Legislature(2009 - 2010)BELTZ 211

03/26/2009 09:00 AM STATE AFFAIRS

Download Mp3. <- Right click and save file as

Audio Topic
09:02:47 AM Start
09:03:29 AM SB126
09:57:08 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
        SB 126-REEMPLOYMENT OF RETIREES; EXEMPT SERVICE                                                                     
9:03:29 AM                                                                                                                    
CHAIR MENARD announced the consideration of SB 126.                                                                             
GINGER BLAISDELL,  Director, Division of Administrative  Services,                                                              
Department  of Revenue (DOR),  said SB  126 contains two  distinct                                                              
personnel  issues. The 2  staff positions  in the  DOR and  the 23                                                              
positions in  the Department  of Natural  Resources (DNR)  are not                                                              
tied to  the retiree-rehire provision  in the bill. She  was asked                                                              
in  the  last  hearing  if  this  is  a  must-have  bill  for  the                                                              
governor. The  retiree-rehire provision affects  local governments                                                              
and  schools,   especially  in   rural  Alaska.  "The   few  state                                                              
employees  have   initiated  knowledge  transfer   plans  so  that                                                              
associated  staff can  learn the  skills needed  to fill that  job                                                              
one day."  If that  provision is  not extended,  there may  be 124                                                              
jobs  in schools,  courts, local  governments,  and state  offices                                                              
left vacant.  The individuals  may seem  like they get  additional                                                              
income, but  their retirement  has been earned  and would  be paid                                                              
whether they  worked in  a government position  or in  the private                                                              
sector. A  retiree can  only be  offered the job  if there  are no                                                              
other  qualified  candidates.  The  23 professional  oil  and  gas                                                              
positions  are  at  risk  for high  turnover  as  their  jobs  are                                                              
temporary  and  project-oriented.  If a  private  company  offered                                                              
these individuals  similar pay  but with longevity,  it will  be a                                                              
challenge for the state to retain them.                                                                                         
9:06:52 AM                                                                                                                    
MS.  BLAISDELL said  turnover  would  be unacceptable  during  the                                                              
state's efforts  in natural  gas development.  There is  no fiscal                                                              
impact for  that. The  risk of losing  these professionals  is not                                                              
one that  the state should take.  The chief economist  position in                                                              
the DOR  will probably remain  vacant due  to low pay.  The person                                                              
responsible for the  revenue forecast also reviews  a wide variety                                                              
of  fiscal  systems  that impact  Alaska.  Leaving  this  position                                                              
vacant  will leave  the state  at  a disadvantage  in this  global                                                              
economy. The state  comptroller is currently filled.  "We can only                                                              
hope that  this person will remain  even though like  positions in                                                              
the  private sector  are  paid 20  to 30  percent  more. With  the                                                              
position  turnover  rate  averaging  one per  year,  the  learning                                                              
curve is reliant  on lower level staff, and the  state cannot grow                                                              
positively in  its cash management  practices." It is  critical to                                                              
pass all  three components  of SB  126 so  the state won't  suffer                                                              
high turnover and  high vacancy. She urged passage  of the bill so                                                              
that  the  state  can  progress  in  developing  a  gas  pipeline,                                                              
compete  in  a  global economy,  educate  its  children  in  rural                                                              
communities, and adequately staff the courts.                                                                                   
9:08:49 AM                                                                                                                    
SENATOR FRENCH  said, "We're  sort of caught  in a funny  position                                                              
where we've  got these highly  valuable state employees  occupying                                                              
senior positions  who have  served for a  long time,  retired, and                                                              
then  come  back to  fill  the job  they  used  to have  in  state                                                              
service;  they're blocking  the advancement  of lower  employees."                                                              
That  must be  frustrating for  the  ones being  blocked. The  124                                                              
jobs can be compared  to 124 leaks in a roof. "When  do we fix the                                                              
roof?  When do  we ...  offer the  pay and  benefits necessary  to                                                              
attract  people  to fill  these  extremely important  jobs,  other                                                              
than double dippers?"                                                                                                           
9:10:07 AM                                                                                                                    
MS. BLAISDELL  said when she last  looked at this  situation there                                                              
were 227  waivers,  and 123 of  them have  termed out.  "Obviously                                                              
