Legislature(1995 - 1996)

02/21/1996 01:37 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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           
  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.                                            

Document Name Date/Time Subjects