Legislature(2013 - 2014)HOUSE FINANCE 519
04/12/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB7 | |
| SB95 | |
| SB47 | |
| SB62 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 12, 2013
2:04 p.m.
2:04:10 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 2:04 p.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative Lindsey Holmes
Representative Scott Kawasaki, Alternate
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
ALSO PRESENT
Daniel George, Staff, Representative Bill Stoltze; Roberta
Graham, Assistant Commissioner, Department of Commerce,
Community and Economic Development; Senator Cathy Giessel,
Sponsor; Curtis Thayer, Deputy Commissioner, Department of
Administration; Nicki Neal, Director, Division of
Personnel, Department of Administration; Rynneiva Moss,
Staff, Senator John Coghill; David Scott, Staff, Senator
Donny Olson; Elizabeth Sweeney Nudelman, Director, School
Finances and Facilities, Department of Education and Early
Development; Tom Begich, Policy Director, Citizens for the
Educational Advancement of Alaska's Children.
PRESENT VIA TELECONFERENCE
Johanna Bales, Executive Director, Tax Division, Department
of Revenue; Dave Herbert, Superintendent, St. Mary's City
School District.
SUMMARY
HB 192 PAYMENT OF FISHERY RESOURCE LANDING TAX
HB 192 was SCHEDULED but not HEARD.
SB 7 am CORPORATE INCOME TAX
HCS SB 7(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one new
fiscal note from Department of Revenue and one
new zero note from Department of Commerce,
Community and Economic Development.
CSSB 18(FIN) am
BUDGET: CAPITAL
CSSB 18(FIN) was SCHEDULED but not HEARD.
CSSSSB 47(FIN)
DISTRICT OPERATED BOARDING SCHOOLS
HCS CSSSSB 47(FIN) was REPORTED out of committee
with a "do pass" recommendation and with one new
fiscal impact note from the Department of
Education and Early Development.
SB 62 SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES
SB 62 was REPORTED out of committee with a "do
pass" recommendation and with one previously
published fiscal note: FN1(EED).
CSSB 95(FIN)
STATE EMPLOYEE COMPENSATION AND BENEFITS
HCS CSSB 95(FIN) was REPORTED out of committee
with a "do pass" recommendation and with three
previously published fiscal impact notes:
FN1(GOV), FN2(LEG), FN3(CRT).
SENATE BILL NO. 7 am
"An Act relating to the computation of the tax on the
taxable income of a corporation derived from sources
within the state."
2:04:47 PM
Co-Chair Stoltze discussed the meeting schedule.
Representative Costello MOVED to ADOPT the proposed
committee substitute for SB 7 am, Work Draft 28-LS0104\C,
(Bullock, 4/9/13).
Co-Chair Stoltze OBJECTED for discussion.
DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE,
addressed the changes in the CS. He communicated that the
bill was the companion to HB 68. He explained that the tax
bracket for the first $25,000 had been zeroed out in the
Senate, which had inadvertently caused tax bracket
calculations to add up incorrectly; no relief was reflected
for corporations earning over $25,000. The CS added items
related to the film tax incentive program beginning in
Section 2. The first item was included on page 2, line 29
through page 3, line 6 and prohibited certain content
including news, weather, current event programming,
industrial and corporate purposes, advertisements and
infomercials, political advertisements, and sexually
explicit content. He stated that the items were originally
prohibited under the current film tax program that would
expire on June 30, 2013. He noted that the prohibitions had
not been carried forward when the program had been
continued the prior year.
Co-Chair Stoltze remarked that not carrying the
prohibitions forward had been an omission rather than
commission.
Mr. George addressed the second change to the film tax
incentive program (page 3). He pointed to a Legislative
Legal Services document (copy on file) that explained the
transition language. He relayed that the provision would
allow individual productions that qualified under the old
program to finish their productions and to continue
receiving the film tax credits instead of needing to
reapply in the new program.
Co-Chair Stoltze asked the department to comment on the
language.
2:09:46 PM
ROBERTA GRAHAM, ASSISTANT COMMISSIONER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT (DCCED),
shared that DCCED believed the language provided the
necessary transition to allow the film office to complete
projects that had received a notice of qualification and
were currently underway. She expounded that without the
language there would be more than 55 productions that would
have to go through a reapplication process; the process
would require considerable time and effort. She stated that
the department supported the amendment.
Co-Chair Stoltze referenced some negative public reaction
to legislative efforts and remarked on working to do the
right thing despite the comments. He believed the reaction
would be forgotten once the bill had passed.
Representative Costello asked for comment about the first
addition included in Section 2. Ms. Graham responded that
Section 2 would exclude five types of productions that had
been in the original bill prior to a change made in the
previous year. She stated that the items were important to
exclude; DCCED supported the exclusion of news and weather
programming and sexually explicit films.
2:12:33 PM
Co-Chair Austerman asked how the department felt about the
benefit of having the film industry in Alaska versus the
amount of tax the state credited back to the industry.
Ms. Graham answered that the film industry was in its
infancy in Alaska. She referenced a 2012 legislative audit
that looked at the financial and the operational pieces of
the film incentive program, which estimated a return to the
state of approximately $18 million. She added that the
department's estimate of return to the state was more
conservative at approximately $10 million; it included the
ground spend in Alaska plus wages earned by Alaskans less
the tax credit. She expounded that the program had been
successful in its employment of Alaskans and in bringing
productions to the state.
Co-Chair Stoltze appreciated the department's endorsement.
He WITHDREW his OBJECTION. There being NO further
OBJECTION, Work Draft 28-LS0104\C was ADOPTED.
SENATOR CATHY GIESSEL, SPONSOR stated that SB 7 would
update the corporate income tax brackets. She explained
that idea for the legislation was a result of a
conversation with business owners who had pointed out
onerous tax brackets. She explained that the top tax
bracket was reached at a taxable income of $90,000. She
furthered that the tax brackets had been set in 1981; there
had been significant inflation since that time, which had
resulted in a tax increase for businesses. She communicated
that the legislation's primary benefit was to small and
medium sized C corporations. The top tax bracket would move
from $90,000 of taxable income to $220,000. The major
companies that would be impacted by the bill were
construction, transportation, and retail. She stressed that
the fiscal note was less than half of 1 percent of the
corporate income tax taken in by the state from C
corporations. She stated that the change was not a
significant impact to the state, but that it was
significant to the companies; it left more hard-earned
money in their hands.
Senator Giessel communicated that the bill had received
wide support from individuals and many state chambers of
commerce throughout Alaska including the state chamber and
chambers in Fairbanks, Anchorage, Seward, Chugiak-Eagle
River, Juneau, and Wasilla. She referenced a letter of
support from the Nana Corporation pointing out that its
shareholder businesses would benefit from the change. She
stated the change was a principle of reduced government
take. She expressed delight about an amendment made in the
Senate that would zero out the first tax bracket. She added
that the amendment had resulted in the readjustment of some
of the numbers included in the bill.