the knowledge  transfer plan  worked." The  jobs were  filled with                                                              
non-retired  people.  It  is  working.  It  is  attrition  as  the                                                              
knowledge is  being passed  on and  as other qualified  candidates                                                              
become  available. The  knowledge transfer  plan is  key, and  the                                                              
Division  of Personnel is  following up  on it  to make  sure that                                                              
lower level positions have training.                                                                                            
SENATOR FRENCH said  the big question is when does  Alaska get out                                                              
of this  loop? When does  Alaska get to  a place where  the people                                                              
working  for the  state are  all regular,  fulltime employees  who                                                              
are getting  wages and benefits and  are paid enough. What  is the                                                              
administration's plan?                                                                                                          
MS. BLAISDELL said the sunset on this bill is 2012.                                                                             
CHAIR  MENARD  asked  why  the  legislature  is  being  asked  for                                                              
another  five years.  She suggested  a one-year  sunset to  make a                                                              
statement  that "we want  people to  be able  to climb  the ladder                                                              
and to  be able to be  advanced." Did it  take five years  for the                                                              
state to drop from 200 to 124, or was it just last year?                                                                        
MS. BLAISDELL said  that was a four-year cycle from  2005 to 2009.                                                              
The  Anchorage school  district began  with 45  retirees, and  now                                                              
they only have 11. That is a positive move.                                                                                     
9:14:02 AM                                                                                                                    
CHAIR MENARD asked if those are with the mentor programs.                                                                       
MS. BLAISDELL  said she is not  sure, but the school  district was                                                              
able to find  enough qualified candidates  that it has  not had to                                                              
request a  waiver. She  explained the waiver  system. In  order to                                                              
hire  a  retired   individual  there  must  be   fewer  than  five                                                              
applicants that meet  the minimum qualifications. The  job must be                                                              
offered  to a  qualified,  non-retired applicant.  It  is truly  a                                                              
last  choice  [to   hire  a  retired  applicant].   Otherwise  the                                                              
position would  need to  be downgraded  to fit the  qualifications                                                              
of other applicants,  or it would be left vacant.  That could be a                                                              
critical mistake.  "So whether they're  using a mentoring  program                                                              
or  whether they're  using a  knowledge-transfer  plan or  however                                                              
each school  district or local  government or state  government is                                                              
working to  fill those positions,  it might be reclassing  jobs so                                                              
that  lower-level  people  can  move in  and  maybe  be  reclassed                                                              
upward again. It's a choice of the employer."                                                                                   
9:15:43 AM                                                                                                                    
SENATOR PASKVAN  said from  an administration  standpoint  this is                                                              
an  effective tool  to  bring in  and  retain  the most  qualified                                                              
employees. "If  we have $6  million in retirement  benefits that's                                                              
being paid  at the same time full  salaries are being  paid, if we                                                              
don't allow  this, we  can save  $6 million  a year in  retirement                                                              
expenditures."  Returning  to  the  defined  benefit  system  only                                                              
costs $14  million. "If we  can save $6  million in an  instant by                                                              
not approving  this, then the net  effect is ... we can  return to                                                              
a defined  benefit for  $8 million  a year  on approximately  a $3                                                              
billion payroll."  So if this is statistically  insignificant, why                                                              
isn't $14 million statistically insignificant?                                                                                  
MS.  BLAISDELL  said  if  "Sally" retires,  she  has  earned  that                                                              
income  - it's  her earned  retirement  - at  any  tier. Tier  III                                                              
people are  beginning to  retire. So Sally  will be  making, let's                                                              
say,  $50,000  per year  in  retirement.  There  will still  be  a                                                              
vacant  position and  that will  have to  be paid.  Even if  Sally                                                              
works at  Fred Meyer, she  still gets paid  that $50,000.  And the                                                              
state will still pay for the state position.                                                                                    
SENATOR  PASKVAN said  it is still  double dipping.  The issue  is                                                              
"whether you  pay a  full salary position  and block  someone from                                                              
advancing,  as Senator French  was questioning,  and pay  from the                                                              
retirement system,  or if you're going to be  a full-time employee                                                              
of the state, that  you can't be part of the system.  So if the $6                                                              
