Legislature(2009 - 2010)HOUSE FINANCE 519
03/27/2009 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| HB161 | |
| HB199 | |
| Adjourn | |
| Start | |
| HB127 | |
| HB35 | |
| HB161 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 127 | TELECONFERENCED | |
| += | HB 35 | TELECONFERENCED | |
| + | HB 161 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 199 | TELECONFERENCED | |
HOUSE BILL NO. 199
"An Act making supplemental appropriations and capital
appropriations; amending appropriations; and providing
for an effective date."
Co-Chair Hawker referred to previous testimony related to
the legislation and questions raised for the Department of
Education and Early Development.
9:11:51 AM
Co-Chair Hawker listed items that were added to the original
list, items where the administration is going to add
personnel in order to accept American Recovery and
Reinvestment Act (ARRA) funds: Item 12, Healthcare Services
Administration; Item 19, Labor Employment Training Services;
Item 27, Public Safety State Troopers; Item 13, Child Care
Benefits Grants; Item 22, Workforce Development Training.
Co-Chair Hawker noted that the entire committee was present
except for Representative Foster, who had a medical excuse.
9:14:08 AM
LARRY PERSILY, STAFF, CO-CHAIR MIKE HAWKER, began with two
follow-up items from the previous day's meeting. First, he
indicated a packet containing the information that
Representative Austerman had asked for from the Department
of Education. Second, regarding questions about the
Department of Conservation (DEC) air quality grants he
explained that in FY08, DEC received about $300,000 under
the program. Rather than granting the money out (the
department does not have granting authority) DEC used RSAs
(reimbursable services agreements) within state agencies.
Some went to the Department of Transportation and Public
Facilities for diesel equipment retrofits. Some went to the
Alaska railroad for diesel retrofits. The $2 million
available for grants would need statutory authority. State
agencies, non-profit organizations, local governments, port
authorities, and anyone with jurisdiction over
transportation or energy would be eligible for the grant
program. He listed examples of things the money could be
used for.
Co-Chair Hawker clarified that the DEC air quality grants
were contained in Item 34.
9:16:35 AM
Representative Fairclough had a question about carbon
credits. Mr. Persily offered to get the information.
Representative Kelly asked if the legislature could put
limits on the DEC grants. Mr. Persily replied that the
legislature cannot appropriate to specific recipients; the
grant program would go through DEC. Representative Kelly
asked if the legislature can instruct DEC about the grants,
such as limiting them to diesel retrofits. Mr. Persily said
he would get back to committee.
Co-Chair Hawker thought the question of how much constraint
could be applied through intent was related to the
Department of Education and Early Development (DEED) as
well.
Representative Kelly asked if similar limits could be put
education, such as accepting only money that would be used
for deferred maintenance. Mr. Persily did not believe so. He
would get the answer to the how question of much direction
and instruction could be used.
9:20:12 AM
Representative Fairclough asked whether the money could be
held and dispersed [by the legislature] to rural communities
through an RSA process to limit how it could be used. Mr.
Persily did not believe so.
Co-Chair Hawker explained that the RSA is used between state
agencies. The legislature does not have the ability to move
money to another public entity's budget, only within the
state budget. The legislature has to empower an agency
through a grant process to pass the money to the other
agencies. There was a discussion about limiting the use of
the $2 million.
9:22:37 AM
Representative Gara thought that most of federal money
allows for a menu of expenditures. He suggested the easiest
way to direct where the money went would be to go through an
agency. Otherwise there must be a statutory grant program to
specify how it is spent. Cooperation with the administration
would be required.
DEPARTMENT OF PUBLIC SAFETY
9:24:17 AM
Co-Chair Hawker asked for details regarding the Department
of Public Safety (DPS) Item 27, the State Trooper/Narcotic
Task Force.
DAN SPENCER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF PUBLIC SAFETY, gave an overview of the justice
assistance grant program, which is a formula program. The
ARRA stimulus funds operate similar to the regular federal
justice assistance grants program, with some changes.
Supplanting rules have been removed and some of the
reporting is different, but the purpose remains the same,
and the grants can be used for just about anything that
improves crime fighting.
Mr. Spencer detailed that about $9.6 million is allocated to
Alaska; about $4 million goes directly from the U.S.
Department of Justice to municipal governments. Another
$5,821,000 comes to the state; of that, $1,252,900 will be
passed to local governments. The application for the funds
is due by April 9, 2009. The stimulus funds do not have to
be used for personnel, but DPS plans to ask for that.
Mr. Spencer continued that the justice assistance grants
program requires the department to provide to the
legislature and to the public a minimum of 30 days notice
before applying for the funds. Public review has to be in
place before the money is spent. In the past, DPS has put
together the grant application, sent a letter to each
presiding body, and given online public notice.
9:28:03 AM
Mr. Spencer reported that there would be a written document
with line item detail for legislative review. There will be
an option of change once the money is approved by the
Department of Justice, but the public and the legislature
has to be notified. There will be full disclosure of all
proposals.
9:30:15 AM
Mr. Spencer responded to earlier remarks about how the
stimulus funds would require more transparency than other
funds. He maintained that DPS is already fully accountable.
Mr. Spencer informed the committee that the overall plan is
to increase investigative capacity with six positions,
including five investigators in Anchorage, Fairbanks,
Soldotna, and Palmer. There would also be an administrative
position, probably based in Fairbanks. Once the positions
are filled, DPS intends to give roughly $150,000 per year to
the Department of Law (DOL) to bring on an additional
prosecutor. In addition, the crime lab would receive funding
for sexual assault exam kits and other equipment, and
funding would go to local government for investigations.
Mr. Spencer anticipated that the plan would cost $5.8
million over three years. The question will then be where
the money would come from to continue the programs. He
asserted that DPS would have proposed increasing the
investigative program even if the federal funds were not
available. He pointed out that Alaska has the highest rate
of sexual assault in the country; several of the positions
would focus on that, as well as on internet and financial
crimes. He added that more details would be forthcoming.
9:33:51 AM
Co-Chair Hawker noted how the proposed program would grow
government.
Representative Fairclough asked for expected costs in three
years and queried the number of new positions at the state
level. Mr. Spencer replied that there would be seven new
positions for $5 million over five years, including the
attorney at DOL. The money would cover the personnel and all
the related training, equipment, travel, and the money to
the crime lab.
Representative Fairclough thought that was a lot of money
for seven positions. Mr. Spencer answered that the new
trooper positions in the first year would cost close to $1
million; the second year would be less because the vehicles,
guns, and so on would have been purchased. He stated there
were no hidden costs related to the positions.
Representative Fairclough clarified that the amount included
$1.3 million for local government. Mr. Spencer added that a
number of municipal governments are getting nearly $4
million from the Department of Justice.
Representative Fairclough asked if that funding stream to
local governments would continue. Mr. Spencer replied that
that had not been discussed; he believed the funding would
continue because it would increase investigative ability
overall.
9:36:39 AM
Representative Gara questioned whether there was double
funding, specifically for the crime lab. Mr. Spencer assured
him there was not.
Representative Gara acknowledged shortfalls in investigation
units. He questioned the money going toward internet crime,
since the federal government already did that work. Mr.
Spencer replied that he would get more information. He
believed the issue would be addressed in the forward of the
grant application.
Representative Gara asked if there would be seven trooper
positions over the three years. Mr. Spencer clarified that
there would be five trooper investigator positions, one
administrative position, and funding to DOL for a prosecutor
position.
Representative Gara pointed to trooper positions that the
state has not been able to fill and asked why the money
should be used for new ones. Mr. Spencer responded that all
the trooper positions were filled or would be filled soon.
He was hopeful that the department would continue to be able
to fill positions.
9:40:12 AM
Representative Gara asked whether positions had been
eliminated rather than filled. Mr. Spencer answered that DPS
started with around 50 vacant positions. The previous
summer, seven trooper positions were reclassified to court
services officers; previously troopers had filled those
positions. The reclassification freed up seven troopers. He
noted that court services officers are easy positions to
fill.
Representative Gara questioned whether the department would
have to come to the legislature in three years if the funds
were approved.
Representative Austerman questioned why the items were not
included on the original legislation. Mr. Spencer believed
that additional requirements such as the need for the public
process affected their inclusion in the original bill.
Co-Chair Hawker remembered that the Office of Management and
Budget (OMB) immediately rejected anything involving
additional personnel.
Representative Austerman asked for clarification.
9:44:58 AM
JO ELLEN HANRAHAN, SENIOR POLICY ANALYST, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained
that the items were not included on the list because they
would increase operating costs; requests with positions were
immediately rejected.
Representative Austerman asked if the governor's office was
moving forward with the application without public comment.
Ms. Hanrahan responded that all agencies were instructed to
continue the application process in order to meet all
deadlines.
