Legislature(1995 - 1996)

04/18/1996 03:05 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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  SENATE BILL NO. 229                                                          
                                                                               
       An  Act relating  to  employment contributions  and  to                 
       making  the state  training  and  employment program  a                 
       permanent state program; and providing for an effective                 
       date.                                                                   
                                                                               
  Co-chairman Halford directed  that SB 229 be  brought on for                 
  discussion.   DWIGHT  PERKINS, Special  Assistant, Dept.  of                 
  Labor, came before committee to speak to CSSB 229 (L&C).  He                 
  explained that it reflects combination of SB 229 and SB 276.                 
                                                                               
                                                                               
  In the first portion,  concerns raised by both the  Dept. of                 
  Community and  Regional Affairs and the Dept.  of Labor were                 
  addressed and agreed upon  in CSSB 229 (CRA).   The original                 
  SB 229 made the STEP  program (State Training and Employment                 
  Program) permanent.   The six-year pilot program  has worked                 
  well over that term.  Sunset provisions were then applied to                 
  the program which changed the title of the legislation.  Mr.                 
  Perkins pointed  to further  wording changes  and additional                 
  subsections incorporated within  the new version.   He spoke                 
  to changes to improve past  problems with record keeping  in                 
  service delivery areas, a limitation of administrative costs                 
  to 20 percent, and new reporting requirements.                               
                                                                               
  The second portion  of the bill was  originally incorporated                 
  within SB 276--calculation of  weekly benefits for insurance                 
  claimants.   Directing attention  to page 10,  line 27,  Mr.                 
  Perkins noted  the current  weekly benefit  for unemployment                 
  insurance.  He  explained that  the payment is  based on  75                 
  percent of the average weekly wage earned by the individual.                 
  He further noted a maximum of $248.00 per week.                              
                                                                               
  Pointing to  accompanying fiscal notes, Mr.  Perkins advised                 
  that the $3,946.2  (relating to Sec.  2) refers to the  STEP                 
  program.  The  $231.8 note  (relating to Sec.  5) shows  the                 
  unemployment benefit  increase.   Fiscal notes  do not  seek                 
  additional moneys in the budget.   Mr. Perkins next spoke to                 
  qualifications which make workers eligible for  unemployment                 
  benefits.                                                                    
                                                                               
  Discussion in previous committees indicated that while there                 
  was no objection  to increasing  the weekly benefit  amount,                 
  legislators  and  constituents   would  "like  to   see  the                 
  employees  picking up  part  of this  cost."   Under present                 
  statutes, the employer pays 82 percent and the employee pays                 
  18  percent.   Mr.  Perkins  then  attested  to  a  proposed                 
  reduction,  to the  employer,  of $15  per  employee and  an                 
  increase in employee  payments of $20  per year (38 cents  a                 
  week).                                                                       
                                                                               
  Senator  Rieger  inquired concerning  cross-subsidization of                 
  unemployment benefits.  He suggested  that those employed in                 
  seasonal jobs collect more unemployment benefits  than those                 
  working  year-round  jobs.     Mr.  Perkins  explained  that                 
  everyone who works pays half of one percent for unemployment                 
  insurance.   Total  collections are  not industry  specific.                 
  However, one industry does not subsidize another since those                 
  in seasonal jobs have higher rates than those in  year-round                 
  jobs.                                                                        
                                                                               
  REMOND HENDERSON, Director,  Administrative Services,  Dept.                 
  of  Community   and  Regional  Affairs,   next  came  before                 
  committee.  He  clarified that  while collections accrue  to                 
                                                                               
                                                                               
  one  account,  moneys  are  separated  by  industry.    ARBE                 
  WILLIAMS, Director, Administrative Services, Dept. of Labor,                 
  concurred that rates  for individual  industries are set  to                 
  cover the cost of benefits for the industry.                                 
                                                                               
  In response to  a question from Senator  Sharp, Ms. Williams                 
  advised  that  an employer's  rate  is based  on  how steady                 
  employment has been over a previous period of time.                          
                                                                               
  Responding to a further question from Co-chairman Frank, Ms.                 
  Williams  explained  that funds  paid  by both  employer and                 
  employee  accrue to the  employer trust fund.   Payments are                 
  handled  like trust  fund moneys.   Senator Rieger  asked if                 
  benefits are appropriated by the  legislature.  Ms. Williams                 
  responded  negatively, saying  they flow  directly  from the                 
  unemployment insurance trust fund.                                           
                                                                               
  Co-chairman  Frank  asked  why  STEP  program  services  are                 
  limited to those who have been  employed over the last three                 
  years.  Ms. Williams  advised that the program is  funded by                 
  employee   contributions   to   minimize   the   effect   of                 
  unemployment on the  trust fund.   It was felt important  to                 
  maintain a  tie between workers  who both contribute  to the                 
  program and may  subsequently need to benefit  from training                 
  programs  offered  by  STEP.     STEP  is  a   diversion  of                 
  unemployment   insurance  moneys   to   which  all   workers                 
  contribute.                                                                  
                                                                               
  Co-chairman Frank inquired concerning availability of  other                 
  programs to those who have not been employed for a period of                 
  time.  Ms.  Williams attested to numerous  federal programs.                 
  Discussion of JTPA and other training programs followed.                     
                                                                               
  Co-chairman Frank next asked who  would receive grants under                 
  the proposed  bill.  Mr.  Perkins explained that  funds flow                 
  through the Dept.  of Labor  to the Dept.  of Community  and                 
  Regional Affairs for dispersement.  Mr. Henderson said funds                 
  are dispersed by three services  delivery areas:  Anchorage,                 
  Fairbanks, and the balance  of state.  He referenced  a list                 
  (copy on file in the original Senate Finance Committee  file                 
  for SB 229) of recipients for 1995.                                          
                                                                               