million  that wants  to be  paid  out now,  if it's  statistically                                                              
insignificant, then  $14 million for  the defined benefit  is also                                                              
statistically insignificant. That's my point."                                                                                  
MS.   BLAISDELL  said   $6  million   and  $14   million  is   not                                                              
insignificant. It is  a small portion of the payroll,  but in this                                                              
economy any  money is significant.  "Does it matter if  the person                                                              
is receiving  a retirement from  an IRA and  we hire them  to work                                                              
for  the state?"  It  shouldn't  make  a difference.  Whether  the                                                              
state  is paying both  is a  personal choice  for the  individual.                                                              
The  state  would still  pay  both  regardless  of who  takes  the                                                              
position. The person who has retired has earned that benefit.                                                                   
9:19:46 AM                                                                                                                    
SENATOR  PASKVAN said  the question  is  if a  person retires  and                                                              
then wants to work  for the state full time, then  he or she can't                                                              
stay retired.                                                                                                                   
MS.  BLAISDELL said  this provision  would allow  someone to  stay                                                              
retired and  work for the state.  Whether there are two  people or                                                              
one person,  it is the  same amount of  money. The  opportunity to                                                              
allow someone to  stay retired but fill a position  that otherwise                                                              
would be impossible  to fill is an advantage that  the state might                                                              
want to have in its back pocket. It is just how it is perceived.                                                                
CHAIR MENARD  said part of  the problem  is that there  are 16,000                                                              
state employees, and  she can't believe that the  state can't find                                                              
people who want  these jobs that aren't retirees  and allow others                                                              
to come  in. She  has a  bias on  the sunset  clause. It was  five                                                              
years  and then  another five  years, and  yet there  are still  a                                                              
significant number  of people. There are many  legislators who are                                                              
interested  in SB 23,  which addresses  defined benefits.  It ties                                                              
into that. She encouraged the governor to look at that.                                                                         
9:22:11 AM                                                                                                                    
JIM DUNCAN, Business  Manager, Alaska State  Employee Association,                                                              
Juneau,  said he  opposes  both  sections of  SB  126. He  opposes                                                              
moving the DNR and  DOR employees "from Section 9  to Section 14."                                                              
The  constitution  provides  for  a merit  system  of  employment.                                                              
Putting people  into the  exempt service  erodes that  system. "We                                                              
need  to  be  very  careful ...  in  putting  people  into  exempt                                                              
service." There  are some positions  that should be there  and are                                                              
required to be there  by statute. It is OK to put  a position into                                                              
exempt service for  a specific project for a period  of time. That                                                              
statute   was   constructed   very   carefully   to   retain   the                                                              
constitutional  merit   system  as  much  as  possible.   The  DNR                                                              
positions  were  hired under  subsection  9 of  AS39.25.110.  That                                                              
says that  persons employed in  professional capacities to  make a                                                              
special inquiry as  authorized by the governor  may be temporarily                                                              
placed in exempt service. This bill would move the positions.                                                                   
9:25:48 AM                                                                                                                    
MR.  DUNCAN said  there  are  only two  reasons  to  do that.  One                                                              
reason  would  be  if  they  have   exceeded  the  constraints  of                                                              
subsection 9,  and they are  no longer temporary.  These positions                                                              
were put in place  in the first years of a  former administration,                                                              
so they have been  there for a number of years.  Temporary doesn't                                                              
mean  four or  five  years.  The collective  bargaining  agreement                                                              
considers  temporary  positions  to be  less  than 12  months;  it                                                              
should become  a permanent position  after that. He has  been told                                                              
that  a legal  opinion  from  the  attorney general  prompted  the                                                              
introduction  of the bill.  So there is  currently a  violation of                                                              
the  statute. The  second reason  to  do this  legislation now  is                                                              
that these positions  are performing duties that  can be performed                                                              
in the  classified service. There  is no longer a  special inquiry                                                              
or  study.  For those  reasons  he  opposes  this portion  of  the                                                              
