Legislature(2007 - 2008)HOUSE FINANCE 519

02/07/2008 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 313 G.O. BONDS FOR CRIME LAB TELECONFERENCED
Heard & Held
*+ HB 343 SUPPLEMENTAL/CAPITAL APPROPRIATIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 343                                                                                                            
                                                                                                                                
     "An  Act  making  supplemental  appropriations,  capital                                                                   
     appropriations,     reappropriations,      and     other                                                                   
     appropriations;    amending   certain    appropriations;                                                                   
     ratifying  certain expenditures;  making  appropriations                                                                   
     to  capitalize funds;  and  providing  for an  effective                                                                   
     date."                                                                                                                     
                                                                                                                                
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
thanked the committee for hearing the bill.                                                                                     
                                                                                                                                
2:45:31 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                                                                      
                                                                                                                                
Section 7-9 Foster Care Base Rate                                                                                               
                                                                                                                                
          Increased  costs in  the  amount of  $656.3 due  to                                                                   
          increase  in Protective Services  Reports received.                                                                   
          Increased  collections   of  Supplemental  Security                                                                   
          Income  (SSI) and Child  Support Services  Division                                                                   
          (CSSD)  receipts  $800.0. Collections  attached  to                                                                   
          IV-E  eligible  children   are  reimbursed  to  the                                                                   
          federal government;  other funds are built into the                                                                   
          Foster Care  Base Rate payments.  Approximate 2,000                                                                   
          children are in foster  care at any given time. The                                                                   
          Foster  Care Base Rate  is $24.13  per day  or $724                                                                   
          per month.                                                                                                            
                                                     $1,456.3                                                                   
                                                                                                                                
LAURA   BAKER,   ACTING   DEPUTY    DIRECTOR,   FINANCE   AND                                                                   
ACCOUNTABILITY,  DEPARTMENT OF  HEALTH  AND SOCIAL  SERVICES,                                                                   
spoke  regarding  the Foster  Care  Base  Rate. She  said  an                                                                   
increase in foster parenting and  foster children in care has                                                                   
resulted in a need for increased funds.                                                                                         
                                                                                                                                
2:47:01 PM                                                                                                                    
                                                                                                                                
Representative  Hawker  thought  the  FY  09  budget  request                                                                   
should  be looked  at to  reflect  the increased  need.   Ms.                                                                   
Baker agreed.                                                                                                                   
                                                                                                                                
Section 7-9 Foster Care Special Needs                                                                                           
                                                                                                                                
          Increased  costs. An  estimated  240 more  children                                                                   
          will  require  special  needs funding  support  for                                                                   
          their  foster care this  year. Approximately  1,800                                                                   
          children  are  eligible  to receive  special  needs                                                                   
          funds at an average cost of $240.00 per month.                                                                        
                                                       $699.8                                                                   
                                                                                                                                
Ms.  Baker addressed  Foster  Care  Special Needs  at  $622.8                                                                   
General Fund (GF)  with a $77.0 federal match,  which relates                                                                   
to a case load increase.                                                                                                        
                                                                                                                                
2:47:55 PM                                                                                                                    
                                                                                                                                
Representative  Hawker referred to  the FY 09  budget request                                                                   
for $1.2  million in interagency  receipts and  no additional                                                                   
GF  and wondered  if  that should  be  reconciled. Ms.  Baker                                                                   
explained that  the $1.2  million in FY  09 relates  to child                                                                   
care  costs  for  foster  care   children  connected  to  the                                                                   
Childcare Development Fund. These  are different cost issues.                                                                   
Representative Hawker asked if  the Department was requesting                                                                   
$622.8 in General  Funds that won't be needed in  FY 09.  Ms.                                                                   
Baker said she would follow up on that.                                                                                         
                                                                                                                                
2:48:55 PM                                                                                                                    
                                                                                                                                
Section 7-9 Medicaid Services                                                                                                   
                                                                                                                                
          ProShare  Disallowance. ProShare was  disallowed by                                                                   
          the  U.S. Department of  Health and Human  Services                                                                   
          Departmental  Appeals  Board in  July 2007.  Before                                                                   
          ProShare  was begun,  the  department funded  these                                                                   
          grants with general  funds. Supplemental funding is                                                                   
          needed to continue the  grants to community service                                                                   
          providers.                                                                                                            
                                                    $17,062.3                                                                   
                                                                                                                                
Ms.   Baker   addressed  the   ProShare   disallowance.   The                                                                   
Department worked  to maximize federal revenue  over the past                                                                   
years and  was able to  save a total  of $40 million  for two                                                                   
years of that  time. The federal government  decided that the                                                                   
Department cannot  use the financing mechanism  which results                                                                   
in a GF increase of $17,062.3.                                                                                                  
                                                                                                                                
Representative  Gara asked  for  clarification regarding  the                                                                   
foster care  base rate.  He asked  if the  base rate  was the                                                                   
per-day reimbursement  rate for  foster families.   Ms. Baker                                                                   
answered in  the affirmative.  Representative  Gara clarified                                                                   
that  the rate  had increased  in  1999 to  reflect the  1993                                                                   
poverty level.  He asked about  the proposed rates for FY 09.                                                                   
Ms.  Baker  said  the  rates   were  still  being  discussed.                                                                   
Representative  Gara  wondered  if  the  supplemental  amount                                                                   
would accommodate  that change.  Ms. Baker answered  that the                                                                   
amount did  not accommodate  any change but  makes up  for an                                                                   
increased  case load and  reflected a  component of  the base                                                                   
services.                                                                                                                       
                                                                                                                                
