contained in the fiscal note. But another consideration is that if the 5,000 licensees of the AELS Board were pulled out of the division's pool of licensees, fees would rise for the remaining licensees in order to cover indirect administrative costs in the division. Each licensee under the Division of Occupational Licensing pays approximately $35 per year to cover indirect administrative costs. If the board "goes away", there will be 5,000 fewer people to share that cost. Regarding the question of how much is new money, about $185,000 would be existing funds and about $407,200 would be new funds. Ms. Reardon related other information contained in the fiscal note. SENATOR TORGERSON asked why we shouldn't look at having a situation similar to that which would be set up by SB 202 for all the boards. MS. REARDON didn't think that would be feasible for the smaller boards, especially those with fewer than 500 licensees. She also has some other problems with that set up. Number 575 SENATOR DUNCAN asked how much more remaining licensees would have to pay to support indirect administrative costs in the division if the AELS Board licensees are no longer contributing. MS. REARDON thinks it would be about $17 per remaining licensee. A discussion ensues as to what the impact would be on the remaining licensees, but no conclusion is reached. TAPE 96-4, SIDE B Number 590 CHAIRMAN KELLY asked Ms. Reardon for a breakdown of the annual fee for licensees of all boards under the Division of Occupational Licensing. He would like the information in two columns: one with the annual fee, and the other with the annual revenue to the state. MS. REARDON noted that fees are collected every other year, and asked the chairman if he wanted the information in that format, or if he would like it broken down to what licensees would pay if it was an annual fee. CHAIRMAN KELLY replied that Ms. Reardon could supply the information in a two-year format. Number 575 SENATOR MILLER stated he would like to see an opinion from the mining association regarding deletion of their designated seat on the board. He also asked Senator Leman if he wants the governor to have to appoint from a list submitted to him from industry organizations, or if he wants the governor to simply take such a submission into consideration. Number 569 SENATOR LEMAN replied that the language in SB 202 does not force the governor to only consider those names submitted by organizations; a provision like that would likely meet with opposition from the governor. But he thinks the language would encourage the governor to consider such submissions. SENATOR MILLER suggests increasing the number of board members by one, and specifying a seat for a member from each discipline of the profession. If we eliminate a mining engineer, to be fair we should eliminate the two civil engineers. Number 555 SENATOR LEMAN responded that the additional challenge of geographical representation also needs to be taken into consideration. He is not suggesting that a mining engineer is not important, but he is suggesting that a chemical engineer, a petroleum engineer, an electrical engineer, and a mechanical engineer are important. Number 540 SENATOR DUNCAN commented he is not sure the legislature can require the governor to appoint from a specific list. CHAIRMAN KELLY asked committee staff to get a legal opinion regarding how far the legislature can go in requiring the governor to appoint members to boards and commissions. CHAIRMAN KELLY asked if, since mining is a growth industry at this time, we could anticipate more mining engineers in the near future. SENATOR MILLER replied he would think so. Number 530 CHAIRMAN KELLY stated the committee would work on SB 202 and bring it up at a later date. Hearing no further testimony, Chairman Kelly adjourned the Senate Labor & Commerce Committee meeting at 2:25 p.m.