Legislature(1995 - 1996)
04/18/1996 03:05 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.