2:50:54 PM                                                                                                                    
                                                                                                                                
Section 7-9 Nome Youth Facility                                                                                                 
                                                                                                                                
          Increased  operating costs.  The facility  is fully                                                                   
          staffed  and cannot cover  the budgeted  4% vacancy                                                                   
          factor  or  other  costs   related  to  the  larger                                                                   
          facility.  This  request  provides  $70.0  personal                                                                   
          services and $80.0 contractual services costs.                                                                        
                                                       $150.0                                                                   
                                                                                                                                
Ms.  Baker explained  that  the Nome  youth  facility is  now                                                                   
fully staffed and has new utility costs.                                                                                        
                                                                                                                                
Section 7-9 Johnson Youth Center                                                                                                
                                                                                                                                
          Increased  medical costs  for services provided  to                                                                   
          juveniles  at the facility.  In the past  two years                                                                   
          these costs  were covered with ProShare  funds, but                                                                   
          that is no longer an option.                                                                                          
                                                       $250.0                                                                   
                                                                                                                                
Ms.  Baker explained  that  although  the request  is  listed                                                                   
under the Johnson Youth Center,  it also applies to increased                                                                   
medical costs at the McLaughlin,  Fairbanks, Bethel, and Nome                                                                   
centers.  Up until this year the  Department has been able to                                                                   
expand ProShare coverage to absorb the increase.                                                                                
                                                                                                                                
Co-Chair  Chenault  asked  if   Kenai  was  included  in  the                                                                   
request.   Ms.  Baker  replied  that Kenai  has  not had  the                                                                   
increased  expenses. Co-Chair  Chenault wondered  if all  the                                                                   
centers would  be seeing  the increased  costs that  the Nome                                                                   
Youth  Facility was  experiencing. Ms.  Baker explained  that                                                                   
the FY  09 budget does  contain a request  for more  money to                                                                   
bring all the facilities closer to being fully staffed.                                                                         
                                                                                                                                
2:53:26 PM                                                                                                                    
                                                                                                                                
Representative  Gara referred  to increased Medicaid  service                                                                   
cost. His understanding was that  the State budgeted money to                                                                   
replace   lost   federal   Medicaid    funding.   He   wanted                                                                   
clarification on  the difference  in what Medicaid  funds the                                                                   
State received  from the federal government last  FY compared                                                                   
to this FY to get a sense of how much has to be replaced.                                                                       
                                                                                                                                
Ms. Baker  pointed out that the  federal match rate  has gone                                                                   
down and some  of the increases relate to replacing  the lost                                                                   
federal receipts for ProShare.                                                                                                  
                                                                                                                                
Section 7-9 Probation Services                                                                                                  
                                                                                                                                
          Replace uncollectible federal funding for Targeted                                                                    
          Case Management.                                                                                                      
                                                       $600.0                                                                   
                                                                                                                                
Ms.  Baker  described  a fund  source  change  for  Probation                                                                   
Services  in Juvenile  Justice consisting  of a reduction  of                                                                   
$600.0  in  federal receipts  and  an  increase of  the  same                                                                   
amount in General Funds. Juvenile  Justice had planned to use                                                                   
targeted case management, but  they will not be able to claim                                                                   
those funds this  fiscal year. There is a similar  request in                                                                   
FY 09.  Co-Chair Chenault  clarified that  this cost  will be                                                                   
picked up by the  State. Ms. Baker said the  State had picked                                                                   
up the cost until FY 08 when the  reduction was taken, hoping                                                                   
the case management method would work.                                                                                          
                                                                                                                                
Representative Hawker  asked how the item would  be reflected                                                                   
in the FY 09 operating budget.  Ms. Baker said there would be                                                                   
an amendment.                                                                                                                   
                                                                                                                                
2:55:45 PM                                                                                                                    
                                                                                                                                
Section 7-9 Probation Services                                                                                                  
                                                                                                                                
          Court  Ordered  costs. Per  legislative  direction,                                                                   
          these  costs  are requested  through  supplementals                                                                   
          instead  of   being  incorporated  into   the  base                                                                   
          budget.                                                                                                               
                                                       $221.0                                                                   
                                                                                                                                
Ms.  Baker  explained  that the  Legislature  had  asked  the                                                                   
Department  to  come  through the  supplemental  process  for                                                                   
costs that were  above and beyond regular operating  and that                                                                   
were court ordered. Juvenile Justice  has tracked those costs                                                                   
and is asking for $221.0 GF to cover the projected need.                                                                        
                                                                                                                                
Section 7-9 Women, Infants and Children                                                                                         
                                                                                                                                
          Increased  SDPR  from  baby formula  rebates.  This                                                                   
          corresponds  to the  department's  FY 09  increment                                                                   
          request of $650.0.                                                                                                    
                                                       $852.3                                                                   
                                                                                                                                
Ms.  Baker explained  that manufacture  rebates  come to  the                                                                   
State for  any infant formula  that the State  disbursed. Co-                                                                   
Chair Chenault  asked what the  funds would be used  for. Ms.                                                                   
Baker  said the  infant food  packages sent  out through  the                                                                   
program are funded by statutory  designated program receipts.                                                                   
                                                                                                                                
2:57:10 PM                                                                                                                    
                                                                                                                                
Section 7-9 Certification and Licensing                                                                                         
                                                                                                                                
          Increased  authority  to  receive and  expend  fees                                                                   
          generated   by   background   check   applications.                                                                   
          Originally    anticipated    16,000    to    18,000                                                                   
          applications;   projected    increase   is   12,000                                                                   
          applications  from   Foster  Care  and  Child  Care                                                                   
          employees.                                                                                                            
                                                       $945.0                                                                   
                                                                                                                                
