House Commerce & Human Resources Committee


2004 Minutes


January 8 - 9, 2004 - CEC Committee Meeting
January 15, 2004
January 21, 2004
January 27, 2004

February 3, 2004
February 5, 2004
February 5, 2004 - CEC Committee Meeting
February 9, 2004
February 13, 2004
February 17, 2004
February 19, 2004
February 23, 2004
February 25, 2004

March 1, 2004
March 9, 2004
March 19, 2004

DATE: January 8-9, 2004
TIME: 1:15
MEMBERS: Co-Chairmen Representative Schaefer and Senator Andreason, Co-Vice-Chairmen Representative McKague and Senator Goedde, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato, Senators Cameron, Stegner, Davis, Compton, Noble, Werk, Malepeai


Senator Goedde

The Thursday afternoon session was called to order at 1:17 by Co-Chairman Schaefer.

Ann Heilman, Administrator, Division of Human Resources presented her report, assisted by Gabe Weske. She mentioned her report is available online. (See Attachment #1) Each year she presents her report to the Governor in October. Some things have changed since then.

She reviewed a few state policies. All raises are based on merit, across-the-board raises are not allowed. A variety of jobs are assigned to one pay grade. There are no longevity or automatic pay raises. According to state code, employees who are competent and fully trained can expect to receive the middle salary of the range in the public sector. At present, state salaries lag the market by 14.6 percent. The over-all price tag to catch up would be over 85.5 million dollars.

The Consumer Price Index grew in 2003. Unemployment in Idaho is close to the national average of 5%. The unemployment rate is higher in rural counties, but the majority of the work force is in the urban areas.

Her job requires that she research the private sector to compare jobs. She gave details of her research. Her survey covered 65% of the classified state jobs. Not all jobs lag the market by the average. Some jobs, such as nursing, lag even further behind.

The average age of a state employee is 46. The average new hire age is 36. Benefits are more important to the older employees. An organization needs to have a wide range of ages.

Wage compression occurs when a new employee's entry wage is close to or at the same level as an employee who has been doing the same job much longer. If someone hires in at less than market rate, the state is likely to get a person who needs more training, and experienced employees bear the load.

Idaho has serious competition in the private sector, the federal level, and neighboring states. A number of employees leave for the federal system because of the higher wages, automatic pay raises, and promotions.

The state mandated Hay system does not account for the impact supply and demand has on wages locally. An Information Technology Programmer Analyst and a Financial Planner are paid the same by the state, but in the market, the IT pay average is $12,000 higher a year.

She suggested a refining of the pay schedules which would need to be done in code. With new technology, changes can be made more easily than could have been done years ago, and gave examples of labor, trades and crafts; skilled nursing; office support and administration.

In response to questions, she said the Hay System does not have the flexibility to address the market fluctuations. She said it would help to break up the occupations into groups and that several states are doing this.

She said it is unreasonable to expect market parity in one year. However, a plan is needed to recognize there are annual market movements­a 3.3 to 3.45 annual wage growth is projected. She said the state needs to increase state wages by 5% each year to catch up by 2009. She suggested one-time pay increases or bonuses to promote the retention of employees. A clear, easy suggestion to take care of this problem doesn't exist.

Among her recommendations to the Governor in October were:

1. No increase to the current salary range schedule

2. No increase to the current "policy rate."

3. Code changes to allow for pay schedules unique to occupational groups.

4. Provide an average of 10% permanent merit raises for nursing occupations.

5. Adopt a strategy to address market salary competition

6. Provide 6.8% CEC to fund the first step toward current law requirement OR

7. Provide as much permanent CEC money as possible and refine current law to specify

market targets

8. If no funds are available, provide 2% one-time money to help with retention, and a

recognition award program for FY05.

She said that she feels doing nothing for another session is much too risky. State employees realize we have been in financial hard times and have taken on extra work because of jobs that remained open or were eliminated. She feels that revision of the rules is absolutely necessary and well worth the Legislature's time for this session.

Co-Chairman Andreason congratulated her on the quality of her report.

In response to questions, Ms. Heilman said that Idaho code does not use the same indexes as does the federal government. She added that Idaho code also refers to doing a study on benefits from time to time, and she feels that this might be a good time to make such a study. In response to further questions, she said small businesses are not used in making the comparison because they do not participate in expensive surveys. Small businesses also employ family members.

In questioning she said that 10% below market rate might be a reasonable goal, considering the state's benefits. As to the 13.8% attrition rate and the reason, Ms. Heilman said employees do not always give accurate reasons for leaving.

In closing, she said that for many years the state benefits' package was better than what was offered in the private sector. However the situation seems to be changing.

Alan Winkle, Executive Director of PERSI made his presentation. (See Attachment #2) He started by commenting that his presentation is more cheerful than it has been in the past years. He believes the retirement benefits of PERSI are on a par with the national average.

Employer units are growing every year as charter schools, counties, and other political subdivisions join. They only had one partial withdrawal in the last year. Covered salaries have grown, which is good, because benefits are based on this.

There was an increase this year of close to 1000 retirees. The average age of retirees is slightly lower as are the years of service. Annual payroll is growing slightly because of additional people retiring. He mentioned other demographic changes.

They ended the year with an unfunded liability of 1.2 billion dollars and are funded at 83.8%. To make the state mandated funded goal of 100%, the rate employees and employers pay will go up this next year.

In a survey of members, 94% of the employers are satisfied and 65% of the employees are satisfied. They are going to do further studies to compare with other states, and expect legislation will be proposed.

There is a mandatory 1% COLA (Cost of Living Adjustment) if the Consumer Price Index grows over 1%. The Board approved a 2.2% COLA this year, which can be modified by the Legislature. The numbers looked better in November when 2.2% was agreed to, than they do now.

When the meeting was called back to order after a break, Pam Ahrens, Director of the Department of Administration, presented her report. (See Attachment #3) She thanked the Legislature for the $836 provided for each employee to cover the increase in costs for health benefits. The actual increase was more than expected, so the employees still had to pay more, with their salaries frozen.

Ms. Ahrens said the dramatic increases in health insurance is having a definite impact on employees. She defined a "Trend" as an actuarial term used to describe the expected change in medical costs from year to year. The current FY 2005 Budget Estimate assumes a 15% trend. This will result in an additional expense of $820 or $.39 per hour per employee. This is the third year of double digit trends, and experts indicate there is no end in sight. This is more than 6 times the rate of inflation.

The population ages as the life expectancy increases. An aging population needs more medical services, which cost more money.

Other employers are shifting more of the health insurance costs to employees; instituting limited, tighter networks; using disease management programs; instituting consumer driven health plans; making insurance carrier changes, and instituting preferred drug lists.

Money comes from the state, employees, and retirees to pay the insurance benefits. They had to draw from the reserves to pay the premiums this last year.

To keep costs down, they added another category of rating, and moved to only one plan that had a lower deduction. The out-of-pocket maximum expense was lowered by $500. Retirees are grouped with the active plan. The active employees subsidize 50% of the retirees' insurance. Retirees by law can only be provided the same package that active employees receive. There is duplication of services due to Medicare. Retirees want a drug prescription program. New programs allow retirees to use unused sickness funds for Medicare supplement plans.

Ms. Ahrens pointed out that the cost per member per month for drugs has increased over 20% every year.

Between 2002 and 2003, there was a reduction in active employees of 1800 persons.

The bids for the health insurance programs just came in the previous day. They first choose a carrier and then design a plan. Appropriation is the final determining factor. The plan will be in place by July.

In answer to questions, she said the state is as close to being self-funded as possible. When the federal drug program goes into effect, the state may be able to take advantage of it. Uninsured medical costs do impact our state's cost.

In answer to further questions, Doug Trosky, a consultant stated there is a push to change the Health Savings Account. Such changes are being suggested as allowing funds to be carried over from year to year, and allowing the employer to contribute.

Both Co-chairmen thanked Ms. Ahrens for her hard work.

The meeting was then adjourned for the day at 4:30.

Friday Morning, January 9, 2004


MEMBERS: Co-Chairman Schaefer and Andreason, Vice-Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato, Senators Cameron, Stegner, Davis, Compton, Noble, Werk, Malepeai


Senator Goedde and Representative Garrett
GUESTS See Attached sign-in sheet

Senator Andreason called the meeting to order at 8:35.

President Richard Bowen of Idaho State University spoke to the Committee. He said teaching is the basic function of a university. The development of the students and faculty is their most important task. Teaching is an individual occupation. ISU over the years has had a very solid teaching force with low turn over. However, the lack of salary increase these past two years has eroded the confidence of the faculty in their future with ISU. Upon graduation, some students gets jobs that pay more than that of their professors.

President Gary Michaels of the University of Idaho spoke. He said there is no "silver bullet" to solve the problem. The U of I does a lot of research. Washington State University, just 8 miles away, offers about 30% more in pay. They haven't had a large turn-over so far, but he is afraid that if the present situation of no raises continues, it will take a toll on the faculty. He said the faculty is working very hard to do the best they can with what they have.

Newly hired faculty are getting equal or greater pay than people who have been there a long time. The more experienced a faculty member is, the higher cost of replacing that faculty member. There is some inequity in the pay system. He said there shouldn't be a discount to live in Idaho. If the situation doesn't improve, they will be losing their brightest and best and won't be able to replace them with equally skilled faculty.

Mr. Michaels says there needs to be more investment in Information Technology to make teaching more efficient. One senior researcher can bring in millions in grant money and also graduate students who want to work with him. One research professor leaving can have a huge economic affect on the university and the state.

There is a lot of collaboration between universities in an effort to stretch the education dollar. President Michaels said he had better luck as a CEO in the private sector by letting those people on the firing line solve the problems, rather than by specifying every detail.

He said the U of I has more problems than just salary. The University Project has had a negative effect on morale and will continue to be a financial burden for at least the next three years. He stated that morale problems should be solved by the individuals themselves. Blaming others is not productive.

Because of the shortfall, Mr. Michaels has encouraged each college to raise money for faculty salaries and scholarships. This is easier for some colleges than others.

President Bob Kustra of Boise State University said he is impressed with what we are doing in Idaho. He said "We don't intend to sit around and wait for things to get better, we are going to make things get better."

The turn over at BSU was 20% last year, 62% of the people left due to better job pay and opportunities. With the increase in technology firms in the Treasure Valley, there is a need to improve the programs in the expensive area of technology. He said BSU salaries are 22% behind in the sciences. Professors feel as if they are the "farm team." He asked for even a small raise for salaries this year. He said it is more cost efficient to pay present employees more, rather than have to replace them at higher salaries.

He said BSU is building a new classroom with extensive technology to take advantage of interactive learning for more efficient use of resources.

Diana Jansen, Administrator of Health and Welfare spoke regarding Human Resource issues in her department. (See Attachment #4) She asked first for greater flexibility in managing resources­recruiting and hiring, as well as rules and regulations. Many states have already implemented these suggested changes with good results.

She also asked for an increase in compensation for her staff. In certain areas of the state, salaries are a critical factor in turn over. The Blackfoot hospital had a 40% turn over in 6 months. It can cost $5,000 to recruit a nurse in addition to training. New candidates were demanding more money than current nurses were being paid. They offered closer to the market rate, and stopped the exodus.

In the area of clinicians, the turn over rate is about 15%. It is worse in some areas. In response to questions, Ms Jensen said she would like a dollar amount, and then the authority to move quickly and efficiently to meet needs.

Monica Young, of the Health & Welfare Department spoke. She is currently at the Idaho State School and Hospital in Nampa. She gave examples of things they are doing to recognize employees.

In response to questions, Ms. Jensen said H & W nurses mostly work in institutions. She said employees leave because: 1) better jobs, 2) better salaries, 3) supervision and work load problems.

Richard Jones, Director of the Veterans' Services, spoke on issues for nurses and others in his department. (See Attachment #5) He asked for an increase in salaries for all employees in his division, but especially for the nurses. Sometimes they have to hire temporary nurses--an extremely costly alternative. He said they are spending more on temporary nurses than they would spend to increase salaries as requested. The need for nurses nation-wide is going up, especially in long-term or geriatric care. An additional problem is that nurses in his division work 24/7. A 28% increase in pay is needed to bring nurses' salaries into line with the private sector.

Karl J. Dreher, Director of the Department of Water Resources, spoke. (See Attachment #6) He gave specific examples of how compensation issues have affected his Department and DEQ (Division of Environmental Quality.) He has 200 employees­permanent and temporary. Their salaries for scientists and engineers is significantly below market and it is costing the Department money. Engineer or science-type positions make up almost half of his department. His department is a leader in bringing technology to the state, but even a 1% increase won't really help much.

More than anything else, they want a plan for correcting the inequity in pay. The problem is not the Hay System, it is that the Hay System hasn't been funded. When the disparity gets over 25% and there is no plan in place to make amends, employees feel they have to move.

In 2003, the Department's loss of technical people went up dramatically due to salary considerations. Replacements have to be offered more money, so they are approaching the position where they have to leave positions open to generate salary savings to hire new employees.

The bulk of their employees are older, and most likely will stick with the Department because of the State retirement benefits. However, the younger men won't stick around, and this will leave a huge gap in a few years.

He gave several examples. One was of a civil engineer with 8 years experience who audits the Federal purchase of water rights for the state­a very important position. She makes below what the State Labor Board says should be the minimum wage of a beginning civil engineer.

Friday Afternoon, January 9, 2004


Col. Dan Charboneau, of the Idaho State Police spoke. (See Attachment #7) He spoke about the impact of these lean times on the citizens of Idaho and the ISP. He pointed out that although the trooper is the most visible member of their team, other employees in communications and the crime lab are also vital to the success of law enforcement. He said his best people are family orientated and want a permanent position.

