Legislature(1995 - 1996)
02/21/1996 01:37 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
Number 325 SB 229 STATE TRAINING & EMPLOYMENT PROGRAM SENATOR TORGERSON brought SB 229 before the committee as the final order of business. He noted there were three proposed amendments before the committee for its consideration. SENATOR RANDY PHILLIPS moved adoption of the following Amendment No. 1: Amendment No. 1 Page 4, line 17: Delete "may" and insert "shall" Page 4, line 20: Delete "pilot project" Page 4, line 21: Delete "If" and insert "When" Page 5, line 5 - 6: Delete "a pilot project grant for a period of up to two years" and insert "grants" Page 5, line 7: Delete "an" Page 5, line 8: Delete "training entity" and insert "training entities. A training entity is eligible for a grant under this section" Page 5, line 16: Delete "pilot project" REBECCA NANCE , Director, Employment Security Division, Department of Labor, stated the department had no objection to the amendment. SENATOR TORGERSON asked if there was objection to the adoption of Amendment No. 1, and hearing none, he stated it was adopted. Number 352 SENATOR RANDY PHILLIPS moved the adoption of the following Amendment No. 2: Amendment No. 2 Page 5, line 1: After "." insert: "The department shall give preference to projects and services that train individuals in industries identified in the resident hire report required under AS 36.10.130 as employing a disproportionate percentage of nonresident individuals." SENATOR TORGERSON explained the amendment directs the department to put as a number one priority training people in Alaska to fill the positions that are held by nonresident workers. REBECCA NANCE stated the department wants to continue targeting local hire. Number 380 SENATOR TORGERSON asked if there was objection to the adoption of Amendment No. 2, and hearing none, he stated it was adopted. Number 385 SENATOR RANDY PHILLIPS moved adoption of the following Amendment No. 3: Amendment No. 3 Page 5, line 19: Delete "established for the council" REBECCA NANCE stated the amendment was recommended by the Department of Labor. SENATOR TORGERSON asked if there was objection to the adoption of Amendment No. 3, and hearing none, he stated it was adopted. He also stated the three amendments would be incorporated into a committee substitute, which brought the committee substitute before the committee. Number 400 SENATOR KELLY noted there were two different fiscal notes on the legislation, and he asked what the differences were. SENATOR TORGERSON responded that the original fiscal notes did not add up, so corrected fiscal notes were requested. SENATOR KELLY said we are talking about over $3 million being allocated for the program, but grants in 1994 totaled just a little over $1 million. He asked where the rest of the money is going. MARK MICKELSON , Division of Community & Rural Development, Department of Community & Regional Affairs, directed attention to a "flow chart" which he said would hopefully provide a picture of the method by which the STEP funds will flow within the state. He said a series of new graphs has been provided to the committee depicting how the 1995 funds were utilized at each of the SDA or the private industry council levels. The listing originally provided to the committee was a listing of the "larger grants" that were let as a result of the competitive RFP process. The balance of the true program funds, or grant funds that have gone on as depicted in the new chart, is spent on eligible clients and on eligible services. They are just done through a different process in terms of how it is recorded. SENATOR KELLY said it still doesn't show where the other $1.5 million is going. MR. MICKELSON said the funding is recorded, it is tracked. A summary report is provided to the Department of Labor every year identifying all the program activities. For example, if someone went to a classroom training program at AVTEC or the University of Alaska, etc., that has been recorded as an actual expenditure. However, they do not have the records of the hundreds of transactions of all those small vouchers. He said they are just providing the straight tuition and the normal costs to send somebody to one of those training programs. SENATOR RANDY PHILLIPS observed that even though they may not record it, they still must have some kind of accounting for those small voucher transactions. MR. MICKELSON agreed that was correct. He said for every individual who is served by this program, a file is maintained that contains the full application, certification that the information provided is true, eligibility verification, etc., so that information does exist. SENATOR KELLY commented there are a whole lot of individuals who are paying their own tuition and their own transportation, and yet, if some state employee graces you, then you get it for nothing. MR. MICKELSON responded they are trying to make the program accessible and available where people would