Ms. Baker explained  that when the Department  originally put                                                                   
the  numbers  together  for  FY   08,  they  had  anticipated                                                                   
processing    approximately     14,000    background    check                                                                   
applications  from  hospitals,   nursing  homes,  residential                                                                   
child care,  assisted living homes  and other  health related                                                                   
service providers.  At the end of August 2007  there had been                                                                   
23,000 processed and over 9,000  more by the end of December.                                                                   
The majority  of the funds are  for the Department  of Public                                                                   
Safety for fingerprint checks.                                                                                                  
                                                                                                                                
Section 8-9 Alaska Psychiatric Institute                                                                                        
                                                                                                                                
          Increased  Third-Party  payment  receipts  enabling                                                                   
          the department to save  some general funds. This is                                                                   
          reflected  in  section  8,  the  departmental  fund                                                                   
          source list.                                                                                                          
                                                                                                                                
Ms. Baker described this delete/add  supplemental item as the                                                                   
Department  offering up  $850.0  GF mental  health funds  and                                                                   
replacing  that with  statutory designated  receipts for  the                                                                   
same amount.  The Alaska Psychiatric Institute  has increased                                                                   
collections   related  to   third-party   payments  such   as                                                                   
Medicare.  Changes in  the Medicare  regulations allowed  for                                                                   
reimbursement  for diagnosis-related  group activities;  more                                                                   
activities can be claimed for Medicare reimbursement.                                                                           
                                                                                                                                
Section 10-12 Capital                                                                                                           
                                                                                                                                
          Alaska  Psychiatric  Institute Automation.  Funding                                                                   
          for electronic  records system and  tele-behavioral                                                                   
          health   evaluation  and   treatment  system.   The                                                                   
          electronic records system  is partially funded with                                                                   
          an  existing  capital  project with  the  remainder                                                                   
          coming  from the operation  budget. This  system is                                                                   
          used  to  track  important patient  data  and  will                                                                   
          provide  API  with   reliable  funding  and  census                                                                   
          information. API is  moving towards tele-behavioral                                                                   
          health   to   allow  psychiatric   evaluation   and                                                                   
          treatment of patients from remote locations.                                                                          
                                                    $1,200.00                                                                   
                                                                                                                                
Ms. Baker  said that the  Alaska Psychiatric Institute  (API)                                                                   
expects  to collect  approximately $2  million in  additional                                                                   
statutory  designated program  receipts. In  addition to  the                                                                   
fund  source  change  discussed  in the  previous  item,  the                                                                   
Department would  like to supplement the capital  project the                                                                   
Legislature  provided  a  few  years ago  for  an  electronic                                                                   
medical records  system for API.  The original system  was of                                                                   
limited scope.                                                                                                                  
                                                                                                                                
3:01:21 PM                                                                                                                    
                                                                                                                                
Ms. Baker  explained that  in addition,  API hopes  to expand                                                                   
treatment options  to include more community-based  work. The                                                                   
Department  thought it would  be more  beneficial to  ask for                                                                   
the money as a capital project.                                                                                                 
                                                                                                                                
Co-Chair Chenault  acknowledged that the  Legislature started                                                                   
the program DHSS  was asking to capitalize.  He recalled that                                                                   
$674,000  was put  into  the program  and  wondered what  the                                                                   
total cost  would be  to bring  the records  up to date.  Ms.                                                                   
Baker did not have a specific estimate.                                                                                         
                                                                                                                                
Co-Chair  Chenault requested  the  total cost  as it  affects                                                                   
both this year's  budget and the out years.  The Governor has                                                                   
said that she would like to control  the increases. Ms. Baker                                                                   
responded that she would follow up on that.                                                                                     
                                                                                                                                
Section 14 Senior Benefits Payment Program                                                                                      
                                                                                                                                
          Senior Benefits.  SB 4, which passed  in June 2007,                                                                   
          does  not establish  a  flat rate,  but sets  rates                                                                   
          from  $100  to $175/month  depending  on  household                                                                   
          income.  Maximum income  eligibility level  is 150%                                                                   
         of federal poverty guidelines for Alaska.                                                                              
                                                    $18,492.1                                                                   
                                                                                                                                
Ms. Baker explained that the senior  benefits program request                                                                   
is a  fast-track request. Senior  care benefits  expired last                                                                   
year and  SB 4 continued those  benefits. The request  is for                                                                   
$18,492,100;  the estimate  is  in the  informational  fiscal                                                                   
note  that passed  with SB  4.  Ms. Baker  reported that  the                                                                   
program is on track with the payments.                                                                                          
                                                                                                                                
Section 29(b)(1) Ratification: Team Nutrition       $8,210.00                                                                   
Section 29(b)(2) Ratification:  EMS Data Collection $9,488.71                                                                   
Section 29(b)(3) Ratification: Phase II EMS Data                                                                                
                                Collection          $5,533.25                                                                   
Section 29(b)(4) Ratification:  IPEMS CPS Coord.    $6,980.98                                                                   
                                                                                                                                
Ms.  Baker talked  about  Ratifications  in Section  29(b)(1)                                                                   
through   29(b)(4),   which    all   relate   to   unbudgeted                                                                   
reimbursable  services agreements  (RSA)  or services  within                                                                   
Public Health. Due to timing and  miscommunications, DHSS has                                                                   
ended   up   in   a  shortfall   situation.   There   is   no                                                                   
administrative  way to  remedy  the shortfall;  however,  the                                                                   
programs  impacted would  have had the  necessary funding  in                                                                   
the  regular side  of the  accounting system  to cover  these                                                                   
costs.                                                                                                                          
                                                                                                                                