2:17:24 PM
Senator Giessel referred to a legislative affairs research
paper in members' packets (copy on file). She pointed to a
chart on page 3 and stated that the lower half of the
brackets showed the current system. She discussed that her
colleague in the Senate had stated that the zeroing out of
the first tax bracket would impact 14,000 companies that
were eligible to pay corporate income tax in 2011. She
corrected that only 1,300 companies would be impacted
(there were 14,000 companies that fell into the bracket
(some were S Corporations and LLCs), but due to various
deductions the companies would not all be affected). She
reiterated that the bill would leave more hard earned money
in the hands of small businesses.
2:19:26 PM
Co-Chair Stoltze CLOSED public testimony.
Representative Costello discussed a fiscal note from the
Department of Revenue (DOR) that showed no fiscal impact to
operating expenditures and an annual $5 million loss in
state revenue from FY 15 through FY 19.
Representative Kawasaki asked for verification that the $5
million change in revenue would result from a decrease in
tax filers. He asked if fewer DOR employees would be needed
to process taxes if there was a reduction in filers.
JOHANNA BALES, EXECUTIVE DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), stated that there would
not be fewer filers. The bill affected tax rates only;
filers in the zero tax bracket would still be required to
file a return.
Representative Gara asked for verification that the state
would collect $5 million less per year beginning in FY 15
because of the reduction to the tax rate. Ms. Bales replied
in the affirmative. She detailed that the bill would adjust
the tax rate down; every current tax payer would receive a
reduction in their tax liability. She stated that the
fiscal note of $5 million was an estimate. There were close
to 1,500 tax payers who would see some reduction; some of
tax payers would fall into the zero tax liability bracket.
2:22:04 PM
Representative Costello addressed a zero impact fiscal note
from the Department of Commerce, Community and Economic
Development.
Representative Costello MOVED to REPORT HCS SB 7(FIN) out
of committee with individual recommendations and the
accompanying fiscal notes.
Representative Gara OBJECTED for discussion. He would be
comfortable eliminating taxes for businesses making less
than $25,000 per year or lowering the rate for businesses
making less than $50,000 per year. He questioned how the
state would pay for things if various revenue reducing
bills and budget costs were passed; he stressed that $5
million was a significant amount of money. He communicated
that he would probably cosponsor the legislation in a
different year; however, under the budget circumstances he
could not support it. He discussed whether the state was
taxing too much and stated that the high bracket only
included a 9 percent tax on taxable income over $2,000;
below $2,000 was bracketed. He wished he could support the
bill, but pointed to items that needed funding including
infrastructure, schools, slowing down the depletion of the
state's savings (until it was known whether current oil tax
legislation was working - if implemented), funding a
gasline, energy projects, university buildings, and other.
He pointed to two $100 million university buildings
currently in need of funding and surmised that there would
be more $100 million buildings needing funding in the
future. He did not believe the state could afford the
legislation. He opined that there were other ways to reduce
taxes in a less costly way, such as time limited taxes for
new businesses, and eliminating "nuisance" taxes at the low
end. Representative Gara WITHDREW his OBJECTION.
There being NO further OBJECTION, HCS SB 7 was REPORTED out
of committee with a "do pass" recommendation and with one
new fiscal note from Department of Revenue and one new zero
note from Department of Commerce, Community and Economic
Development.
2:26:28 PM
AT EASE
2:31:28 PM
RECONVENED
Vice-Chair Neuman took over as Chair.
CS FOR SENATE BILL NO. 95(FIN)
"An Act relating to the compensation, allowances,
geographic differentials in pay, and leave of certain
public officials, officers, and employees not covered
by collective bargaining agreements; relating to the
compensation and geographic differentials in pay of
certain justices and judges; relating to certain
petroleum engineers and petroleum geologists employed
by the Department of Natural Resources; relating to
increased pay for certain partially exempt employees
of the state in specific circumstances; making
conforming amendments; and providing for an effective
date."
2:31:53 PM
Representative Costello MOVED to ADOPT the proposed
committee substitute for CSSB 95, Work Draft 28-GS1101\C,
(Wayne, 4/11/13).
Vice-Chair Neuman OBJECTED for discussion.
DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE discussed
that the CS included five changes. He pointed to page 2,
lines 24 through 25 where language clarified who would be
subject to the leave accrual portions of the legislation.
He noted that previously the section had referred to
"officers and employees of the state employed before July
1, 2013, are entitled to personal leave with pay that
accrues as follows..." The language had been changed to
read "Officers and employees of the state who are first
employed before July 1, 2013, in a position for which leave
may accrue are entitled to personal leave with pay that
accrues as follows..." He noted that the same change had
been made to page 3, lines 5 through 6.
Mr. George pointed to the next change on page 4, line 12
where the word "and" had replaced the word "or" at the end
of the sentence ["(1) be exempt from the limitation under
(b) of this section; and..."]. He directed attention to
page 4, lines 15 through 21 where paragraph (e) had been
inserted.
2:34:26 PM
Mr. George reiterated the change on page 4, line 12, where
the word "or" had been replaced with the word "and" at the
end of the sentence. He pointed to the next change on page
4, lines 15 through 21 where a paragraph (e) had been
inserted. A drafting error had been corrected on page 12,
line 18, where the language "sec. 15" replaced "sec. 16" to
maintain consistency throughout the paragraph.
Representative Holmes asked about page 4, lines 15-21.
2:36:02 PM
CURTIS THAYER, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, pointed to various staff available for
questions. He mentioned that HB 195 was a similar bill. The
bill established the consistency for cost of living
allowances for non-covered employees of 1 percent, 1
percent, and 2.5 percent for the next 3 years respectfully.
He detailed that the increases had recently been bargained
with the public employee unions. The bill also reduced
leave accrual for new hires; current employees were
grandfathered into the previous accrual rate. Additionally,
a leave cap of 1,000 hours was created for the first time;
hours that were currently earned and were over 1,000 hours
were protected. The bill decreased the percentage between
pay increments for exempt and partially exempt employees
from 3.75 percent to 3.25 percent every 2 years.
Mr. Thayer continued to discuss the legislation; it would
allow the state to enhance its ability to recruit and
retain skilled professionals in highly complex and
specialized positions such as the Department of Natural
Resources manager position for the Division of Geological
and Geophysical surveys (the position had been vacant for
more than 1 year). The bill would also implement geographic
pay differentials; he noted that the CS included justices
and judges.
2:38:14 PM
Representative Munoz asked if the bill applied area cost
differentials to exempt and non-exempt employees for the
first time. If not, she wondered when the practice had been
implemented.