legislation. Statute  allows some positions to be  exempt for very                                                              
good reasons,  then when  that short-term  project is  done, those                                                              
positions should  be moved into  classified service  or disappear.                                                              
He  has heard  the argument  that the  state can't  afford to  pay                                                              
these  people so  they need  to be  in exempt  service to  receive                                                              
higher salaries.                                                                                                                
9:28:51 AM                                                                                                                    
MR. DUNCAN  said management  should evaluate  the state's  current                                                              
pay  plans.  "They  should  be   talking  with  those  of  us  who                                                              
represent members  in the classified  service to determine  how we                                                              
can adjust  our pay  plans and  our contracts  to accommodate  the                                                              
needs  of those positions."  It  should be negotiated  as  part of                                                              
the collective bargaining  agreement. That has not  been done, and                                                              
that should be the first step.                                                                                                  
9:30:02 AM                                                                                                                    
MR. DUNCAN  guesses that the study  has been done and  that is why                                                              
the change  is being  made. Exempt service  people can  be removed                                                              
easily  from  political  pressure.  Regarding  the  retiree-return                                                              
language of SB 126,  he opposes it. He is a  former legislator who                                                              
worked  on  this  very  statute  for 24  years,  and  he  was  the                                                              
commissioner of  the Department  of Administration when  the first                                                              
retiree-return program  was enacted. The  intent was to  address a                                                              
short-term issue  and not to  continue the retiree-rehire  program                                                              
into  the future.  Back then,  there  was a  serious problem  with                                                              
recruitment in certain job classifications.                                                                                     
9:32:05 AM                                                                                                                    
MR. DUNCAN  said he  was asked  how to  address that. The  program                                                              
was  proposed   by  his  director.   Mr.  Duncan  was   less  than                                                              
enthusiastic about  it, but a serious problem needed  a quick fix.                                                              
He authorized  the request to  introduce legislation but  with the                                                              
provision that  it would  have a three-year  sunset. It  was never                                                              
intended to continue  for many years. It served a  purpose at that                                                              
time. It was intended  as a quick fix that would  be followed with                                                              
an  assessment of  the  long-term  problem with  recruitment.  The                                                              
state  still needs  to  do  that. There  has  been  progress in  a                                                              
couple of  areas, but  there have also  been some steps  backward.                                                              
The  erosion  of a  good  pension  system  in  Alaska was  a  step                                                              
backward.  It  made  it  more  difficult  to  recruit  and  retain                                                              
people. The  state needs  to look at  adequate compensation  and a                                                              
good  benefit system.  The  retiree-return  program restricts  the                                                              
ability of employees to advance.                                                                                                
9:34:39 AM                                                                                                                    
MR. DUNCAN said  his union has various classifications  to advance                                                              
up the career  ladder. Employees should have every  opportunity to                                                              
advance.  The program can  be abused.  It was  to be a  short-term                                                              
fix while the administration looked at the long term.                                                                           
9:36:20 AM                                                                                                                    
BARB  ANGAIAK,  President, National  Education  Association  (NEA)                                                              
Alaska, Bethel,  said she started  teaching in a small  village in                                                              
1980. She  now teaches in Bethel,  which is the district  that has                                                              
been  the biggest  beneficiary  of being  able  to hire  retirees.                                                              
This program  has been  used for  hard-to-fill positions,  but the                                                              
district  also  allowed  almost any  retiree,  administrators  and                                                              
teachers,  to  come  back  into   service  in  any  capacity.  The                                                              
district  had a  very broad  interpretation of  what this  program                                                              
allowed  as every  teaching position  became  eligible. There  are                                                              
still  retired people  who have  been rehired  for positions  that                                                              
were  not  hard  to fill.  Administrators  were  also  allowed  to                                                              
double  dip,   including  the   former  superintendent   with  "no                                                              
advertisement;  no   process  for  trying  to  find   a  specific,                                                              