3:05:16 PM                                                                                                                    
                                                                                                                                
Section 29(b)(5)Ratification: Medicaid            $25,141,116                                                                   
                                                                                                                                
Ms. Baker explained that in FY  03 and FY 04 the DHSS saved a                                                                   
total of $40  million related to ProShare. When  ProShare was                                                                   
disallowed,  the $21,357,000  spent  in FY  06 was  ratified.                                                                   
These  funds  were  within  the   total  appropriation;  DHSS                                                                   
expected the federal  revenue and carried a  federal accounts                                                                   
receivable on  the books. However,  the payment has  gone out                                                                   
of  the GF.  She reminded  the  Committee that  DHSS had  the                                                                   
understanding of both the Administration  and the Legislature                                                                   
that there was risk to continuing the refinancing process.                                                                      
                                                                                                                                
Ms.  Baker further  explained  that the  second  part of  the                                                                   
29(b)(5)  ratification is  the Indian  Health Services  (IHS)                                                                   
request for $3,784,017. If someone  goes into an IHS facility                                                                   
and  they are  referred to  a non-HIS,  the Department  feels                                                                   
that the  referral should be  covered by 100%  federal funds.                                                                   
The federal government disagrees,  and other states have lost                                                                   
this appeal.                                                                                                                    
                                                                                                                                
Section 29(b)(6) Ratification: Medicaid         $4,350,407.00                                                                   
                                                                                                                                
Ms. Baker  explained this  ratification as  a small  piece of                                                                   
the FY 07 ProShare ratification.                                                                                                
                                                                                                                                
3:08:27 PM                                                                                                                    
                                                                                                                                
Section 29(b)(7) Ratification:  Health Care Serv. $231,500.00                                                                   
                                                                                                                                
Ms. Baker  described another  ratification related  to health                                                                   
care services in FY 05 for the  women and adolescent services                                                                   
component.  The   Department  over-collected  on   the  grant                                                                   
resulting in a shortfall of $231,500.                                                                                           
                                                                                                                                
3:09:25 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF ADMINISTRATION                                                                                                  
                                                                                                                                
Section 1-3 General Government Unit (GGU)                                                                                       
                                                                                                                                
          Ratified  bargaining unit  agreement costs  for the                                                                   
          GGU.   4%  wage  increase   and  health   insurance                                                                   
          increase of $16.58 from $863.20 to $879.78                                                                            
                                                    $24,234.3                                                                   
                                                                                                                                
ERIC SWANSON, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT OF ADMINISTRATION DOA,  explained that the section                                                                   
pertains  to the  funding necessary  to provide  for the  GGU                                                                   
contract. The  increase will be reflected in  adjustments for                                                                   
virtually every agency.                                                                                                         
                                                                                                                                
Section 4-6 ETS Net Zero Supplemental                                                                                           
                                                                                                                                
          Funds previously  distributed to state  agencies to                                                                   
          offset  increased chargeback  rates for  enterprise                                                                   
          technology services  as identified in the statewide                                                                   
          federal cost  allocation plan are  redistributed to                                                                   
          more closely align with costs.                                                                                        
                                                         $0.0                                                                   
                                                                                                                                
Mr. Swanson reassured the Committee  that DOA was not looking                                                                   
for new  funding with this  request but looking  for approval                                                                   
to  redistribute   some   of  the  funding   that  has   been                                                                   
appropriated  in   prior  years  for  enterprise   technology                                                                   
services  charge backs.  For three  departments  the cost  is                                                                   
going down;  for the remainder  of the departments  costs are                                                                   
going up.                                                                                                                       
                                                                                                                                
Section 7-9 Office of Public Advocacy                                                                                           
                                                                                                                                
          Current  projections   indicate  OPA  will  require                                                                   
          supplemental  funding in the amount of  $2,400.0 to                                                                   
          operate  through FY2008.  Caseload growth  has gone                                                                   
          beyond  anybody's  expectation.   OPA  has  seen  a                                                                   
          significant spike in  case assignments in Anchorage                                                                   
          and Palmer. OPA has  also seen a number of the more                                                                   
          complicated  and expensive cases go to  trial (cold                                                                   
          cases  and   numerous  murder  cases).   While  OPA                                                                   
          projected  an  increase  in  felony  cases  of  12%                                                                   
          statewide based  on a 5 year average,  in Anchorage                                                                   
          OPA has  seen a 43%  increase in felony  filings in                                                                   
          the first half of FY2008  compared to last year. On                                                                   
          the higher level crimes,  OPA saw a 48% increase in                                                                   
          unclassified  cases   and  a  158%  increase  in  A                                                                   
          felonies.                                                                                                             
                                                                                                                                
          There are  $90.0 excess guardianship  fees receipts                                                                   
          in FY2008, which will  be used to fund a portion of                                                                   
          this supplemental.                                                                                                    
                                                     $2,400.0                                                                   
                                                                                                                                
Section 7-9 Public Defender Agency                                                                                              
                                                                                                                                
          Current  projections indicate  the PD will  require                                                                   
          supplemental  funding in  the amount  of $820.0  to                                                                   
          operate  through  FY2008.  The PD  has  experienced                                                                   
          significant increases  in case load of a variety of                                                                   
          types  throughout  the much  of  the  state in  the                                                                   
          first  quarter of  FY2008 as  compared to  the same                                                                   
          period in  FY2007. In Anchorage felonies  are up 2%                                                                   
          and  misdemeanors  are   up  19%.  In  Southcentral                                                                   
          Alaska  felonies are  up 12%,  misdemeanors are  up                                                                   
          19%, child in need of  aid (CINA) cases are up 82%,                                                                   
          while in  Southwest Alaska those cases  are up 30%,                                                                   
          21%, and 85% respectively.                                                                                            
                                                       $820.0                                                                   
                                                                                                                                