ISP does not offer career development enhancements. There is neither the funding, nor the discretion to deliver this. The discretion to make these decisions is a large problem. Many city police departments offer incentive programs, high entry salary, and more levels of advancement and pay.

During 2002, they lost 3 out of 13 scientist in the crime lab due to low pay which is 36% below the Mountain States. A lack of hope for advancement also contributes to low morale.

Low pay and lack of salary incentives continues to drain state employee talent. He is concerned for the safety of the citizens of Idaho as the force is becoming younger and lacks maturity. This year 10 troopers left, 19% of the local force.

He gave an example of a trooper who was leaving the force that day because of finances and concerns for his family.

There also is a serious concern in keep forensic services people. Sometimes it takes 18 months or longer to train a new employee. Last year they lost both of their forensic firearms experts and have been unable to provide this service for various agencies in the state.

Col. Charboneau presented his recommendations­more compensation for ISP employees, more flexibility to administer career development plans, encourage agency innovation and creativity, and review and update the benefits package for state employees. He fears that the ISP is becoming a training agency for other police departments and agencies.

Capt. Don Van Cleve, Investigative Captain for Region 3--SW Idaho, spoke. In 1999, the Criminal Investigative Division was folded into the ISP. They are involved in all crime scene investigations, except for large cities. They also do drug investigations and assist many small municipalities. They work behind the scenes, so do not get the press and media coverage. They have received numerous national awards, but cannot continue to do this job unless they receive more compensation. Many small agencies will be affected if the ISP loses forensic people.

Captain Stephen Jones, Patrol Commander for Region 3, South West Idaho, spoke about the recent drain on his officers. He has lost two, and he knows of six others that have applied to other agencies. He is allocated 40 patrol officers. If he loses these 6 officers, it will be a 20% loss and he will be losing his field training officers and his experienced people.

Upon questioning, Captain Jones said they have the same number of officers as they had in 1985, except for four motorcycle officers added a few years ago. He said the main reason employees are leaving is due to a lack of compensation­both in pay and benefits.

Director Charboneau gave examples of disparity in salary. Patrol officers make $18.25 an hour, Boise PD pays $22.19, Meridian $19.68, Oregon $22.21, and Washington $25.21.

Co-Chairman Andreason asked about a Career Development Plan. Director Charboneau said they have one, but the Legislature has never funded it. In answer to what discretion he wanted, he said beyond a CEC increase, he would like some discretion in FTP. He has to jockey people around to keep positions open until they can be filled. He suggested "red shirting" a position and using the saved salary to keep the people they now have in order to slow down the exodus. There have been suggestions to move Public Safety out of the Hay Plan. He said that any help will be appreciated.

When asked about the impact on the forensic lab, he said he has gone out on a limb and tried to find some creative ways to get the people he needed and to stop the exodus. There have been murders in Idaho, and the Lab could not provide the needed services. They are the 'one-stop shop" for all of the law enforcement in Idaho.

Vicki Patterson, lobbyist for the Idaho Public Employees Association, spoke. (See Attachment 8) Officers of that organization were present in the audience. She thanked the Legislature for their help with the cost of medical insurance, even though it didn't cover the entire increase. She asked that the Hay System be funded as it should be. She said a 5% increase would be 1% of the General Fund--money for those who take care of our state. She said the increase should come off the top of the General Fund. Her numbers were questioned by several members.

In response to questions, Ms. Patterson said there are a lot of employees who hold second jobs, but no one has exact numbers. She said some state employees are on welfare or are getting food stamps, and promised they will try and get numbers.

Senator Marti Calabretta spoke representing the state employees who contacted her in north Idaho. State retirees have a guaranteed COLA, but state employees do not. Their work load has increased and the staffing has decreased. The replacement workers drain the existing workforce when they have to be trained. They asked for help with the increases in the cost of health insurance, and a push for a healthier life style. Current state employees feel they have a contract with the state which has not been kept. She asked for an established level of COLA (Cost of Living Allowances.) When questioned, she suggested cutting programs rather than failing to give raises to the state employees. She said the budget problems should not fall on state employees.

Jon Sowers of the Department of Corrections, Deputy Director of Human Resources, spoke. (See Attachment #9a) He pointed out that their department deals with the most dangerous and difficult segment of the population. He thanked the Legislature for their help with premiums, but said wages have been frozen and employees have not been advanced in their careers. He asked for fair compensation for his employees. He said a problem that lasts for many years becomes more difficult to correct as more time passes. He said it is much better to maintain present employees than train new officers. Idaho Correctional Officers are paid the lowest in this general area of states, with the exception of Montana. It costs almost 2 million dollars a year to train new employees, which is between 1/3 and ½ of their total officers' salaries. Four out of five who leave, leave for higher pay. He urged the Legislature to "invest in employees."

Selina Carver of the Department of Health and Welfare spoke. (See Attachment #9b) She is a program manager in the Division of Health. She has salary savings but could not use them. Her division is federally funded and she gets money for raises, but can't give them to her employees. She said the system they are bound to is broken which results in low morale and high turn over.

Galen Lewis of the Department of Health and Welfare spoke. PERSI retirement salary is based on the highest 42 months of service. The freeze in salaries has impacted his retirement salary. Only 16% of state employees are at mid point or above within their grade. He said the rise in health costs is eroding the advantage in benefits the State used to have as an employeer..

Officer Van Waggaman of the Idaho State Police spoke. He was taking his last day of work to speak to the Committee, rather than spend his time saying good bye to his fellow workers. He came from a law enforcement family, but knowing he could not provide for his family, he is leaving the ISP. He said he loves the ISP and the training is excellent. The State Police has lost too many good officers, and more are leaving than the Director knows about. All of the officers who want to leave are finding jobs.

Ruth Ann Benjamin of Boise State University spoke. (See Attachment 9c) She took an early retirement and took a 58% pay cut to work at BSU. She represented the specialized workers at BSU who work on one-year contracts. They are not part of the Hay System or PERSI. They need college degrees and sometimes additional certification. Many work over 40 hours a week with no overtime. People are taking sick time because they feel so overloaded.

Bonnie Carlton, President of Classified Employees at BSU, spoke. One-third of the employees are making less than $10 an hour. Some cannot afford to buy needed food. Over 10% of the Classified workforce at BSU hold at least one extra job. Fifty per cent of the workers are single income families. In 25% of the dual income families, the spouse also holds a second job. Their take home pay is going down

Bill London Commissioner of the Idaho Conservation Officers' Association spoke. (Attachment #9d) They represent 99 Fish and game officers. Their department receives its money from hunting and fishing licenses and fees. Only 6% of their officers are at policy. Of the officers who have served 20 years, only 35% are at midline. For 20 years of service, 20% are at midline.

Rick Schenfield from the Idaho Liquor Store in Post Falls spoke. He is a liquor clerk. Washington liquor clerks make a great deal more and have guaranteed increases with good records. Washington State, just 6 miles down the road has much better benefits.

Alice Tauschiter spoke representing the classified employees from ISU. Their salaries are lower than the market by 14%. More funding is needed to bring salaries to the market level. State employees are paying too large a percentage of the Idaho State budget with their reduced salaries.

Doug Nilson, Chair of the Faculty Senate of ISU, spoke. At a meeting before Christmas to get comments for his presentation, he heard that morale has gone down and has adversely affected the quality of education of ISU. More of the same situation promotes anxiety among the faculty as the disparity becomes greater. It is difficult and expensive to find replacements for departing faculty members. Research and families suffer, as professors take consulting jobs off campus. This diminishes emotional attachment to the University as well as enthusiasm for the job. A small increase in salary, along with a plan to increase pay in the future, would be greatly appreciated.

Brenda Smith, Human Resources Director at North Idaho College spoke. She is new to public education and Idaho. She is concerned about her ability to recruit staff and faculty. Two-thirds of those who are leaving mention salary as the main reason. They are having difficulty keeping the nursing faculty. The low salaries are affecting the ability of the Colleges and Universities of Idaho to hire faculty and staff to train its citizens.

Andrew Hanhardt of Services Employees International Union (SEIU) spoke representing the state's employee members. He said State employees are working harder than ever with fewer employees. Although Idaho is not as bad off financially as other surrounding states, Oregon gave their state employees a raise.

Stewert Edwards of the Idaho State Tax Commission spoke regarding Holiday Pay. He works a different type of shift, so does not get the regular full holiday pay. He asked that the state insurance cover dependents whether they are children or parents. He has a mother who qualifies as his dependent on his tax returns.

Jon Sandoval, Chief of Staff for the Department of Environmental Quality, presented his written testimony. (See Attachment 10)

Kim Day, First Vice President of the SEIU spoke. She is an employee of the Idaho Industrial Commission. He said that Legislators rarely come to see the state employees at their work place, nor does the Governor. He pointed out the difference between meeting with managers, or meeting with state workers. He said the state managers are getting the benefits, not the regular state employees.

Ken Miracle, HR officer of the Department of Agriculture, spoke. In the Ag Department, the turn over rate has been historically low, however it is now at 17%. In the last 18 months, 20 employees have left because of salary. An increasing number of employees in the Department are aging and reaching retirement. Getting a needed Vet for their program was extremely difficult. The Federal Government is very attractive for their employees. Their department is becoming a training ground for employees who then move to other places.

Sergeant Bret Kimmel of the Department of Correction in the Maximum Security Division spoke. They have over 5000 prisoners. Money is an issue. Officers leave when their taxes and health insurance goes up. There are officers' families who are eligible for food stamps and Medicaid. Their job is very difficult­every day they deal with violence and such things as HIV.

Officer Renea Bevry, of the Department of Corrections, spoke with passion. She gave an example of the daily weapons confiscations and other details of her job. She said that most of her officers earn under $12 an hour. She said that a $6 an hour increase would bring her to the minimum of an Idaho State Trooper.

Shelli Rambo Roberson, Program Manager for the Department of Health and Welfare in the area of pregnancy prevention, spoke. (See Attachment #11) She is passionate about her work and feels it is extremely valuable. However she said there is frustration with the inequity in the system. She said that keeping state employees through additional compensation can prove financially advantageous to the State.

David Winkler, who works as a teacher in the Department of Juvenile Corrections, spoke. He asked for both more compensation and medical coverage, even if the amount is small. Some of the staff positions in his section go unfiled and this can be a dangerous situation. He is retired military and has his benefits, so he said he was speaking for his employees more than for himself.

Debbie Coles, of the Idaho Transportation Department, spoke. She is 30% below market pay and has been with the Department for 20 years. She asked for help for the ISP and Correctional Officers before herself.

Tim O'Leary from ISP spoke. He said the ISP officer who left the force today walked out the door with $150,000 worth of training. He said we have to find a way to keep those top people or the state is going to pay the price in many ways.

Kip Sherry, of the IDOC spoke for himself. He is an IT Systems Director for the Department of Corrections, and an Idaho native for 7 generations. He would like to stay in Idaho. He gave examples of a program he instituted that is saving the state $15,000 a month by collecting child support and other payments from inmates. In a technology position, he is 47% below market value in Boise. Employees have been giving their best to the State, he asked that the Legislature give the state employees their best.

Ingrid Bolen, of the Department of Health and Welfare, spoke. She said it is with a heavy heart that she realizes she cannot grow in her field in the department. The only employees to make over the mid point have 33 years of service. She said she minds being broke.

Anita Hanks, who works for the Idaho Supreme Court, spoke for herself. Her pay increase when she came to the State has entirely disappeared during the last four years. Her family has to live an extremely modest life style. The work load has increased tremendously in the last year, but they have no new employees.

Robert McCall, of the SEIU, spoke for himself. He has been on the faculty at BSU for 18 years. He said the benefits of his job do not overcome the lack of salary. The Board of Education can remove entire sections of faculty, so he doesn't have job security. He said enrollment is up and some classes are so full, students must bring their own chairs. He asked for a "living wage."

Ron Stickland, an IT systems analyst for the Department of Corrections, spoke. He pointed out that most of the state employees have taken vacation time to appear before the Committee. He said it is obvious that state employees are not at the mid point within 5 years. Directors can't advance employees because they do not have the funds. The State of Idaho is a large business employer, not a small one. He suggested that the director of an agency should have more flexibility. He said there isn't pay for performances­performance evaluations are either pass or fail, so 95% pass. Because the written notes then become crucial, one needs an eloquent supervisor, if one is to have a chance for advancement. This isn't fair.

Ann Heilman, of the Division of Human Resources, spoke in defense of the performance evaluations. She said that the previous evaluations were inconsistent and everybody was rated above average. She was instructed to fix this evaluation problem. Each job has performance expectations and each area is marked pass or fail. She said this new evaluation was presented to some committees, and is better than the old one.

Dylan McDonald, of the Idaho State Historical Society, spoke. There is a massive backlog of items that need to be classified. They have waited for five years for a promised building. He explained his life style is limited by the state budget cuts.

Karen McDonald, Dylan's wife spoke. (See Attachment #13) She works for Boise State. With student loans, they cannot afford to buy a house or start a family. She doesn't feel that she will be able to stay home should she have a child. She is afraid that she and her husband may have to face moving out of state. She teaches music lessons in the evening to provide extra funds.

Eugenia Horne spoke. She is not an employee of the state. She said she has been black listed by Ann Heilman for four years. She said she has seen people in various departments who have abused travel funds, but others covered for them. She said she was an internal auditor and got black listed for what she discovered. She claimed there is a waste of state funds.

Marie Collier, a registered dietitian who works with Central District Health, spoke. She works with the WIC program. According to the Department of Labor statistics for Boise, she is paid 26% below what a dietitian should receive in Boise. Some of her employees are receiving WIC benefits, or other such welfare benefits in order to survive. At her own expense, she must keep up her license. She has two children in college in Idaho, and expenses are going up.