NICKI NEAL, DIRECTOR, DIVISION OF PERSONNEL, DEPARTMENT OF
ADMINISTRATION, replied that it was not the first time that
the geographic differential was applied to exempt
employees. She believed the statutory provision had been
adopted in 1966; the provision specifically applied to
partially exempt and non-covered classified employees. She
could not say whether the provision had first been applied
to exempt employees upon its implementation in 1966. She
detailed that a number of years ago, the provision had
begun to apply to exempt employees who were paid off of the
statutory salary schedule.
Representative Munoz asked for comment on a McDowell Group
study and any impact it had on the cost differential
calculations.
2:39:52 PM
Ms. Neal replied that the McDowell Group had recommended
the establishment of geographic differential pools. There
were five pools (including a base pool) and locations had
been grouped based on survey results. She relayed that
differences between surveys were not statistically
significant. For example, one pool including ranges above
base of 5 percent to 17 percent may have been grouped with
a geographic differential of 11 percent. She restated that
a statistically significant difference between the pools
did not exist.
Vice-Chair Neuman asked the department to comment on other
changes in the CS.
Ms. Neal communicated that Sections 1 through 3 had been
added in the Senate CS. The sections provided geographic
differential to judges and justices on $100,000 of their
base salary; the current geographic differential was
applied to $40,000. She shared that the proposed
differential was consistent with rates established in
Section 15 of the bill. Sections 4 and 5 had been amended
to clarify that leave accrual rates were determined based
on an employee's first date of hire as opposed to the
employee's most recent appointment date. An editing error
on page 4, line 12 had been corrected and the word "or" had
been replaced with the word "and" at the end of the
sentence.
Ms. Neal continued to address changes in the CS. A
subsection (e) had been added to the bill on page 4 [lines
15 through 21]. She relayed that the wording of the section
was consistent with wording in Section 6 that addressed
what would occur if 15 days of personal leave was not used
during a 12-month period. She elaborated that the leave
would be canceled without pay unless an agency head
certified in writing that the employee was denied the
opportunity to take the leave. Section 20 had been amended
in the Senate CS to define public officers as heads of
principle departments of the executive branch and permanent
and temporary employees in the executive branch (not
including the governor and lieutenant governor). She
continued that Section 16 had been incorrectly referenced
in Section 24, page 12, line 18 and had been corrected to
read "sec. 15."
Vice-Chair Neuman WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 28-GS1101\C was ADOPTED.
Representative Costello asked the department to comment on
the problem the bill attempted to solve related to leave.
She wondered if the bill would prevent a person from saving
leave to use at a future date for something like an
extended vacation.
2:44:54 PM
Mr. Thayer replied the bill would require a person who had
over 400 hours of leave to use 112.5 hours of leave. The
department had bargained with unions that one week of the
112.5 total could be cashed out. He added that employees
could choose to cash out all but one week of leave.
Mr. Thayer addressed the leave issue as a whole. He
explained that the absence of a cap on leave had been
brought to the forefront during the department's
negotiations with unions. He noted that a cap that had
existed on sick leave had been removed. He conveyed that
the state currently had an unfunded leave liability of $164
million. One of the bargaining goals was to address the
issue by slowing down the accrual for new employees after
July 1, 2013; the change applied to the three bargaining
units and the legislation would extend the change to non-
covered employees. The bill placed a cap of 1,000 hours on
accumulated leave (the cap had also been bargained with the
unions; the Classified Employees Association union had a
cap of 825 hours). He furthered that there were 10
employees that made up 35,000 hours of leave that was
valued at $1.6 million. He stated that the value of leave
over $1,000 was $1.2 million. Under the legislation, the
liability of the future 10 employees in outlying years
would be $400,000 instead of $1.6 million.
Mr. Thayer continued that the mandatory usage of leave had
been increased under the legislation. The existing usage
requirement was one-week of leave per year; the requirement
had been increased to two weeks of leave for employees with
below 400 hours of leave; employees with over 400 hours of
leave would be required to take three weeks of leave with
the ability to cash in one of the three weeks. He explained
that a person with 400 hours of leave was accumulating 270
hours, but they would only be required to use 112 hours. He
listed items used by the bill to address the $164 million
leave liability including the leave cap, new accrual
ratings, and increasing the mandatory leave usage. He added
that the current liability would not increase because the
department was actively working to reduce the amount to a
manageable level.
2:48:28 PM
Representative Gara pointed to page 4, line 8. He addressed
emergency situations that would enable an employee to use
more than 1,000 hours of leave. He thought the exception
would be permissible in situations beyond an employee who
was denied the opportunity to use leave. He wondered what
happened if a single mom with four children developed a
serious medical condition and needed the leave in order to
receive treatment. He asked if the hypothetical situation
would be covered under the bill.
Mr. Thayer replied that 1,000 hours of leave was worth
approximately 6 months. He communicated that union members
had access to emergency leave that would provide up to one
month of health care. He relayed that non-covered employees
would have to rely on leave donated by colleagues.
Representative Gara asked if the department saw a problem
with the limit. Mr. Thayer replied in the negative.
Representative Gara believed there was a problem. He
elaborated that a union employee would receive health care,
but no pay for an additional month; and a mother with
cancer needing extensive treatment could not use accrued
leave she had earned and worked for to help her through the
circumstance.
Mr. Thayer stated that 1,000 hours would be available to
the employee for use.
Representative Gara relayed that medical conditions could
last beyond 6 months in some circumstances.
Vice-Chair Neuman observed that a Department of Law
employee was available for questions as well.
2:51:14 PM
Ms. Neal clarified that an employee could accrue up to
1,000 hours and could use any of the leave they accrued.
She restated the potential medical situation as described
by Representative Gara and noted that employees of all
bargaining units and non-covered employees could receive
donated leave from coworkers. She expounded that an
employee would be paid for any donated leave received;
health insurance would continue for the any particular
month when an employee was in paid-leave status at the
first of the month. She specified that unions had
additional leave programs such as an emergency leave bank
that employees could contribute to and a catastrophic leave
bank; supervisors and confidential units had catastrophic
leave as well. She relayed that a generous amount of leave
was available. She added that employees were typically
generous with leave donation when a coworker had a medical
situation.
2:52:46 PM
Representative Gara asked for a description of the
catastrophic leave bank.
Ms. Neal replied that the catastrophic leave bank was
available to several unions and possibly more. She
explained that provisions differed by agreement; however,
the bank was most commonly filled by employees who
separated from the state with an excess leave balance. She
discussed that years back there had been a distinction
between annual and sick leave; when the conversion took
place many employees ended up with excess sick leave
because only a portion had been converted to personal
leave. The excess sick leave was available to an employee
when they had a significant medical condition. The balance
canceled when an employee terminates state service; all or
a portion of the units were placed into the catastrophic
leave bank. The bank was then available for union members
to maintain pay status typically for health insurance
purposes. She stated that most commonly the bank provided
enough leave to keep an employee in pay status the first
couple of days of the month to ensure their health
insurance is paid.