Mr.  Swanson explained  that in  these supplemental  requests                                                                   
for the Office  of Public Advocacy (OPA) and  Public Defender                                                                   
Agency  (PD),  the  funding amount  is  driven  by  caseload.                                                                   
Caseload  is  up  for both  agencies.  The  disparate  amount                                                                   
requested by the agencies is explained by several factors.                                                                      
                                                                                                                                
3:12:27 PM                                                                                                                    
                                                                                                                                
Mr. Swanson thought  PD has improved its ability  to identify                                                                   
potential conflicts  early in a  case. A case  with conflicts                                                                   
is  automatically  transferred to  the  OPA.  Those types  of                                                                   
cases have tended to be more expensive  ones with significant                                                                   
fiscal  impact.   Many of  those  cases must  be assigned  to                                                                   
contract attorneys, who cost more than staff attorneys.                                                                         
                                                                                                                                
Representative  Gara  pointed  out that  under  the  previous                                                                   
administration there  was an attempt to save  costs by hiring                                                                   
in-house.  He  wondered if  the  case  load was  expected  to                                                                   
increase substantially  and if  the Department has  given OPA                                                                   
the authority to  save money by hiring more  staff attorneys.                                                                   
He  was concerned  that past  administrations  have tried  to                                                                   
keep down the number of state employees.                                                                                        
                                                                                                                                
JOSH  FINK,  PUBLIC  ADVOCATE,  OFFICE  OF  PUBLIC  ADVOCACY,                                                                   
DEPARTMENT OF ADMINISTRATION (TESTIFIED  VIA TELECONFERENCE),                                                                   
explained  that in  FY  08 the  DOA  was authorized  ten  new                                                                   
positions.  Those positions  were  not enough  to handle  the                                                                   
significant and unexpected increases  in caseloads. Anchorage                                                                   
is up 43% on felony cases; the  trial rate is up 61% from the                                                                   
previous  year.  He  believed  the  Commissioner  of  DOA  is                                                                   
amenable  to bringing  on staff  as  long as  people will  be                                                                   
represented  more efficiently.  He  is currently  looking  at                                                                   
data to figure  out how to hire staff to lessen  the need for                                                                   
contractors and reduce those costs.                                                                                             
                                                                                                                                
3:16:01 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  asked how  many of  the ten employees  had                                                                   
been hired. Mr.  Fink replied that eight have  been hired and                                                                   
DOA is recruiting for the others.  Co-Chair Chenault wondered                                                                   
if Mr. Fink  saw the increase  in cases as an  on-going trend                                                                   
or  a one-time  spike.  Mr. Fink  thought  the situation  was                                                                   
unusual  and that  although  typically PD  gets  most of  the                                                                   
criminal cases,  OPA would start getting a  larger percentage                                                                   
of them. Early  in FY 08 as  a number of cases were  going to                                                                   
trial, PD realized they had a  conflict and so OPA received a                                                                   
surge of unanticipated cases.  The Public Defender decided to                                                                   
conduct conflict analysis early in the cases.                                                                                   
                                                                                                                                
3:19:06 PM                                                                                                                    
                                                                                                                                
Section 28(a) Administrative Lease Financing                                                                                    
                                                                                                                                
          Atwood   parking   garage  debt:   $3,443,000   was                                                                   
          appropriated  in HB 95, Sec  30(m) for FY08.   Only                                                                   
          one debt payment in  the amount of $535,105.53 will                                                                   
          be  made in  FY08, a reduction  of $2,907,894  from                                                                   
          the  maximum   amount  that  had   originally  been                                                                   
          estimated.                                                                                                            
                                                   ($2,907.9)                                                                   
                                                                                                                                
Mr.  Swanson explained  the debt  service  reduction for  the                                                                   
Atwood parking garage.                                                                                                          
                                                                                                                                
3:19:52 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF COMMERCE, COMMUNITY & ECONOMIC DEVELOPMENT                                                                      
                                                                                                                                
Section 7-9 Alaska Energy Authority Power Cost Equalization                                                                     
                                                                                                                                
          Fully fund  PCE by increasing the  program $1,200.0                                                                   
          from $26,760.0 to $27,960.0  due to the increase in                                                                   
          fuel costs.                                                                                                           
                                                     $1,200.0                                                                   
                                                                                                                                
SAMUEL   THOMAS,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                   
DEVELOPMENT, explained the increase requested for PCE.                                                                          
                                                                                                                                
Section 7-9 Banking and Securities                                                                                              
                                                                                                                                
          Estimated  legal and  administrative hearing  costs                                                                   
          above  the funding  level  of the  fiscal note  for                                                                   
          Chapter  50, SLA2007 (HB162  - Mortgage Bill).   At                                                                   
          the  time the bill  was passed  it was agreed  with                                                                   
          the   legislature   that,   if   necessary,   these                                                                   
          additional costs would be sought for FY08.                                                                            
                                                        $95.0                                                                   
                                                                                                                                
Mr.  Thomas   explained  that  Banking  and   Securities  are                                                                   
requesting $95,000 receipt support  services money because of                                                                   
recent legal costs especially on the ANCSA oil site.                                                                            
                                                                                                                                
Section 7-9 Insurance                                                                                                           
                                                                                                                                
          Estimated  legal and  administrative hearing  costs                                                                   
          above funding level.                                                                                                  
                                                       $140.0                                                                   
                                                                                                                                
Mr. Thomas  described the Division  of Insurance  request for                                                                   
$140,000 receipt  supported services to cover  increased cost                                                                   
due to fraud convictions.                                                                                                       
                                                                                                                                