narrowly-defined  superintendent  for  the school  district."  The                                                              
district  was  having  a  hard   time  trying  to  fill  principal                                                              
positions  in village  schools, but  it used  the program  for all                                                              
administrative positions.                                                                                                       
9:40:10 AM                                                                                                                    
MS. ANGAIAK  said that  her current  superintendent told  her that                                                              
even  if the  program  continues,  he would  probably  not opt  to                                                              
participate. It prolongs  being able to recruit  and train people.                                                              
The original intent was good, but it has not solved the problem.                                                                
9:40:56 AM                                                                                                                    
KEVIN  BANKS, Director,  Division of  Oil and  Gas, Department  of                                                              
Natural  Resources  (DNR), said  23  of  his employees  are  under                                                              
subsection  9, and that  language includes  "temporary or  special                                                              
inquiry".  It  doesn't say  "and".  There  is  no bar  under  that                                                              
subsection  to   hire  permanent  employees.  It   is  a  semantic                                                              
question,  "and not necessarily  meaningful  with respect  to what                                                              
is actually  happening on the ground  here. As to the  question of                                                              
whether  or not  these  staffers are  doing  work that  classified                                                              
employees  should be  doing, I'm  always surprised  when my  words                                                              
come  back out  somewhere else  and  from someone  else." But  his                                                              
point is  that if a person  in a position  is doing the work  of a                                                              
classified employee,  a classified employee should  have that job.                                                              
That  is the  constitutional  direction,  and  a merit  system  is                                                              
needed.  There are  concerns  that the  constitutional  imperative                                                              
not be eroded, and  he agrees. But these positions  cannot be done                                                              
by  classified employees.  These  people are  doing  work that  is                                                              
certainly not at  the level that he would hope  a classified-level                                                              
employee  would be  expected to  do. They  are "the  point of  the                                                              
spear"  for  the division  in  conducting  business with  the  oil                                                              
companies.   They  form   the  leadership   team.  They   are  not                                                              
implementing policy,  they are making it, so they  are legally and                                                              
importantly hired under subsection 9.                                                                                           
9:44:10 AM                                                                                                                    
MR. BANKS said the  question is why he wants to  make them part of                                                              
"14". It  will demonstrate  to these staff  that they need  not be                                                              
concerned  that  in  performing  their  functions  they  are  "not                                                              
subject  to some  rule that  could  be interpreted  as Mr.  Duncan                                                              
would  have  us   do."  By  hiring  a  commercial   analyst  as  a                                                              
commercial  analyst or  a petroleum  geophysicist  as a  petroleum                                                              
geophysicist,  because of  the skills  they bring  to the  job and                                                              
because  of  the  requirements  of  that  position,  they  can  be                                                              
assured  that   they  will  be   retained  even  when   they  give                                                              
unpalatable  advice. It is  a commitment  to these employees  that                                                              
they can  take uncomfortable stands  under pressure  regarding the                                                              
industry. "Under  '9' perhaps  there is more  potential for  ... a                                                              
kind  of loophole  that I  think  Mr. Duncan  should be  concerned                                                              
about,  but  under   '14'  and  by  identifying   very  particular                                                              
positions within the division we can avoid that."                                                                               
9:46:03 AM                                                                                                                    
SENATOR FRENCH said  he has an enormous amount of  respect for the                                                              
work  of Mr. Banks  and his  staff, but  he takes  issue with  the                                                              
interpretation  of the  word "special"  in subsection  9. "I  take                                                              
the word  'special' to mean not  regular, and therefore  I believe                                                              
that  'special'  carries  a  strong   connotation  of  temporary."                                                              
Exploiting  that  word  to  capture  long-term  employees  is  not                                                              
appropriate.  Maybe  he  is  agreeing  with  Mr.  Banks  that  the                                                              
employees  "should be  pushed  down into  subsection  14," but  he                                                              
wanted to express his views on the definition of "special".                                                                     
9:47:11 AM                                                                                                                    
CHAIR MENARD suggested separating the provisions into two bills.                                                                
