Legislature(1999 - 2000)
02/17/2000 01:40 PM House FIN
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HOUSE BILL NO. 343
"An Act making and amending capital, supplemental, and
other appropriations and reappropriations; making a
reappropriation under art. IX, sec. 17c, Constitution
of the State of Alaska, from the constitutional budget
reserve fund; making appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
Co-Chair Mulder provided members with a spreadsheet analysis
of HB 343 from the Office of Management and Budget, dated
2/7/00 (copy on file).
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR reviewed the Governor's
supplemental request. When the Governor took office there
was over $100 million dollars in "pared-down" supplemental
items pending. The Governor made it one of his top
priorities to reform the overall supplemental budget
process. The Governor concluded that the situation of under-
funding budgets that would obviously require supplemental
appropriation was unsatisfactory. Most formula programs have
been funded at a level consistent with projections in the
FY00 budget. Funding for disasters and fire suppression was
retained in the supplemental budget. Expenses for fire
suppression and disasters exceeded the amount included in
the FY 00 budget plan. The average amounted needed for fire
suppression over the past five years has been $11.7 million
dollars.
Ms. McConnell noted that $21 million dollars are needed in
the FY 00 budget to cover thirteen entitlement programs that
were insufficiently funded, including pupil transportation.
Pupil transportation was $2.1 million dollars short.
Estimates for pupil transportation costs are based on a 3.5
percent growth factor. This was exceeded in three school
districts: Fairbanks, Anchorage and Kenai. She observed that
there is limited competition in those areas. There is no
cost control element on a straight reimbursement basis.
Ms. McConnell observed that there were savings in some areas
of the FY 00 budget. She noted that K-12 enrollment was
below the anticipated level. Authorization for education
foundation formula funding was $12.4 million dollars over
the FY 00 required amount due to decreases in enrollment and
a $7.9 million dollar increase in federal aid. This will
offset other areas in the supplemental including student
transportation.
Ms. McConnell referred to other areas were savings offset
supplemental costs. The total supplemental amount will be
within the budgeted amount, with the exception of disaster
expenses for the on-going Central Gulf disaster. Savings in
the Temporary Assistance to Needy Families (TANF) block
grant can be used to fund $1.5 million dollars in daycare
assistance grants, to meet the commitments to people coming
off of welfare. Approximately $3.1 million dollars earmarked
for Y2K funding was not needed and will be used to offset
the $4.5 million dollar shortfall in the longevity bonus
program. Federal funds were used to supplant state funds in
front line social workers and subsidized adoption.
Ms. McConnell referred to power cost equalization (PCE). The
funding package for PCE was a combination of the funds
remaining in the PCE Fund ($2.2 million dollars), 60 percent
of the four-dam pool revenues ($5.5 million dollars),
interest earnings ($200 thousand dollars), and the National
Petroleum Reserve-Alaska (NPRA) grant ($7.8 million
dollars). The Administration has recommended that the one
time additional dividend from Alaska Industrial Development
and Export Authority (AIDEA) be applied to the PCE Fund.
That way it can be used if it is needed this year or in the
next year.
Representative Williams asked for more information regarding
PCE funding.
Ms. McConnell explained that 60 percent of four-dam pool
revenues is approximately $5.5 million dollars. This funding
has previously gone to self-help projects, which have been
completed.
Ms. McConnell provided members with a spreadsheet of
estimated costs for the on-going, Central Gulf storm
disasters (copy on file). Funding for the disasters was
included in section 1, without an identified amount. She
noted that as of 2/11/00, $16.3 million dollars in costs
have been identified. This includes the cost of clearing
avalanches by the Department of Transportation and Public
Facilities and the Alaska Railroad Corporation (ARRC). This
also includes expenses associated with the restoration of
power and telephone service. Expenses were divided into
three categories: public assistance (infrastructure costs),
individual assistance costs and business losses. Public
assistance is a category used by the Federal Emergency
Management Agency (FEMA) and totals $13 million dollars.
Each category was divided into reported and verified
expenses. Verified expenses have been verified by teams
working with FEMA as being eligible for FEMA disaster funds.
Only $7.9 million dollars have been verified to date, but
they expect additional verifications by the FEMA teams. The
majority of the individual costs were in Cordova. These
expenses include temporary housing for people who were
evacuated and have not been allowed to return to their homes
due to avalanche danger. Business loss was minimal.
She observed that verified costs of $9.8 million dollars
were transmitted to the President. This amount will be
updated as more costs are verified by FEMA.
Representative J. Davies questioned why items included in
the verified column were not also included in the reported
column. Ms. McConnell replied that they should have been
reported in both.
Representative G. Davis observed that a lot of individuals
were stranded in Girdwood. He questioned if their expenses
will be reimbursable. Ms. McConnell did not know. Programs
were intended to cover actual loss of homes or business as
opposed to lost income. There were some people that chose to
go to hotels when other free housing choices were available.
Ms. McConnell noted that the President has declared a FEMA
disaster and the state of Alaska will be eligible for
reimbursement.