9:46:56 AM
Mr. Spencer added that items could later be modified if the
legislature decided, for example, not to include positions.
Co-Chair Hawker noted an opinion issued by the governor.
Mr. Persily clarified that Item 27 was for $5.8 million that
would go directly to the state; a separate allocation under
the stimulus bill of $3.8 million would go directly to 19
different cities and boroughs around the state. For example,
the Municipality of Anchorage would get $2.7 million of that
amount, Fairbanks North Slope Borough, Unalaska, the City of
Bethel, Bristol Bay Borough, and so on would get
disbursements separate of legislative action. The deadline
for the state's $5.8 million is April 9, 2009; the cities
and boroughs have until May 18, 2009. The state and the
cities and boroughs will have to go through the same 30-day
public revenue of applications. He added that of the $5.8
million the state would get, $1.2 million has to go to local
governments not covered by the $3.8 million. There are some
restrictions: the money can be used for new positions and
other things, but the federal law stipulates that the funds
cannot be used directly or indirectly for security
enhancements, and the money may not be given to non-
governmental entities that are not engaged in criminal
justice, public safety, or victim compensation.
Mr. Spencer clarified that some of the $1,282,000 that is
passed through the local governments can go to larger
municipalities, although the intent is to ensure that
smaller municipalities receive funds.
9:50:03 AM
Representative Salmon asked whether money was earmarked for
Village Public Safety Officers (VPSO) for smaller
communities. Mr. Spencer replied no for the proposal under
discussion. He explained that a VPSO is not a law
enforcement position in the normal definition. However,
three other competitive grant programs that the department
intends to apply for, including: the $1 billion Community
Oriented Policing Program (COPS), which is specifically
oriented to creating new police officers; the $225 million
Edward Byrne Memorial (Byrne) Competitive Grant program,
which could apply; and a rural law enforcement program
[Assistance to Rural Law Enforcement to Combat Crime and
Drugs Program] aimed at a variety of things. The department
has not finalized plans, but intends to apply for at least
another five positions through the COPS program; those come
with a "general funds kicker right up front." The COPS
program will only pay for the entry-level salary and
benefits, not for training, equipment, merit increases, etc.
The condition of applying for the positions is that the
federal government will fund the entry level salary for each
of three years; after that, whatever entity created the
positions has to agree to continue the positions for a
fourth year. The department will apply for additional
positions through the Byrne competitive grant. The
department plans to ask for three trooper positions
dedicated to VPSOs through the rural law enforcement
program. He stressed that the applications were not at the
final stages and he would come back when there is more
information.
Co-Chair Hawker expressed concerns about the growth of
government caused by obtaining one-time funds. He saw it as
a way of bypassing the legislature and wondered if the
legislature should not pass a law to stop it. Mr. Spencer
did not agree that the department was going around the
legislature. He emphasized that even if the funding is
received, the legislature has to give the authority to spend
the money and the governor has to sign off on the
expenditures. He called law enforcement a government
program.
9:54:13 AM
Co-Chair Hawker asked if the government was sanctioning the
growth of government. Mr. Spencer replied that the
department had been told to work on applications for what it
deems appropriate purposes. Public discussion will determine
whether it goes forward, but the intent is to apply by the
deadline.
Representative Kelly thought that a state employee position
was hard to cut once it was created, while construction
workers are laid off when the job ends. He maintained that
the record shows that state positions will not be easily cut
after three years.
Representative Joule referred to the five positions that the
department planned to apply for under the COPS program. He
asked if any of the positions were related to the VPSO
program. Mr. Spencer answered that the positions were not
specifically dedicated to VSPO positions.
Representative Joule heard the answer as no. Mr. Spencer
concurred.
Representative Joule asked if the three positions that the
department planned to apply for [through the rural law
enforcement program] would translate to more VPSO positions.
Mr. Spencer replied that VPSOs are not certified police
officers, which is the focus of the programs.
Representative Joule asked if the VPSOs are public safety
workers. Mr. Spencer replied that they were, but his
understanding was that the programs require that the
positions be law enforcement positions. He offered to get
more information.
9:57:34 AM
Representative Gara referred to the fact that the department
had filled the trooper positions for which there had
previously been a shortage. He was supportive of that. He
stated that the highest crime, lowest served areas are high-
crime urban areas, which have local police forces; troopers
will not solve those problems. He questioned why the
positions would not go to rural areas where they are most
needed. Mr. Spencer denied saying that the positions would
not go to rural areas. The troopers are still working on
their proposal; he did not know where they planned to put
the positions. The five positions covered in Item 27 are
investigator positions. He understood the issue of getting
positions to rural areas; some may go to Bethel.
10:00:10 AM
Representative Austerman asked who would oversee the public
scrutiny of programs outside the legislative budget process,
such as the COPS grant. Mr. Spencer referred to earlier
testimony indicating that the Legislative Budget and Audit
Committee (BUD) [would perform the function]. He pointed out
that the receipts would be federal, and would be tracked
separately; since the funds were not anticipated and did not
have expenditure authority, he expected to go before BUD
during the interim.
Co-Chair Hawker asked for clarification. Mr. Spencer
explained that the department had federal authority in the
budget. Sometimes the department gets the money it needs,
but sometimes it gets less. When there is excess federal
receipt authority, or less federal money coming in, the
department can use the federal receipt authority to use
federal money from other sources. He emphasized that the
stimulus money was different. He likened it to a capital
appropriation, in that they have a defined purpose. He
assumed there would be a mechanism for legislative review on
the competitive grant proposals.
Co-Chair Hawker cautioned against assuming anything. Mr.
Spencer acknowledged that the legislature could change any
assumption he had.
10:02:58 AM
Ms. Hanrahan agreed that normally, an agency may apply for
competitive grants throughout the year if it has excess
federal authority, and that the stimulus money is different.
She said that the focus has been to identify the funds that
they know are coming to the state and have public debate
about those funds. The next layer is the competitive
process. However, there is no assurance about whether the
state would receive any of the money through the competitive
process. Some of the grants have stipulations which make it
unlikely that Alaska would get the money. She emphasized
that until more information was obtained, the administration
was focusing on the direct grants. She believed the only
potential review for the direct grants is through BUD.
Co-Chair Hawker added that the mechanism works because in
the operating budget there is an appropriation of all
federal funds that may be received. The appropriation goes
through a review by the Legislative Budget and Audit
Committee. However, he warned that the BUD review is a
"toothless tiger" in that even if the committee says no to
the appropriation, the administration may still accept it
after a 45-day waiting period.
Mr. Spencer expanded by saying that few governors have taken
that prerogative. Co-Chair Hawker emphasized that compliance
with the committee is voluntary. Mr. Spencer agreed.
10:05:27 AM
Representative Salmon asked what a VPSO is considered if not
law enforcement. He wanted to know what it would take for a
VPSO to become legitimate law enforcement. Mr. Spencer
explained that VPSOs are public safety officers. They have a
wide variety of duties; they do deal with crimes in some
circumstances, but they are not a certified police officer
under Alaska Police Standards Council certification rules.
The primary purpose of a VSPO is not to arrest, investigate,
and help to prosecute. They do have probation and parole
responsibilities, which helped in improving the pay
schedule. They also have public safety roles such as working
with villages with code red firefighting apparatus. He did
not know what it would take to get a VPSO certified and
offered to get the information to the committee.
10:07:24 AM
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
Co-Chair explained that the Department of Health and Social
Services (DHSS) would cover Items 12 and 13. He detailed
that Item 12 involves additional personnel and Item 13 has
significant dollar value.
ALISON ELGEE, ASSISTANT COMMISSIONER, FINANCE AND MANAGEMENT
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
introduced Item 12, Health Information Technology. The
program has been proposed through ARRA with a slightly
longer timeframe than most stimulus programs. The money
would be made available soon, but the program dollars will
be available through FY15. The item will be primarily
capital dollars. As yet, there is only very limited guidance
from the federal government about exactly how the money will
be made available. Nationally, there is $20 billion for the
information technology.
Ms. Elgee reported that the health information technology
program is designed to move the country into an electronic
health records environment. The benefits have been
identified for some time as improving health care quality,
preventing medical errors, reducing health care costs,
increasing administrative efficiencies, decreasing
paperwork, and expanding access to affordable care.
Ms. Elgee noted the tremendous planning effort that will be
required to establish health information technology in the
state of Alaska. The department will create a health
information exchange that will allow providers to access
health records from other providers through a very
controlled environment that assures the protection and
privacy of the health records.
Ms. Elgee offered that DHSS is proposing to establish
positions to begin the planning effort. The department
believes that a project coordinator, data processors, and
additional support personnel will be needed.