Representative Gara asked whether anyone was contributing
to the catastrophic leave banks currently.
Ms. Neal answered that some units had a substantial
balance. She shared that there were still employees with
excess sick leave balances. She stated that the balance
would likely be exhausted in many years; however, a balance
currently existed that employees continued to contribute
to.
2:55:16 PM
Representative Kawasaki asked how much leave existed in the
catastrophic and other union funds. He wanted to ensure
that protection existed for future years. Ms. Neal
responded that the department maintained and had access to
the accounts. She would follow up with the balances.
Representative Kawasaki referred to an amendment related to
the geographic pay differentials he had planned to offer to
a similar bill (HB 195); he did not plan to offer the
amendment to SB 95. He understood that there had been
controversy when the first differentials had been adopted.
He did not have reason to disagree with the McDowell Group
study, but he observed that for differential pay Fairbanks
was a 3 and Anchorage was a zero. He listed other
communities that were listed as zeros (Delta, Denali,
Cantwell) and guessed that the locations were on the road
system and would be more expensive. He wondered how
frequently the survey was conducted.
Mr. Thayer replied that a survey was supposed to be done
every five years; the most recent study had been completed
in 2009. The department would ask for an allocation from
the legislature in FY 15 for an updated study.
2:57:54 PM
Representative Kawasaki looked at language in Section 16 of
the bill noted that the geographic pay differential survey
was subject to appropriation, which was always the case. He
wanted to ensure that the division would conduct the
survey. He was interested to know whether the survey
results and pay rates across the state were changing. He
believed the department should have the information. He
noted that the survey was not a given because the
legislation specified that it would be done subject to
appropriation. He wanted the department to regularly ask
for money to fund the survey.
Ms. Thayer understood Representative Kawasaki's intent and
ensured that the department would make the funding request
at the five-year mark.
Representative Edgmon pointed to pages 6 and 7 of the bill
and stressed that the geographic differential numbers
between communities did not make sense. He looked at
various communities: Fairbanks was a 3, nearby Delta
Junction was a zero, Dillingham was a 37, nearby King
Salmon was a 50, Bethel was at 50, Nome was a 37. He
emphasized that the numbers were all over the map. He
wondered what could take place to bring the numbers into
alignment.
Mr. Thayer relayed that the department had emailed
responses to committee members' questions on April 11,
2013. He replied that the Bethel differential was higher
than those for Dillingham and Nome because the 2009
McDowell Group study assigned cost differentials to various
locations throughout the state based on a household
consumption survey and a retail price survey. He furthered
that below the differentials assigned to the locations
Bethel had been a 1.53, Dillingham was a 1.37, and Nome was
at 1.39. The study had also recommended that the state
define geographic differential pay pools in the various
communities. He elaborated that based on the
recommendations Bethel had been placed at 50 percent;
whereas Dillingham and Nome had been placed at 37 percent.
He furthered that the household consumption and retail
price surveys had looked at utilities, cost of fuel,
transportation costs, and home prices. He explained that in
some of the rural areas such as Glennallen and Tok many
residents did not have mortgages, which was factored into
the study as a low cost of living in the areas compared to
Fairbanks or Anchorage with home values of $300,000 or
$400,000. He noted that the McDowell Group could discuss
the survey with members.
Representative Edgmon did not want to belabor the point,
but restated that the numbers in the survey were disparate.
Vice-Chair Neuman had heard similar comments from other
committee members.
3:02:50 PM
Representative Thompson wondered why Valdez and Cordova
were at 11 and Yakutat was at zero. He looked at page 7 of
the bill and noted that Deadhorse was listed as 50 percent.
He relayed that state employees traveled to the community
to keep snow cleared at the airport; he wondered if the
employees were living in state housing and whether they
received a 50 percent differential or per diem. He asked
about the Coldfoot community as well.
Ms. Neal answered that if Deadhorse was an employee's duty
station they would receive the [50 percent] differential;
however, if their duty station was in Fairbanks the
employee would receive the Fairbanks differential and per
diem.
Representative Thompson asked for verification that an
employee based in Fairbanks traveling to Deadhorse for 3
weeks of work would be paid the Fairbanks differential and
per diem.
Ms. Neal replied in the affirmative.
3:03:55 PM
Representative Wilson asked about the household consumption
survey. She wondered if the survey looked at the price of
housing or if a person had a mortgage.
Mr. Thayer replied that the study had looked at both items.
He noted that phone interviews had been conducted with
employees to help with the study.
Representative Wilson asked how much the studies cost. Mr.
Thayer replied that the survey cost approximately $500,000.
Representative Wilson wondered how many employees were
contacted for the study. Ms. Neal replied that the study
results indicated how many employees were contacted in each
location. She could follow up with the data and informed
members that the study was available on the department's
website.
Representative Wilson speculated that the state could
conduct a cost of living survey for less than $500,000. She
recalled that communities did not believe the prior study
was accurate. She wondered if there would be a better way
to conduct the study.
Ms. Neal replied that the study determined the cost of
living in an area and included responses from a random
sample of community members. The prior study had cost just
under $400,000 and the department estimated the following
study would be around $500,000, but that it would not
exceed the amount.
3:06:12 PM
Representative Wilson asked if a Request for Proposal was
submitted for the survey. Ms. Neal answered in the
affirmative.
Vice-Chair Neuman asked Representative Holmes to look at
the cost of the surveys to see if there were ways to reduce
the number.
3:06:49 PM
Representative Gara had seen numbers changed in the past
based on personal experience and knowledge of committee
members. He surmised that Representative Thompson,
Representative Edgmon, or other committee members may be
able to point out illogical geographical pay differentials
and to modify the numbers until more accurate data was
available.
Representative Gara pointed to page 4, lines 6 through 8.
He asked for verification that a state employee could use
more than 1,000 hours of leave if they had been denied the
opportunity to use it.
Ms. Neal replied that the provision would enable an
employee to accumulate more than 1,000 hours of leave if
they were denied the opportunity to use it during that
year. She noted that the ability was subject to the
adoption of regulations by the personnel board. She added
that providing the ability was the department's intent.
Representative Gara wondered if the department was keeping
track of leave hours that employees were not able to use.
Ms. Neal replied that an employee would be required to keep
their leave balance at 1,000 hours or below at the end of
the leave year. Employees had the ability to use leave or
to cash it in to keep the level at 1,000 hours. The
department did not allow employees to accumulate more than
1,000 hours of leave.