Tony Ewing, of the Idaho State Tax Commission, spoke. He is a native of Idaho. He has worked as a firefighter and policeman in Idaho. He has only worked 5 months there and one co-worker who has worked there since 1997 makes a penny an hour more than he does. He said the Tax Commission is very cost effective because of the amount they collect. He trusts the Legislature will do the right thing.

Terry Stephens, with the Idaho Tax Commission spoke. Most of the employees at the Commission are single mothers. It is very difficult for them to work two jobs. He said the insurance situation "stinks." The Commission met their yearly collection revenue amount 4 months early. He feels that the Commission wastes money. He referred to a two and one-half day meeting held at the Red Lion­a very expensive place.

Kelly Gornik, of the Division of Building Safety, Electrical Bureau, spoke. She does the licensing of Electricians. She is proud to be an Idaho native. She is single, 48, and her children are grown. She lives in a single wide mobile home in Melba and commutes to Boise. She listed her medical problems and gave an example of her budget. She said there are dedicated funds for employees salaries, but they are not distributed when the money is there.

Billie Havery, an Administrative Assistant at the Department of Finance, spoke. She said that morning she had to decide between medicine, heat, or housing. She decided to forgo medicine. She has worked up to three jobs at a time to survive. She makes $13 an hour and her health insurance has not helped with her medical bills. She has sold her house, and now has had to sell her car.

Sgt. Floyd Barnes, of the Idaho Department of Corrections, spoke. He said he works with employees who love their job. They asked him to tell the Committee what they do for a living, how they try and help the inmates learn the tools to stay outside of prison. He works at Orofino. Some officers are on public assistance or are working two or three jobs in Orofino where he works. He asked that Corrections not be considered the "Black Hole of Idaho." If they can make a difference on one inmate's life, an officer can, in effect, pay his or her salary.

Robert L. Amoureux, of the Idaho Transportation Department, Design Section, spoke. He has been there since 1985. They are facing a problem in that they cannot hire the people they need because of the competition in salary. He has decided to retire early, in about a year and open his own business which he feels will earn twice as much as his present salary.

Steven Hughes, who works for the BSU landscaping crew, spoke. He is making $7.41 an hour. Most of his crew is on welfare or trying to get it. He cannot make it from pay day to pay day. He asked for a raise.

Aaron Walter, of the Division of Administration and Purchasing, spoke. He is due to retire in two years. He has been there 12 years and is roughly at the mid point of the salary range. He had to push to get to the mid point. The cost of health insurance is going to go up due to all the new drugs, and it will cost the state and the employees more money. He is thankful for the medical insurance. However, he gets his glasses from his wife's policy. He gave an example of how he saved the state money in his job­a multi-state purchasing arrangement for lab salaries, which saves more than his salary each year.

Robert Gale, who works for the landscaping crew at BSU, spoke. He makes $7.41 an hour. He rides the bus and his bicycle. He loves the work he does. He is 47 and in good shape. The BSU campus needs to be brought into the 21st Century. Some of the plumbing is quite antiquated. The crew hopes to make the campus beautiful, but he can't make it from pay check to pay check.

The meeting was adjourned at 5:35 by Co-Chairman Andreason. The next meeting will be at the call of the Chairs.


DATE: January 15, 2004
TIME: 1:40
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Chairman Schaefer and Representative Crow
GUESTS: Alan Winkle, Dennis Stevenson, Jane Buser
The meeting was called to order at 1:40 by Vice Chairman McKague. The page Elizabeth Keaton and guests were introduced (See list above).
59-0103-0301 Alan Winkle, of PERSI, presented the Pending Rule 59-0103-0301. This rule implements the increase in contribution rate by the employer as put into law last year for firemen and policemen. They have had one claim for the $100,000 death benefit so far. Mr. Winkle went through the various categories of firemen and policemen that depended upon whether they were hired before Oct 1, 1980 when the firefighters and policemen joined PERSI.
59-0103-0302 Alan Winkle then presented Pending Rule 59-0103-0302 which raises the rates for employers and employees to match the requirement in law that PERSI be fully funded. The PERSI Board is required by law, and has the authority to raise the rates. He submitted a chart showing how the rates will go up each year from July 1, 2004 through July 1, 2006. (See Attachment 1).

Rep. Lake said he didn't realize we were approving a rule for increase in contributions through 2006. Mr. Winkle said the purpose of this increase is to meet the Code requirements that the PERSI Fund be fully funded, plus a reserve. If the rule is disallowed, he does not know what would happen. The Attorney General would have to rule on this.

In response to further comments from the Committee, Mr. Winkle said that the rates were indeed temporarily reduced in the past, and then made permanent. After the market fell in 2000, an unfunded liability occurred. Mr. Winkle said he does not know if the unfunded liability exists with recent higher market returns, using data as of that date. He agreed that it is his understanding that the PERSI Board has the sole authority to set the rates, but there is no federal law that states the Board has to have this kind of authority.

Mr. Winkle said the Board knew two years ago that the rates would have to be increased and informed the public. However, they delayed the hike for two years, and then have phased in the increases over three years to make it easier on the employers and employees to plan ahead.

On a different subject Sub rule.114 deals with the situation where a worker is on Worker's Compensation and receives benefits from PERSI besides. The worker is allowed to maintain eligibility in the system, but the money received from Worker's Compensation is not counted as salary to accrue service.

Sub rule .176 covers the only section that did not have a 5 day reporting requirement. This was an oversight.

Motion Rep. Martinez moved to approve both of the rules-59-0103-0301 and 59-0103-0302. It was seconded by Rep. Naccarato.
Substitute Motion Rep. Lake offered a Substitute Motion to approve 59-0103-0301, and to hold 59-0103-0302 for a time certain of 10 Legislative days (January 27). He raised the question whether it was necessary to have the increase, considering the current market, and also wanted to know what happens if the rule is disapproved. Is there statutory authority for the PERSI Board to still set the rates. Rep. McKague seconded.
In discussion some were comfortable that the PERSI Board had given the best numbers based on what they are allowed to do, and considering their past history of lowering the rates when possible. Others felt there was no harm in waiting 10 Legislative days for a ruling, even though this raise has been discussed for two years. There was also a curiosity expressed to know what would happen should the Committee vote against the rule.

At the request of Rep. Trail, the two rules were split for voting.

ACTION By a show of hands 6 to 3, the Committee voted to Hold 59-0103-0302 for 10 Legislative Days (January 29).
ACTION By voice vote, 59-0103-0301 was approved.
Rep. Lake raised the issue of a person working for a university in a program that gets its money from a grant. If the funds run out, they lose their job, and lose their chance to become vested in PERSI. Jane Buser from BSU said that with all universities, except the University of Idaho, the employee is RIFed (Reduction in Force) and does not lose their chance to be vested if they find another position at the University.


DATE: January 21, 2004
TIME: 1:37
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Representative Crow
GUESTS: See Attached Sheet
MOTION: Rep. Lake moved to approve the minutes of January 15. Rep. Trail seconded. By voice vote, the motion passed
Ann Heilman, Director of the Division of Human Resources, started with some general comments. The Division of Human Resources and the Idaho Personnel Commission have rules that define the system. Changes must be made all the way through the system. There are 12,000 classified employees that may be impacted by these rules. The 50,000 job applications they received last year are also affected. They tried very hard to have participation.

One highly charged issue is how the state conducts layoffs. These last two years, 260 employees were laid off by the State. Rules governing this were made a long time ago. It was done on a point system. Points were awarded for years of service and performance evaluations. The System was analyzed in 1966 and again in 1999 when the Division of Human Resources was created. The system was found to be dysfunctional. However, attempts to change the system have met with resistance. Some managers want complete control. State employees want pure seniority. Requests for rule changes have come from a variety of sources over the past two years.

Rough drafts were sent out to people involved in state agencies. There was an informal comment time in July. Then an open letter was sent to all employees, letting them know that the rules were not set and asking for input. In their responses, 98% of the employees said they did not want the system of lay offs to be at the agency discretion. The Division came up with a set of rules which have been revised several times. These rules were posted on the web site, published, and hearings were held around the state.

Ms. Heilman said the pending rules are not perfect, but they are balanced and fair. There is accountability for supervisors and those who make decisions, and there are employee rights. They don't want law suits. They removed jargon and tried to make the language simple.

They have had good experience with the recent layoffs and tight budgets. They also need to incorporate new state and federal laws. There are no monies involved, but the changes are extensive. Most of the comments received from employees came by e-mail.

Ms. Heilman graciously yielded the floor to the other presenters who had scheduling conflicts.

09-0130-0301 The pending Rules of the Benefits Bureau of the Department of Labor were presented by Dwight Johnson. This rule lets claimants file for unemployment on the Internet. This rule has been in place almost nine months and they are finding that 30% of the claims are being filed this way. It is working very well.
MOTION Rep. Garret moved to accept Rule 09-0130-0301. Rep. Trail seconded. By voice vote the motion passed.
09-0135-0301 These pending Rules of the Employer Accounts Bureau were presented by Mr. Johnson. He said there are three parts to this rule. The first one states that late penalties for non-payment of uninsurance taxes continue to run even after the lien is filed. It is $10 a month or 2% of the amount owed. It cannot exceed the amount owed.

The second one deals with professional employer organizations. It used to give them 90 days in which to report changes or transfers. The rule is being changed to give them whatever time is allowed by law. Currently it is 180 days. However, should the law change again, the rule will not need to be revised.

The third change is to help prevent unemployment fraud called "psudo-dumping." Employers pay taxes based on their turn-over rate. Employers transfer employees to another entity with a lower tax rate. This cost the state $463,000 and billions of dollars nationally. The Department is also bringing legislation to the Legislature this year to correct this problem.

MOTION Rep. Trail moved to accept 09-0135-0301. By voice vote, the motion passed.
48-0103-0301 Karl Tueller, of the Department of Commerce presented this rule. The state has a tax on hotels, motels, and campgrounds. Two per cent of this tax comes back to the Department of Commerce for tourism promotion. This amounts to about 5 billion dollars annually. Forty-five per cent of this money goes into a grant program for local areas.

Renea Nelson, Deputy Director of the Grant Program, answered questions. She said they have between 2.3 and 2.5 million dollars for these grants. Most of this money goes to the smaller communities. These changes have gone through the negotiated rule process. No comments have been received.

Ms. Nelson then went through changes that were made in the rules governing the purchase of large items and rental of large items. The amount of money that requires formal bids has been raised to $5000.

Also, since applications for grants may be sent in electronically, changes will also be able to be sent electronically.

Line item exchanges are allowed of up to 10% of the grant, but any monies over $1000 must be approved by the Idaho Travel Council. The grants do not pay any salary.

48-0103-0302 Ms. Nelson explained this rule changes the way credit is given in radio ads. It will now be "Visit scenic Idaho," rather than giving credit to the Idaho Travel Council.
MOTION Rep. Martinez moved to approve 48-0103-0301 and 48-0103-0302. It was seconded by Rep. Trail. By voice vote the motion passed.
15-0401-0301 Ann Heilman, Director of the Division of Human Resources, continued with her presentation.

In answer to a question, Dennis Stevenson, of the Office of Administrative Rules, stated that what the Department of HR has done has been correct and in accordance with the law.

Ms. Heilman said she is responsible for the system. The Legislature set broad directives in some areas, and rather specific directives in others. She has tried to be very careful to do exactly what the Legislature specified. She went through the rule changes highlighting those issues on which she felt the Committee would want more explanation.

001.03 Some new managers feel these are suggestions, not rules, so a new rule states that it is a misdemeanor to break the rules.

54. Ms. Heilman said that this rule is at the request of the Idaho State Police. They need promotion levels within a salary grade. This rule allows an agency to request this promotion authority.

025. This rule deals with nepotism. The previous rule says a person cannot work under a manager who is close family. This has been expanded to read a close relative or "significant other" cannot be in the "chain of command." If this rule is approved, Ms. Heilman said she will have to write further explanations for the agencies. In response to questions, she said she has the ability to waive any rule if it is in the best interest of the state should special circumstances arise.

The Division attorney, Daniel Steckel, said this rule only applies to classified employees. Others, such as elected officials, would fall under the Ethics in Government Act.

In answer to further questions, Ms. Heilman said that agencies usually make conflict of interests rules specific to their agency. In general they all start with the law and build from there. These individual policies must be published within the department.

.05 Salary Protection. The Agency discovered that a section of rules covering when non-classified employees go to classified service was illegal, so they made changes to follow the law.

.068 Violations of classification. Ms. Heilman said when a violation of classification has been found, a 30-day period is allowed to take remedial action. These types of problems can be very complicated.

In response to questions, she said that there are still issues with state employees that can only be fixed by legislation. She can only fine tune the rules.

.070 Compensation is based on the Hay System. They felt this had to be stated clearly. It also specifies the various labor markets used to make comparisons in salaries.

A problem exists with how holiday pay is calculated. A bill dealing with this issue last year passed the House, but not the Senate. They could not reach a consensus. People work varied schedules and have different days off. She commented that if there was a furlough program in an economic down turn, it would soon be decided that a full-time day is 8 hours.

075b defines how shift differential compensation is paid when an employee has to substitute for someone whose schedule varies from nights, days, and/or swing. They discovered there were differing ideas as to what the previous rule meant.

.076 deals with alternative work schedules and locations. This came from employee suggestions. Some agencies did not feel that they had the ability to allow flexible schedules, job sharing, and telecommuting.

