Legislature(2021 - 2022)SENATE FINANCE 532
05/05/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB27 | |
| HB169 | |
| Presentation: Omb May 3, 2021 Amendments Op/cap/sup | |
| SB49 || SB51 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 169 | TELECONFERENCED | |
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 27 | TELECONFERENCED | |
| += | SB 49 | TELECONFERENCED | |
| += | SB 51 | TELECONFERENCED | |
HOUSE BILL NO. 169 am
"An Act making appropriations for public education and
transportation of students; and providing for an
effective date."
9:18:07 AM
Co-Chair Stedman asked the sponsor to address the
committee.
9:18:34 AM
REPRESENTATIVE DAN ORTIZ, SPONSOR, explained that HB 169
was an appropriation bill for the foundation formula and
pupil transportation for 2022 and 2023. The bill was a
separate appropriation bill from the regular operating
budget, in order to pass funding for education early in the
session for FY 22 and provide forward-funding for FY 23. He
referenced the long legislative history of the members, and
thought they were familiar with the ongoing problem of
delayed funding for school districts. He described the
challenge of school districts that often had to send out
layoff notices to teachers because of uncertainty with
funding levels and the need to comply with contracts. He
recalled receiving such a notice early in his own teaching
career.
Representative Ortiz continued his opening remarks. He
asserted that HB 169 reflected an attempt to help alleviate
the problem as described. He identified that education and
student success was a high priority for the legislature and
the state. He asserted that HB 169 reflected the
legislature's commitment to education, students, and
teachers and would help alleviate one issue related to the
growing problem of not being able to retain teachers.
Senator Wielechowski thanked the sponsor for bringing the
bill forward, which he thought was a huge step forward in
the way education was funded. He hoped the state would
engage in the method more often. He asked if the sponsor
knew when layoff notices were sent to teachers in the
state.
Representative Ortiz thought that the layoff date varied
around the state. He thought some districts began layoffs
in the middle of April, and others at a later time
depending upon the budget cycle of the district. He
understood that the Juneau School District had an earlier
layoff date.
9:23:12 AM
Co-Chair Stedman asked if the sponsor could recall if the
legislature had ever lowered the Base Student Allocation
(BSA) amount and asked if the bill contained the targeted
BSA amount.
Representative Ortiz could not recall the legislature
having ever lowered the BSA. He mentioned the
constitutional obligation to provide an adequate education
for all students in the state, including a financial
commitment for the state to bear the responsibility. He
considered that since there was no question of having the
obligation, the legislature might as well provide the
funding earlier.
Co-Chair Stedman asked for more detail regarding the timing
of the proposed appropriation and where the funds would
come from. He asked if there had been litigation over the
issue.
Representative Ortiz was not aware of any litigation. He
thought no one could argue that the bill proposed to tie
the hands of a future legislature, as the current body
would be the legislature for FY 23. He did not think there
would be a threat of a lawsuit going forward.
Co-Chair Stedman set the bill aside. He assured the viewing
public that there would be further information coming from
the committee regarding maintenance of effort and the
federal assistance funding coming for schools. He
referenced data sheets that were being assembled. He
thought there would be dialogue over the following year as
to how to track the funds.
HB 169 was HEARD and HELD in committee for further
consideration.
^PRESENTATION: OMB MAY 3, 2021 AMENDMENTS OP/CAP/SUP
9:27:09 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, addressed four amendment packages
differentiated by operating, capital, supplemental
operating, and supplemental capital (copy on file). He
addressed the FY 22 operating governor amend package, which
had a memo followed by a summary spreadsheet with three
items.
Mr. Steininger addressed Line 1, which was an adjustment to
the cost-of-living adjustment (COLA) for court service
officers and deputy fire marshals. Upon further review, it
was noted that the two percent adjustment for the second
year of the contract was applied to an incorrect base
salary. The total was $317,000, $300,200 of which was
Unrestricted General Funds (UGF). The item accommodated a
four percent salary adjustment made in the first year, and
a two percent adjustment was made to the base salary.