Representative Gara queried how the department would grant
more than 1,000 hours to people who had been denied the
opportunity to use leave. Ms. Neal replied that DOA
notified employees and supervisors prior to the end of a
leave year that the employee would exceed the maximum
allowable limit at the end of the year. She detailed that
the employee had the option of scheduling the leave with
the supervisor's approval or cashing it out to keep the
number of hours at or below 1,000.
3:09:44 PM
Representative Gara asked for verification that the
department allowed employees who were denied the
opportunity to use the leave to exceed the 1,000 limit.
Ms. Neal responded in the affirmative. She elaborated that
regulations would allow the department head to certify that
an employee had been denied the opportunity to use the
leave, which would enable their leave balance to accrue
beyond the 1,000 hour limit.
3:11:15 PM
Representative Thompson asked whether money had been set
aside to fund the leave balance or if it was unfunded.
Ms. Neal replied that the state had a reserve account. The
balance was sufficient to pay the leave for the next year,
but it was not sufficient to pay out all of the existing
leave.
Representative Thompson shared that when he had been mayor
[City of Fairbanks] the city had 200 employees and a
$700,000 unfunded leave balance. He expounded that the city
had eventually set the money aside and had begun funding
unused leave on an annual basis. He asked for verification
that the state had a leave balance set aside to help offset
the problem.
Ms. Neal answered in the affirmative.
Representative Gara MOVED to ADOPT Amendment 1:
Page 4, line 8:
Insert "leave" after "or for illness confirmed in
writing by a physician"
Representative Wilson OBJECTED.
Representative Gara spoke to the amendment. He explained
that there were rare circumstances in which a person knew
they would need to take time off due to illness. He
believed that a person was entitled to leave earned above
1,000 hours if an illness required them to take time off.
He understood the state's goal with the cap, but stressed
that an exception should exist in cases of serious illness.
He detailed that the extra 40 to 80 or more hours would
make a difference to individuals. He cited various
financial responsibilities a person may have such as caring
for children, paying for school, and other. He opined that
an exception for medical leave was of equal importance to
the one allowable exception that enabled employees who were
not permitted to use leave to accumulate over 1,000 per
year. He stated that under the circumstance employees
should be granted access to leave earned; he considered it
a work ethic reward.
Representative Thompson asked how the amendment would read
in the bill.
Representative Gara pointed to page 4, line 7 and stated
that the amendment would modify the bill to read
"...because the officer or employee was denied the
opportunity to use personal leave or for illness confirmed
in writing by a physician."
Representative Thompson pointed to the drafted amendment
and observed that it would insert the word "leave" [after
"or for illness confirmed in writing by a physician"].
Representative Gara MOVED to AMEND Amendment 1 to read:
Page 4, line 8
Insert after "leave" "or for illness confirmed in
writing by a physician"
Representative Holmes OBJECTED for discussion.
Vice-Chair Neuman asked Representative Gara to clarify how
the amendment would read in the bill.
Representative Gara replied that with the proposed
amendment the bill would read "...because the officer or
employee was denied the opportunity to use personal leave
or for illness confirmed in writing by a physician."
Representative Holmes asked for the administration to
comment on the amendment. She did not believe the language
in Amendment 1 would accomplish the sponsor's intent. She
detailed that the bill section related to how much leave a
person could accumulate; whereas, the sponsor had discussed
the amendment in the context of how much leave a person
could use. She understood that the legislation would allow
an employee to accumulate 1,000 hours of leave; a person
who became ill could use all 1,000 hours, but would not be
accumulating additional hours.
Vice-Chair Neuman clarified that the amendment to Amendment
1 was before the committee.
Representative Holmes WITHDREW her OBJECTION. There being
NO further OBJECTION, Amendment 1 was AMENDED.
Vice-Chair Neuman restated the amendment as amended.
Representative Gara affirmed.
Representative Munoz asked if the amendment would allow for
a continual accumulation of hours over the 1,000 hour
limit.
Ms. Neal replied in the affirmative. She clarified that an
employee's leave balance would reduce if they became ill
and began to use their leave. As long as the employee
remained in paid-leave status they would continue to accrue
leave. She furthered that when an employee was on leave
full-time they would use leave faster than they accrued it;
therefore, they would fall below the 1,000 hours and would
not reach a point where they would accumulate beyond 1,000
hours.
Vice-Chair Neuman pointed to language on page 4, line 4
stating that the personnel board may adopt regulations. He
wondered if the provision allowed the board to adopt
regulations that would cover the amendment.
Ms. Neal answered in the affirmative.
3:19:42 PM
Representative Thompson pointed to a situation in which a
person may realize they would need major surgery 5 or 6
months in the future that would require recovery time. He
asked for verification that the amendment would allow the
person to accumulate more than 1,000 hours to ensure they
had sufficient leave time accrued for recovery.
Ms. Neal affirmed.
Representative Costello stated that the intent of Amendment
1 was to allow a person to accrue and use more leave. She
observed that under the system a person could not accrue
more than 1,000 hours of leave while they were in paid-
leave status. She believed the amendment could also address
a situation where a person knew they would need to take
leave in the future to deal with a medical issue. She
detailed that if the person accrued more than 1,000 hours
and had a letter from a doctor they would be allowed to use
the total hours of leave earned.
Ms. Neal replied that the tracking of the issue might prove
challenging.
Representative Costello countered that under the current
bill the department would track individuals accruing more
than 1,000 hours who had not been permitted to take leave.
She wondered why there would be a difference in the ability
to track one circumstance and not another.
Ms. Neal agreed that tracking would be available for
conditions under the amendment [if adopted].
Vice-Chair Neuman added that the amendment would allow the
personnel board to adopt regulations to deal with the
issues.
3:23:12 PM
Representative Kawasaki pointed to a circumstance in which
a person had saved up leave in anticipation of double knee
replacement surgery. He believed individuals were planning
ahead for major medical needs more frequently. He wondered
if a person could take leave if another person in their
family was ill.
Ms. Neal replied in the affirmative; a person could take
leave to care for a family member. She pointed to the
existence of federal and state family leave acts.
Representative Kawasaki spoke in support of the amendment.
He discussed that the Fairbanks Memorial Hospital had a
leave bank and a maximum leave cap of 650 hours; however,
the hospital also had the ability to surpass the limit for
items such as adult care. He provided an example of a
husband and wife sharing duties to care for elder family
members. He believed the circumstances were arising more
and more frequently.
Representative Gara asked for verification that a person
could use leave if they accrued it. Another committee
member or an administration representative replied in the
affirmative [inaudible].