3:23:16 PM                                                                                                                    
                                                                                                                                
Section 7-9 Regulatory Commission of Alaska                                                                                     
                                                                                                                                
          Unexpected high, ongoing  costs of major litigation                                                                   
          are exceeding FY07 supplemental  and FY08 operating                                                                   
          funding  amounts.  In  the  past,  some  litigation                                                                   
          costs  were funded by  not filling positions.  This                                                                   
          is no  longer possible due to expanding  case load,                                                                   
          recently imposed statutory  deadlines, and dramatic                                                                   
          loss of tenured advisory staff.                                                                                       
                                                      $ 500.0                                                                   
                                                                                                                                
Mr.  Thomas explained  the  rising  costs of  the  Regulatory                                                                   
Commission of Alaska.                                                                                                           
                                                                                                                                
Section 10-12 Capital Request: Prescription Drug Monitoring                                                                     
                                                                                                                                
          This  capital  project  grant  request is  for  the                                                                   
          initial   planning  grant   awarded  by   the  U.S.                                                                   
          Department  of Justice related to  the Prescription                                                                   
          Drug  Monitoring Program.  Prescription  monitoring                                                                   
          programs help prevent  and detect the diversion and                                                                   
          abuse  of  pharmaceutical   controlled  substances,                                                                   
          particularly  at the  retail level  where no  other                                                                   
          automated information collection system exists.                                                                       
                                                        $49.4                                                                   
                                                                                                                                
Mr.  Thomas  described  a new  prescription  drug  monitoring                                                                   
program.  Investigators are  spending  a great  deal of  time                                                                   
searching for  drugs. The $49,000  is for planning  purposes,                                                                   
to research the purchase of a  software program that will cut                                                                   
search time from three months to a few weeks.                                                                                   
                                                                                                                                
Co-Chair Chenault  voiced concerns  that this is  a mechanism                                                                   
to  start a  new program  that  will eventually  lead to  new                                                                   
State operating costs.                                                                                                          
                                                                                                                                
3:25:59 PM                                                                                                                    
                                                                                                                                
Section 10-12 Capital Request: Grant for Elections.                                                                             
                                                                                                                                
          The  Division of  Elections will  be conducting  an                                                                   
          incorporation  election in  Wrangell in early  May.                                                                   
          If  voters approve,  city will  be dissolved  and a                                                                   
          borough will be formed.  The department only has 30                                                                   
          days  after the  election is  certified to  provide                                                                   
          the first year organization  grant. This request is                                                                   
          for  the first  year grant  for Wrangell,  the FY09                                                                   
          Capital Budget requests the second year grant.                                                                        
                                                       $300.0                                                                   
                                                                                                                                
Mr. Thomas explained that the  city of Wrangell is asking for                                                                   
a grant to cover costs related to becoming a borough.                                                                           
                                                                                                                                
Section 10-12 Capital Request: Climate Change Impact                                                                            
                                                                                                                                
          Climate  Change Impact  Mitigation Program.  Grants                                                                   
          ($150.0  max) to imminently threatened  communities                                                                   
          for planning for addressing  threats and mitigation                                                                   
          measures;  mini  grants  ($50.0  max)  to  identify                                                                   
          climate    change   related   impacts    that   are                                                                   
          threatening  life, property  or economics;  support                                                                   
          for     local    coordination    in     communities                                                                   
          demonstrating  imminent  threats;  and funding  for                                                                   
          oversight of programs and grants.                                                                                     
                                                     $1,100.0                                                                   
                                                                                                                                
Mr.  Thomas  delineated  the $1.1  million  request  for  the                                                                   
Climate Change Impact Mitigation  Program. He described major                                                                   
erosion  problems in  villages and other  effects of  climate                                                                   
change in northern Alaska.                                                                                                      
                                                                                                                                
Co-Chair   Chenault   reiterated   concerns   and   questions                                                                   
regarding new programs.                                                                                                         
                                                                                                                                
3:28:01 PM                                                                                                                    
                                                                                                                                
Representative   Joule  wondered   if  help   would  get   to                                                                   
communities  when  urgently  needed  rather  than  depend  on                                                                   
funding  cycles. He  described the  difficulties in  Kivalina                                                                   
after a bad season and wondered  about the need for a capital                                                                   
supplemental.                                                                                                                   
                                                                                                                                
Section 20(a) Capital                                                                                                           
                                                                                                                                
          Correct  sec 42(c),  SB53, SLA  2007, pg 164,  line                                                                   
          19, by  deleting the  reference to "for  the fiscal                                                                   
          year ending June 30, 2008."                                                                                           
                                                         $0.0                                                                   
                                                                                                                                
Mr. Thomas pointed out a language change.                                                                                       
                                                                                                                                
Section 20(b) Capital                                                                                                           
                                                                                                                                
          Restore $34,334  revenue sharing for  the community                                                                   
          of Whitestone - sec.  55(c), ch. 30, SLA 2007, page                                                                   
          184, line 3.                                                                                                          
                                                        $34.3                                                                   
                                                                                                                                
Mr. Thomas  talked about restoring  $34,334 to  the community                                                                   
of Whitestone  which did  not receive  money appropriated  to                                                                   
them  due to  confusion  about two  locations  with the  same                                                                   
name. One of the locations was a mining operation.                                                                              
                                                                                                                                
3:31:34 PM                                                                                                                    
                                                                                                                                
Section 20(c) Alaska Energy Authority                                                                                           
                                                                                                                                
          Rename   the  Alaska   Energy  Authority   -  ALCAN                                                                   
          Intertie  project (sec. 4,  ch. 82, SLA  2006, page                                                                   
          117,  lines 21-22  - $3,200,000)  to Alaska  Energy                                                                   
          Authority -  Kake - Petersburg Intertie  and Alaska                                                                   
          - British Columbia Intertie.                                                                                          
                                                         $0.0                                                                   
                                                                                                                                