Representative J. Davies asked if there has been discussion
regarding a fast track supplemental. Ms. McConnell noted
that past fast track supplementals have not been considered.
Disaster funding could be separated. She emphasized that it
would be better to move the entire supplemental request as
fast as possible. She observed that the administration has
tried to separate items that could be part of the next
year's budget. Items included are strictly for the current
fiscal year. Representative J. Davies had the impression
that there are some items that need to be done soon. He
suggested that there be some separation.
Ms. McConnell noted that there have been inquiries regarding
Power Cost Equalization (PCE) and childcare assistance. She
observed that NPRA grant funding would not be available
until April. If the Administration does not receive
clarification on the supplemental request, individuals that
are currently receiving childcare assistance will have to be
cut off. She noted that there are sizable wait lists for
childcare assistance. The Administration is proposing to
fund childcare assistance through excess in the TANF block
grant. She observed that the increase in childcare
assistance is tied to the decrease in welfare; there is
excess in the TANF block grant because the caseload is being
reduced.
Representative Foster referred to section 9d, pupil
transportation. Ms. McConnell explained that school district
estimates are based on a annual 3.5 increase in cost. The
cost of pupil transportation increased by more than 3.5
percent in Anchorage has been higher. Fairbanks was $2.6
million dollars over and Kenai was $750 thousand dollars
over the estimated amount. Other school districts have come
in slightly over or under.
Representative Foster noted that student enrollment was down
and asked the difference in student enrollment. Ms.
McConnell observed that the overall change in pupil count
was 3,100 under the projected amount. Changes in state
policy regarding correspondence school counts affected the
estimate. She emphasized that school districts were caught
by surprise.
Representative Austerman asked if it is possible to get
information on pupil transportation contracts for Kenai,
Anchorage and Fairbanks. She explained that there is not as
much cost control in areas without competition. The contract
amount is reimbursed.
Representative Austerman expressed concern that contracts
were negotiated for a higher amount than was budgeted.
Ms. McConnell clarified that a 3.5 percent growth rate was
used for projection purposes. State statutes provide that
the reimbursement will be for the actual contract amount.
Contracts exceeded the estimated amount. Representative
Austerman questioned if "may" or "shall" is used in the
statutes. He pointed out that school districts have been
aware of the state's budget difficulties.
Representative G. Davis observed that a reduction in
students equated to an increase in pupil transportation.
Representative J. Davies noted that the contracts were
negotiated before student population was determined. He
emphasized that contractors make commitments to schedules
and that it takes time to respond to a change in student
numbers.
Ms. McConnell clarified that school districts normally
negotiate for their contracts. She pointed out that there is
no cost control mechanism built into the state's process.
Representative Williams questioned if there was a
supplemental for pupil transportation in FY 99. Ms.
McConnell stated that there was not a problem in FY 99. Vice
Chair Bunde clarified that labor contracts were renegotiated
in FY 00.
Representative Grussendorf emphasized that private carriers
provide the service. He pointed out that fuel costs have
escalated.
Representative Phillips stressed the importance of a
standard for cost control and questioned if there is a cost
variance in different areas of the state. Vice Chair Bunde
observed that Anchorage maintains its own fleet of buses and
drivers to control costs.
Representative J. Davies pointed out that new schools in
Fairbanks resulted in an increase in the number of routes.
There are some students that must travel by bus for an hour
and a half each way. He maintained that the Fairbanks School
Board is conservative and drives a hard bargain.
Representative Grussendorf noted that there was a jump in
pupil transportation in FY 98.
Representative G. Davis referred to section 4h, satellite
infrastructure. There was a $100 thousand dollar fund shift
from interagency receipts to general funds. Ms. McConnell
explained that interagency receipt authority was included
with the assumption that funding would come from the
university. The university did not receive the funding. This
portion was not related to university needs.
Representative Williams referred to section 9c, foundation
formula. Ms. McConnell clarified that $11.811.2 million
dollars of the amount authorized for education foundation
formula funding was not required. She reiterated that some
areas needed more funds than were authorized. This area
needed less and can help cover cost of the supplemental.
This is the only area were there was a reduction from the
authorized amount to what was actually needed.
In response to a question by Representative Austerman, Ms.
McConnell reiterated that the state would receive FEMA
reimbursement for the disaster. The federal government will
pick up the larger percentage of what is fundable.
Representative Austerman referred to NPRA funding. He did
not think it was likely that the state would receive
additional NPRA funding. Ms. McConnell observed that the
application for NPRA funding total $71 million dollars.
Approximately $40 million dollars are available. She
emphasized that the process is not finished. She observed
that funding for PCE would be needed in the next fiscal
year.
Representative Austerman questioned if the Governor
anticipated offering a long-term financial plan for PCE. Ms.
McConnell noted that discussions regarding the future of PCE
are still occurring. She acknowledged the need for a long-
term solution.
Representative Austerman observed that there was no firm
offer in FY 00 for purchase of the four-dam pool. He
expressed support for a PCE endowment. Ms. McConnell
stressed that the Administration is looking at all
possibilities.
HB 343 was heard and HELD in Committee for further
consideration.
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