Mr. Steininger addressed Line 2, concerning an upward
adjustment to the investment management fees for the Alaska
Permanent Fund Corporation (APFC), due to higher returns
and a larger than expected account balance. He detailed
that management fees were scaled as a percent of assets
under management. The $60 million item was an estimate, and
if the fees came in lower than $60 million the money would
be put back into the fund.
9:29:47 AM
Mr. Steininger spoke to Line 3, which was for three
temporary positions for the Department of Transportation
and Public Facilities (DOT). As the department had been
working through the complexities of the guidance and rules
surrounding the federal relief from the Federal Aviation
Administration (FAA), Federal Transit Authority (FTA), and
the Federal Highway Administration (FHWA) in all 3 primary
COVID-19 funding acts, there was about 9 pots of money with
differing rules that necessitated additional accounting
staff.
Co-Chair Stedman observed that the item description listed
three long-term non-permanent (LTNP) positions. He asked
for greater detail.
Mr. Steininger explained that in the classification system
for state employees there was permanent full-time
employees, and non-permanent employees were split into
short-term and long-term positions. The short-term non-
permanent positions were limited to 90 or 120 days
depending upon the bargaining contract. The long-term non-
permanent positions were those requiring more than 90 or
120 days.
Co-Chair Bishop asked if the department had the position
control numbers (PCNs) available, or if a classification
study would be needed. He asked if the positions would go
away after the funds were expended.
Mr. Steininger stated that the proposed amendment would
create three new PCNs and were labeled as long-term non-
permanent position to ensure that the employees understood
the positions would go away once the need and federal
funding expired.
Senator Wielechowski asked if there were any other
collective bargaining agreements that were currently being
negotiated that might necessitate a supplemental request.
Mr. Steininger answered affirmatively. There were two
tentative agreements that he had received that morning, and
there would be further amendments related to the bargaining
units. He thought there was a third agreement outstanding.
He affirmed that OMB would come back before the committee
with more information when it was available.
Co-Chair Stedman asked if the further amendments would be
within the next seven days.
Mr. Steininger stated that OMB was working on formal backup
in order to transmit the information to the legislature in
the next 24 to 48 hours.
Senator Wielechowski about Item 2 pertaining to APFC
management fees. He asked about the fee rate.
Mr. Steininger had to the defer the question back to APFC.
He believed the fees varied according to the management
entity.
Co-Chair Stedman thought the fees would be tied to the
asset base. He suggested that as the Permanent Fund
advanced in value the fees would go up.
9:33:47 AM
Senator Wilson asked about the two forthcoming amendments
and the bargaining unit that Mr. Steininger referenced.
Mr. Steininger thought the supervisory unit and the
Correctional Officers Association would be ready in the
next 24 to 48 hours, his office was putting together the
technical records so that the Legislative Finance Division
(LFD) could put the adjustments in the right components. He
recalled that the remaining contract was labor, trades, and
crafts.
Co-Chair Stedman clarified that the committee had expressed
interest in having the OMB formalize amendments so that
paperwork was in order and the committee would take action
on the amendments were presented.
Mr. Steininger addressed a memo and spreadsheet with
capital budget amendments (copy on file). He discussed Item
1 on the spreadsheet, relating to FTA. He explained that
the item was not related to federal COVID-relief funding
but was an adjustment to the normal federal transit
administration grant. The increase was due to the FTA
apportionment rising over the previous years and
communities being able to submit applications through DOT.
The increase was for $25.26 million from a base of $10
million and would be a pass-through to community transit
organizations.
Mr. Steininger discussed Item 2, related to federal COVID-
relief funds. A portion of the Coronavirus Response and
Relief Supplemental Appropriations Act (CRRSAA) funding
through DOT would be passed through to the Anchorage
Metropolitan Area Transit Solutions Organization. The act
required that the monies be passed through to Anchorage,
and the pass-through had been omitted from earlier
appropriation vehicles. The funding was in the amount of
$11.3 million.