Mr.  Thomas talked  about the  Alaska  Energy Authority  name                                                                   
change  and  said he  did  not  have many  details.  Co-Chair                                                                   
Chenault wanted  to be  sure the  Alaska Energy Authority  is                                                                   
changing their  name and not re-appropriating  to a different                                                                   
project.                                                                                                                        
                                                                                                                                
Section 20(d) Quality Trade Association Contract                                                                                
                                                                                                                                
          Reduce  the FY08 operating  appropriation  for this                                                                   
          component  by $800.0 from  $5,005.1 to  $4,205.1 to                                                                   
          "free  up" funds  that are  then used  in the  FY09                                                                   
          capital budget named recipient grant to ATIA.                                                                         
                                                     ($800.0)                                                                   
                                                                                                                                
Mr.  Thomas  said the  Alaska  Tourism  Industry  Association                                                                   
could not come  up with a match  in FY 08, so they  asked for                                                                   
an $800,000 reduction in that appropriation.                                                                                    
                                                                                                                                
Section 20(e) Capital                                                                                                           
                                                                                                                                
          Scope  change:  Community   Development  Assistance                                                                   
          [GRANTS] capital  project to expand scope  to allow                                                                   
          department    spending    to   provide    community                                                                   
          assistance.   Currently scope  is too  narrow, only                                                                   
          allowing grants  to communities.  (Sec.  4, ch. 30,                                                                   
          SLA  2007,  page  84,   line  26)    The  estimated                                                                   
          unobligated balance is $11,089,500.                                                                                   
                                                         $0.0                                                                   
                                                                                                                                
Mr.  Thomas said  this item  proposes  adjusting language  to                                                                   
reflect a  change in scope. The  current scope is  too narrow                                                                   
and only allows grants to communities.                                                                                          
                                                                                                                                
3:35:25 PM                                                                                                                    
                                                                                                                                
Representative Kelly asked if  the section dealt with federal                                                                   
funds. Mr.  Thomas said  some of the  money comes  from other                                                                   
agencies and  some from  other sources. Representative  Kelly                                                                   
wanted to  make sure  a simple  word change  does not  have a                                                                   
broader effect.                                                                                                                 
                                                                                                                                
Section 27 PCE Fund                                                                                                             
                                                                                                                                
          PCE Fund      Increase PCE Fund capitalization by                                                                     
          $700.0  from $12,999.4  GF to  $13,699.4 GF  (total                                                                   
          funds  from  $25,273.0 to  $25,973.0)  in order  to                                                                   
          provide  more PCE funding  needed due  to increased                                                                   
          fuel costs.                                                                                                           
                                                       $700.0                                                                   
                                                                                                                                
Mr.  Thomas  said  he  would   provide  more  detail  if  the                                                                   
Committee needed it.                                                                                                            
                                                                                                                                
3:37:43 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF CORRECTIONS                                                                                                     
                                                                                                                                
SECTION 7-9 Correctional Academy                                                                                                
                                                                                                                                
          Training  Academy -  Recruitment efforts  have been                                                                   
          successful,  however,   this  has  created  a  very                                                                   
          critical   backlog  in  getting  new   hires  their                                                                   
          mandatory  training. This is  a serious  safety and                                                                   
          security  issue. A supplemental  request  will meet                                                                   
          the current training  needs of the recruits as well                                                                   
          address the curriculum needs of the academy.                                                                          
                                                       $145.4                                                                   
                                                                                                                                
SHARLEEN  GRIFFIN,   DIRECTOR,  DIVISION  OF   ADMINISTRATIVE                                                                   
SERVICES, DEPARTMENT OF CORRECTIONS,  began with the $145,400                                                                   
supplemental request  for the Department's  training academy.                                                                   
She  said the  Department has  done well  with a  recruitment                                                                   
campaign  which  has  succeeded  in  filling  the  positions;                                                                   
however,  an  additional  academy  is  needed  to  train  new                                                                   
officers this year.                                                                                                             
                                                                                                                                
Section 7-9 Institution Director's Office                                                                                       
                                                                                                                                
          This  request  covers the  Correctional  Facilities                                                                   
          shortfall  of personal  services, contractual,  and                                                                   
          commodities.   This    includes   costs   such   as                                                                   
          correctional  officer  overtime,  fuel  surcharges,                                                                   
          electricity  and other  utility and heating  costs,                                                                   
          increased  commodities  costs  for food  and  other                                                                   
          operational  commodities. The  prisons are  24-hour                                                                   
          facilities  that must remain open. Every  effort is                                                                   
          made  to control costs,  however, actual  costs are                                                                   
          exceeding the FY2008 budget.                                                                                          
                                                     $1,852.0                                                                   
                                                                                                                                
Ms. Griffin  said a  portion of the  $1,852,000 is  needed to                                                                   
pay an additional  day of salaries and meals  because of leap                                                                   
year.  Another $795,000  is  to make  up  for increased  fuel                                                                   
costs. There are  additional costs for overtime  to cover for                                                                   
new  officers   going  through   the  correctional   academy.                                                                   
Supplies also cost more because of fuel costs.                                                                                  
                                                                                                                                
Co-Chair  Chenault  asked  for  clarification  regarding  the                                                                   
overtime expenses.  Ms. Griffin  explained that  correctional                                                                   
officers  are working  as well as  being trained.  Additional                                                                   
resource is needed to cover for them during training.                                                                           
                                                                                                                                