  Senator  Donley  voiced  his  understanding  that  the  bill                 
  decreases  contributions  from   employers,  and   increases                 
  contributions   from   employees,  to   extend  unemployment                 
  benefits and fund  the STEP training  program.  Mr.  Perkins                 
  reiterated  that  the  bill   reflects  combination  of  two                 
  unrelated pieces of  legislation.   The sources of  incoming                 
  revenues  to pay  for  the  programs  are different.    Only                 
  employee-generated payments fund STEP.                                       
                                                                               
  Discussion followed between Senator Donley and Arbe Williams                 
  regarding diversion  of trust fund  moneys to fund  the STEP                 
  program.   Mr. Perkins advised that the program is scheduled                 
                                                                               
                                                                               
  to end on June  30.  The first portion of  the proposed bill                 
  would re-establish it  in law and provide  a two-year sunset                 
  for subsequent legislative review.                                           
                                                                               
  Further discussion and review of the list of training grants                 
  followed.                                                                    
                                                                               
  END:      SFC-96, #87, Side 2                                                
  BEGIN:    SFC-96, #88, Side 1                                                
                                                                               
  Co-chairman Halford specifically inquired  concerning grants                 
  to  entities  outside  the  state.    LAMAR  COTTEN,  Deputy                 
  Commissioner,  Dept. of Community and Regional Affairs, came                 
  before  committee.   He advised  that Golden Age  Fishery in                 
  Seattle is a partner with  one of the CDQ groups  in Alaska.                 
  Mr. Perkins added  that necessary  in-state training is  not                 
  always  available.   Arbe  Williams  noted that  training is                 
  provided to those who qualify for STEP funds--those who have                 
  an  attachment to  the Alaska  unemployment insurance  trust                 
  fund.                                                                        
                                                                               
  Further discussion  of listed grantees and training services                 
  ensued.  Co-chairman Halford referenced $142.0 in individual                 
  referrals and subgrants  of $865.0 for a  total of $1,008.9.                 
  Mr. Henderson advised that  the total reflects actual  FY 95                 
  expenditures in  the statewide  service delivery  area only.                 
  Expenditures for  the Anchorage  service  area were  $731.0.                 
  The  Fairbanks  area  expended  approximately $170.0.    The                 
  fiscal note is an estimate of FY 97 expenditure based on the                 
  amount  being RSA'd to  the Dept. of  Community and Regional                 
  Affairs by the Dept. of Labor.  That totals $3,333.6.                        
                                                                               
  In response to an inquiry  from Co-chairman Frank concerning                 
  how people find  out about the  STEP program and the  actual                 
  point  of  entry,   Mr.  Henderson  attested  to   brochures                 
  advertising  the program as part of the general job training                 
  information the department provides.  Services  are provided                 
  through field  offices.   Arbe Williams  added that  welfare                 
  counselors are also aware of  the program as are  employment                 
  service employees in the Dept. of Labor's 19 field  offices.                 
                                                                               
                                                                               
  Co-chairman Frank  asked what  would prevent employers  from                 
  using  the  program to  fund training  for  new hires.   Mr.                 
  Henderson noted need for the  individual to have contributed                 
  to  the unemployment insurance fund  in order to qualify and                 
  be eligible for the program.  He acknowledged that employers                 
  could take advantage  of the program  for new trainees.   He                 
  further  advised  of  benefits  of  JTPA (the  Job  Training                 
  Partnership Act) under  which employers pay only  50 percent                 
  of  the  employee's  wage  during  training.    Mr.  Perkins                 
  stressed that  both programs  assist in  getting individuals                 
  off  welfare or unemployment and into  productive jobs.  Co-                 
  chairman Frank asked  why the program could not  be extended                 
                                                                               
                                                                               
  to the longer term unemployed.  Arbe Williams explained that                 
  not every employer,  employee, or occupation is  eligible to                 
  receive STEP  funds.   The program  targets occupations  and                 
  industries that have high unemployment and tend to hire non-                 
  residents.    Statistics are  derived  from the  annual non-                 
  resident  hire  report.    Funds   are  dispersed  by  area,                 
  depending upon where  those occupations  and industries  are                 
  located.                                                                     
                                                                               
  Senator Donley MOVED for passage of the bill with individual                 
  recommendations.    Co-chairman  Frank  expressed  need   to                 
  determine whether training programs  could serve longer term                 
  unemployed individuals as  well.  He expressed  concern that                 
  some  individuals  have  been  denied benefits  because  the                 
  program  targets  the   recently  unemployed.    Co-chairman                 
  Halford voiced  his  understanding that  subgrants apply  to                 
  anyone.   Co-chairman Frank said  that if an  individual has                 
  not worked  for four  years, he  or she  would not  qualify.                 
  Arbe  Williams concurred.  She  explained that the reason is                 
  that  employees are  paying for  the program.   Mr.  Perkins                 
  voiced need to review expansion of the  program to determine                 
  whether or not there might be  negative impact on the trust.                 
  Mr. Henderson  suggested  that expansion  could  be  handled                 
  since all  available funds  are not  currently being  spent.                 
  Co-chairman Frank attested to the desirability of  expanding                 
  the program to a larger pool of participants.  Arbe Williams                 
  advised that she would feel  more comfortable consulting the                 
  actuarial regarding the potential impact  on the trust fund,                 
  before action is taken.  At this time, the STEP program is a                 
  "fairly small pot of money" that serves a "fairly small pool                 
  of people."                                                                  
                                                                               
  Co-chairman Halford suggested that Co-chairman Frank develop                 
  an amendment for  discussion at the  next meeting.   Senator                 
  Donley  withdrew his motion for passage,  and CSSB 229 (L&C)                 
  was held in committee.                                                       
                                                                               

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