10:10:22 AM
Co-Chair Hawker asked for more background regarding
electronic medical records. He wondered how long the
practice had been around and if it was voluntary. He did not
regard electronic data as secure. Ms. Elgee responded that
planning is needed to protect the records. A very secure
environment is essential. She explained that the protection
of health records runs throughout the business that DHSS
does. She emphasized that there are extensive federal
requirements under the Health Insurance Portability and
Accountability Act (HIPPA) that the department will need to
comply with in creating the health information technology
environment.
Ms. Elgee pointed out that the potential for cost savings
are tremendous. For example, tests are ordered for an
individual by a primary physician. If the individual goes to
a different doctor, currently most of the tests are
duplicated. In a health records environment, a provider
would be able to access the original tests and not have to
repeat them. The program will help the safety of individuals
because the records will contain information such as
allergies.
Co-Chair Hawker asked if the initiative was a state
initiative. Ms. Elgee replied that it was a federal
initiative but that the state has put a great deal of energy
into planning with providers what it might look; there has
been no money to make it happen.
Larry Persily added that part of the electronic medical
records provisions in the stimulus bill is a grant program
that states will administer to health care providers. The
funds that will be available will be administered by the
states and will provide as much as $67,000 to each health
care provider spread over six years. The amount would depend
on costs; the maximum grant would be $21,250 the first year,
and up to $8,500 each year for the next five years,
depending on costs. Hospitals, doctors, clinics, nurses,
midwives, and anyone who qualifies could then obtain the
grant funds to help pay the cost of converting to electronic
medical records, which eventually every health care provider
will have to do. He emphasized that there will be a lot of
money flowing to health care providers in Alaska to help
with the conversion over several years.
10:13:44 AM
Co-Chair Hawker wanted to know if the conversion is already
federally mandated. Ms. Elgee understood that the change is
not currently federally mandated. The program is intended as
incentive to move states in the direction of electronic
records. She could not predict the timing of federal
mandating but noted a federal process in place planning
around the effort.
Mr. Persily believed that there would be a federal mandate
at some point, which was why it was a key part of the
stimulus bill.
Co-Chair Hawker thought the item would give money to the
state to administer the process, but asked if it would
administer the grants to providers. Ms. Elgee responded that
the money was to begin the planning effort necessary to be
positioned to accept the remaining health information
technology funds, which will include provider incentive
payments.
10:15:26 AM
Representative Joule wondered whether major health care
providers were heading towards electronic health records,
either with or without the DHSS. Ms. Elgee responded that
there has been planning underway. She referred to an
organization created specifically to look at the development
of an electronic health records environment. Dr. Butler
represents DHSS on the board of directors. She noted a lot
of provider interest.
Representative Joule asked if the providers interested were
organizations like Providence, Regional, Memorial, and
others. Ms. Elgee answered in the affirmative.
Representative Joule wondered if there would be a need for
additional capital commitment from the state. He had heard
of a requirement for a match of $1.3 million. Ms. Elgee
responded that the department has received very little
guidance for the program, so she could not confirm or deny a
future need for a state capital match.
10:17:28 AM
Mr. Persily introduced another concern related to electronic
medical records: the issue of privacy. He pointed out that
there are already strict privacy rules related to medical
records, and that the stimulus bill includes pages of even
tighter privacy restrictions. For example, ARRA prohibits
the sale of records and use of records in marketing. An
audit trail of people having access to the information is
required. There are also mandates for standards for
technology systems to restrict the sensitive information,
use data encryption, to notify people of breaches. There are
monetary penalties for violation of privacy and requirements
for monitoring the contracts and compliance. He emphasized
that the issue of privacy was taken seriously in the writing
of the law.
10:18:35 AM
Representative Gara asked why the state needs so much
database infrastructure, since it does not itself provide
medical care or share medical records with others. He wanted
to know what the state staff would be doing. Ms. Elgee
explained that the underlying technology is called a help-
information exchange, a means by which providers can
exchange records in a secure environment. Once a doctor at
Providence indicates a need obtain records from a provider
in Kotzebue, they will query the health information exchange
for the records. The exchange will then retrieve the records
and pass the information on. Records can be made available
quickly and duplication of tests can be avoided.
Mr. Persily added that the exchange ensures a secure safe
system, rather than passing records on through email
attachments.
10:21:09 AM
Representative Kelly pointed out that the list the committee
was looking at consisted of projects that the governor did
not put in, putting the departments in the position of
asking for something that she did not request funds for. He
hoped that presenters would clarify whether the governor had
changed her mind regarding any of the items discussed.
Co-Chair Hawker asked if the department would like to get
the funds. Ms. Elgee acknowledged that the department would
like to receive the funds and believed there was tremendous
benefit in the program in terms of controlling health care
costs. She observed that SB 133 would address the same
subject matter; the department had been advised to work on
the bill.
Representative Kelly did not want to hear what the
department wanted but whether the administration had changed
its position on the items. He assumed that the governor had
not changed her mind regarding any of the 39 items on the
spreadsheet. Co-Chair Hawker expressed frustration with a
lack of communication with the governor.
Ms. Hanrahan felt that the governor was clear that while
many of the items could benefit the state, she wanted public
discussion regarding the associated costs.
10:27:03 AM
Representative Kelly reiterated a desire for a clear
indication that the governor had changed her position on
individual items.
Co-Chair Hawker queried what authority Ms. Hanrahan had in
speaking to the committee. Ms. Hanrahan believed that the
goal was giving as much information to the public as
possible so that the public could decide whether they wanted
the funds. Co-Chair Hawker asked if she felt the departments
had been giving fair and complete presentations. Ms.
Hanrahan affirmed that departments have identified the full
spectrum of the issues. She felt that there could be more
discussions on costs or obstacles that might be associated
with the items.
10:29:25 AM
Representative Gara concluded that the governor has not
changed her position of not wanting the funds. He asked if
there had been any discussion with the governor regarding
the technology energy funds. Ms. Elgee noted that the
department presented information to OMB and supports the
request, but noted they have gotten little information from
the federal government.
Representative Gara asked if there was an understanding at
OMB that the projects would be presented to the legislature.
Ms. Hanrahan explained that OMB was instructed to identify
the benefits and costs of the items. She emphasized how
little information had been provided by the federal
government.
10:33:49 AM
Representative Gara commented that he was hearing different
things from the agencies and from the governor through the
press.
Representative Kelly cited experience dealing with the
budgeting process. He found the reports from the departments
clear and reasonable. He only wanted to know if the
departments were aware of a change in the governor's stance
regarding the stimulus money. He did not intend to stir up
controversy.
10:37:15 AM
Vice-Chair Thomas talked about experience dealing with
health records. He opined that the governor would support
the department's project, as she has approved money for
electronic records in the past. He emphasized the value of
letting the public hear detailed discussion about the
various items.
Representative Crawford thought the important question was
whether such things as electronic health care records,
troopers, or teachers are needed. He thought the items were
needed and that the funds would be requested if even the
stimulus money was not there. He opined that getting money
from the federal government for the next few years would be
a good thing and that the legislature needs to decide
whether to make a commitment, regardless of what the
governor does. He felt the question of whether funds would
be available in three years was a separate question.
10:42:17 AM
Ms. Elgee turned to Item 13, Public Assistance and Child
Care Benefits. She explained that the childcare development
block grant funding being proposed through ARRA includes
$4,360,000 for the state of Alaska. She believed the money
would be available through 12/31/2010. The intent was to
improve the quality of childcare services and expand
programs. The money cannot be used to supplant general
funds; existing programs must be maintained. Within the
allocation, $333,660 is specifically targeted for quality
expansion and $193,232 for activities that improve the
quality of infant and toddler care.
Ms. Elgee continued that the program is partially addressed
in the governor's proposed FY10 budget. The department put
forward an increment in the amount of $3 million in general
funds to increase the reimbursement level for low-income
families that qualify for childcare assistance. The
department is aware of issues relative to the eligibility
standards being used and are looking at other barriers to
childcare access. In addition, DHSS has been working with
the Department of Education and Early Development and the
Best Beginnings organization to identify needed
improvements. The department believes the stimulus money
could be used on a one-time basis and would not necessarily
commit the state to on-going expense. However, the
department would probably come back to the legislature for
continued funding to the degree that the money increased the
level of childcare assistance reimbursement.
Co-Chair Hawker clarified that currently nearly $10 million
of federal money goes to childcare benefits. He asked if the
money could be brought into the program and free up the
federal money to be used elsewhere. Ms. Elgee did not think
so but would have to confirm. Co-Chair Hawker verified that
the department would look for continued general funds if the
stimulus money was accepted.
Representative Gara asked if $3 million of the stimulus
money could be used for the childcare expansion considered
by the governor. Ms. Elgee answered yes.
10:46:58 AM
Representative Fairclough clarified that the funds would not
supplant a program that the legislature has not approved
funding with general funds.
Representative Gara thought $3 million could be taken out of
the operating budget and the stimulus funds used instead.