Section 7-9 Inmate Health Care                                                                                                  
                                                                                                                                
          The  department is  requesting  a supplemental  for                                                                   
          increased  inmate  health care  costs  and to  meet                                                                   
          medical  staff  overtime   costs.  The  funding  is                                                                   
          needed   to   meet    the   department's   mandated                                                                   
          obligations  of  medical  care  for the  aging  and                                                                   
          increased  population  of  offenders  and  for  the                                                                   
          sharp  increase  in the  number  and  the cost  for                                                                   
          inmates needing dialysis,  cancer treatment and the                                                                   
          growing  number of life-threatening  cases. Funding                                                                   
          will  also assist in  meeting the personal  service                                                                   
          overtime   costs  associated  with   providing  the                                                                   
          required nursing oversight.                                                                                           
                                                     $2,427.3                                                                   
                                                                                                                                
Ms. Griffin described the additional  costs for inmate health                                                                   
care  due to  increases  in  population and  to  catastrophic                                                                   
cases.                                                                                                                          
                                                                                                                                
3:42:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  wondered how the State is  doing regarding                                                                   
catastrophic  cases. Ms.  Griffin answered  that so  far this                                                                   
year the  cost is $2  million. She said  some of  those costs                                                                   
are being  recovered due  to a $1.9  million increase  in the                                                                   
budget.  She said  the population  is aging  and has  serious                                                                   
health challenges, including several heart cases.                                                                               
                                                                                                                                
Section 21(a) Community Jails                                                                                                   
                                                                                                                                
          The Division  of Legislative Audit  recommends that                                                                   
          the  Department  of   Corrections  restructure  the                                                                   
          community  jails program to promote  equity between                                                                   
          communities. This involves  identifying the various                                                                   
          types  of  activities  and  costs  associated  with                                                                   
          operating  local jails while being  consistent with                                                                   
          security standards and  staffing requirements. This                                                                   
          is  even more  important because  according to  the                                                                   
          Department   of   Administration   each   community                                                                   
          participating  in the  community  jails program  is                                                                   
          already  required  to have  a State  single  audit.                                                                   
          Establishing  a  professional   services  agreement                                                                   
          with  an  independent  contractor will  assist  the                                                                   
          department  in  its   endeavor  to  ensure  that  a                                                                   
          balanced  distribution of  funding is allocated  on                                                                   
          an  equitable  basis  within  the  community  jails                                                                   
          program. An  extended termination date  is required                                                                   
          to allow sufficient  time to procure a contract and                                                                   
          assure  the vendor  has adequate  time to  complete                                                                   
          this analysis.                                                                                                        
                                                        $45.0                                                                   
                                                                                                                                
Ms. Griffin described  the request of $45,000  to restructure                                                                   
the  community  jails  program   to  promote  equity  between                                                                   
communities. The Department would  like a term date extension                                                                   
on the supplemental. In response  to an audit, the Department                                                                   
proposes  to  hire  a contractor  to  review  each  of  these                                                                   
communities and  present a plan to more  equitably distribute                                                                   
the money.                                                                                                                      
                                                                                                                                
Representative  Kelly wondered  about correcting inequity  in                                                                   
the  smaller  facilities.  He   hoped  the  Department  could                                                                   
recognize that there are differences  in what can be provided                                                                   
in different  communities.  He was  concerned about  spending                                                                   
too much money.                                                                                                                 
                                                                                                                                
3:45:07 PM                                                                                                                    
                                                                                                                                
Representative Nelson thought  Dillingham, a community in her                                                                   
district,  had  one of  the  smaller  facilities. A  boom  in                                                                   
prison  population  during  the fishing  season  resulted  in                                                                   
prisoners  sleeping  on the  floor.  She thought  there  were                                                                   
disparities in  smaller communities  compared to  places with                                                                   
larger and more consistent populations.                                                                                         
                                                                                                                                
Ms. Griffin listed some of the  smaller prison communities in                                                                   
the state.                                                                                                                      
                                                                                                                                
Representative Kelly  reiterated his concerns and  wanted the                                                                   
list.                                                                                                                           
                                                                                                                                
3:47:34 PM                                                                                                                    
                                                                                                                                
Section 21(b) Out-of-State Contractual                                                                                          
                                                                                                                                
          This amount  pays for an FY2006  unpaid outstanding                                                                   
          contractual   invoice    for   $50,000   from   the                                                                   
          Correctional Corporation of America.                                                                                  
                                                        $50.0                                                                   
                                                                                                                                
Ms. Griffin explained that the  vendor had overlooked sending                                                                   
the invoice.                                                                                                                    
                                                                                                                                
Section 21(c) Parole Board                                                                                                      
                                                                                                                                
          This   request   is  to   pay   an  FY2005   unpaid                                                                   
          outstanding  invoice for  $399.09 from the  Voyager                                                                   
          Hotel.                                                                                                                
                                                         $0.4                                                                   
                                                                                                                                
Section 21(d) Population Management, Anchorage                                                                                  
                                                                                                                                
          There  have been lower  than anticipated  costs and                                                                   
          therefore  federal  receipts, for  housing  federal                                                                   
          inmates (man-day federal  shortfall). Beds are used                                                                   
          for  state  and  local   inmates  so  general  fund                                                                   
          authorization is necessary.                                                                                           
                                                         $0.0                                                                   
                                                                                                                                
Ms. Griffin said  DOC is requesting that $1  million of empty                                                                   
federal  receipt  authorization   be  replaced  with  General                                                                   
Funds. She  said last year  federal receipts collected  could                                                                   
not  be   expended  and  required   a  GF  replacement.   The                                                                   
Department was  $960,000 short last year. These  receipts are                                                                   
slightly overstated  as the federal population  is going down                                                                   
and the costs of the facilities are static.                                                                                     
                                                                                                                                
Co-Chair  Chenault   wondered  if  there  would   be  another                                                                   
supplement request  next year.  Ms. Griffin replied  that the                                                                   
FY 09 request addresses this issue.                                                                                             
                                                                                                                                
HB  343  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                

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