SENATOR PASKVAN said that is worthy of consideration.                                                                           
SENATOR  FRENCH  said the  committee  doesn't  have the  power  to                                                              
split the  bill in  two; it  can only  delete sections.  "We can't                                                              
suddenly create a new bill."                                                                                                    
CHAIR MENARD suggested a one-year sunset.                                                                                       
SENATOR  MEYER asked  if anyone  oversees the  retiree rehires  to                                                              
make sure  the program isn't abused.  One position is  a custodian                                                              
in  Ketchikan, and  there  surely must  be  qualified people  that                                                              
could  fill  that  position  as well  as  for  the  administrative                                                              
assistant,  executive  secretary,  and  student  service  director                                                              
positions on the list.                                                                                                          
NICKI NEAL,  Director, Personnel  and Labor Relations,  Department                                                              
of  Administration, said  the executive  branch  oversees it,  and                                                              
she personally  approves  the appointments  of retiree rehires  in                                                              
the classified service  of the executive branch.  There first must                                                              
be  a  30-day open  recruitment.  If  there  are fewer  than  five                                                              
qualified applicants,  she will entertain  a request to  appoint a                                                              
retiree,  but  she needs  to  be  shown  why any  other  qualified                                                              
applicant cannot  learn to  perform the duties  by the end  of the                                                              
probationary  period. Since  2005, there  have been two  instances                                                              
where  there was  another applicant  that  met the  qualifications                                                              
when she  allowed the hiring of  the retiree. It  was demonstrated                                                              
that  the other  applicant couldn't  learn the  duties within  the                                                              
probationary  period. There  were  only two  cases  after HB  161,                                                              
which  put strict  sideboards on  the  program. It  is very,  very                                                              
rare that there are other applicants in the pool.                                                                               
SENATOR MEYER  said there  is technical  expertise needed  for the                                                              
positions  in  Kevin  Banks'  office where  others  would  not  be                                                              
qualified, so  he can see  why this option  is very  important and                                                              
likely necessary.  But he is afraid  it may be abused.  A one-year                                                              
extension might be a good compromise.                                                                                           
9:52:44 AM                                                                                                                    
MS. NEAL said  one year will give  time for planning.  In terms of                                                              
what  the administration  is  doing  to increase  recruitment  and                                                              
retention, the DOA  will be issuing an intent-to-award.  "We did a                                                              
request for  proposal for  a state-wide  salary survey.  For many,                                                              
many years  we've internally aligned  for the purposes  of setting                                                              
salaries in the  classified service." In some areas  the state has                                                              
fallen well below  the market. She expects that  the salary survey                                                              
will be complete  by next fall,  and DOA will prepare  to seek any                                                              
funding necessary to implement the survey results.                                                                              
SENATOR  FRENCH said  he looked  at the  jobs that  are filled  by                                                              
retirees.  Alaska  has  a  10  percent  unemployment  rate.  There                                                              
should  be  Alaskans who  would  be  interested in  filling  those                                                              
positions,   including  administrative   assistant  I,   mechanic,                                                              
correctional  superintendent  I,  food service,  and  others.  How                                                              
aggressively  does  the state  recruit  for these  positions  once                                                              
they have been filled?  Are there ads being run?  They have crummy                                                              
benefits,  in  his  opinion, but  decent  salaries.  He  suggested                                                              
inserting  language that  requires  advertising these  jobs on  an                                                              
ongoing  basis.  It  would give  the  labor  representatives  some                                                              
comfort.  That  is  one  way  to find  out  if  there  are  people                                                              
interested in these jobs. It would be uncomfortable for the                                                                     
employee to know that his or her job is being advertised, "but                                                                  
that's the point." The point is to phase this out.                                                                              
CHAIR MENARD asked for language.                                                                                                
SENATOR FRENCH said he would need legal help.                                                                                   
SENATOR MEYER suggested creating a committee substitute.                                                                        
SENATOR FRENCH said he will probably prepare an amendment.                                                                      
SB 126 was held over.                                                                                                           

Document Name Date/Time Subjects