Ms. Elgee explained that the House version of the budget
contains $1.5 million in general funds for the purpose. When
the Senate was closing out its budget, the federal economic
stimulus funds were better understood; they chose to
eliminate the general funding in deference to the policy
debate regarding the stimulus funds.
Co-Chair Hawker pointed out that the gamble is the governor
rejecting the stimulus funds and the budget going to
conference committee.
Representative Gara still thought that some general funds
could be freed up if the legislature could do what the
governor and both houses want to do with the stimulus funds
regarding childcare. He described what could be done for
foster care youth with $1.5 million.
10:48:45 AM
Representative Austerman verified that $3 million in general
funds was requested for the same program in the FY10
governor's budget. He asked for further clarification. Ms.
Elgee explained that the governor's proposed FY10 budget had
gone through exhaustive review. The stimulus money came
after the committee review and the governor wanted
discussion to take place.
Co-Chair Hawker asked if the administration believed the
department's presentation had adequately described the
challenges of the item. Ms. Hanrahan replied yes, costs as
well as benefits had been described in a transparent manner.
10:51:16 AM
Representative Gara asked if the governor had proposed a $3
million increment in her operating budget for some of what
is covered in the $4 million amount, after which the House
moved the amount to $1.5 million, and finally the Senate was
thinking about how to use stimulus money for the program.
Ms. Elgee agreed with his analysis. Representative Gara
thought that the governor's rejection of the stimulus money
is rejection of federal money to pay for something the state
was going to pay for. Ms. Elgee stressed that the governor
had not rejected the money, but has called for additional
conversation.
Representative Fairclough requested the definition
"supplanting." Mr. Persily explained that money that is
already budgeted cannot be supplanted. The increment in the
FY10 proposal has not been approved, and so is not being
supplanted. He defined supplanting as replacing dollars, as
in not spending a dollar that had been budgeted,
appropriated, and planned on spending, but replacing the
dollar with a federal dollar.
Representative Fairclough pointed out that Alaska is caught
in a quandary because a budget had been submitted in
November before the federal stimulus legislation came about.
She described the chain of events. She thought if the
federal government reviewed the situation, it would look
like supplanting.
Ms. Hanrahan agreed with Mr. Persily's definition that funds
not officially in the budget cannot be supplanted.
10:54:54 AM
Representative Austerman did not understand why the governor
would put the item in the budget but not request the
stimulus funds. Ms. Hanrahan responded that one of the
concerns about the stimulus package is that there will be
unprecedented accountability and requirements above and
beyond some of the state's formula programs. She believed
the governor was providing a chance for more debate
regarding any stimulus money that would come to the state.
10:56:57 AM AT EASE
11:06:05 AM RECONVENED
DEPARTMENT OF REVENUE
Co-Chair Hawker explained that the committee would next
approach items 35, 36, and 37. He noted that there had been
a lot of confusion about the three programs: the State
Energy Program, the Weatherization Program, and the
Efficiency and Conservation Block Grants.
11:06:53 AM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE (via teleconference),
provided an overview of the three programs, beginning with
the $28.5 million listed for the state energy program (SEP).
The Alaska Housing Finance Corporation (AHFC) has received
federal funds for many years, though not as much as offered
by the stimulus funds. The corporation has had a
reimbursable services agreement (RSA) with the Alaska
Industrial Development and Export Authority (AIDEA) for
around ten years. The corporation shares the federal money
with AIDEA; AHFC deals on the demand side of the energy
equation and AIDEA or the Alaska Energy Authority (AEA)
deals with the supply side. The item has raised questions
because the federal legislation requires a state-wide energy
code.
Mr. Fauske continued that AHFC also receives money every
year from the federal government for weatherization, though
not as large as the stimulus amount. For many years the
money was used for people at 60 percent of median income.
Now, with the approval of the revised weatherization rebate
program, there is about $200 million in weatherization; the
stimulus money would go to that program.
Mr. Fauske explained that the $8.5 million for the block
grants are funds for energy efficiency and conservation
activities for communities. Providers would compete for the
funds to provide the services required by the legislation.
Mr. Fauske stated that AHFC could certainly put the money to
use. Whether the money can be accepted or not because of
code requirements is dependent on policies being developed.
He pointed out that most building codes in most areas of the
state equate to a four-star-plus energy code. By statute the
corporation cannot purchase mortgages unless they meet
certain standards.
11:12:29 AM
Co-Chair Hawker asked if Item 37 (the block grant program)
was a new program for the corporation. Mr. Fauske answered
that it was. Co-Chair Hawker questioned whether additional
resources would be needed from the state to administer the
program. Mr. Fauske replied that the program would be
project based, so any additional money needed would be
limited. Once the money was gone, the position would go
away.
11:13:30 AM
Mr. Persily spoke to the question of energy efficiency codes
and utility rates. He stated that there is no requirement to
change state utility regulation or energy efficiency codes
for the weatherization program funds or the energy
efficiency and conservation block grants. The requirements
under ARRA apply only to the state energy program funds
(Item 35, for $28.5 million).
Co-Chair Hawker queried whether OMB or anyone else believes
otherwise. He emphasized the importance of correct
information.
Mr. Persily clarified the two requirements under ARRA for
the $28.5 million for the state energy program. Regarding
the first requirement, he read from the act:
The applicable state regulatory authority [the
Regulatory Commission of Alaska (RCA) in Alaska] will
seek to implement in appropriate proceedings for
electric and gas utilities a general policy that
ensures that utility financial incentives are aligned
with helping their customers use energy more
efficiently, and that provide timely cost recovery and
a timely earnings opportunity for utilities associated
with cost-effective and measureable, verifiable
efficiency savings in a way that sustains or enhances
utility customer incentives to use energy.
Mr. Persily added that the provision is also referred to as
"rate decoupling." He assured the committee that other
states have already accomplished the requirement by sending
a letter the U.S. Department of Energy certifying
compliance, and that such assurance has been accepted.
Co-Chair Hawker underlined the key point that the prefacing
condition is that the states "seek" to implement the
provision; there is no mandate to include a decoupling
arrangement. Mr. Persily concurred.
ROBERT (BOB) M. PICKETT, CHAIRMAN, REGULATORY COMMISSION OF
ALASKA (RCA) (via teleconference), testified that the RCA
commissioners had taken the matter up at a March 11, 2009
public meeting. He stressed that decoupling is one of the
tools towards the end; it is not mandated nor the only tool.
He was authorized by the commissioners to draft a letter to
Governor Palin. He read part of the letter:
The Regulatory Commission of Alaska assures you that it
will seek to implement in appropriate proceedings for
each electric gas and electric utility in Alaska for
which the RCA has rate-making authority a general
policy that ensures that utility financial incentives
are aligned with helping their customers use energy
more efficiently and that provides timely cost recovery
and a timely earnings opportunity for utilities
associated with cost-effective, measurable, and
verifiable efficiency savings in a way that sustains or
enhances utility customers' incentives to use energy
more efficiently.
Mr. Pickett believed that the letter provides the necessary
assurances to the governor.
11:17:27 AM
BOB STOLLER, ATTORNEY, REGULATORY COMMISSION OF ALASKA
ANCHORAGE (via teleconference), testified that RCA has
regulations on the books that date back to 1984. The precise
citation setting out the pricing objectives or the pricing
of electricity is found in Title 3 Alaska Administrative
Code Chapter 48, Section 510. There are five itemized
objectives; number four is explicitly conservation, and
number five is explicitly "optimal use, which includes
considerations of efficiency."
Mr. Stoller read from 3 AAC 48.520:
The fundamental basis for establishing rates in order
to meet pricing objectives is costs. The Commission
will, in its discretion, for appropriate reasons,
consider non-cost standards in establishing electricity
rates.
Mr. Stoller added that RCA applies similar policies in its
gas rate design and gas revenue requirement determinations.
11:18:36 AM
Co-Chair Hawker asked for copies of the letter and the
regulations cited.
Mr. Persily turned to the second requirement under ARRA for
the $28.5 million for the state energy program, which deals
with energy efficiency codes for buildings. The act requires
that within eight years of the date of enactment, or until
February 2017:
The state shall have achieved compliance on at least 90
percent of new and renovated residential and commercial
square footage.
Mr. Persily emphasized that there were two separate
standards for residential and commercial buildings. He
referred to a handout depicting how many states are at the
required level. The law requires that the state meet the
most recent or equivalent international energy conservation
code for commercial buildings; for residential buildings,
the state must meet or exceed the equivalent of the American
Society of Heating, Refrigerating, and Air-Conditioning
Engineers (ASHRAE).
Mr. Persily pointed out that on the map, the 26 states in
green (for commercial energy codes) either meet, exceed, or
are just one addition away from the most recent ASHRAE
codes; 22 states meet the residential energy codes.
