Some senators say a sick leave provision in a tentative labor contract could cost the state as much as $24 million - nearly the cost of a dozen new state labor contracts combined.
Department of Administration Commissioner Bob Poe, however, said that expense is extremely unlikely. ``History hasn't shown that,'' he said.
Questions about the sick leave change came up as the Senate Finance Committee held its first hearing on the labor contracts Thursday.
The Legislature will have to approve funding for the agreements. The administration has said the three-year contracts with 12 separate unions will cost almost $25 million this year. About $13.8 million of that comes from the state's general fund, with federal funds and other sources paying the rest.
Senators fired dozens of questions at Poe as he gave an overview of the contracts. But probably the single area getting the most attention was a change in the Alaska State Employees Association contract.
The change lets about 7,400 ASEA employees convert half of their sick leave to personal leave, which can then be cashed out. Currently, sick leave has no cash value if it isn't used.
Poe said if everyone eligible cashed out all their available sick leave at once the cost could be $24 million.
``I was surprised at the financial liability of the sick leave buyout,'' Sen. Tim Kelly, an Anchorage Republican, said after the meeting. ``It was a real eye-popper.''
But Poe said there's no reason to believe there will be that kind of ``run on the bank'' when the conversion takes place. Other unions have gone through similar leave conversions without dramatic impacts, he said.
``This is the only bargaining unit left that hasn't made this change,'' he said.
The sick leave liability was not included in the administration's estimate of the contract's costs.
The administration has a $10 million reserve account to cover leave cash-out. The account is continually being replenished. The money to replenish that is part of the personal services budget for each department, he said.
Some union members, such as lower-paid single moms with kids, will want to keep the leave for illnesses, Poe said.
In considering the cost of the contract provision, he said, one also needs to consider the abuse of sick leave that occurs now when it has no cash value.
``You also have to factor in the savings you get, the increase in productive work hours by attaching a value to that leave,'' he said.
ASEA is the largest of the state employee unions and includes workers ranging from clerks to doctors. About 2,000 members work in Juneau.
The labor contracts will receive more scrutiny before the session ends. Sean Parnell, an Anchorage Republican who co-chairs the Senate Finance Committee, said he plans to hold additional hearings on the contracts.
The Senate has also hired an Anchorage law firm, Kemppel, Huffman and Ellis, to analyze them in detail. Kelly, the Senate Rules Committee chairman, said the firm has a $24,000 contract to provide the Legislature with a report, due within a couple of weeks. If needed, another $26,000 is available for the firm to do more work.
Legislators said it's too soon to say what action they'll take on the contracts.
``We were just beginning to ask questions and understand them'' in Thursday's hearing, said Senate President Drue Pearce, an Anchorage Republican.
Contracts with all 12 unions contain the same basic provisions: a $1,200 one-time bonus the first year, a 2 percent raise in base pay the second year, and a 3 percent raise in base pay the third year.
The ASEA membership has already voted to authorize its executive board to call a strike if the Legislature refuses to fund the contracts.
``I would like to avoid a state employee strike if possible,'' Kelly said Thursday. ``From my point of view the first step along that path is to find out exactly what's in these contracts, and that's what we're doing now.''
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