normally go for assistance for employment, for unemployment insurance. He conceded they perhaps could do a better job at making the service better known to everyone. He also clarified that tuition at the University of Alaska is an allowable expense if it is compatible with someone's career goals. He added that they do not allow people to pursue long-term educational goals just for the sake of going to school. The program is focused on reattachment to the labor force. SENATOR KELLY asked if they would send any of their clients out of state for training. MR. MICKELSON answered that's generally not the case, but it would be possible if a very specialized training course or program was not available in the state of Alaska. However, the individual still must meet all the criteria. SENATOR KELLY asked if there is a parallel with the STEP program and the training provisions contained in the welfare reform legislation. SENATOR TORGERSON said he has discussed this with Mike Andrews of the Alaska Human Resource Investment Council and this does not parallel the welfare reform legislation, although the welfare reform creates another training program. The STEP program is driven by employee contributions so it's really not general fund money. TAPE 96-10, SIDE B Number 001 After brief discussion on how the employer/employee contributions are calculated, SENATOR TORGERSON invited Chris Miller to the table to explain the process. Number 060 CHRIS MILLER , Chief, Research Analysis Section, Department of Labor, explained that when they calculate the UI tax rate, the total contribution is separated at an 82 percent contribution from the employer and 18 percent from the employee. The tax rate is determined by multiplying the 82 percent times what they call their average benefit cost rate. The same thing is then done for the employee. He added it is possible that the employee tax will vary, but it varies only slightly over time. The last time the employee tax rate changed was in 1991 when it dropped to 0.5 percent. The 0.5 percent is on the wages earned up to the taxable wage base, which is currently at $24,400. To clarify the process, Mr. Miller said, as an example, for the current year the maximum an employee would pay, based on the taxable wage base of $24,400, would be $122, and the average an employer would pay, discounting the varying rates they have, would be $529 for a maximum. SENATOR KELLY asked, if he, as an employer, is paying 2.17 percent for domestic help, what's the highest rate somebody is paying and how much that employee is paying. MR. MILLER responded the highest rate is 5.4 percent for the employer and the employee is still at 0.5 percent. He also clarified for Senator Kelly that the employers at the 5.4 percent rate are penalty employers. These are employers who have not met various reporting requirements, or for other reasons they are paying a penalty rate. Number 215 SENATOR KELLY commented that the program is quickly becoming a funding mechanism, with DOL, DCRA and AHRIC getting parts of the pot. He asked if any of the numbers go through the budget process. ARBE WILLIAMS , Director, Administrative Services, Department of Labor, replied they do and they are listed in various places in the Department of Labor budget. SENATOR KELLY asked why they are asking for more money this year. MS. WILLIAMS said the difference between the total grant amount is what they estimate will be collected from one-tenth of employees' salaries. SENATOR KELLY wondered who is getting this money because he doesn't know anybody who his benefiting from this program. MARK MICKELSON related that the system is capable, in the future, of providing a lot of information on where individuals are being served, what they are enrolled in, etc., if that kind of information is desired. He added there are over 6,000 Alaskans who are very pleased this program has been in place. He has seen a lot of good things done with the program, and he believes they can provide the kind of accountability and information that would give assurance that this program is well designed in intention. Number 320 SENATOR TORGERSON asked about the possibility of finding a cap so that no more than a certain amount of money is taken out for administration. He said it is an employee giving money and it is funding other segments of government. MS. WILLIAMS spoke to reorganization efforts that are going on in the Employment Security Division, and she said they are well aware of the fact administratively, at all levels, that if they are not efficient, it costs their programs. Number 358 SENATOR TORGERSON stated he was going to hold SB 229, and he requested that the department provide more detail on where this money goes to balance the $3.6 million figure. He also believes it is a good idea to look at the possibility of a cap to limit the amount of overhead for the program. There being no further business to come before the committee, the meeting was adjourned at 2:55 p.m.