Mr. Persily detailed that the ASHRAE codes for energy
efficiency deal with lighting levels, insulation, windows,
and so on; they are not geared towards advanced technology
or high performance on proven technology. The codes are
practical and doable; the intent is to be cost effective.
Co-Chair Hawker clarified that the codes are strictly energy
related and not plumbing or structural. Mr. Persily
explained that the energy efficiency codes could be part of
a building code. The requirements deal with 90 percent of
square footage for energy efficiency codes standards. To
receive the funds, the state would have to certify that the
codes would be in place within eight years.
Mr. Persily reported that he had asked the U.S. Department
of Energy what would happen after eight years if a new or
renovated building is found to be at less than 90 percent;
the response was that they did not know.
11:22:36 AM
Co-Chair Hawker asked if AHFC had concerns about the codes.
Mr. Fauske answered that the corporation had two concerns.
First, the energy code is for both residential and
commercial buildings, but AHFC does not deal with commercial
buildings and cannot estimate those costs. Second, the
corporation was concerned about the cost of enforcement.
Mr. Persily emphasized that the commercial compliance
applied only to new and renovated buildings; he thought most
new buildings would already meet the codes. He noted that
the state would have to accumulate the data.
Mr. Persily disclosed that his brother is vice-president of
ASHRAE. His brother had confirmed that most new construction
would meet the codes, which are required in order to get new
financing. The challenge for the state would not be
enforcement as much as how to gather the data needed to
certify that the standards were being met.
Mr. Persily added that voluntary compliance on new and
renovated commercial structures would help the state towards
the 90 percent goal in eight years, since commercial
buildings are larger, and since the square footage is
cumulative and made of the combined totals of residential
and commercial structures.
Representative Austerman asked if the code issues affected
the energy efficiency provision in Item 37. Mr. Persily
assured him that the codes apply only to Item 35.
Co-Chair Hawker queried how to measure voluntary compliance
and how voluntary compliance would affect the totals. Mr.
Persily did not know. He opined that the state would have to
figure out whether reporting would be voluntary and how to
accumulate the data.
Co-Chair Hawker questioned whether the state was required to
adopt the codes or if compliance to the standard was the
issue. Mr. Persily replied that though the requirement is 90
percent, the law says that the state will implement the
energy code for residential and the energy code for
commercial buildings. At some point during the eight years,
the state would have to adopt the energy codes and gather
the data.
Mr. Fauske interjected that currently the energy rating for
compliance for residential buildings costs approximately
$300.
In a response to a question by Co-Chair Hawker, Mr. Persily
reported that his brother has tested federal buildings in
Alaska, which involves running plastic tubing throughout the
building, closing the doors, blowing fans, and seeing which
way the air moves.
11:27:48 AM
Vice-Chair Thomas asked if state office buildings or schools
would fall under the requirements. He did not think some
buildings had been built to be energy efficient. Mr. Persily
was not aware of anything in the law exempting public
buildings from meeting the energy efficiency codes.
Mr. Fauske pointed out that AHFC represents about 20 to 25
percent of residential mortgages in Alaska. Regarding
compliance, he noted that Fanny Mae, Freddie Mac, and other
mortgage companies do not have to adhere to Building Energy
Efficiency Standards (BEES) requirements, although they do
adhere to building codes. He had just attended a federal
home loan bank board meeting (he is a board member) where
the issue was discussed; they concluded that a great deal of
money was at stake.
11:30:12 AM
Representative Gara wondered how much money would be lost if
the state did not comply with the energy efficiency codes.
If the state did certify compliance with the codes, he
wondered whether the $28 million could be used for renewable
energy projects. Mr. Persily thought the state would have
wide latitude on how to use the money.
BRYAN BUTCHER, DIRECTOR, GOVERNMENT AFFAIRS AND PUBLIC
RELATIONS, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF
REVENUE (via teleconference), replied that, per previous
agreement with AEA, the funds would be split 50-50 between
AHFC and AEA. He listed estimated amounts of money that
could be used for the different programs:
· $2 million: weatherization and rebate support, software
enhancements, expanding an energy audit program to deal
with commercial, school, and state buildings
· $4 million: home-based renewable energy program, with
smart metering, net metering, ways of gathering
information
· $1.8 million: consumer education
· $4.5 million: weatherization community building
retrofit
· $2 million: statewide energy efficiency standards for
public buildings, including developing the commercial
energy code
Representative Gara asked whether the agreement to split the
money with AEA could be adjusted. Since AHFC was already
getting weatherization and other money, he did not think the
50-50 split would be good policy. Mr. Butcher replied that
the agreement could be adjusted. If the ARRA funds were
received, there would be policy meetings discussing how to
use the funds in the time allotted. He noted that
information was still being gathered. Mr. Fauske added that
both agencies would want all the money.
11:35:36 AM
Representative Gara emphasized his desire to use the funds
to deal with Alaska's energy crisis. Mr. Fauske thought the
legislature and the governor could set policy on the issue.
Mr. Persily stressed that meeting the energy efficiency
standards would take a lot of work. He referred to
legislation in the Senate that addressed the issue by
exempting structures without running water or utilities. He
referred to communities moving towards compliance but making
the process relevant and doable for Alaska. He opined that
the policy call was deciding whether the funds were wanted
and could be used well, and then adopting an interim
project.
Representative Kelly noted that the private sector was
moving ahead on the codes and asked if the federal
government would be satisfied with codes already in place.
Mr. Persily did not think so. He believed the legislature
would have to craft legislation that both complies with the
energy efficiency standards required under ARRA and works
for Alaska.
Co-Chair Hawker asked if local government could enact
standards in lieu of the state. Mr. Persily quoted the
legislation: "…the state or the applicable units of local
government that have authority to adopt building codes will
implement the following..."
11:39:52 AM
Representative Kelly stated for the record that just
determining how to deal with federal requirements would not
th
satisfy citizens who want more states rights as per the 10
amendment. He asked if there was some way to get around
federal requirements. Mr. Persily responded that there
probably was not; he thought there would be considerable
discussion regarding the issue.
Representative Austerman queried requirements for Items 36
and 37 and asked why the items were not in the original
budget. Ms. Hanrahan replied that originally the energy
funds assurances applied to all three programs or only to
one. She reported receiving conflicting information
regarding which programs were affected. She added that
another issue tied weatherization was the requirement to use
the prevailing wage, which is not how weatherization has
been operated in Alaska.
11:43:21 AM
Mr. Butcher explained that Davis-Bacon Act wages [a federal
law requiring the payment of prevailing wage on public works
projects] have historically been exempted for federal funds
coming in for weatherization, but ARRA stipulates that the
provision would apply to stimulus funds. All states are
waiting for guidance from the U.S. Department of Energy. He
did know that the Department of Energy would make the
decision, not the individual states.
11:44:24 AM
Mr. Fauske stated that AHFC was anxious to hear back from
the federal government about the issue; the corporation did
not want to "taint" the $200 million currently in
weatherization by adding federal money that requires the
measure.
Representative Gara wondered why the administration had
rejected Items 36 and 37. He felt that the administration's
recent response had been offensive. Ms. Hanrahan stated that
the administration had not taken the decision lightly. She
shared that the administration had been told to be
conservative in its approach until hearing from the U.S.
Department of Energy.
Representative Austerman asked for clarification concerning
federal requirements related to the block grants. Mr.
Persily detailed that the U.S. Department of Energy had
officially determined that $9.6 million would go to the
state for energy efficiency and conservation block grants;
$4.5 million would bypass the state and go directly to the
10 largest cities and boroughs. He specified that in
addition, 60 percent of the state's $9.5 million had to go
to communities too small to received direct funding.
11:48:59 AM
Mr. Fauske replied that AHFC is not aware of strings
attached to the funds. Ms. Hanrahan reiterated that the
department had had no guidance concerning the funds, aside
from the weatherization funds.
Representative Gara wondered how the 90 percent compliance
would be measured. Mr. Persily replied that within eight
years from the act at least 90 percent of new and renovated
residential and commercial buildings space must meet the
requirements. Representative Gara asked for further
clarification. Mr. Persily felt that the answers would come
from the U.S. Department of Energy. He stated that the
definition of "new" was not clear.
11:52:24 AM
Mr. Fauske concurred with Ms. Hanrahan about the issue of
compliance.
Ms. Hanrahan stated that the governor would need to sign
certification that she will comply with the assurances to
implement an energy building code and that the state would
implement a general policy ensuring that utility financial
incentives are in line. She emphasized the issue of
decoupling, which would have a significant impact on Alaska;
the administration wanted to make the assurance without the
decoupling. Regarding the state energy building codes, she
believed the question of preemption of local codes needed to
be answered. She felt that the cost to the homeowner needed
to be addressed; renovating a house in Fairbanks, for
example, would cost around $12,500.