Representative Wilson wondered if the department was in
favor of the amendment. She stated that the issue
represented a policy call and related to how much liability
the state would have. She believed 1,000 hours of leave was
substantial. She read the proposed amendment: "for illness
confirmed in writing by a physician." She stressed that
there were a multitude of illnesses, some of which would
have a minor impact; however, the minor illnesses could
also be brought to a supervisor for increased leave
approval under the amendment. She surmised that the intent
of the existing exception that would allow an employee to
exceed 1,000 hours of leave was related to specific
situations where specialists with unique expertise could
not take time off. She opined that the current language
would not create a significant amount of tracking for the
department, but that the amendment could increase that
number substantially and may require DOA to employ a person
to provide the tracking function. She believed the
amendment was counterproductive to the goal of reducing the
state's liability.
3:26:54 PM
Mr. Thayer noted that the department had not previously
discussed the amendment. He reminded the committee that the
bill only applied to 1,300 non-covered executive branch
employees (such as employees of the Department of Law). He
shared the concern that non-life threatening illnesses may
be harder to track or defend; the goal was to cap a
liability. He stated that there was a compassion that
played into the conversation related to life threatening
illnesses. He relayed that the unions felt that six months
was a generous leave amount; the unions had been granted
the 1,000 hour cap and he felt it made sense to provide the
same number for non-covered employees.
Representative Wilson voiced her opposition to Amendment 1.
She believed the amendment would cause the issue to be
brought up for union contracts. She furthered that the idea
had come at a late notice and she did not know exactly how
it would impact the bill. She opined that if the idea was
good that it should be introduced the following legislative
session for inclusion in all contracts instead of applying
it to a limited number of employees.
3:28:41 PM
Representative Thompson spoke in support of the amendment.
He surmised that if a person knew that they were going to
need a double hip replacement or knee replacement that
regulations would specify the requirement for confirmation
by a physician explaining how many months a person would be
out of work. He believed it would be up to the department
to outline the criteria. He stressed that a person should
be able to save leave hours if they provided a letter from
a physician.
Vice-Chair Neuman stated that the personnel board was able
to adopt regulations. He remarked that there were many
unknowns related to the issue.
Representative Holmes communicated that she was "on the
fence" regarding the amendment. She believed the amendment
would not help people plan far enough ahead for illnesses
such as cancer, but that it would help people planning for
surgery. She discussed that the amendment would provide
more generous terms to exempt and partially exempt
employees than to union employees.
3:30:43 PM
Representative Costello wondered whether the amendment was
too vague or if the department could use the committee's
intent as a guideline for the adoption of regulations.
Mr. Thayer replied that the committee's testimony could be
gathered to help formulate regulations. He understood the
intent and saw a need for a similar amendment; however, he
was concerned about who would determine whether an employee
needed extra leave hours. He stressed that the state did
not want to get into situations in which an employee had a
significant amount of leave that they could cash out at any
time. He furthered that if leave accrual above 1,000 hours
was allowed it would necessary to define that it was for a
medical reason, when it would occur, and how long it would
take. He stated that the amendment alone would not allow
the department to accomplish the definition. He pointed to
a situation where an employee could amass many hours of
leave, decide not to have surgery, and then cash the leave
out at retirement.
3:32:28 PM
Vice-Chair Neuman wondered if the amendment would allow
personnel to adopt regulations that would address the
concerns.
Representative Costello was aware of the growing liability
to the state. She noted that the amendment was intended to
address circumstances in which a person needed extra leave
for use at a specific time. She pointed to the word "may"
on page 4 ["the personnel board may adopt regulations to
allow an exemption from the requirements..."] and wondered
if it meant the department would not be required to take
any action.
Ms. Neal replied that it was the department's intent to
adopt regulations, but the language did not require it to
do so.
Representative Costello asked for a track record of donated
leave hours. She wondered whether there were individuals
who received a tremendous amount of donated leave.
Ms. Neal replied in the affirmative. She elaborated that
employees were often very sympathetic when their co-workers
were sick. She had seen employees receive hundreds of hours
and referenced a specific situation in which an employee
had received over 1,000 hours of donated leave. She noted
that donated leave was not subject to the cap; it went into
a separate account and was processed on an as needed
(first-in, first-out) basis.
Vice-Chair Neuman asked for verification that a person
could not cash out donated time. Ms. Neal answered in the
affirmative.
3:35:12 PM
Representative Munoz stated that the issue of fairness was
her priority. She observed that the legislation would apply
to higher paid employees and not union employees. She
believed the lack of fairness was troubling. She wanted to
see the issue become part of future contract negotiations
and to find a way to make it fair for all employees.
Representative Gara addressed the comments provided by
other members and the administration. He communicated that
the personnel board would not need to adopt regulation if
the amendment was worded well and did not require further
delineation; however, the word "may" enabled the board to
put regulation in place if necessary. He discussed that
there were many circumstances when people planned for
medical events. He pointed to his personal experience
planning 6 months ahead for cancer surgery the prior year.
He noted that recovery time could be much longer than
anticipated. He addressed a concern that a malingerer could
sham the state; he emphasized that the state would have the
right to fire the employee. He believed adopting the
amendment would give unions a better chance at negotiating
its expansion to their members. He would like to see union
members receive the benefit as well, but it was not
possible to amend their contracts at present. He reiterated
his support for the amendment.
3:38:53 PM
Representative Wilson pointed to donated leave banks that
could be set up for employees. She believed it made a
difference that the amendment could not be applied to all
state workers. She surmised that there were items in place
that could be used to address the issue. She guessed that
unions would have negotiated for more leave if 6 months was
not sufficient.
Representative Thompson remarked that depending on someone
receiving donated leave could not be relied on. He provided
an example and stated that he may choose to donate leave to
Representative Wilson but may choose not to donate leave to
Representative Gara.
Representative Costello stated that the amendment addressed
a valid concern. She relayed that she would vote no at
present, but would write a letter asking the department to
look at the issue. She felt that the current wording may be
problematic and was willing to work with Representative
Gara during the interim to correct the issue.
A roll call vote was taken on the motion to adopt Amendment
1.
IN FAVOR: Gara, Kawasaki, Thompson, Neuman
OPPOSED: Wilson, Costello, Holmes, Munoz
The amendment failed (4/4).
3:42:51 PM
Representative Costello discussed the three previously
published fiscal notes. The first note (FN1) was from the
Office of the Governor and showed a fiscal impact of
$8,171,900 in FY 14, $4,821,800 in FY 15, and $10,664,000
in FY 16 [corrected below]. The second note (FN2) was from
the Legislature and indicated a fiscal impact of $1,281,200
in FY 14, $410,400 in FY 15, and $1,039,300 in FY 16. The
third note (FN3) was from the Alaska Court System and
included a fiscal impact of $1,088,700 in FY 14, $749,100
in FY 15, and $1,890,900 in FY 16.