.077 covers bonuses and goes along with the law passed last year. It repeats the code. When a bonus is paid, a memo is placed in the employee's personnel file. If an employee saves the state money, he may be paid up to $1000 by the agency. Any monies over that have to be approved by the Board of Examiners. The problem is that bonuses are paid from salary savings, and there is very little money available from this source. Smaller agencies with a stable work force are particularly hampered. Often savings are in the operating budget area, but that money cannot be used for salary bonuses.

In response to questions, Ms. Heilman said the situation arises where an employee has to take a sick leave. Some agencies have no money to hire a replacement employee, but end up using an expensive temporary employee because they can use other funds to pay for this.

101. covers Eligibility Registers. There used to be a paper list of those employees laid off who were eligible for re-employment. This list has been revitalized. These Eligibility Registers list employees who have been laid off. This rule follows Idaho codes to award points to veterans.

.104 covers the removal of names from the register, and how this is handled.

120 covers Limited Service Appointment. If a person is hired for a temporary job, they have a much higher chance of being laid off. This is a "truth in advertising" requirement, and requires employees be clearly told this when hired. This is to be re-emphasized every two years when the job comes up for review. Jobs like this are often created by federal grants. When the funds go away, the job ends.

.124 covers in more detail that a department must rehire those laid off first, then look at other sources. Sometimes a person is hired for a temporary job, and then wants to keep that job when it becomes permanent. Although time has been spent in training that person, they have to go through the State's process to qualify. If a person on the top ten of one of these Eligibility Registers is hired for a temporary job, they can keep the job when the position becomes permanent.

It was decided to finish the rest of the rules on Tuesday, January 27.
ADJOURN: The meeting was adjourned at 3:45


DATE: January 27, 2004
TIME: 1:38
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Representative Crow
GUESTS: See Attached Sheet


Ann Heilman, Director of the Division of Human Resources, continued her presentation of the rules covering Layoffs, RIFs (Reduction in Force) and other situations where employees move within the agency or to another agency. She covered the major changes in each section. She said they tried to strike a balance between seniority and management's need to control the agency. A manager may appeal a state ordered layoff if the employee's job is "mission critical." She said the mission statement for the agency should show the importance of the employee's contribution. If these rules are approved, she said there would be some "pretty stern" guidance issued for this situation.

She covered such things as when an employee's job changes dramatically due to something like technology taking over the job, and the solutions provided.

Ms. Heilman said appeals to the Personnel Commission cost the state at least $1000 each, so they try very hard not to have this happen.

There are minor changes on the Calculation of Retention points to stress that the content of the performance evaluations are important as well as the number awarded.

On the subject of performance evaluations, the manager is responsible to do one each year, however a grace period is granted. If the manager fails to do the evaluation, it is not to hurt the employee in a layoff.

In response to questions, Ms. Heilman said that they are merging the old system and the new system, now on computer. In response to questions, she said the "pass/fail" term is slang and is used because it is easier to say. It isn't an accurate description of the process.

In answer to questions, Don Steckel, of the Attorney General's Office said that reclassifications of employees are appealable through the Personnel Commission.

Ms. Heilman pointed out that the rules prohibit the change of previously passed-on evaluations, and that war veterans get a preference of a 3 year credit.

Several times Ms. Heilman reiterated that these rules are a result of an enormous amount of comments from agencies and employees. These rules prohibit the use of the layoff process to dismiss a state employee. When a position opens up again, first choice goes to those laid off, or those who took a voluntary demotion. The rules were changed to more accurately reflect the state law. After layoffs, an agency is to rehire their own people first, then those laid off from other agencies, and lastly, look at the state applications for employment.

Ms. Heilman graciously yielded the floor to Steve Allred who had to leave for another meeting.

Steve Allred, Director of the Department of Environmental Quality, spoke in support of these rules. He said employees can appeal rulings to him or the Director of HR. He didn't believe this would be necessary in a well-run agency.
As Ms. Heilman continued going through the rules, the question was asked if an employee could have someone with them at these hearings, such as a union representative.

Tim Davis, Deputy Attorney General, explained that there are rules that deal with the unauthorized practice of law. A person who is not an attorney, cannot represent someone where there is adjudication. They may have someone with them, but that person cannot represent them.

When questioned about the employee having to pay attorney's fees for the state if he or she were to lose, Ms. Heilman said that part of the rule has never been used. They wanted to delete it, but were told it should stay in.

Ms. Heilman discussed the changes in the sick leave rules. Sick leave can be granted for the care of foster children. Under new laws, accommodations must be made for those with disabilities, however, all jobs require a reasonable level of performance. If a person uses every day of sick leave earned, a supervisor may ask for a doctor's certification. If an employee is sick for more than three days, the supervisor may request a doctor's written excuse.

Objections were raise by a couple of Committee members that this could make the employee incur needless expense, and also raise the cost of health insurance for the state and the employees.

Ms. Heilman said some agencies have more of a problem with workers missing due to sickness than other agencies. This is a subject of national conferences. One rule would not fit all, and it would be unreasonable and costly to expect all employees to go to a doctor.

A new section has been added to allow for separation when an employee does not return to work. Sometimes a worker quits and leaves town. Other times there may be an emergency. The agency has to mail a letter to the last known address giving them 5 days to contact the agency. The agency can back away from a dismissal if an emergency did indeed happen.

Most of these rules are in individual agencies' rules. Should a new agency be formed, these rules would apply.

When asked how satisfied employees are with the problem solving process within the agencies, Ms. Heilman said that the Department of Human Resources is "out of the loop", and so she didn't have figures. She agreed that the law needs first to be changed in this area, and then with the Idaho Personnel Commission, her division can "flesh out" the rules.

Andrew Hanhardt, President of the SEIU (Service Employees International Union), spoke. He said he represents 600 state employees in various state agencies. He said the division did a great job as a whole on the rules. However, they object to the entire package that has been presented. There are too many rules for the committee to give its attention to. The scope is too broad. Too many of the current rules are not enforced. He asked for a review of the entire system.
In answer to questions, Ms. Heilman said there was Negotiated Rule Making. There was enormous public input. More so than had ever been done before.

Mr. Hanhardt admitted he or his associates had attended several meetings. When asked for objections to specific rules, he mentioned the sick leave rule. He said he did not have a presentation prepared, but offered to present to each Committee member a list of his union's concerns the following morning.

Tim O'Leary, Human Relations Manager for the Idaho State Police, spoke. He was involved in many meetings, some with as many as 60 of the HR managers from around the state. He said it was a collaborative effort, and there will be additional changes proposed next year, but huge strides have been made. The employees of the ISP did participate and sent many suggestions. He recommended acceptance of this package.
Carolann Zografus, a clerical support person and a member of the Idaho State Employees Union, spoke. She works for Health and Welfare in the Division of Medicaid. People in her area were unaware of the changes. She could not use E-mail to let people know, it could only be done by word of mouth. She was unhappy with her situation. When asked, she said most likely her supervisor would have given permission to send out notification of the rules review to employees. She also agreed it was her supervisor's responsibility to notify employees about the proposed rules changes.
MOTION Rep. Ringo moved that we delay action on this package until our next meeting. In the meantime, each member of the Committee will be presented with those items of dispute, with rationale, for members to consider before taking action.
Discussion followed. Some members felt we had been given enough time to consider this issue, others wanted to wait to vote.
SUBSTITUTE MOTION Rep. Schaefer moved that the rules be voted on today. Rep. Schaefer commented that representatives have received very few contacts from employees about this issue. Mr. Hanhardt didn't have specifics when asked. We could delay, but there wouldn't be any changes. After a year and one half, he couldn't see any reason to further delay the process.
ACTION After a brief discussion, in which the majority of the members said they were willing to wait, Rep. Schaefer pulled his substitute motion.
ACTION The motion to delay action on the package until the next meeting passed by voice vote.


Alan Winkle, Executive Director for PERSI, presented some further details (See Attachment). Although the Board of PERSI is not allowed to use numbers received after the June 30 date, he presented data showing several scenarios­assuming various Annual Net Returns. (See page 2 of the attachment.)

Rep. Lake again expressed his concern with the language that the Board "shall" increase the rate beginning July 1, 2004.

Mr. Winkle assured the Committee that the Board does not intend to proceed with these rates, irregardless of what happens in the economy. If the economy changes, the decision to raise the rates could change.

When asked what would happen if the rule regarding the rate were rejected, he thought the Board might take court action in order to keep the PERSI system in line with code requirements.

When asked, Mr. Winkle said he saw no problem with the Board setting the rates for more than one year at a time.

Mr. Winkle encouraged the members of the Committee consult with the Attorney General themselves regarding their questions. He said the Board can only change the rate after the actuarial evaluation made on the market value of the portfolio as of June 30. That number won't reach the board until mid September.

When asked why have the rule come before the Committee if the Committee doesn't have the power to reject the rule, Mr. Winkle said it is required by law and it gets the notice out to employers and employees so they can plan and budget for the change in contributions.

Members of the Committee agreed to not vote on the rule until Rep. Lake gets an opinion from the Attorney General. The Committee will vote on it February 5, in a half-hour meeting before the CEC meeting at 2 in the JFAC Room.


DATE: February 3, 2004
TIME: 1:30
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Chairman Schaefer and Representative Crow
GUESTS: See Attached Sheet
Pending Rule 15-0401-0301 The meeting was called to order at 1:37 by Vice Chairman McKague. She gave a brief review of the history of Pending Rule 15-0401-0301, and said that this was the third time this rule had come before the Committee. She said Committee Members could ask questions, but there would be no presenters.
In answer to a question, Andrew Hanhardt said one of his objections was that some jobs comparisons for salaries were only made within the state, not with Oregon, Washington, or Montana where the jobs pay more. People may leave the state to move for those better paying jobs.
In answer to questions Ann Heilman said the term "significant other" in section 025 is not defined. If the rule is approved, she would have to write significant guidelines. This rule is needed to warn managers to watch out for relationships within the department that might result in favoritism. They are trying to make managers responsible under the Ethics in Government Act.

As to the failure of a performance evaluation being done, she said this rule came from employee comments. The feeling was that with no bonuses, some managers did not bother to do them, and the perception was the employee only had a satisfactory rating. This rule is an effort to default in favor of the employee if the performance evaluation is not done. As to the consequences for a supervisor failing to do an evaluation, she said that it depends upon the attitude of the agency management. In the new performance evaluation system, doing the evaluations is a core item for managers. These evaluations are state law.

MOTION Rep. Lake moved to approve Pending Rule 15-0401-0301 with the exception section 025 on Nepotism, striking the lines that read: "Similar relationships such as significant others, may also create a conflict of interest and should be addressed by an agency conflict of interest policy."
SUBSTITUTE MOTION Rep. Martinez presented a substitute motion to reject the rules and to recommend the establishment of an interim committee to study these issues. He said a lot of employee comments have been received stating they were not allowed access, or weren't notified about meetings. He said he did not mean to imply that HR didn't do a good job, but employees feel they didn't have a fair opportunity for input.
Rep. Lake spoke against the substitute motion as did Rep. Bradford. Reps. Ringo and Trail spoke in favor of the substitute motion.

Rep. Garrett spoke in favor of the original motion. She said not often do we see negotiated rule making to the extent we have seen it here. She said in reviewing comments, she is struck most by the perception of the way it will be administered and a lack of trust in supervisors. She said we need to work to build a better element of trust with state employees. There is a perception that supervisors are taking credit for employee suggestions. Rewriting rules will not change this. The implementation of the rules, not the rules need work. She said she hated to see all the hard work thrown out.

SUBSTITUTE MOTION ACTION By a vote of 5 to 4 the Substitute motion was defeated. Rep. McKague, Lake, Bradford, Bauer, and Garret voted Nay, and Reps. Trail, Martinez, Ringo, and Naccarato voted Aye.
ACTION By a vote of 5 to 4, the original Motion passed. (It was to approve Pending Rule 15-0401-0301 with the exception section 025 on Nepotism, striking the lines that read: "Similar relationships such as significant others, may also create a conflict of interest and should be addressed by an agency conflict of interest policy.") Rep. McKague, Lake, Bradford, Bauer, and Garret voted Aye, and Reps. Trail, Martinez, Ringo, and Naccarato voted Nay.
In answer to what happens if the Senate rejects more rules than we do, Dennis Stevenson said there will be a Substitute Concurrent Resolution.
Dwight Johnson, of the Department of Labor, made a presentation on the proposed merger of the Departments of Labor and Commerce. He presented a packet of information which included the RS that had been presented at the House State Affairs Committee that day.

The idea of merging the two departments came from the Governor. They all feel that it makes a great deal of sense, and will maximize the resources of both agencies. Similar mergers are being considered in other states. Michigan is the most recent state to make this change.

The two departments have a long-standing relationship. The effective date would be July 1. A bi-partisan committee will be formed that will also include past directors to help plan the merge.

There will be no reduction of budget. The Department of Commerce had their budget cut 17% in the last couple of years. The Department of Labor receives most of their money from the federal government, and their funding has been flat. They don't want to reduce the budget, but use the money they have been getting to get more done. In spite of these economic hard times, the Governor's Blue Ribbon Task Force suggested over a million more should be given to this area.

They do not plan on relocating the current offices. The Department of Labor has 24 offices throughout the state. With the merge, the Department of Commerce will now have local offices. The Department of Labor deals with the Bureau of Labor Statistics, the Department of Commerce is Idaho's "point of contact" for US Census information. In such areas as business retention and expansion throughout the state, by joining forces they will be able to get "more bang for the buck."

In answer to questions from the Committee, Mr. Johnson said they don't see any area of conflict between the two departments at this time.

In answer to further questions, Karl Tueller, Deputy Director of the Department of Commerce, spoke. They are thrilled with the Governor's support for an Office of Science and Technology, with $100,000 to get things started. In 2001, jobs in this field comprised over 25% of Idaho's gross state product, and these wages are 92% higher than state average. The Department of Commerce has moved 3 ½ of their full-time people to this new office. Some of this $100,000 will be used for travel funds to meet with other companies.

In the area of bio-tech, some states are spending up to 60 million dollars to attract companies. Idaho can't compete with those kinds of spending, but we have incredible university sources, as well as INEEL, and we will look for a niche.

In response to questions, Mr. Johnson, said The Department of Commerce's code is being folded into the Department of Labor because their code is more complex, due to federal requirements. The only position lost will be that one director's position will be eliminated.


DATE: February 5, 2004
TIME: 1:32
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Bauer, Garrett, Martinez, Ringo, Naccarato


Representatives Crow and Bradford
GUESTS: Karl Malott, Alan Winkle, Dennis Stevenson
MINUTES Representative Ringo moved to approve the minutes for Feb 3 as printed. By voice vote the motion passed.
MOTION Rep. Lake moved for adoption of Rule 59-0103-0301. He commented we asked for the Attorney General's opinion. We got it (See Attachment 1) and he is a happy camper. By voice vote the motion passed.
The Chairman commented that rules are a work in process. Changes are a matter of course from year to year.


DATE: February 5, 2004
TIME: 2:01
MEMBERS: Co-Chairmen Representative Schaefer and Senator Andreason, Co-Vice-Chairmen Representative McKague and Senator Goedde, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato, Senators Cameron, Stegner, Davis, Compton, Noble, Werk, Malepeai
GUESTS See attached sheet
MINUTES Rep. Lake moved the minutes of January 8 and 9 be approved as printed. By voice vote the motion passed.
RS 13862

RS 13860C2

RS 13861C2

Jeff Youtz, Supervisor, Budget & Policy Analysis, LSO, gave a brief review of the three RSs before the Committee. All three of the RSs are concurrent resolutions providing funding for benefit cost increases, and a permanent 2% salary increase for state employees.

RS 13862 does only this.

RS 13860C2 provides, in addition, a temporary 1% salary increase contingent upon revenues exceeding the current year estimates (surplus eliminator) of 5 million dollars.

RS 13861C2 provides, in addition, a temporary 2% salary increase contingent upon revenues exceeding the current year estimate (surplus eliminator) of 5 million dollars (a 1% increase), or up to 2% if the surplus is up to 10 million dollars.

Mr. Youtz pointed out the wording on each RS, state "It is the policy of the State of Idaho to provide a total compensation system that attracts, retains, and recognizes state employees for their valuable service. The foundation of this system is to pay competitive job market average salaries and to reward performance with a merit based compensation philosophy."

Mr. Youtz pointed out that non-general fund agencies will receive the same increases as the general fund agencies.

He said that language states that salary savings are to be used for the people in the agency before operational items. It also states clearly that on-going salary savings should be used for a bonus, or one-time merit awards. Agencies are not to get themselves into budget traps by using temporary salary savings for permanent job expenditures.

If an agency finds a better way to do the work and the savings result in permanent savings, the monies saved can be used for permanent salaries. There are some job classifications that are way behind salaries in the market place. This is not a one-size fits all solution, but it is the best they could do.

Mr. Youtz continued that the Director of Human Resources and the Division of Financial Management are to insure that all state agencies and institutions are following the same rules and make decisions based on the intent of this bill. The effective date is July 1, 2005­that is the date employees would actually start receiving the additional money.

He further clarified that RS 13860C2 doesn't speak to specifics as to whether the money will be paid as a bonus or a one-time merit increase. The 1% temporary increase only kicks in if there is a 5 million surplus. With RS 13861C2, if there is 5 million the 1% kicks in. Anything over that is pro-rated up to 2% or 10 million dollars. The money would come from the current year surplus revenues after the bills are paid.
In response to questions, Mr. Youtz said that each percentage point of our general fund budget is about 20 million. Ten million would be .5%, 5 million would be .25% of the budget. He couldn't predict how the money will turn out. He also said there is no plan to use the surplus funds for any other reason.
MOTION Rep. Bauer moved that we recommend RS 13862 be introduced for printing. Rep. Martinez seconded the motion.
SUBSTITUTE MOTION Rep. Garrett moved that we recommend RS 13860C2 be introduced for printing. Rep. Lake seconded the motion. Rep. Garrett said as a state employee for 21 years she understands the value of state employees to the state. She also understands from personal experience and perspective what it is like during tough budget times. She said our state employees' efforts need to be recognized. Constituents in our districts have lost their jobs, but our state employees are our employees as well as constituents. Year after year we have heard how our employees lag significantly behind market. It is time we make an effort to make up that lag.
AMENDED SUBSTITUTE MOTION Sen. Andreason moved that we recommend RS 13861C2 be introduced for printing. Rep. Naccarato seconded the motion. Sen. Andreason said that the Division of Human Resources estimates the state employees lag by 14.6 percent. Only 16% are at or above policy point. It takes a state employee an average of 19 years to achieve policy point. In the last two years, the Consumer Price Index has increased 6%, but state employees' salaries have not increased at all. Federal, counties, and cities have given salary increases, but not the state. Leadership has strongly advised us not to do anything to jeopardize the budget. This RS will not stop the sunset clause on the sales tax increase from cutting in. Our state employees have been loyal and this is our opportunity to show them our approval without a risk to the budget.
In response to questions, Mr. Youtz said that JFAC (Joint Finance Appropriations Committee) will design the bill following the intent of this resolution if it passes. It wasn't practical to put all the proposed details into these RSs. He said this is an advisory tool, and it can be amended or changed in the House and Senate respective committees if they so wish. He said that JFAC cannot undermine the direction of this resolution.
Sen. Cameron, Co-chair of JFAC, said everybody appreciates the level of commitment of state employees in these last two years. He and his Co-Chair Representative Bell are grateful for employees across the state who gave them suggestions for saving money. Every motion is a positive vote for state employees. We all wish it could be more. We want to attract and keep employees. He was concerned with RS 13861C2. At this point in time, the sales tax increase goes off automatically. The numbers for 2003 "are not pretty." The State needs a substantial carry-over in reserve because of the sales tax increase sunsetting. "We need every dime to balance the budget in 2006." Because of this he said he would support RS 13860C2.
Sen. Davis also spoke in support of RS 13860C2. He said that it is most responsible to keep our eye focused on strong and healthy budget practices. RS 13861C2 is more than Idaho can support.
Sen Andreason spoke again in support of RS 13861C2. He said in order to get state employees up to a level agreed upon in statute would require a 6.8% increase each year over a five-year period. Some employees have received salary increases due to salary savings in their agency; and others, whose agency had no money, received nothing. This is not fair. He closed by saying this is our chance to put our money where our heart is in relation to our state employees.
Rep. McKague said that the people of the state who pay all of our salaries have been left out of this equation. Many of them have lost their jobs with the down-turn in the economy. She said we have all suffered. She said she didn't think this was the time to raise state employees salaries on a fairness issue.

RS 13861C2

On a Roll-call Vote, Amended Substitute Motion RS 13861C2 was defeated. Voting Aye Were Senators Andreason, Werk, and Malepeai, Representatives Trail, Martinez, Ringo, and Naccarato. Voting Nay were Senators Goedde, Cameron, Stegner, Davis, Compton, and Noble, Representatives Schaefer, McKague, Lake, Crow, Bradford, Bauer, and Garrett.

RS 13860C2

On a Roll-call Vote, Substitute Motion RS 13860C2 was passed. Voting Aye were Senators Andreason, Goedde, Cameron, Stegner, Davis, Compton, Werk and Malepeai, Representatives Schaefer, Lake, Trail, Bradford, Garrett, Martinez, Ringo, and Naccarato. Voting Nay were Senator Noble, Representatives McKague, Crow, and Bauer.
Co-Chairman Schaefer commented that "we will go forward from here."
Co Chairman Andreason thanked everyone who has taken a part in this whole process.
Co-Chairman Schaefer said we are not "out of the woods" yet. The Legislature has tried to help with the rise in insurance costs. Some employees have seen raises, others have not. This is a difficult balancing act in an attempt to be fair to all employees. The action taken today is an extremely good effort on the part of this body. He appreciated those who had come, the state employees, the budget employees who have carried the ball, and the Committee.
Co-Chairman Andreason closed with the comment that salary savings are good for those who get it, but in his opinion it is the worst possible criteria for agencies to give raises.


DATE: February 9, 2004
TIME: Representative Schaefer called the meeting to order at 1:35
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: See attached sheet
MINUTES Rep. Bradford moved to accept the minutes of Feb. 5 as written. By voice vote the motion passed
Pending Rule

15.04.01 Sec. 025

Rep. Lake moved to reject Pending Rule 15.04.01, Section 25. Rep. Bradford seconded. By voice vote the motion passed.
RS 13953 Rep. Lake presented RS 13953. This specifies that holiday pay is 8 hours exemption from work for which pay is received. In Committee hearings, it was discovered that holiday pay was not consistent throughout the state. The purpose is to treat everyone equally.
MOTION Rep. Crow moved to introduce RS 13953. By voice vote the motion passed
RS 13952 Rep. Lake presented RS 13952. Ths bill provides for an annual benefit survey. In Committee hearings, it was learned that benefit surveys are only done when the Legislature requests it. This also moves the due date of the salary survey to Dec 1, as well as setting the due date for the benefit survey. Rep. Lake said the Department of Human Resources's report won't be "hanging out there" for two months.
MOTION Rep. McKague moved to introduce RS 13952. By voice vote the motion passed.
HB 545 Rep. Langford presented this bill which is the result of a tragic incident August 23, 2001 on a road construction project on Interstate 15 near Malad and the Idaho border. A water trailer, improperly secured, came loose and struck 8 employees, killing two. Several of the survivors are permanently crippled and disabled. A large truck, with no place for attaching a safety chain, was pulling the water trailer. Pictures presented to the Committee showed equipment and connections that was corroded and covered with cement. The employer, Multiple Concrete Enterprises, is an out-of-state employer. As a result of the accident, OSHA issued a number of "Serious" citations and one "Willful" citation, and fined the company $98,000. The Idaho State Patrol also issued 16 citations. Under Idaho law, that employer cannot be held responsible for monetary damages by the employees. (See attachment 1)
Sen. Ingram spoke in support of this bill. This bill is for those employers who repeatedly violate the rules. Safety pays in a business, he has seen this from personal experience. This bill says that if the employer is irresponsible, the employee can sue the employer. The state is "picking up the tab" for these irresponsible employers.

In response to questions, Sen. Ingram said that "gross negligence" is defined in code and the law is pretty tight. He said they did not meet with the Insurance Commission, but will do so if necessary and are open to amendments to make the bill better. He also said this bill is not talking about a felony, but a "pocket book" issue.

Bill Von Tagen, of the Attorney General's office spoke. He said his office takes no position on this bill. He said "gross negligence" is not defined in statute as far as he knows, but rather in court. It is a fairly high standard. Gross negligence falls between willful negligence and ordinary negligence. When asked for an example, he said closing your fist and hitting someone was willful negligence­one intended to do the action. When asked if "gross negligence' should be defined in law, he said he didn't know if the legislature could do a better job of defining it than the courts have done.
Speaker Newcomb spoke in support of the bill. He said the employer was grossly negligent and that whole families have been damaged by the injury or death of one member. He thought this incident was beyond criminal negligence. He said the law should have been changed before this.
Former Senator Ipson spoke in support of the bill. One of those killed was his nephew. He mentioned that the benefits for the widow are 45% of the average state wage, and an additional 5% for each child for 9 ½ years only, even if the child is not grown.
Jedd Jones, representing his father, Myron Jones, a former representative spoke. For medical reasons his father couldn't come. He read a statement from his father. (Attachment 2). The statement urged the Committee to support the proposed amendment to Idaho Code section 72-209. Myron Jones personally knows many of the people involved in this situation and hopes to prevent others from suffering the "mourning and financial stress this terrible tragedy has caused." He also believed that by removing the "shield of virtual immunity, employers will be motivated to increase efforts to improve and provide safer working conditions." He felt this would not create an unreasonable burden or duty on employers.
John Greenfield, a labor lawyer, spoke. He said the concept looks good at "first blush." However, the 1971 Idaho Workman's Compensation Act was a carefully constructed no-fault system. It was born of necessity in industrialized nations. It was called the great compromise. It was difficult for workers to prove employer's fault. Labor and industry got together and decided this bill. Labor wanted immediate medical care for the injured worker, industry wanted injured workers taken care of without bankrupting the company. Labor gave up "pain and suffering" and full economic loss. Industry gave up finding out who was at fault. With gross negligence, one is asking a jury to award for pain and suffering. One must look at this from beyond one case. "Exclusive remedy" is an important, fundamental part of Workman's Compensation. The system we have in place now, on the whole, shouldn't be tampered with. He is sorry that this Utah employer is allowed to operate in Idaho.

In questioning, he agreed with Bill Von Tagen that a jury has to decide whether the act is so negligent that it rises to the level of gross negligence. He said the idea of Worker's Compensation was to take negligence out of the equation. He said he hasn't found similar laws in any other state.

Mike Williams, who was disabled by the accident, spoke. He said this company cannot work in Oregon and Washington because they can't pass inspections. He said this company sends their new equipment into California, and uses their old equipment in Idaho. He gave examples of individuals driving trucks for this company who did not have a Commercial Driver's License.

In response to questions, he said that other states have higher equipment standards. OSHA told him at the time they would take action, but didn't. He gave examples of unsafe conditions on the site a year later. He said the company has nothing to lose by continuing to act this way, they have no accountability. He said the standards for safety are much lower in Idaho. He was employed by Multiple Concrete, he is now disabled and unemployed. He said IDOT (Idaho Department of Transportation) was inspecting the quality of work.