Co-Chair Hawker questioned the relevancy of her remarks
about renovation costs, since the assurances would relate to
new construction. Ms. Hanrahan believed renovation applied.
11:55:20 AM
Mr. Persily stated that any renovation would be voluntary.
Ms. Hanrahan replied that the statewide energy code would
cost private homeowners when there was new construction on a
residential building.
Vice-Chair Thomas felt that Alaskans should learn to help
themselves when it comes to conserving energy in their
homes. He relayed personal experience. He felt that public
buildings, especially schools, need to be brought up to some
kind of standard.
Representative Fairclough noted that the communities of Tok,
Glennallen, and Kodiak had asked the legislature to consider
weatherization.
11:58:43 AM
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT
Co-Chair Hawker wanted to discuss the larger dollar items,
Items 10, 22, and the Unemployment Insurance Modernization.
He pointed out that the last line item was found in a
supplemental document.
GUY BELL, ASSISTANT COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT (DLWD), discussed Item 19, $4.3
million for Employment and Training Services. He explained
that the funding would allow the department to provide
enhanced services to out-of-work Alaskans through a web-
based labor exchange system and would fund eight positions,
including counselors and employment security specialists in
Anchorage, Fairbanks, Wasilla, and Kenai.
Co-Chair Hawker asked if the job centers would provide
services to rural Alaskans. Mr. Bell responded that the
department already provides services to rural areas; the
item would address areas with the largest influx of
unemployed workers.
Representative Gara asked about the closing of the Tok job
center and wondered if it should be reopened.
12:03:35 PM
Mr. Bell replied that job centers in Tok and Glennallen had
been kept open; Delta Junction and Petersburg were closed.
He explained that DLWD workload declines during the good
times and increases in more difficult times; 31 positions
had been eliminated over the past five years through both
layoff and attrition.
Representative Joule asked if the eight positions would be
in places with the highest unemployment. Mr. Bell clarified
that the positions were not necessarily in places with the
highest unemployment but the places with the largest volume
of job center activity.
Representative Joule explained that unemployment numbers in
rural Alaska may not reflect the actual number of
individuals who are unemployed. He wanted attention paid to
people who have given up on getting a job.
12:06:35 PM
Representative Fairclough asked if the 31 positions were
reclassified or if the budget was reduced. Mr. Bell
responded that the number of full-time positions had been
reduced in the budget.
Representative Fairclough queried the year the budget had
been reduced.
TOM NELSON, DIRECTOR, EMPLOYMENT SECURITY DIVISION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, informed the
committee that since 2005, DLWD has reduced 31 positions in
its employment and training component. The department has
been able to manage the workload by reclassification of
remaining staff. He noted that the unemployment rate was 6.2
percent in 2007.
Representative Fairclough asked if she would then see the
dollar reduction to the department in the 2005 budget. Mr.
Bell responded that the reduction in position count could be
seen, as well as a reduction in dollars. He noted that the
Division of Employment Security is nearly 100 percent
federally funded. The reduction in federal funding over the
period was reflected in the budget.
12:08:44 PM
Co-Chair Hawker queried the department's need for the
positions. Mr. Bell acknowledged sensitivity to increasing
staff but assured the public that asking for the funds would
not mean creating long-term costs.
Co-Chair Hawker asked if collective bargaining would allow
the department to hire positions with the up-front
understanding that they would not have a job when the
federal funds ran out. Mr. Bell replied no; however, there
is considerable turnover, which he explained.
12:11:12 PM
Co-Chair Hawker asked if the positions could be hired on a
contractual services basis with a termination date. Mr. Bell
responded that the department could consider non-permanent
positions, with the understanding that the individuals would
not be receiving standard state benefits because they are
project employees. He stated that the department felt it
would be more fair and appropriate to hire the positions
with benefits.
Co-Chair Hawker asked whether the positions should be
filled. Mr. Bell answered in the affirmative; he believed
the criteria could be met and the funds spent creatively in
a way that avoids future commitment from the state.
Ms. Hanrahan pointed out that the agencies had been asked to
describe what could be done with the funds without expanding
government.
Representative Kelly expressed concerns with adding
employees that would not have work in several years. He was
concerned about timing and asked why the positions should be
filled.
12:15:20 PM
Mr. Bell reiterated that the department was accustomed to
jobs coming and going depending on the economy. He thought
the goal to upgrade the skills of Alaskan residents and to
reduce non-resident hires was good. He pointed out that
there are job opportunities for Alaskans.
Representative Kelly reiterated concerns about the timing.
He would rather say no to the effort than get people to work
and cut off later.
12:18:33 PM
Representative Joule talked about references to "Velcro"
describing jobs that the state is stuck with. He thought
there were two sides to the story; for some people, the jobs
would provide an important level of security. He did not
think the question was where the work was but where the work
was going to be when the recession was over. He wanted to
provide vision for the future.
Representative Joule listed the necessities for his
constituents: education, healthcare, transportation, and
some level of resource development. He supported moving
rural people who cannot find work in construction towards
the jobs in education and health care that are being filled
by imported workers. He felt strongly that DWLD's ability to
retrain Alaskans is important and stressed the need for a
vision for Alaska's workforce.
12:21:15 PM
Vice-Chair Thomas told the committee that while doing
research for HB 58 (debt retirement for college students
from Alaska) he was shocked to discover that the state does
not track the need for professional jobs such as engineers,
teachers, or biologists in Alaska. He thought there should
be focus on tracking more than workforce development. He
pointed out that highly trained workers end up leaving
Alaska. He asked if two of the new positions could be
dedicated to determining the needs for professionally
trained workers.
Mr. Bell explained that industry and occupational forecasts
are done by the department's research and analysis section.
Projections for job growth and decline are made by
occupation. The most recent projection covers from 2006 to
2016 and shows there will be a need for 30,000 positions.
Identifying the supply side or how to train for priority
occupations is more difficult. He sympathized with
Representative Thomas regarding HB 58; he hoped to come up
with a workable method to track the need.
12:26:38 PM
Vice-Chair Thomas noted that the lack of inventory of need
made it difficult for families to plan the future related to
returning to Alaska and finding a job. He asked again if two
of the positions could be dedicated to the research.
Mr. Bell commented that the department is waiting for
information on how many jobs would be created by the
stimulus package. He thought there might be a role for
research analysis economists to set up a tracking mechanism.
Vice-Chair Thomas asked if the answer to his question was
no. He did not hear anything from the department about
helping college students. Mr. Bell responded that he was not
saying yes or no. The department acknowledges that the need
is important. He stated that there may be opportunities
within the funding.
12:29:39 PM
Representative Gara relayed a story of a constituent who had
been a job counselor for DLWD. His position had been cut.
The man expressed frustration at being unable to have a job
where he knew he could help multiple people find work, when
there were so many out of work. He asked for an explanation
of how the department operated in terms of getting people
retrained and able to get new jobs, and how this related to
the new positions.
Mr. Nelson explained that DLWD front-line staff (the
counselors and employment security specialists, which the
eight positions would be) helps people get re-employed. In
current conditions, the department is serving an increase of
68 percent of initial unemployment insurance claims; that
activity started in June 2008. The front-line staff tries to
intervene and immediately reconnect the workers to the
workforce. The ideal is to reconnect them in the areas and
industries they worked previously; if that is not possible,
staff tries to find them something suitable. If there are
significant barriers, more intensive services are required.
The counselor positions spend more time dealing with more
complex cases, such as drug and alcohol treatment and
referrals to child services. The system is designed to
facilitate those kinds of referrals. At any one point in
time on the continuum of services, workers can exit into
suitable employment.
12:33:10 PM
Representative Kelly pointed to Vice-Chair Thomas's question
regarding the needed research. He wanted the question
answered. Mr. Nelson responded that part of the answer lies
in two legislative appropriations over the past two fiscal
years. One appropriation was for a variable reporting system
and the other was for a credentialing project. The
combination of both will allow DLWD to inventory the skills
in communities in Alaska and to provide variable reports to
employers who have the needs. For example, if an employer in
a hospital has a need and lists the jobs with DLWD, the
department will be able to tell them ahead of time how many
of the skills or credentials exist in a certain geographic
area. That work along with the research and analysis will
provide the needed information.
Representative Kelly expected an answer to the question. He
expressed concerns that the department dealt more with union
jobs. He thought the department should work with the
university's data.
12:37:11 PM
Mr. Bell moved to Item 22, $9.2 million for the Working
Investment Act, a federal program directed towards re-
training unemployed or dislocated workers. He explained that
in FY09 the department received about $12 million in funding
under the program; the item would increase that amount
significantly.