Representative Holmes clarified that the FY 16 amount in
FN1 was $10,644,000.
Representative Costello affirmed.
3:44:14 PM
Representative Costello MOVED to REPORT HCS CSSB 95(FIN)
out of committee with individual recommendations and the
accompanying fiscal notes.
Representatives Kawasaki and Gara OBJECTED for discussion.
Representative Kawasaki commented that the last geographic
pay differential study had been done in 2008 and was
outdated; a capital budget appropriation had been made to
fund the 2008 study. He noted that the previous study had
been done 15 years earlier. He had not offered an amendment
that would make sure the director was required to conduct a
survey. He believed it was the department's intent to
conduct a survey, but he thought members may be more
comfortable if the language was in statute. He WITHDREW his
OBJECTION.
Representative Gara appreciated the interest that had been
expressed in Amendment 1. However, he pointed to page 4,
line 7 of the legislation and stated that it was impossible
to work out a solution with the department because statute
specified that DOA would not be allowed to do what the
amendment would do. He detailed that the only people
allowed to accumulate over 1,000 hours of leave were
employees who were denied the opportunity to use personal
leave. He stressed that the change would need to be made in
statute.
Vice-Chair Neuman remarked that an amendment could be
offered on the House floor.
There being NO further OBJECTION HCS CSSB 95(FIN) was
REPORTED out of committee with a "do pass" recommendation
and with three previously published fiscal impact notes:
FN1(GOV), FN2(LEG), FN3(CRT).
3:47:08 PM
RECESSED
3:54:16 PM
RECONVENED
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 47(FIN)
"An Act relating to boarding schools operated by
school districts; and providing for an effective
date."
3:54:25 PM
DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE,
discussed the change appearing in a CS to CSSSSB 47(FIN) on
page 2, lines 11-15:
(A) for the Southeast Region (Region I), $820
[$410];
(B) for the Southcentral Region (Region II), $800
[$400];
(C) for the Interior Region (Region III), $968
[$484];
(D) for the Southwest Region (Region IV), $1,006
[$503];
(E) for the Northern Remote Region (Region V), $1,184
[$592].
Mr. George relayed that the totals represented a doubling
of the prior amount [for a per-pupil monthly stipend (page
2, line 8)]. He noted that a prior version of the bill had
included a tripling of the existing amount. He deferred to
the bill sponsor for additional information.
RYNNEIVA MOSS, STAFF, SENATOR JOHN COGHILL, communicated
that the change in the CS reflected a compromise between
the sponsor and Co-Chair Stoltze. The sponsor understood
that it was a financially tight year and that it may not be
the year to expand boarding schools. She expressed
enthusiasm and faith in the boarding school system and
relayed the sponsor's belief that it would be an important
part of Alaska's educational system. She stated that the
sponsor would work over the summer on an educational plan
that would include the expansion of the boarding school
program, expanding financing options for boarding school
facilities, and helping with school maintenance in rural
areas. She elaborated that the original bill had multiplied
the existing stipend by three; the existing stipend had
been placed in statute in 2005. She expounded that the
stipend had been increased by two times in 2011. She
pointed to a fiscal note that reflected an increase;
however, the note was based on the stipend sunsetting on
July 1, 2013. She explained that the fiscal note showed an
increase that did not really exist if compared to FY 12 and
FY 13.
Representative Costello MOVED to ADOPT the proposed
committee substitute for CSSSSB 47(FIN), Work Draft, 28-
LS0408\E (Mischel, 4/12/13}. There being NO OBJECTION, it
was so ordered.
Ms. Moss reiterated that the sponsor had great faith in the
boarding school system and was encouraged by inquiries
about rural Alaska magnet schools and other opportunities.
She pointed to the success rate of children who attended
boarding schools. She relayed that the sponsor would like
to see an increased opportunity for the children.
Representative Edgmon appreciated the sponsor's work on the
bill. He referred to an amendment he had not offered and
expressed disappointment that elementary students had not
been included in the stipend program; he surmised that the
issue would be worked on.
Ms. Moss replied in the affirmative.
Representative Edgmon looked forward to seeing the bill on
the House floor.
Vice-Chair Neuman agreed.
Representative Costello discussed the fiscal note from the
Department of Education and Early Development in the annual
amount of $1,660,700 in FY 14 through FY 19.
Representative Edgmon MOVED to REPORT HCS CSSSSB 47(FIN)
out of committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSSSB 47(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal impact note
from the Department of Education and Early Development.
4:01:47 PM
RECESSED
4:02:16 PM
RECONVENED
SENATE BILL NO. 62
"An Act relating to grants for school construction."
4:02:29 PM
DAVID SCOTT, STAFF, SENATOR OLSON, stated that SB 62 added
five schools for Regional Educational Attendance Area
(REAA) grant fund eligibility. The bill defined what a
small municipal school district is and allowed the
districts to be eligible for REAA funds including Hydaburg,
Kake, Klawock, St. Mary's, and Tanana. He added that the
locations were all first class cities and were a part of
the unorganized borough. He shared that the REAA fund was
created in the 26th Legislature [2009-2010] to provide a
revenue stream to REAA school districts; it was a funding
mechanism that arose from the Kasayulie settlement. He
furthered that the fund was capitalized through a formula
included on page 1, line 9.
Mr. Scott continued that REAA school districts lacked the
ability to bond and could not take advantage of the state's
bond reimbursement program (the term 70/30 referred to the
program). He relayed that some rural communities had
elected to incorporate as first class cities, which
required the communities to take on education
responsibilities and to lose their REAA school status. He
stated that the communities were in "limbo" because they
could not use the REAA fund and did not have bonding
authority. He communicated that the intent of the bill was
to get the schools out of limbo status. He pointed to
Section 2 of the legislation and stated that the term
"small municipal school district" was defined as a school
with an Average Daily Membership (ADM) of less than 300 and
with a full value per ADM of no more than $500,000.
4:06:04 PM
Representative Edgmon expounded on Mr. Scott's testimony
and explained that most school districts (the bigger
districts) had the ability to access the bond debt
reimbursement program. He shared that as a result of the
Kasayulie court case, the legislature had created an REAA
school construction fund in 2010. The bill would grant five
communities eligibility for the REAA school construction
fund program, which would simultaneously address a
potential log-jam on school construction capital
improvement project list. He furthered that without the
ability to bond or to access the REAA construction fund,
the communities would not have another funding source
outside a legislative capital appropriation. He clarified
that the legislature had the ability to fund the school
construction and maintenance projects; however, the
legislature did not always have the ability to put the
needed funds in the budget.
Vice-Chair Neuman commented that small schools were not
necessarily 5,500 or less.
Representative Wilson asked if the term "small municipal
school district" was used in any other locations in
statute. Mr. Scott answered that the bill created and
defined the term in Section 2.
4:09:07 PM
Representative Wilson questioned whether the districts
would have the same 70/30 structure as larger districts
where the state pays 70 percent and the districts pay 30
percent.
ELIZABETH SWEENEY NUDELMAN, DIRECTOR, SCHOOL FINANCES AND
FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
responded that the bill provided a funding source that
would fund schools on the construction list in order. She
continued that there would be funds available for the
districts as they reached the top of the list for REAAs and
small municipalities. She furthered that when a school was
funded there would be a participating share paid by the
district. The participating share had not changed and
ranged from 2 percent to 30 percent.
Representative Wilson looked at the definition of a small
municipal school district on page 2, lines 1 and 2 of the
bill. She asked if the numbers had been selected because
anything above the amounts had bonding ability. Mr. Scott
replied in the affirmative.
Representative Wilson stated that she had no problem
helping with bonding for school districts that did not have
that ability. She wanted to be fair to all communities and
noted that larger districts paid high property taxes to
participate. She was comfortable that the bill would allow
the small communities to make improvements and that they
shared in the cost. She voiced support for the definition
[for small municipal school district] used in the bill.
Mr. Scott affirmed.
4:12:30 PM
Representative Munoz thought that first class cities had
the ability to bond. Mr. Scott replied that being a first
class city did not give the automatic ability to bond. He
detailed that the five communities did not have sufficient
economic capacity to be granted bonds by a municipal bond
bank. There were some first class cities in the unorganized
borough that could bond.
Representative Munoz understood, but stated that there was
no statutory prohibition that would prevent the communities
from bonding if they had the capability. Mr. Scott agreed.
4:13:45 PM
DAVE HERBERT, SUPERINTENDENT, ST. MARY'S CITY SCHOOL
DISTRICT (via teleconference), spoke in strong support of
the legislation. He shared that the school district had
originally been part of the Kasayulie case that had been
settled in 2011. He explained that the settlement
recognized that the method of funding new school
construction in Alaska's schools needed to be fair and
equitable. He shared that St. Mary's had been excluded in
the final settlement negotiations because it was not an
REAA school district (St. Mary's is a first class city
school district). He explained that being a first class
city school district required the city to make a mandatory
local contribution to the school district each fiscal year
to help offset its operation costs; whereas, REAA schools
did not have a mandatory local contribution. He
communicated that the district had taken the necessary
steps to improve its position on the new school
construction list through DEED. He elaborated on the steps
the district had taken. He shared that currently the
district was the only small municipal school district on
the list that the legislation would apply to.
Mr. Herbert furthered that the impact of the bill was
minimal to the state, but was greatly important to St.
Mary's. He relayed that most municipalities had bonding
capacity and were eligible to receive up to 70 percent
reimbursement from the state for new school construction.
He detailed that there was only a small group of schools
that did not qualify for the bond reimbursement or the REAA
fund source. He stressed that the legislation would ensure
that new school construction funding sources were truly
equitable for all of Alaska's schools. He stated that the
district had demonstrated its ability to provide quality
education. He urged the committee and the legislature to
pass the legislation.
4:18:32 PM
TOM BEGICH, POLICY DIRECTOR, CITIZENS FOR THE EDUCATIONAL
ADVANCEMENT OF ALASKA'S CHILDREN, spoke in support of the
legislation. He shared that the organization was
responsible for initially bringing the Kasayulie suit
forward. He informed the committee that the legislation was
the organization's number one priority and the top priority
for its REAA members. He stated that the bill made a
necessary correction to an error that needed repair.
Representative Wilson asked for verification that the five
school districts were the only districts that were not
currently covered by a bonding mechanism.
Mr. Begich replied in the affirmative. The group had
reviewed the formula before the bill had been introduced to
ensure that it would not unfairly penalize schools with the
ability to bond. He added that because the bill contained a
formula instead of specifying the five school districts it
would allow districts to "pop" out of the category if their
economic capacity increased.
Representative Edgmon remarked that a significant amount of
work had gone into the bill prior to its introduction. He
believed the bill was a good compromise and noted its zero
fiscal note.
Representative Munoz appreciated the sponsors' who worked
on the bill. She asked how the construction fund worked
that had resulted from the Kasayulie case.
Mr. Begich answered that the Kasayulie mechanism
established in 2010 had been built on a fairly complex
formula developed by Senator Lyman Hoffman's office and
added to by the House Finance Committee. He elaborated that
the formula looked at the bonding capacity for any given
year for schools that were eligible for bond reimbursement
and established a referential amount based on the number of
schools that was deposited into the REAA fund annually. He
stated that the REAA fund had a $70 million cap. He
detailed that the idea was to encourage the spending of the
available funds annually in order to rectify what the
courts found was a biased process of funding schools in
Alaska.
Vice-Chair Neuman CLOSED public testimony.
4:22:15 PM
Representative Kawasaki asked about a report on school
construction and major maintenance. Mr. Scott replied noted
that the report was available on the DEED website.
Representative Kawasaki did not see a problem with the bill
if its intent was to fix the ability for schools' ability
to bond and to provide for funds. He believed a bigger
question existed regarding how schools equitably received
money for construction. He pointed to a Fairbanks school on
the list for major maintenance that continued to move down
on the priority list. He believed the overall issue should
be addressed by the committee in the future.
Representative Wilson asked how the school priority list
for major maintenance worked.
Representative Edgmon replied that the bill was not related
to the major maintenance list.
Representative Wilson clarified her interest in the
construction list. Ms. Nudelman replied that the list was
recalibrated each year; districts could reuse their
application for one year.
4:24:27 PM
Representative Costello addressed the one zero fiscal note
from the Department of Education and Early Development.
Representative Edgmon MOVED to REPORT SB 62 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SB 62 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
note: FN1(EED).
HOUSE BILL NO. 192
"An Act relating to the filing date for the final
quarterly payment of, and to the assessment of
penalties under, the fishery resource landing tax."
HB 192 was SCHEDULED but not HEARD.
CS FOR SENATE BILL NO. 18(FIN) am
"An Act making, amending, and repealing
appropriations, including capital appropriations,
supplemental appropriations, reappropriations, and
other appropriations; making appropriations to
capitalize funds; and providing for an effective
date."
CSSB 18(FIN) am was SCHEDULED but not HEARD.
ADJOURNMENT
4:25:15 PM
The meeting was adjourned at 4:25 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS-FIN SB 7, version C (with FilmFix).pdf |
HFIN 4/12/2013 1:30:00 PM |
SB 7 |
| Memo 13-232 lnd (for CS-FIN SB 7, version C).pdf |
HFIN 4/12/2013 1:30:00 PM |
SB 7 |