Senator Olson considered the proposed DOT funding listed in
item 1 and item 2. He asked if any of the funding had to do
with the Knik Arm Bridge and Toll Authority (KABATA)
project.
Mr. Steininger did not believe either of the items would
deal with the KABATA issue but would confirm with the
department and get back to the committee.
9:37:13 AM
Mr. Steininger addressed a spreadsheet with supplemental
operating amendments (copy on file). He addressed Item 1,
which would be an increase to federal authority for the Mt.
Edgecumbe Boarding School to accommodate COVID-19 relief.
The item was related to the relief funding managed by the
Department of Education and Early Development that got
spread to different school districts. For Mt. Edgecumbe to
collect the funds it needed federal authority within its
budget in the amount of $5.3 million.
Mr. Steininger addressed Item 2, which was $410,000 of
judgement settlements and claims. He directed attention to
the list of judgement settlements and claims against the
state.
Mr. Steininger spoke to Item 3, which was a reappropriation
to the Marine Highway System Fund. He noted that there
would be a corresponding decrease in the supplemental
capital budget. The item was a reappropriation of the
aviation match for FY 21. The aviation match had been
waived in FY 21 as part of one of the federal relief
packages, and the Marine Highway System Fund was posting a
$5.5 million deficit at the close of the current fiscal
year. The item utilized the reduced need for match in the
aviation program to backfill the need in the Marine Highway
System Fund.
Mr. Steininger addressed FY 2021 Supplemental Capital
Budget Amendments. Item 1 corresponded with the transfer to
the Marine Highway System Fund and reflected the reduction
in the capital budget for aviation state match of $5.5
million. Item 2 was $11 million from the Coronavirus Aid,
Relief, and Economic Security (CARES) Act funding for rural
airport deferred maintenance. The item covered deferred
maintenance at airports owned by the state. Item 3 was
authority for the Alaska International Airport System to
use some of its COVID-19 relief to pay down debt service.
He explained that the relief funds received by the airport
system could be deposited into its International Airport
System Fund as general revenue, however in order to use it
outside day to day operations an additional appropriation
was needed.
Mr. Steininger addressed Item 4, another reappropriation of
the aviation state match. The $1 million would be
reappropriated to an emergency weather event capital
project for the department to be able to respond to
emergency weather events that required funding above and
beyond the amount available in normal maintenance operating
budgets. He used the example of extreme freeze events and
avalanches, after which the funds could be used without
having to come forward with individual supplemental items
for every weather event.
9:41:16 AM
Senator Wilson asked how much estimated debt service would
be paid with the federal COVID-19 relief funds.
Mr. Steininger specified that the item proposed to use $30
million in debt service for the Alaska International
Airport System. He believed the system had been able to use
other federal receipt authority at the close of the
previous year to pay down debt service. He agreed to
provide more detail at a later time.
Senator Wilson asked if there were other departments that
would be using federal CARES Act funding to pay down debt
service.
Co-Chair Stedman asked if Mr. Steininger could provide the
information at a later time.
Mr. Steininger was not aware of any other departments
paying down debt service with federal CARES Act funding. He
knew there was a proposal in the other body to use some of
the American Rescue Plan Act (ARPA) funding to pay down the
state's annual debt service as a replacement for general
funds. He agreed to look to see if there were any other
areas with debt service not in the main area of the
operating budget.
Co-Chair Bishop asked about Item 2 pertaining to CARES Act
funding and rural airport deferred maintenance. He asked
about the inclusion of capital expenses for equipment.
Mr. Steininger explained that most of the funding had
limitations on purchasing equipment, but the maintenance
work was generally eligible. He thought was nuance involved
since there was multiple pots of money and multiple sets of
rules. He would work with the department to see if there
was allowability in one or more pots of money for purchase
of equipment.
9:44:34 AM
Senator Olson considered aviation funds being
reappropriated to the Alaska Marine Highway System (AMHS)
and extreme weather events. He asked where the funding was
originally allocated.