Mr. Bell detailed that there were three categories to the
program. The first is a program focused on at-risk and
economically disadvantaged youth between the ages of 14 and
24. The $4 million would focus on a summer employment
program to increase work preparedness. The department has
begun contacting agencies that administer youth programs to
get the word out that the program might be available this
summer. The department hoped to serve about 1,600 youth
through the program. The employment opportunities for the
youth would be 100 percent subsidized.
Co-Chair Hawker questioned what would happen when the money
runs out. Mr. Bell replied that they would have a work
skill; the person could go into a trade or continue their
education.
12:40:49 PM
Representative Joule asked if the program would apply to
college students who come home in the summer months. Mr.
Bell replied that the student would need to meet income and
other eligibility criteria; the program is generally
intended more for young people who are disconnected.
Representative Austerman asked if the program would span two
summers. Mr. Bell responded that the funding would expire
June 30, 2011.
12:42:35 PM
Representative Crawford asked who would get the benefit of
the young people's labor and what criteria would be used to
decide who would get the subsidized workers. Mr. Bell
described a similar program in Anchorage. The entities
getting the workers could be in the private, public, or non-
profit sector.
Representative Crawford asked for more information. Mr.
Nelson gave the example of the King Career Center, a
construction academy in Anchorage. The trained youth are
hired by a consortium of construction companies and industry
leaders. The youth learn industry standards and then the
industry hires them. Last year, all but three of more than
70 youth that went through the center were hired. Ideally,
the positions would later be unsubsidized.
Representative Crawford thought companies would fight over
the fully subsidized positions.
12:45:23 PM
Mr. Nelson agreed. One of DLWD's tasks is to develop a
relationship with the employers to promote the programs for
youth as well as adult workers.
Representative Crawford did not understand the 100 percent
subsidy. He described experience of industry giving a 40
percent break for a first-period apprentice. Industry
competes for the 40 percent break. He wondered why there
would be such a high break, when it could be spread out to
more kids at a 50 percent subsidy, for example. Mr. Nelson
pointed out that the emphasis of the incentive funds in the
program is that the full subsidy is better than the normal
50 percent or less. The formula under the workforce
investment act works to develop an on-the-job training
opportunity or federally recognized apprenticeship
opportunity. The incentive is to get more employers
involved. The incentive is short-term.
Representative Crawford spoke of experience with prison
labor contracts that were ended because some businesses were
at a huge advantage with the cheap labor force. He could see
possibility of abuse. He queried the criteria that would be
used to decide which company would get the free workers.
12:48:52 PM
Mr. Bell admitted he did not have all the details and
offered to get more information.
Representative Crawford reported that every year 50,000 to
70,000 or one in four Alaskan jobs are filled by workers
from out-of-state, mainly in tourism, the fishing industry,
and the construction industry. He thought that a better
case could be made for connecting Alaskan kids with those
jobs. He felt the 100 percent subsidy proposed would benefit
employers more than employees.
Mr. Bell promised to get more information about the
perimeters of the program.
12:50:45 PM
Representative Austerman wanted to know, regarding Item 22,
if additional employees would need to be hired to do the
training. Mr. Bell replied that the department did not plan
to add additional staff. The work will be done mostly
through training providers; DLWD will be directing more
people to training. Eligibility criteria is being
established. More people will be trained without increasing
staff.
Co-Chair Hawker queried the strings attached to the item.
Mr. Bell explained that there will be a federal fund
increase in the operating budget. The department will work
with other training providers such as the university rather
than create permanent training programs. He cited other
experience with federal grants for large amounts of money
for specific training. He pointed to good partnerships with
training providers around the state.
Co-Chair Hawker asked if the goal could be accomplished. Mr.
Bell answered yes.
12:53:32 PM
Co-Chair Hawker asked if the governor's office found the
program acceptable in terms of risk. Ms. Hanarahan responded
that the policy issue must be decided by the governor and
the legislature.
Mr. Bell turned to the department's last item, Unemployment
Insurance Modernization. He noted that the issue has been
controversial for other states because of the strings
attached.
Co-Chair Hawker added that the issue had been discussed with
the governor's office. He believed the item would require
careful scrutiny.
Mr. Bell explained that the item was related to the
unemployment insurance program administered by DLWD. In
general, unemployment insurance (UI) is an insurance program
funded in Alaska by both employers and workers. A weekly
benefit is provided to workers who become unemployed to
support them until they are re-employed. The maximum weekly
benefit was increased during the last session to $370 per
week. Alaska is one of three states nationally in which
employees pay a portion of the UI tax; in all other states
the UI tax is paid fully by employers.
12:56:34 PM
Representative Crawford interjected that the legislature had
substantially raised the share that employees paid.
Mr. Bell continued that the ARRA provision offers monetary
incentive to states that adopt certain changes or offer
certain conditions for the purposes of qualifying for the UI
benefits. For Alaska, the incentive would be $15.6 million;
if Alaska met the criteria, the money would be deposited
into Alaska's UI trust by the federal government. He noted
that a legislative appropriation would not be required; the
deposit would automatically occur when the criteria were met
and the state applied for the funds.
Mr. Bell detailed that the first condition to receive one-
third of the incentive would be Alaska adding an alternative
base period for the purpose of qualifying individuals for UI
benefits. The rest of the funding would be dependent on both
the alternate base period and the state meeting at least two
of four specifically identified criteria. The Department of
Law (LAW) has already determined that Alaska meets the
second set of criteria. Therefore, Alaska is compliant.
However, in order to receive anything, the state must meet
the first criteria; Alaska is not compliant on that.
Co-Chair Hawker asked if the committee could stipulate point
two, while recognizing that point one is at issue. Mr. Bell
disclosed that Legislative Legal had raised questions
regarding the issue; LAW believes the criteria are met.
Mr. Bell reported that one of the primary concerns regarding
the provision in other states has been specific language in
ARRA indicating that in order to be in compliance, there
needs to be a change to permanent law. A number of states
have asked what that means. On March 19, 2009, the U.S.
Department of Labor indicated that the change had to be
permanent; however, if a state eventually decides to repeal
or modify any of the provisions, it may do so without
returning the incentive payments.
1:00:07 PM
Co-Chair Hawker asked reaction to the idea of passing the
law with an inherent repeal provision. Mr. Persily replied
that his understanding was that a sunset provision could not
be put in the law. To receive the one-third funds, the law
making the provision permanent in statute could be passed,
and then it could be repealed later.
Mr. Bell provided more information about the alternate base
period. The base period is the period of time that the
department looks at to determine if an individual is
qualified for UI benefits and the amount they will receive.
For example, if a person applied for UI benefits in the
present quarter (January 1, 2009 through March 31, 2009),
the department looks back at the four quarters preceding the
last quarter they could have worked, or September 1, 2007
through September 31, 2008; the most recently completed
quarter is skipped in determining eligibility. The recovery
act would change the law so that a person would be evaluated
under the alternate base if they did not qualify under the
current base.
Mr. Bell continued that the department looked at 2008 to
determine whether making the change would have a fiscal
impact on the UI trust. Individual claims denied in 2008
were re-evaluated to see if the applicants would have
qualified under the alternate base criteria. The department
determined that approximately 1,300 additional individuals
would have qualified for UI benefits; the estimated payout
would have been approximately $1.5 million. The information
was then given to the UI actuary, Jim Wilson, who determined
that the result would be a $10 per employer per year
increase for an annualized worker. The relative cost to the
employer would have gone from $376 to $386.
1:03:45 PM
Representative Kelly asked if raising benefits encouraged
workers to get back to work as soon as possible or to stay
on benefits. Mr. Nelson believed the intent of the UI weekly
amount is only a partial replacement of wages, or about 35
percent. About half of applicants receive the benefits.
Representative Kelly asked if benefits were a stimulus to
employment. Mr. Nelson did not think it was a stimulus to
employment.
Co-Chair Hawker asked if the increase in benefits would
motivate people to return to work or to be deadbeats. Mr.
Nelson stated that the department stimulates people to get
back to work. He did not think the amount of money
accomplished that, but he believed the department did a good
job engaging people in order to re-employ them as soon as
possible.
Representative Crawford interjected that unemployment is a
stimulus to keep workers in Alaska, especially apprentices
and trainees. Otherwise, they go other places where wages
are as high or higher. The legislature raised unemployment
to keep people in the state.
1:07:08 PM
Representative Gara opined that the public might support
rejecting stimulus funds for the item, which does not create
jobs. He reminded the committee that UI money goes to people
who are looking for work and does not subsidizes deadbeats.
He asserted that the benefits support economic recovery; he
estimated $15.6 million would enter the local economy at a
cost of $2 to $3 million to employers.
Mr. Bell spoke to the Unemployment Insurance Trust Fund,
which has a surplus as of Dec 31, 2008. He thought the
system was working well.