Chairman Schaefer, commented that the issue is the no-fault system. This law is attempting to change the system. The Committee has been educated in the past on this subject. OSHA isn't a lot of help in these cases. They are good at fining people, but not much else.
Mark Balzer, a health physicist from Oneida County spoke in support of the bill. He has been involved in industry for 25 years, and industrial safety for 8 years. As it is today, an employer "has to hold a gun to an employee's head and pull the trigger before he is held liable." There were many safety issues in this case. The vehicles and equipment did not have the required safety equipment to perform the job. There was no place to attach a safety chain to the truck. The chains on the trailer, lights and brake controls were corroded and non-functional. He referred to the pictures and packet of information. (See attachment 1) Also attached are 31 OSHA violations. ISP found 16 violations. OSHA's report shows no attempt to train employees or maintain equipment. Considering the actions of the employer, this was not an accident. If nothing is done, this type of behavior will continue. Gross negligence is a very high standard.

In questioning, Mr. Balzer said he appreciates the dilemma of changing the no-fault law. In response to the comment that the issue is safety, not workman's compensation, Mr. Balzer said either the employer, or the State of Idaho was negligent. The employees were the victims of one or the other.

In response to further questions, he said the employer was "playing the odds." The employer knew the state was lax in enforcement.

Teresa Molitor, Vice President of Resources for IACI (Idaho Association of Commerce and Industry) spoke in opposition to the bill. She presented a letter to the Committee. (See attachment 3). She said in general, HB 545 is opposed by IACI because "it would turn Workers' Compensation on its head." Discussing safety issues is "muddying the issues."
Lynn Isaacson, of Weiser, spoke in support of the bill. One of the victims was his nephew. He was in construction for 34 years and understands the dilemma. Some contractors think safety decreases the profits. Some are unscrupulous. Idaho State hasn't done anything about contractors like the one discussed, so the courts must provide some remedy. Some of these people will never work again. 9 ½ years of compensation is not enough. What will these victims in their 20s do? He said the situation is heart wrenching.
John Barrett, an attorney, spoke in opposition to the bill. Several years ago, he presented a history of Worker's Compensation to the Committee. He started practicing in 1959 and has worked in personal injury and workers' compensation. He gave a brief history of Workers' Compensation which started in Germany, and then moved to England, and the US. He is aware of no place that has any provision for gross negligence. He said the benefits go up depending upon the average state wage, and the benefits are set by the Legislature.

Mr. Barrett said there are three exceptions to the current no-fault system. 1) If the injury or death is the direct action of the employer. 2) If the employee's injury was caused by himself or his intention to hurt others. 3) If the employee was intoxicated, he gets medical, but not financial benefits.

Mr. Barrett said from 1971 to 1998, there was a statute that provided if an employee did not follow the safety rules or use the provided safety equipment, his compensation was forfeited. After a case, he proposed this section be repealed and it was. He said if this legislation passes, then there will also be legislation that if the employee is grossly negligent, he will receive no benefits. It will be only fair. There will be a flood of civil suits. Also in this case, maybe the insurance carrier could sue the employer for the benefits it had to pay.

In closing he said he has sympathy for the families and individuals who suffered, but this bill is not the solution. The solution is to find a way to police these contractors before they come into Idaho. We need to review the safety issues in place in this state.

In response to questions. Mr. Barrett said death benefits are 45% of the state average wage for 9 ½ years for the surviving spouse. For each additional child, a 10% benefit is added up to 65% of state average wage. If the spouse remarries before the 9 ½ years are up, there is a lump sum payment. At the end of 500 weeks, if there are children who haven't reached the age of 18 the benefits will continue. In the case of personal disability, the income and medical benefits last for a life time.

In response to questions, Mr. Barrett said that damages awarded would fall under last year's tort reform. He said the Exclusive Remedy feature only covers an employer. Third parties could be sued, even the State of Idaho, if it was at fault. He said Idaho's system is one of the simplest and most effective in the United States.

Kirk Corbridge, of Malad, Idaho spoke in support of the bill. He had family and friends involved in the accident. They had a very difficult time getting a lawyer to take the case. He said 12 other states who have faced the same problems have redefined the criteria. The community of Malad felt there had been some serious violations of safety and that the system had failed. This accident has produced a mind set­"It's not my fault, I am not accountable."

OSHA rushed into investigate, and promised action. Six months after the accident, the earliest records became public, he called OSHA and was told it wasn't in "their jurisdiction."

In questioning, he said he did not have the information on the other 12 states, with him, but promised to get it to the Committee.

Rula Thomas, who lost her son in the incident, was unable to complete her testimony, but submitted written testimony. (See Attachment 3) In it she stated that she believes the accident would never have happened if current regulations had been enforced. She also said nothing can undo the past, but she would hope this bill would prevent this tragedy from being repeated in other groups of families and friends.
Phil Barber, an attorney, spoke against the bill. In one period of time, he did a lot of appeals using gross negligence. He said it is very difficult to define or prove. One can find court cases on either side.

He also said that Exclusive Remedy is a fundamental premise nation-wide. If we move to open it up, both sides will use an accusation or defense of gross negligence. It will become hard or expensive to underwrite. If there are problems with OSHA or IDT, they need to be addressed. "This is like a hand grenade in the wrong place."

In questioning, he promised to do more research and get back to the Committee.

Alan Gardner, a Worker's Compensation attorney for 36 years, spoke against the bill. He also serves on the Workers Compensation Committee with Mr. Greenfield and Mr. Barrett. He said it is admirable that a community has rallied around these individuals. However, he feels it is wrong to make a decision to throw out a system because of one tragic event. He said there are a lot of employers that do not have coverage. He said the solution is to look into why this employer was allowed to operate under these circumstances.

He expressed a concern if we interject negligence into this issue, the result will be much more litigation. A plaintiff's attorney would have to sue, or he would be derelict in his duties. Currently, the "delivery system" of benefits is much quicker. If there is contested liability, there is a time lag, which could put the delivery system on hold. If there is gross negligence, the state wouldn't be liable, so they might wait for settlement of a lawsuit. "Sure and certain delivery of benefits" would not happen.

MOTION: Rep. Lake moved to hold HB 545 to time certain two weeks from today. Rep. Trail seconded. By voice vote the motion passed.


DATE: February 13, 2004
TIME: The meeting was called to order at 12:08 by Chairman Schaefer
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Rep. Lake
GUESTS: Rep. Bayer
MINUTES Rep. Garrett moved to approve the minutes of February 9, 2004 as written. By voice vote the motion passed.
RS 14061C1

RS 14048

RS 14075

Rep. Bradford moved to introduce RS 14061C1, RS 14048, and RS 14075 for printing. By voice vote the motion passed.
ADJOURN: 12:15


DATE: February 17, 2004
TIME: Chairman Schaefer called the meeting to order at 2:21.
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
MINUTES Rep. Crow moved to approve the Committee Minutes of Feb. 13 and the CEC (Change in Employee Compensation) Committee Minutes of Feb. 9. By voice vote the motion passed.
GUESTS: See Attached Sheet
HB 638 Rep. Lake presented HB 638 which requires an annual benefit survey in addition to the already required annual salary survey. The due date for this survey report to the Governor is moved from October 1 to December This also gives the Department of Human Resources a chance to provide the Legislature with more "up-to-date" information.
MOTION: Rep. Crow moved to send HB 638 to the floor with a do pass.
Ann Heilman, Director of the Division of Human Resources answered questions. She said they will be able to accomplish the benefit survey with their current resources since they know about the benefit survey "up front." She believes the "product" will be helpful. If something more detailed were to be requested, it might cost more. An additional advantage to the Dec. 1 due date is there is a salary survey of other states that isn't finished until mid October. Now they will be able to include that information in the annual report.
ACTION By voice vote HB 638 was sent to the floor with a do pass.
HB 639 Rep. Lake presented HB 639. He said basically this is a three word change stating that holiday pay is 8 hours exemption from work for which pay is received. The Department of Labor has suggested this may cause a problem with part-time employees. He is agreeable to an amendment to correct that possible problem.

He said there is a problem in that different agencies handle holiday pay in different ways. Some get paid for 8 hours, some get paid for 10 hours. This is an attempt to bring uniformity to the way state employees are treated. It is not right to treat one class of employees different from another.

Lynn Evanson, the Human Resource Employee Relations Manager at the Department of Corrections in Boise spoke, representing himself. (He said the Department of Corrections maintains a neutral policy on this bill.) He said he believes there is fairness now, and this bill would create unfairness. He said that those who work four-ten hour shifts only get 10 days of paid vacation a year, because vacation is earned 8 hours per month (under five years of service). (Eight-hour a day employees get 12 days of vacation leave a year). Receiving ten hours of pay for a holiday, helps to make up for the two less vacation days earned a year.

If someone working a ten-hour shift only received eight hours of pay, those missing two hours would need to be made up to get the same pay check, but it is almost impossible to schedule someone in for two hours. This is especially true in the Department of Corrections. He said this law favors those who work eight-hour shifts over those who work ten-hour shifts. He pointed out that most of the ten-hour shifts are at the direction of the agency, not at the choice of the employee.

Reference was made to a letter received by Dan Charboneau, Director of the Idaho State Police (ISP) opposing the bill. In his letter he said that defining a paid holiday in terms of eight hours would be detrimental to ISP Troopers and others working ten-hour shifts. He said some employees take two hours of vacation to make up for the missing two hours of pay. He said that this bill will adversely affect Trooper morale and cause serious scheduling difficulties.
Ann Heilman, Director of the Division of Human Resources, responded to a request for background and information from the Committee. She said there is "pretty significant inequity" in holiday pay among state employees. Attempts have been made to address this issue, but a consensus cannot be reached, so the proposed rule has been withdrawn before presentation to the Legislature several times. She has looked at other states' laws and has not found a good solution. She therefore supports the eight hour holiday pay.

She said that permission is given in code for people who work ten-hour days to be given ten hours of holiday pay if all members of the agency work ten hour days. However another section of code states that all state employees with the same job classification must receive the same benefits. An administrative assistant at ISP can't legally receive ten hours of vacation pay while an administrative assistant at another agency receives only eight hours of pay for a holiday.

Part-time employees are usually covered by rules, not code, she said, so she doesn't see a need for an amendment covering part-time employees.

She also said that taking two hours of vacation to fill out to the ten hours of pay is done. Troopers could receive 10 hours of pay for a holiday as they are in a classification by themselves, but not the administrative assistants who work at ISP.

Bob Wells, representing the Idaho State Police Association, spoke. He presented a proposed amendment to the bill. In response to questions, he agreed that with his amendment, those working four-ten hour shifts would get 100 hours of holiday pay a year, and those working eight hour days would receive 80 hours of holiday pay.
MOTION Rep. Naccarato moved to hold HB 639 for two Legislative Days, until Thursday, February 19, 2004.
Steve Kenyon, an attorney for the State Controller's office spoke. He said they need a solution in code. What is happening now does not work. They did a survey of all the state employees. Vacation pay varied from 80 to 144 hours of holiday pay a year. Some employees are scheduled to work 18 hours, so they receive 18 hours of pay. All employees must be treated the same. The Controller's Office won't take a position whether holiday pay is 8 hours or the scheduled shift. The Connecticut Supreme Court ruled on a similar issue a few weeks ago. Because it wasn't in code, the court said that whatever was scheduled during the 24-hour period of the holiday was the number of hours the employee should be paid for. Only holiday pay is counted by the day. Vacation and sick leave is accrued by the hour. Making holiday pay a number of hours, will make it consistent across the board for all state employees. He closed by saying this bill "needs to be done."

When questioned, he said the holiday pay currently varies from state agency to state agency for the same job classification. State employees are unhappy that some are getting 120 hours, or more, paid holiday time a year, while other get only 80. They prefer the language stating the "regularly scheduled shift" or "8 hours." The term that they be paid "as if they actually planned to work" is not good enough. The problem is that some agencies work varying shifts, so what would have been the actually scheduled shift that day is an unknown.

ACTION By voice vote the motion passed to hold HB 639 for two Legislative Days.
ADJOURN: The meeting was adjourned at 3:27


DATE: February 19, 2004
TIME: Chairman Schaefer called the meeting to order at 1:32.
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Garrett, Martinez, Ringo, Naccarato


Representative Bauer
GUESTS: See attached sheet
Chairman Schaefer introduced our page for the second part of the session, Arielle Gorin. She is from Eagle and is home schooled.
MINUTES Rep. Ringo moved to approve the minutes as printed. By voice vote, the motion passed.
HB 639 Rep. Lake presented HB 639. (It had been held for a time certain until today.) This bill defines holiday pay as 8 hours of pay. The amendment proposed at the last meeting was rejected. The Department of Labor and Ann Heilman said part-time employees can be handled in rules as has been done in the past.

Ann Heilman, Director of the Department of Human Resources confirmed that indeed rules can handle part-time employees, and that other sections of code have been clarified by rule that dealt with part-time employees.

MOTION Rep. Bradford moved to send HB 639 to the floor with a do pass.
Rep. Naccarato said he has struggled with this issue and is still struggling.
SUBSTITUTE MOTION Rep. Ringo offered a substitute motion to hold the bill for further discussion.
Rep. Lake said we have struggled with this issue for three years. We are a policy-making body, and it is time to "cross the bridge." There is no justification for treating employees differently, regardless of the type of work they do, or the hours they work.

Chairman Schaefer said he was comfortable trying this change.

ACTION By voice vote, the substitute motion failed.
ACTION By a roll call vote of 6 to 4, HB 639 was sent to the floor with a do pass. Those voting Aye were Reps. Schaefer, McKague, Lake, Crow, Bradford, and Garrett. Those voting Nay were Reps. Trail, Martinez, Ringo, and Naccarato.
HCR 46 Rep. Lake moved that we send HCR 46 to the floor with a do pass. He commented that we have dealt with this issue a number of times and he saw no reason for further discussion.
ACTION By voice vote, the Committee voted to send HCR 46 to the floor with a do pass.
HCR 47 Rep. Garrett presented HCR 47. She said this is the legislation to implement the CEC (Change in Employee Compensation) Committee's recommendation that we voted on a few weeks ago.

Rep. Garrett stated that she was a state employee for 21 years in another state. She saw the good times and the bad times, as all states have them. From her experience she understands the value of state employees in carrying out our state missions. She said that she understands that in tough times benefits are diminished and work load increases. She said our state employees have been with us every step of the way.

The CEC Committee felt, in addition to the 2% Governor's pay increase, the state employees should be granted a 1% increase, dependent upon sufficient revenues being received. Although others in our state have had a difficult time financially, Rep. Garrett said that state employees are "our employees" and "we need to do the best we can for them."

Rep. Garrett pointed out that page 2 of the resolution gives direction as to how the Legislature would like to see the agencies carry out their salary savings. One time salary savings should be used for one-time bonuses. Long term savings should be applied to those groups with significant market pay lag. She said the Committee hopes to work towards making up some areas where current pay lags considerably behind the market.

In response to questions, Rep. Garret said that by statute, pay raises must be based on merit. Not all positions lag behind market as significantly as others. Some employees have to quit to get rehired at a higher salary. By law, the Division of Human Resources and Financial Management has oversight as to how the money is disbursed.

In response to other comments, Chairman Schaefer said that he and Rep. Garrett were concerned that the pay increases would go mostly to the top levels of management. In order to prevent this, direction has been given to the Division of Human Resources to insure this doesn't happen.

In response to further comments, Rep. Garrett said that it was the general consensus that this was the most state employees could be given in a bill that still had a chance to pass.

MOTION Rep. Trail moved to send HCR 47 to the floor with a do pass.
Chairman Schaefer commented that the two terms to describe this legislation are "doable" and "consensus."
ACTION By voice vote, the Committee voted to send HCR 47 to the floor with a do pass. Rep. McKague voted Nay.
HB 699 Rep. Bayer presented HB 699. This bill allows people working in the research field for a university, college, community college or professional-technical center in a research position funded by federal or private grant funds to be fully vested in PERSI at 5 months of service. Elected officials are vested after five months. He said employees under these grants sometimes have to participate in PERSI while working, but they aren't around long enough to become vested. Some people have to leave their chosen fields in order to get vested. The matching contributions for the employers part go into PERSI and stay there. When the employee's job ends, he or she only gets the money personally contributed, not the matching funds. Federal and private grant monies are then funding PERSI.

In questioning, Rep. Bayer said that the main problem is with the University of Idaho. Employees are "classified" and so their involvement in PERSI is mandated. Some colleges and universities in the state give this type of employee the opportunity to use an ORP (Optional Retirement Plan), like a 401K.

In further questioning, Rep. Bayer said that the original plan was to take these employees out of PERSI, but it was going to take too long to get the consensus necessary to pass a bill this year. He hopes that will be done in the future, but this bill will help those currently being paid by grants and in PERSI.

Alan Winkle, Director of PERSI, spoke. He said the Legislature is the "plan sponsor" of the PERSI plan. Those who can be vested in 5 months under current law are elected officials and those working for elected officials. These people are not classified or on the merit system for pay raises. As it is now, some of these people on grants could be in a classified position or on the merit system.

Secondly, Mr. Winkle said that vesting does not improve the value of the benefit; it simply gives individuals the benefit of a life-time annuity once they reach the minimum age. He said if people invested the money returned to them by PERSI, they could very well get a higher return. If they are rehired, they can return the money and buy back the years of service. Continuity is provided that way.

Mr. Winkle gave the example of someone having $2,000 in the system and being vested. At age 65, this person would receive a monthly check of about $6.56 as long as one lived.

If people quit or are "cashed out", they only get what they put in, plus interest. They do not get the employer's part of the contribution.

Rep. Bayer responded to questions as to how many individuals might be affected. He said the number is very small, "only a handful."

When asked to respond to the same questions, Alan Winkle said he doesn't know. That is part of the problem. There is no classification for grant money researchers. It would take a case by case study to decide if an employee was vested. This is "uncharted ground" as far as he knows. He said PERSI knows who contributes, but not who pays the salaries­the grant or the university.

Mr. Winkle also said that there are people at Health & Welfare and the Labor Department who are paid from federal funds. They would not be covered under this bill. He said this bill could be a "slippery slope" at this time.

Jane Buser, Human Resources Director for BSU, spoke. She said that at Boise State, research assistants and those like them are in an optional program.

Ms. Buser said she was also speaking for her colleague who is the Human Resources Director at the U of I. Their employees are not under the Department of Human Resources control. She said there are 150 employees this bill might affect. It would take a great amount of research to determine who is vested and who isn't. They do not have the highly skilled and complicated system that would be required to figure this out. Records are not kept after three years, so this adds to the problem.

Ms. Buser said it would be better to handle this situation administratively rather than through legislation.

MOTION Rep Trail moved that we send HR 699 to the floor with a do pass.
SUBSTITUTE MOTION Rep. Lake offered a substitute motion to hold HB 699 in Committee.
ACTION By voice vote, the substitute motion to hold HB 699 in Committee passed.
ADJOURN: The meeting was adjourned at 2:37


DATE: February 23, 2004
TIME: Chairman Schaefer called the meeting to order at 3:04.
PLACE: Room 416.
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: See attached sheet
MINUTES Rep. Ringo moved to approve the minutes of February 19. By voice vote the motion passed.
Chairman Schaefer referred to a letter he had written to Ann Heilman, Director of the Division of Human Resources requesting information for next year. He said it should help the Committee do its job. Copies were given to each representative. (See Attachment A)
S 1226 Dwight Johnson, Administrator of Public Affairs Division, of the Idaho Department of Labor, presented S 1226. This bill came from an interim committee made up of members from industry, labor, and the Legislature, among others. He explained that the first three sections were housekeeping items, putting back an inadvertent deletion that had occurred in 1998, adding wording to distinguish between Idaho and federal trust funds, and clarifying details about federal appropriations. (See Attachment B)

The main point issue of this legislation is SUTA (State Unemployment Tax Act) Dumping. An employer's "experience rating" determines his unemployment insurance rate tax. If an employer has paid more taxes to the Unemployment Fund than has been drawn by former employees, he has a positive number. If he has paid less than has been drawn, he has a negative number.

In order to get a better rate, businesses are transferring employees from one entity with a bad rate to another with a better rate. Under current law, this is legal in Idaho and in most states. Four cases in Idaho have cost the trust fund over $400,000. It is costing billions of dollars nationally. Federal legislation is pending to outlaw this, but the federal government wants the states to stop this practice now. There is an emergency clause to put it into effect as soon as possible.

To answer questions, Mark Whitworth, Employer Account Specialists, spoke. He said the last paragraph of the bill is new language to "pull all of this together."

MOTION Rep. Trail moved to send S 1226 to the floor with a do pass. By voice vote, the motion passed.
HB 545 HB 545 was held from February 9 for time certain February 23.

Chairman Schaefer asked Rep. Lake if he had received certain information since February 9. Rep. Lake said no.

not received any information that convinced him other states had allowed for this type of action.

Rep. Langford presented her closing comments. To give a clear definition of gross negligence, she presented a handout from the Deputy Attorney General giving examples of gross negligence as defined in Idaho Supreme Court decisions. (See Attachment 1)

To show there have been other such incidents in Idaho, she presented handouts and mentioned accidents in Inkham and Soda Springs where there were fatalities. (See Attachment 2a & 2b) There were serious OSHA violations and Idaho violations at each site. She mentioned one other where an employee suffered brain damage when he was asked to clean a tank with cyanide gas in it.

Rep. Langford stated that the accident in Malad was unique in that two died and six were injured.

Her third handout (See Attachment 3a and 3b) gave examples in which employees were allowed to recover damages from the employer. Although the term "gross negligence" wasn't used in these particular cases, except for the one in Texas, she said the Idaho Supreme Court definition of "gross negligence" would fit in these cases. Attachment 3a, from the Idaho Attorney General, was a listing of the out-of-state cases and did not contain an opinion. However, Rep. Langford said that the case in Texas was the best example of the use of the term "gross negligence". Details of the case in New Mexico were presented in Attachment 3c.

Rep. Langford asked if Idaho needed more strict rules. To answer, she presented a handout of an Idaho Transportation Document concerning the contract with Multiple Concrete Enterprises, the firm responsible for the incident in Malad. She said this demonstrates, that the rules are there, but are not enforced. (See Attachment 4)

She closed with statement that current rules encourage some firms to be lax in safety issues as they know they can't be sued. She said that only those would vote against the bill who were comfortable leaving a widow with two children to raise on only $1000 a month for the next ten years, or an employee so ill he was unable to stay until his turn to testify February 9, or one left with one leg shorter than the other. She said both injured employees who testified will live with the terrible consequences of their injuries the rest of their lives.

Rep. Langford said adding "gross negligence won't lead to a flood of law suits. She asked the Committee to send HB 545 to the floor with a do pass.

In answer to questions from the Committee, Rep. Langford said that when there isn't adequate money, there aren't adequate inspections.

MOTION Rep. Trail moved to send HB 545 to the floor with a do pass.
SUBSTITUTE MOTION Rep. Lake said he was reluctant to turn three-fourths of a century of workers compensation law upside down. Rep. Lake moved to hold HB 545 in Committee.
ACTION By voice vote, the Substitute Motion to hold HB 545 in Committee passed, with Reps. Trail and Bradford voting nay.
Chairman Schaefer said he was very disappointed in the telephone response he received from the Idaho Department of Transportation. The Department only claimed responsibility for inspecting large items, not small things such as checking that the safety chain was attached every time a truck pulled a trailer.
HB 726 Rep. Harwood presented HB 726. He referred to a situation that came up in his district. Both the husband and wife were employed in Idaho schools and retired with a pension. At the time of retirement, the spouse was made the contingent annuitant of the policy for both of them. Subsequently, they divorced. Although the court decreed as part of its settlement that they each take their own retirement, they discovered this was impossible. At the time of retirement, the contingent annuitant is "set it stone."

Rep. Harwood said this bill allows the rights to be waived during a divorce with a court decree only if specific requirements are met, including specific directions in a court decree, and proper identification of those involved, along with a signed waiver.

There was one mistake in the bill. On page 5, Line 18, "under option 4" was inadvertently crossed out. An amendment restoring that phrase needs to be added to this bill.

In response to questions, Rep. Harwood guessed this might have affected 40 couples in the past. How many this would affect in the future is unknown, but probably only a few.

Allan Winkle, Director of Idaho PERSI, answered questions. In the case of a retiree who gets divorced, this bill allows the spouse--if he or she is the contingent annuitant­to waive his or her rights. This will affect the amount the retiree receives, in that the payment goes to the amount of the regular retirement pay once the spouse is no longer the contingent annuitant. Should the retiree remarry, a new contingent annuitant may be added, and the monthly payments would be recalculated.

MOTION Rep. Martinez moved to send HB 726 to the Amending Order to correct the cross-out. By voice vote the motion passed.
SCR 124 Sen. Goedde presented SCR 124. The Senate Commerce and Human Resources Committee rejected all the rules from the Division of Human Resources. This resolution is the result of that vote.
MOTION Rep Garrett moved to hold SCR 124 in Committee. She said much work had been done by the Division of Human Resources. With the letter written by Chairman Schaefer to help monitor the process, she felt this bill was unnecessary.
ACTION By voice vote the motion to hold SCR 124 in Committee passed, with Reps. Trail, Naccarato, Ringo and Martinez voting nay.
ADJOURN: The meeting was adjourned at 4:20


DATE: February 25, 2004
TIME: 2:53
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Representative Trail
GUESTS: Diana Jansen, Dona VanTrease, Amanda Brown, & Vicki Patterson
MINUTES: Rep. Crow moved to approve the minutes of February 23 as printed. By voice vote, the motion passed.
S 1276: Rep. Crow moved to send S 1276 to the Business Committee. By voice vote, the motion passed.
H 595 Rep. Ringo presented H 595. She said this legislation deals with the Rules from the Division of Human Resources, which our Committee approved and the Senate Committee rejected. Rep. Ringo said that this bill provides an opportunity for direct communication between employees and employers throughout the various agencies of the state. She commended the efforts of Ms. Heilman in writing the rules this year. However, she said a consensus is needed. A number of employees and supervisors have concerns they felt were not addressed. Some were not given a reasonable opportunity for input.

Rep. Ringo was asked why there is no fiscal impact to the general fund. She said the people taking part in this new committee would be donating their time. In response to further comments, she said it is not her intent to redo the entire set of rules, but to continue a process enabling Ms. Heilman and her representatives to hear from public employees as to how the rules are working out and the further changes that need to be made.

Amanda Brown, of the SEIU (Service Employees International Union), spoke in favor of the bill. She said her union represents 800 city, county and state employees. There were 55 pages of rules, a huge amount, and enough time was not given to these rules. She said Legislative Services expressed concern over some of these rules. She didn't know if this information was widely distributed.

In response to questions, Ms. Brown said the vast majority of the union's members are state employees. She said more responded by e-mail than attended hearings on the rules, but she didn't have the numbers.

Vicki Patterson, representing the Idaho Public Employees Association (IPEA), spoke in favor of the bill. She said she had the same concerns as Ms. Brown. A lot of the employees couldn't get to the hearings. Some attended the hearings, but nothing changed in the rules. Many problems were still unresolved. She felt that the committee to be created by this bill could do a better job of following-up. She said she believed that there were other individuals who, although not listed in the bill, should be part of the new committee. She said these rules affected every one of the state's 19,000 employees. She said this is, in effect, a problem solving committee for the problems that arise from these rules. She closed with the statement that these are people and individuals, not an industry.
At Chairman Schaefer's request, Ann Heilman, Director of the Division of Human Resources, spoke. She gave a review of the thorough process her Division used in formulating the rules. In June, a rough draft was sent to 220 individuals. On July 14, an open letter was sent to all agency directors describing the informal comment period that followed. IDPA and SEIU were asked to notify their members. On September 10, a summary showing the changes in a question and answer format was put on the web. October 1, the rules went into the formal process. The Division then held 24 hearings, 17 of which were open to the public. (Some were held in a specific agency.) Meetings were rather sparsely attended, which did give those that attended the opportunity for a lot of dialogue and explanation. These sessions qualified as negotiated rule making. Meeting were held at various times of the day, including two in the evening.

When asked about the next step, Ms. Heilman said that her Division will make temporary rules to take care of any laws passed during this session. The rules are a reflection of a continuing process. She has a task force to study performance evaluations, and do a random check to see if the system is working.

She said this process was very expensive in money and time. The Division of Human Resources tried to get the employees involved, but some agencies and managers did not encourage participation. She said she doesn't know if she would do this again because of the cost, and the complaints that surfaced afterwards.

Chairman Schaefer said he was impressed by the lengths to which Ms. Heilman went. He said he had never encountered this degree of effort by an agency before.
MOTION Rep. Martinez moved to send H 595 to the floor with a do pass. He said Ms. Heilman did a great deal of work, but some agencies did block the access for their employees. He said he felt it would be difficult for this new committee, but good would come out of it over the years.


Rep. Crow made a substitute motion to hold H 595 in Committee. She said every effort was made for access. She said "one can micro-manage to the end of time, and not every single soul will feel heard." She said Ms. Heilman went the extra mile, yet some are still unhappy.
Rep. Ringo thanked the Committee and the Chairman for hearing the bill and giving her and employee representatives a chance to discuss it. She said she was not here to criticize the process. She said this new

committee would make the rules a work-in-process and allow for a follow-up.

ACTION By roll call vote, the substitute motion to hold H 595 in Committee passed. Reps. Schaefer, McKague, Lake, Crow, Bradford, Bauer, and Garrett voted Aye. Reps. Martinez, Ringo, and Naccarato voted Nay.
Chairman Schaefer commented that he does not feel it is appropriate to sit on a bill. He thinks we are the Committee to hear the rules and doesn't want to turn this over to someone else. He said he was impressed by the lengths the Human Resources Director has taken to involve the state employees.
ADJOURN: The meeting was adjourned at 3:25


DATE: March 1, 2004
TIME: Chairman Schaefer called the meeting to order at 2:47
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato. Representative Bennett (substituting for Representative Trail)


Representative Crow
GUESTS: See attached Sheet
Chairman Schaefer called the meeting to order at 2:47. He introduced Dr. Bennett, former Dean of the College of Mines, and then College of Science at U of I. Dr. Bennett said he was the State Geologist for many years. He will be taking Representative Trail's place for a few days.
Stephanie Camarillo, Head of International Trade for the Department of Commerce, introduced Roger Madsen, the Director of the newly combined Departments of Commerce and Labor. She also introduced the four speakers as they made their presentations.

Director Madsen spoke briefly about the important service performed for Idaho by the trade offices in other countries. He said there are cultural barriers as well as language barriers, and these offices help various Idaho parties communicate with their Chinese counterparts. (See Attachment A)

Eddie Yen, of the Idaho-Asia Trade Office in Taipei, Taiwan, said last year was successful, in spite of the serious SARS "incident" last spring. He said that he had been asked about television reports showing problems in Taiwan, but he assured the Committee that this is just the election process, and things will go back to normal once the election is over.

Mr. Yen spoke about various Idaho products that are being exported to Taiwan. He said Idaho wines from Ste Chapelle and Sawtooth wineries have been successfully exported to Taiwan. His office produced a book on Idaho wines in simple Chinese, and then printed an English version. "Fries," made of corn by Simplot, have also sold well in his country. He said a lot of peaches, cherries and apples are shipped to Taiwan from Idaho. Boise Cascade is also exporting building supplies to Taiwan and China. (See Attachment 1 for more details)

Mr. Yen said that in a fire, more people are killed by smoke than by the actual fire. A company in Idaho is one of the few in the world with a process that reduces smoke. This Idaho company has sold its product to Japan and Australia.

Mr. Yen's office worked with a local Chinese/English radio station to do a one week promotion of Idaho. The program featured a live 20 minute interview with someone from a different sector of Idaho on each day. He played a recording of a promotion ad that had played before the "Idaho Week."

In closing, he said that Taiwan is Idaho's fifth largest trading partner.

Armando Orellana, of the Idaho-Mexico Trade Office in Guadalajara, Mexico, spoke. He said that not as much was exported to Mexico last year because of the general down turn in the economy. He said that Governor Kempthorne's trade mission to Mexico was very successful. The Governor took 60 people representing 20 organizations, as well government officials. As a result of this mission, AMX International has potential sales of $80 million in software and services, Magic Miles of Meridian estimates new orders of about $500,000 with 10-15 new potential jobs, and wheat sales were $2.3 million (600,000 bushels).

His office is working to sell Idaho's superior bean seed to Mexico so farmers can have better yields on this staple food item. There is also a potential market for Idaho's agriculture machinery in Mexico. (See Attachment 2 for more details.)

The Trade Office continued to assist all major Idaho Colleges and Universities to enhance student awareness of the international market. In addition, there were two interns working in Mr. Orellana's office for 3 months, who were a great deal of help.

As a result of Governor Kempthorne's mission, the Governor of Jalisco said he is interested in a return visit to Idaho.

Mr. Orellana said his office assisted 84 Idaho companies last year in a variety of ways­market intelligence, translation, etc. They have produced a brochure on Idaho tourism written in Spanish which has been very well received. Many other states do not have literature translated into Spanish for tourism and commerce.

General Woo-Joo Chang, of the Idaho-Korea Representative Office in Seoul, Korea, spoke. He works part-time in this position. He said Korea is sending more students to Idaho universities. He said Idaho makes the best honey in the world, but it is difficult to export to Korea because of the high tariff. Now they make it into a powder so it is easier to export. He is happy to see the free trade agreement between Chile and Korea that was signed last month. He said that many Korean economic commentators believe that type of agreement is coming between the US and Korea.

General Chang said that as Korea is becoming more industrialized, there is more competition between the two countries. He mentioned Micron as an example. He introduced a gentlemen on his team who had worked for Samsung for 25 years.

General Chang said the US Department of Commerce gave him a citation last year for 15 years of supporting Idaho commerce in Korea. He said he will continue to help Idaho business in the future. He introduced Mr, Lee, whom he referred to as "young blood," and whom he has hired to help in this mission. He said Mr. Lee speaks excellent English and has a degree in mechanical engineering and management as well as financial experience.

General Chang's office promotes Idaho where ever they can. He mentioned ads promoting Idaho industries that are posted in a long corridor in the Korea World Trade Center which is visited by 200,000 people every day.

Dr. Cao Guoli, of the Idaho-Shanghai Representative Office in Shanghai, China, spoke. He said he was excited to be here and report on the general Chinese market, and in particular the market in Shanghai. He said that China's economy had a "big jump" last year. The Gross National Product was $1.4 trillion. The GDP increase was 9.1%­the highest since 1997. China is the third largest trade country in the world. Last year, China was seriously impacted by SARS, and was also impacted by the Iraq war to some extent. Despite this, China produced $3.9 billion worth of goods for the US last year, a 32.3% increase. The US is its third largest trading partner. (See Attachment 3 for more details.)

Dr. Guoli said that more and more Idaho companies are doing business in China. His office helps identify the most promising areas. He said Micron and Simplot are expanding their facilities in China. He said a 2003 promotion for Idaho products in China went very well. They want to help small and medium sized Idaho companies to do business in China. They are also helping Idaho's environmental and high tech companies do business in China.

When asked how much China buys from the US, Dr. Guoli said there is a $60 billion trade deficit between the US and China. He said China makes low-tech products. This helps improve the quality of life for Americans on limited budgets. He said the profit from a lot of these items comes to the US. He referred to a computer mouse made by Logitech that sells for $40 in the US. Only $3 is left in China, the remaining $37 is divided among American companies.

Roger Madsen thanked the Committee members for their time, and promised to be back next year with another good report.


DATE: March 9, 2004
TIME: 2:45
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: See attached sheet
MINUTES Rep. Crow moved to accept the minutes of March 25. By voice vote, the motion passed.
MINUTES Rep. Bauer moved to accept the minutes of March 1. By voice vote, the motion passed.
S 1282 Steve Kenyon, from the State Controller's Office, presented S 1282. This bill allows the head of an agency, division, or bureau to accumulate comp time up to 240 hours. Employees in this class are not allowed to work overtime. If they report more than 40 hours in a two-week period, those hours are dropped when it comes to figuring pay. If they work less than 40 hours in the next two week period, they have to take vacation time to get full pay. In reality, these executives keep a time sheet or ledger on the side. This bill will promote accurate time reporting by these employees and allow the Controller's Office to know the actual hours these executives are working. This lack of provision for comp time is the only section of Idaho code that deviates from the Fair Labor Standards Act.

In response to questions, Mr. Kenyon said that all employees accumulate vacation and sick leave on an hourly basis. Vacation time is capped, depending upon the time worked for the state. Sick leave has an unlimited accumulation.

In response to further questions, Mr. Kenyon said the Controller's Office has received only positive comments about this change, which may affect 1000 employees state wide. He also said that no one covered by this bill qualifies for overtime pay, so no one is losing overtime pay.

MOTION Rep. Lake moved to send S 1282 to the floor with a do pass. By voice vote, the motion passed. Rep. Edmunson will carry the bill.
S 1256 Alan Winkle, Executive Director of PERSI, presented S 1256. Some employees qualify under two state retirement programs as they work two jobs. Some colleges and universities have their own program (OPR­Optional Retirement Programs), and employees may qualify under both OPRs and PERSI. This bill amends the PERSI section of code to clarify that those covered under an OPR cannot add their time under that program to their PERSI time. This bill separates retirement programs and lets the employee chose which retirement program they will use.
MOTION Rep. Martinez moved to send S 1256 to the floor with a do pass. By voice vote, the motion passed. Rep. Martinez will carry the bill.
S 1257 Alan Winkle, Executive Director of PERSI, presented S 1257. Ocassionally, PERSI has had cases where an unmarried individual retires and lists, for instance, a sibling as beneficiary. If the retiree marries, but neglects to change the beneficiary listing, the one receiving the benefits may choose to waive the benefit so the spouse may have it. This bill says that if the death benefit is waived by the beneficiary, the same process for descent and distribution is used as if there were no beneficiary named. This situation arises only every 3 or 4 years, but is very contentious when it does happen.
MOTION Rep. Lake moved to send S 1257 to the floor with a do pass. By voice vote, the motion passed. Rep. Bauer will carry the bill.
S1258 Alan Winkle, Executive Director of PERSI, presented S 1258. Since 1980, new firefighters have joined PERSI. Those employed before that date stayed in the Firefighters Retirement Fund (FRF), while the new employees joined PERSI. It has been difficult to determine the benefits for FRF, as instructions are to use the salary paid current firefighters as the basis for benefits, rather than the salary earned. Pay periods vary; some are every two weeks, some are twice a month, some may be monthly. Some pay is delayed two weeks, some half a month, and some a month. This bill changes the basis to salary earned, which is tied to the number of hours worked in that time period. This will simplify the calculations. In addition, the calculations will be based on the July 1 to June 30 year, the state's financial year, rather than the current September 1 to August 31 year. There is a clause on the last page of the bill that allows an adaptation of figures for the cross-over year.

In response to questions, Mr. Winkle said that there will be no change in benefits for the retirees. He also commented that many firefighters are still working even though their benefits have been capped at 25 years.

MOTION Rep. Naccarato moved to send S 1258 to the floor with a do pass. By voice vote, the motion passed. Rep. Naccarato will carry the bill.
S 1259 Alan Winkle, Executive Director of PERSI, presented S 1259. This bill deals with the reporting of Social Security numbers. New federal legislation limits the use of Social Security numbers in an effort to protect citizens' information, because of the rise in identity theft. This bill removes the requirement that Social Security numbers be provided in public divorce proceedings.
MOTION Rep. Bauer moved to send S 1259 to the floor with a do pass. By voice vote, the motion passed. Rep. Trail will carry the bill.


DATE: March 19, 2004
TIME: 11:56
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake, Bradford, Garrett, Martinez, Ringo,


Representatives Trail, Crow, Bauer, Naccarato
GUESTS: Alan Winkle
MINUTES Rep. Ringo moved to approve the minutes of March 9. By voice vote, the motion passed.
S 1156: Alan Winkle presented S 1146. At the Governor's request, an examination of the PERSI rules was done checking the application to National Guard members serving overseas. It was discovered that to qualify for PERSI, a member had to have active membership before and after duty. Should a soldier be killed, active membership after service would not be possible. Therefore, death benefits would not be paid to the family. S 1446 resolves this iinequity.
MOTION: Rep. Martinez moved to send S 1146 to the floor with a do pass. By voice vote, the motion passed. Chairman Schaefer will carry the bill.
Chairman Schaefer thanked the members for their work, and said this would be the last meeting of the session.
ADJOURN: The meeting was adjourned at 12:00