Mr. Steininger explained that in the previous year's
capital budget there had been $8.8 million in one
appropriation intended for matching the airport improvement
program. Part of it was proposed to be reappropriated, and
the remaining amount was being reserved for potential costs
that were not federally reimbursable. Originally the funds
were UGF intended to match the airport improvement program,
but the change in FAA rules allowed for the state (in that
one year) to not require match for the program, and the
need went away.
Senator Olson asked if there was any other fund source that
could be used.
Mr. Steininger asked if Senator Olson referenced the Marine
Highway System Fund or weather events.
Senator Olson answered "yes."
Mr. Steininger informed that the state could use a
straightforward UGF appropriation rather than a
reappropriation, or other Designated General Fund (DGF)
sources that had available balances, however using the
reappropriation as proposed was a place where there was not
necessarily a competing need.
Senator Wielechowski asked if the proposed reappropriations
of aviation funds would be a loss for the Airport
Improvement Program.
Mr. Steininger stated that the match was waived for the
Airport Improvement Program and the FAA had provided
significant additional amounts of relief that could be
applied to airport maintenance improvement needs throughout
the state. Through the federal relief funding, the total
amount available for airport needs had grown significantly,
but there was no longer a need for general fund match. He
summarized that the airports were not necessarily harmed by
the use of the matching funds as there was other FAA money
coming in that could backfill the amount.
9:47:52 AM
Senator Olson asked if the funding switch would slow down
any projects.
Mr. Steininger relayed that the projects funded through the
projects funded through the FY 21 Airport Improvement
Project would use federal funds that were still available
for use. He understood that the change would not slow down
any of the projects.
Senator Olson considered the $410,000 UGF in judgements,
settlements, and claims referenced in Item 2 of the
supplemental operating amendments. He wondered about any
other judgements, settlements, and claims were present in
the regular operating budget.
Mr. Steininger offered to provide a full list of the
judgements, settlements and claims inclusive of new items.
He explained that there were not any in the FY 22 operating
budget, and generally the way the state managed judgements
and settlements was in a supplemental budget after the item
occurred, so the items were primarily always supplemental
needs. he offered to provide a full list by case and
amount.
Senator Olson asked how much the state paid in total, which
he thought was more than $410,000.
Mr. Steininger did not know the exact number but estimated
that the amount was in the several million dollar range.
Co-Chair Stedman asked for Mr. Steininger to provide the
information to the committee at a later time.
Senator Wielechowski requested a list of management fees
listed in Item 2 in the operating budget amendments. He
thought the amount seemed huge on top of other fees the
state was already paying.
Mr. Steininger stated he would work with APFC to get the
information. He cited that the increase in management fees
was a result of market returns increasing the value of the
fund. He agreed to provide the information.
Co-Chair Stedman relayed that the committee would reconvene
at one o'clock in the afternoon to consider proposed
committee substitutes for SB 49 and SB 51, and to hear a
presentation about recurring revenue and recurring
expenditures. The committee would be engaging in budget
discussions over the following two weeks, and would build
upon the afternoon presentation as different monies and
transactions were layered in. The committee was also
waiting for the other body to transmit the companion
operating budget bill, which he suspected would not be done
for several days. He asserted that the Senate would try and
advance the process and minimize the number of days it
would take to put the final budgets together after
receiving the version from the House. He referenced the
constitutional deadline on the 19th of May and was unsure
if the deadline would be met.
9:53:24 AM
RECESSED
1:04:50 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 50 Supplemental All Funds-UGF-GF.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 50 |
| SB 50 Supplemental Capital Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 50 |
| SB 49 Supplemental All Funds-UGF-GF.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 Supplemental Operating Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 Federal Direct Inflexible ARPA Spreadsheet 5.5.21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 OP All Funds-UGF-GF Summary.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 CSSB 49-50-51 Reports Master Sheet.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 49 work draft version N.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 |
| SB 51 work draft version G.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 51 |
| SB 49-SB 51 SFIN Fiscal Position 5-4-21.pdf |
SFIN 5/5/2021 9:00:00 AM |
SB 49 SB 51 |