1:09:55 PM
Mr. Bell presented the employer's perspective, whose UI tax
burden is lessening from 2008 to 2010. The average employer
rate was 2.5 percent in 2005; in 2009 it is at 1.15 percent.
Mr. Wilson figured the rate impact of an alternate base
period with the 2010 employer share, assuming the state
recognizes 100 percent of the alternate base liability. The
employer rate would be 1.12 percent with the alternate base
period; without it would be 1.1 percent. There would be a
relative increase in cost, but because the employer share is
declining, the relative impact is still trending downward.
Mr. Persily thought the calculations assume that the entire
$15 million put into the trust fund is appropriated out for
eligible items under the program, as opposed to leaving some
behind in the trust fund, which would result in a lower
employer rate. Mr. Bell agreed; the department did not
factor in the additional $15.6 million.
Co-Chair Hawker wanted to be sure the committee was
following the conversation. Representative Gara said he was
not. Co-Chair Hawker referred to a remedy that would be
presented later.
1:13:27 PM
Mr. Bell explained another pertinent provision in ARRA that
does not relate to the alternate base period but that
affects Alaska. In order to meet the criteria of the act,
Alaska also has to be in compliance with all the provisions
of the federal UI act. Alaska is on notice that it does not
conform to the ability to allow federally recognized tribal
entities to become self-insured or reimbursable employers.
Generally speaking, employers in the state are charged a
rate for UI based on experience. A reimbursable employer,
such as some non-profits, the state, and other entities
reimburse the trust for actual experience, or UI benefits
paid to workers that left them. The federal law requires
states to enable federally recognized tribal entities to opt
to become reimbursable employers. There are around 305 such
entities in Alaska. The department did not think very many
of the entities would become reimbursable, but the option
has to be available. The conformity issue exists outside
ARRA, but is also a condition of the act.
1:15:30 PM
Representative Fairclough asked how long the department has
been aware of the non-compliance. Mr. Nelson replied that
the department was made aware in 2002 when Congress
prevented the U.S. Department of Labor from sanctioning
Alaska with federal funds.
Representative Fairclough wondered why legislation had not
been introduced to remedy the situation. Mr. Bell responded
that DLWD hoped legislation was going to be introduced to
address the matter.
Representative Fairclough asked who was reviewing the
provision. Mr. Bell replied that the Attorney General's
Office has reviewed the legislation and aggress that the
state needs to move forward with compliance.
Representative Fairclough wondered if the tribal entities
had given support. Mr. Bell did not think the department had
reached out to tribal entities. He said analysis had shown
that the actual benefit payouts in the aggregate for the
entities is significantly greater than the amount taken in.
When an employer becomes reimbursable, the employer becomes
100 percent responsible for the liability of the UI claims;
the employees do not pay a rate.
1:18:46 PM
Representative Fairclough asked about pooling with other
organizations. Mr. Nelson answered that the tribal entities
are listed on an annual eligibility federal register and
able to receive services from the Bureau of Indian Affairs
the U.S. Department of the Interior. The list includes
tribal employers and sub-entities that they wholly own. The
department had not reached out to the entities because each
one is different.
Co-Chair Hawker asked whether Alaska's child support
division and some block grants require the same recognition
of federally recognized tribal entities as the UI tax
provision. Mr. Nelson replied that the department's
sanctions result in a de-certification to receive funds from
the U.S. Department of Labor Employment and Training
Administration.
1:21:00 PM
Mr. Nelson noted that the state would lose a current 5.4
percent federal unemployment tax act credit, valued at
approximately $111 million. The state would have to start
paying the amount at de-certification. In addition,
approximately $20 million in UI administrative funds would
be lost; potentially job center funding could also be lost.
Co-Chair Hawker believed the Department of Revenue and the
Department of Health and Social Services would be affected
as well. Mr. Nelson agreed. He pointed out that the
requirements would still remain.
Representative Kelly asked whether the law hand to be
changed to accept the stimulus funds. Mr. Nelson replied
that the law would need to be changed.
Representative Gara asked whether other federal money would
be at risk if the legislature does not pass a law by the end
of session. Mr. Bell replied that significant progress needs
to be demonstrated. He did not think there was an absolute
answer to the question.
Representative Crawford asked about timing related to
compliance. Mr. Nelson replied that he did not know.
1:25:42 PM
Co-Chair Hawker said the issue would be revisited in
committee. He believed that the compliance put several other
state programs at risk. He spoke of legislation that had
been introduced to remedy the situation.
Mr. Bell described the progression of events that would take
place with compliance:
· The $15.6 would be deposited into the Alaska UI trust.
· The money would be held by the trust and earn interest.
· The money could be used to pay for benefits.
· Alternatively, subject to legislative appropriation,
the money could be used either for UI program
administration or technology improvements, or for re-
employment services through the job center network.
· There is no time limit on expenditure of the funds.
1:27:41 PM
Co-Chair Hawker asked whether the department factored in
adjustments to the trust for the investment of the $15.6
million. Mr. Bell replied that they did not.
Co-Chair Hawker asked about a possible remedy to the
increase in employer UI rates. Mr. Persily stated that there
had been some objections from employers, the National
Federation of Independent Businesses (NFIB), and the Alaska
State Chamber of Commerce. He explained that the provision
works like a capital appropriation that goes into the UI
trust fund. The fund is then overfunded and earns interest.
The legislature has the option under ARRA of appropriating
out any or all of the $15.6 million to spend on eligible
items. The $10 per year cost to the employer does not kick
in until after three years and only if all of the amount
were appropriated out and never earned interest. He said
that a solution could be found in finding out how much must
stay in the trust fund so that there is no cost to
employers; the rest can be used for eligible items.
Mr. Bell added that the issue is complicated; however, the
$15.6 million would go into the trust and increases the
solvency of the fund and earns interest.
1:30:42 PM
Mr. Bell pointed out that more careful analysis would have
to be made to determine how long the money would cover the
liability.
Mr. Persily noted that the decision about appropriating the
$15.6 million does not need to be made this year. The
current decision is whether the legislature wants to make
the statutory change in the base period to get the $15.6
million into the trust.
Co-Chair Hawker believed only a few million dollars would be
needed to keep employers from an increase in UI rates and
asked how much of the $15.6 million would be used. Mr.
Persily reported that there is preliminary conjecture that
it might be enough to leave $3 million in the fund
permanently, leaving $12 million for appropriation. He
agreed that the department should calculate projections with
its actuary if the intent is to hold employers harmless.
Co-Chair Hawker emphasized that $3 million was an educated
guess and wanted stronger numbers, but noted that the NFIB
and chamber of commerce were supportive of the option.
1:32:54 PM
Representative Gara queried what could be done with the
other $12 million. Mr. Bell replied that the amount could
possibly be used in the general fund as long as it was used
for eligible purposes. He disclosed that the department has
received general funds over the past couple years to cover
salary increases because of the declines in federal funding;
he did not know if the general funds would still be needed.
The department gave up general funds for the UI division,
because workloads were up and federal cash flow increased.
He detailed that there were some general funds still in the
employment services component.
Representative Gara asked if the $12 million could be used
anywhere. Mr. Bell replied that he could not comment on
possible conversations with the chamber of commerce. He
reiterated the need for the department actuary to conduct an
analysis before he could comment. He believed whether DLWD
needed general funds could be re-evaluated.
1:35:57 PM
Representative Gara viewed the money as free money until he
heard otherwise. Co-Chair Hawker believed there was a route
forward, although more calculations needed to be done. He
had originally viewed the ARRA provision as one of the most
problematical.
Mr. Bell noted that the measure would take a statutory
change that will allow more people to become eligible for UI
benefits; therefore, it increases liability to the UI trust.
He reiterated that future legislative committees could
revisit the law if it is passed.
1:38:02 PM
Ms. Hanrahan noted confusions due to uneven guidance and
lack of guidance. She added her appreciation for the
committee and the process.
Co-Chair Hawker pointed to a need for much more policy
discussion.
HB 199 was HEARD and HELD in Committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| A M E N D M E N T 1 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 2 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| CSHB161 Explanation of Changes from (H)CRA.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Exec Budg Act-HB127-detailed comments 3-23-09.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| AK Railroad briefing.ppt |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| AMHTA Subport HB161 Admin Briefing Paper 3 24 09.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Blank Rome memo to ARRC 032309.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| A M E N D M E N T 3 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 4 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 5 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| CSHB161(CRA)-DOR-TRS-03-27-09FN Corrected.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| DHSS Response 033009.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| HB127 Letter AK Miners Assoc..pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB127 Opposition Letter.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB127_Sponsor_Stmt.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB161 SPONSOR STATEMENT.mht |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| HB161 Labor Bldg. Lease Costs.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep Millet Response from Dept of Admin.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep Millet Response from The Land Trust.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep. Millet Questions.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Subport Architect Presentation.ppt |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |