Legislature(2017 - 2018)HOUSE FINANCE 519

01/26/2017 01:30 PM FINANCE

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Audio Topic
01:31:23 PM Start
02:50:37 PM Fy 18 Budget Overview: Alaska Mental Health Trust Authority
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 59 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ Overview: FY18 Budget by TELECONFERENCED
- Dept. of Education & Early Development
- Dept. of Public Safety
- AK Mental Health Trust Authority
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 26, 2017                                                                                           
                         1:31 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:31:23 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:31 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Michael Johnson,  Commissioner, Department of  Education and                                                                    
Early Development;  Heidi Teshner,  Director, Administrative                                                                    
Services,  Department of  Education  and Early  Development;                                                                    
Patience  Frederiksen,  Director,   Division  of  Libraries,                                                                    
Archives,  and Museums,  Department of  Education and  Early                                                                    
Development;  Stephanie Butler,  Executive Director,  Alaska                                                                    
Commission   on  Postsecondary   Education,  Department   of                                                                    
Education    and    Early   Development;    Walt    Monegan,                                                                    
Commissioner-Designee,  Department of  Public Safety;  Kelly                                                                    
Howell,  Director,  Division   of  Administrative  Services,                                                                    
Department  of  Public  Safety; Greg  Jones,  Interim  Chief                                                                    
Executive  Officer, Alaska  Mental  Health Trust  Authority;                                                                    
John  Morrison,  Executive   Director,  Trust  Land  Office,                                                                    
Alaska   Mental  Health   Trust   Authority;  Jeff   Jessee,                                                                    
Legislative Liaison, Alaska Mental Health Trust Authority.                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 57     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          HB 57 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 59     APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          HB 59 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
FY 18 BUDGET OVERVIEWS:                                                                                                         
                                                                                                                                
     DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                              
     DEPARTMENT OF PUBLIC SAFETY                                                                                                
     ALASKA MENTAL HEALTH TRUST AUTHORITY                                                                                       
                                                                                                                                
Co-Chair Seaton addressed the meeting agenda.                                                                                   
                                                                                                                                
^FY 18  BUDGET OVERVIEW:  DEPARTMENT OF EDUCATION  AND EARLY                                                                  
DEVELOPMENT                                                                                                                   
                                                                                                                                
1:32:4v1 PM                                                                                                                   
                                                                                                                                
MICHAEL JOHNSON,  COMMISSIONER, DEPARTMENT OF  EDUCATION AND                                                                    
EARLY  DEVELOPMENT,  introduced  a  PowerPoint  presentation                                                                    
titled   "Alaska   Department   of   Education   and   Early                                                                    
Development: Department  Overview, House  Finance Committee"                                                                    
dated January 26, 2017 (copy  on file). He referred to slide                                                                    
2  and  addressed  the department's  mission  statement:  to                                                                    
ensure  quality   standards-based  instruction   to  improve                                                                    
academic  achievement for  all students.  He noted  that the                                                                    
State Board of Education  was updating its mission statement                                                                    
to: An excellent  education for every student  every day. He                                                                    
read from  slide 2. The  performance review  performed under                                                                    
HB 30 had  proved an asset for the department  and was being                                                                    
used for  restructuring the department, however,  the budget                                                                    
documents reflected the current structure.                                                                                      
                                                                                                                                
Co-Chair  Seaton  recognized   Representative  Kawasaki  had                                                                    
joined  the  meeting. He  reminded  the  committee that  the                                                                    
overview   would   be    identifying   questions   for   the                                                                    
subcommittees to delve into.                                                                                                    
                                                                                                                                
1:36:24 PM                                                                                                                    
                                                                                                                                
HEIDI    TESHNER,    DIRECTOR,   ADMINISTRATIVE    SERVICES,                                                                    
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, addressed a                                                                      
chart from the Legislative Finance Division on slide 3:                                                                         
                                                                                                                                
     The chart on  Slide 3 shows a 10-year look  back of the                                                                    
     non-formula appropriations in  the department's budget,                                                                    
     for  both unrestricted  and  designated general  funds,                                                                    
     compared to all agencies budgets.                                                                                          
     The   department's  total   general   fund  budget   is                                                                    
     $50,144,400,  of  which   $35,822,900  is  unrestricted                                                                    
     general  funds and  $14,321,500  is designated  general                                                                    
     funds.                                                                                                                     
                                                                                                                                
     Since  FY2015,   the  unrestricted  general   funds  in                                                                    
     department's   non-formula  appropriations   have  been                                                                    
     reduced $21.6 million or 37.6%.                                                                                            
                                                                                                                                
     Of particular  note on  this slide  is the  increase in                                                                    
     FY2015, which  was attributed to the  passage of HB278,                                                                    
     which  was  the Education  Bill.    Some of  the  items                                                                    
     included in that legislation were:                                                                                         
                                                                                                                                
        · Funds for the College and Career Readiness                                                                            
          Assessment ($525.0);                                                                                                  
        · Middle   School   STEM    3-year   pilot   program                                                                    
          ($3,000.0); and                                                                                                       
        · School Broadband Access Grants ($5,000.0)                                                                             
                                                                                                                                
                                                                                                                                
Ms. Teshner turned to slide 4 and read from prepared                                                                            
remarks:                                                                                                                        
                                                                                                                                
     The chart on  Slide 4 shows a 10-year look  back of the                                                                    
     formula   and   non-formula   appropriations   in   the                                                                    
     department's   budget,   for  both   unrestricted   and                                                                    
     designated  general  funds,  compared to  all  agencies                                                                    
     budgets.                                                                                                                   
                                                                                                                                
     The graph on the previous  slide is shown on this graph                                                                    
     as the blue bars.                                                                                                          
                                                                                                                                
     As  you  can see  with  the  purple bars,  the  Formula                                                                    
     programs  are  the  largest part  of  the  department's                                                                    
     general   funds.     Included   in   the  formula   is:                                                                    
     Foundation,   Pupil   Transportation,   Boarding   Home                                                                    
     Grants, Special  Schools, Youth  in Detention;  and the                                                                    
     Alaska Performance Scholarship.                                                                                            
                                                                                                                                
     Formula is  95% of  the general funds,  and non-formula                                                                    
     is 5%.                                                                                                                     
                                                                                                                                
     Of particular  note on  this slide  is the  increase to                                                                    
     the formula funding in FY2015,  which was attributed to                                                                    
     the passage of HB278, the Education Bill.                                                                                  
                                                                                                                                
1:38:31 PM                                                                                                                    
                                                                                                                                
Ms. Teshner moved to slide 5 and addressed all funds:                                                                           
                                                                                                                                
     The chart on  Slide 5 shows a 10-year look  back of the                                                                    
     non-formula appropriations in  the department's budget,                                                                    
     by  line item,  for  all fund  sources. The  department                                                                    
     receives  unrestricted  and designated  general  funds,                                                                    
     federal funds, and other funds.                                                                                            
                                                                                                                                
     As  noted   by  the  purple  bars,   grants  to  school                                                                    
     districts  and other  grantees is  the majority  of the                                                                    
     department's non-formula  budget.   Most of  this grant                                                                    
     funding is from federal funds.                                                                                             
                                                                                                                                
     Of particular note is the spikes in FY2010 and FY2012.                                                                     
                                                                                                                                
     In  FY2010, this  was attributed  to ARRA  funding (the                                                                    
     American Recovery and Reinvestment Act of 2009).                                                                           
                                                                                                                                
     In FY2012, this  was attributed to the  addition of the                                                                    
     BTOP   grant  (which   was  the   Broadband  Technology                                                                    
     Opportunities Program); funding  for the Education Jobs                                                                    
     Fund which was part of ARRA ($649.0).                                                                                      
                                                                                                                                
     I  would  also  like  to  point  out  that  the  FY2018                                                                    
     personal  services, travel,  and commodities  lines are                                                                    
     all below the FY2012 level.                                                                                                
                                                                                                                                
1:39:46 PM                                                                                                                    
                                                                                                                                
Ms. Teshner addressed slides 6 through 8:                                                                                       
                                                                                                                                
     The chart on  Slide 6 shows a 10-year look  back of the                                                                    
     non-formula appropriations in  the department's budget,                                                                    
     broken down by appropriations, for all fund sources.                                                                       
                                                                                                                                
     Teaching and  Learning Support  (the blue  line towards                                                                    
     the top  of the graph) contains  the largest percentage                                                                    
     of    federal   funding    compared   to    the   other                                                                    
     appropriations;  thus the  gap between  that blue  line                                                                    
     and the rest.                                                                                                              
                                                                                                                                
     The chart on  Slide 7 shows a 10-year look  back of the                                                                    
     non-formula appropriations in  the department's budget,                                                                    
     broken  down by  appropriations,  for unrestricted  and                                                                    
     designated general funds only.                                                                                             
                                                                                                                                
     Teaching and  Learning Support,  which has  the largest                                                                    
     unrestricted   and  designated   general  fund   budget                                                                    
     compared  to the  other non-formula  appropriations, is                                                                    
     shown  on  the  green  line.    Please  note  that  the                                                                    
     Governor's FY2018 proposed budget  shows the TLS budget                                                                    
     below the FY2009 levels.                                                                                                   
                                                                                                                                
     ·  Increases from FY2008 through  FY2013 included items                                                                    
        such as:                                                                                                                
          o Funding for programs such as the Alaska Native                                                                      
             Science and Engineering Program (ANSEP), Best                                                                      
             Beginnings, and Parents as Teachers; among                                                                         
             others.                                                                                                            
     ·  Reductions from FY2015 through FY2017 included items                                                                    
        such as:                                                                                                                
          o Repeal of the HSGQE (which was the High School                                                                      
             Graduation  Qualifying   Exam);   as  well   as                                                                    
             reductions  in  personal  costs   and  budgeted                                                                    
             positions (a  total reduction  of 28  positions                                                                    
             since FY2013)                                                                                                      
                                                                                                                                
     The chart on  Slide 8 shows a 10-year look  back of the                                                                    
     total    funding   comparison    by   fund    category:                                                                    
     unrestricted  and  designated  general  funds,  federal                                                                    
     funds, and other funds.                                                                                                    
                                                                                                                                
     As noted  in the blue bars,  unrestricted general funds                                                                    
     are the  largest percentage  of DEED's  overall budget,                                                                    
     followed  by federal,  other,  then designated  general                                                                    
     funds.                                                                                                                     
                                                                                                                                
     Again, the  increases in federal  funds from  FY2010 to                                                                    
     FY2012 were  attributed to ARRA, Education  Jobs Funds,                                                                    
     and BTOP funds.                                                                                                            
                                                                                                                                
     And  the  increase  in unrestricted  general  funds  in                                                                    
     FY2015  was attributed  to the  passage  of HB278,  the                                                                    
     Education Bill.                                                                                                            
                                                                                                                                
1:42:36 PM                                                                                                                    
                                                                                                                                
Ms. Teshner addressed slides 9 through 11:                                                                                      
                                                                                                                                
     On the next  6 slides, we break down  the department by                                                                    
     results delivery units  and component/allocations, this                                                                    
     is  shown in  the 1st  column.   The remaining  columns                                                                    
     contain the  information that  this committee  asked us                                                                    
     to prepare.                                                                                                                
                                                                                                                                
     Column 7 is  the Rating of Effectiveness.   For this we                                                                    
     used a  "grade" of A,  B, or C -  where A means  we are                                                                    
     getting the  job done; B  means we are getting  the job                                                                    
     but there are  areas for improvement; and C  we are not                                                                    
     getting  the  job  done with  limited  opportunity  for                                                                    
     improvement.   These  ratings are  of the  department's                                                                    
     performance in our ability to  get the job done to meet                                                                    
     the  mission  and  is  not  a  ranking  of  the  school                                                                    
     district's in Alaska.                                                                                                      
                                                                                                                                
     The  other columns  contain  the  funding breakdown  by                                                                    
     fund  category; the  total  # of  positions;  the #  of                                                                    
     Alaskan's served;  the % cost through  fees; the rating                                                                    
     of importance to  mission (which will have  a rating of                                                                    
     critical,  important, beneficial,  or status  quo); and                                                                    
     the   final   three   right-hand   columns   show   the                                                                    
     constitutional, federal, and statutory requirements.                                                                       
                                                                                                                                
     In  the interest  of time,  I  will not  go over  these                                                                    
     slides  line  by  line but  will  address  some  FY2018                                                                    
     budget highlights.                                                                                                         
     ·  Foundation -  fully  funded  at the  statutory  Base                                                                    
        Student Allocation (BSA) of $5,930                                                                                      
     ·  Pupil Transportation  -  Funding  maintained at  the                                                                    
        FY2017 funding level of $72,619.8                                                                                       
                                                                                                                                
     Within the Education  Support Services Results Delivery                                                                    
     Unit,                                                                                                                      
                                                                                                                                
     Administrative Services -                                                                                                  
     ·  Transfer   1   PFT   position   to   Department   of                                                                    
        Administration for Shared Services of Alaska                                                                            
        Implementation                                                                                                          
     ·  $9.5  Other  (I/A  receipt  authority)  decrement  -                                                                    
        savings   from    Shared    Services    of    Alaska                                                                    
        Implementation                                                                                                          
                                                                                                                                
     Information Services -                                                                                                     
     ·  $110.0 Other  (I/A receipt  authority) decrement  to                                                                    
        reduce uncollectible inter-agency receipt authority                                                                     
        and delete 1 PFT position                                                                                               
     ·  Transfer   1   PFT   position   to   Department   of                                                                    
        Administration for Centralized Office of Information                                                                    
        Technology Implementation                                                                                               
                                                                                                                                
     Within  the  Teaching   and  Learning  Support  results                                                                    
     delivery unit,                                                                                                             
     Student and School Achievement -                                                                                           
     · Delete two vacant positions                                                                                              
     State System of Support -                                                                                                  
     ·  $250.0  UGF  one-time  increment   request  for  the                                                                    
        Innovative Best Practice Initiative                                                                                     
                                                                                                                                
1:45:24 PM                                                                                                                    
                                                                                                                                
Ms. Teshner moved to slide 12 related to commissions and                                                                        
boards, Mount Edgecumbe High School, and state facilities                                                                       
maintenance:                                                                                                                    
                                                                                                                                
     Within  the  Commissions  and Boards  results  delivery                                                                    
     unit,                                                                                                                      
                                                                                                                                
     Alaska State Council on the Arts -                                                                                         
     ·  Transfer   1   PFT   position   to   Department   of                                                                    
        Administration for Shared Services of Alaska                                                                            
        Implementation                                                                                                          
     ·  $6.6 decrement [$2.1 Fed;  4.5 G/F Match]  - savings                                                                    
       from Shared Services of Alaska Implementation                                                                            
                                                                                                                                
     Within Mt. Edgecumbe High School (MEHS) -                                                                                  
     ·  $100.0 UGF  increment request  for the  warm storage                                                                    
        and maintenance costs for the new MEHS Aquatic                                                                          
        Center                                                                                                                  
                                                                                                                                
Ms. Teshner turned to slide 13:                                                                                                 
                                                                                                                                
     Within  the  Alaska   State  Libraries,  Archives,  and                                                                    
     Museums results delivery unit,                                                                                             
                                                                                                                                
     Library Operations -                                                                                                       
     ·  Transfer   2   PFT   position   to   Department   of                                                                    
        Administration for Shared Services of Alaska                                                                            
        Implementation                                                                                                          
     ·  $25.6 UGF decrement  - savings from  Shared Services                                                                    
        of Alaska Implementation                                                                                                
     · Delete 2 long-term non-perm positions                                                                                    
                                                                                                                                
     Museum Operations -                                                                                                        
     ·  Delete 1 PFT vacant position due to a reorganization                                                                    
        with that component                                                                                                     
                                                                                                                                
1:46:47 PM                                                                                                                    
                                                                                                                                
Ms. Teshner addressed program administration and operations                                                                     
on slide 14.                                                                                                                    
                                                                                                                                
     Within the Program  Administration & Operations results                                                                    
     delivery unit -                                                                                                            
     ·  $625.1 Other decrement and delete 7 vacant positions                                                                    
        (4 PFT and 3 NP)                                                                                                        
     ·  $125.0  DGF   increment  request   for  the   Alaska                                                                    
        Education Grants, which is a needs-based grant                                                                          
        program that is set in statute to equal half the                                                                        
        amount allocated to the APS                                                                                             
     ·  Transfer   1   PFT   position   to   Department   of                                                                    
        Administration for Shared Services of Alaska                                                                            
        Implementation                                                                                                          
     ·  $7.8 Other decrement - savings  from Shared Services                                                                    
        of Alaska Implementation                                                                                                
                                                                                                                                
     Within  the WWAMI  Medical  Education results  delivery                                                                    
     unit -                                                                                                                     
     ·  $106.0  DGF  increment  request   to  cover  program                                                                    
        contractual increases                                                                                                   
     ·  And within the Alaska  Performance Scholarship (APS)                                                                    
        Awards results delivery unit -                                                                                          
     ·  $250.0 DGF increment  request to cover  the expected                                                                    
        demand increases                                                                                                        
                                                                                                                                
1:48:03 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Gara   spoke   to  the   department's   mission                                                                    
statement.  He  said  that, according  to  the  Division  of                                                                    
Legislative  Finance,   the  state  was  behind   two  years                                                                    
previous  by  around  $31  million  in  terms  of  classroom                                                                    
funding  and   pupil  transportation.   There  had   been  a                                                                    
classroom funding  grant of $43  million that was  no longer                                                                    
available, and $6 million for  pupil transportation had been                                                                    
vetoed.  He asked  if the  department was  able to  meet its                                                                    
mission.                                                                                                                        
                                                                                                                                
Commissioner  Johnson answered  that,  during his  state-of-                                                                    
the-state address, the governor had  stated that for far too                                                                    
long too  many of  Alaska's students  were near  the bottom,                                                                    
which indicated that  the department had work to  do to meet                                                                    
its mission. He spoke to  an achievement gap in the schools.                                                                    
He  referred to  it  as "Alaska's  education challenge"  and                                                                    
indicated that they were planning  to spend the next several                                                                    
months   presenting    legislators   with   a    series   of                                                                    
recommendations and five  priorities the department believed                                                                    
needed addressing, including a discussion of finances.                                                                          
                                                                                                                                
Vice-Chair  Gara spoke  to  the $6  million  veto for  pupil                                                                    
transportation which the governor  had proposed for a second                                                                    
year. He  asked if  some districts  had economized  on pupil                                                                    
transportation,  or   if  the   money  was  coming   out  of                                                                    
classrooms.                                                                                                                     
                                                                                                                                
Commissioner  Johnson  answered  that  it  differed  between                                                                    
districts.  There  were  some  districts  that  had  to  use                                                                    
operating budget  money to fund pupil  transportation, while                                                                    
others had not.                                                                                                                 
                                                                                                                                
Co-Chair  Seaton  mentioned   that  the  subcommittee  would                                                                    
address pupil  transportation, whether  it was  by adjusting                                                                    
school bus  routes or  getting money  from other  places. He                                                                    
asked the finance subcommittee to look into the issue.                                                                          
                                                                                                                                
Representative  Kawasaki spoke  to the  Washington, Wyoming,                                                                    
Alaska, Montana,  and Idaho (WWAMI) program  and performance                                                                    
scholarship  rewards on  slide  14. He  asked about  whether                                                                    
funding was coming from the Higher Education Trust Fund.                                                                        
                                                                                                                                
Ms. Teshner answered in the affirmative.                                                                                        
                                                                                                                                
Representative Kawasaki  asked if it was  an appropriate use                                                                    
of the funding.                                                                                                                 
                                                                                                                                
1:52:48 PM                                                                                                                    
                                                                                                                                
Ms.  Teshner replied  it  had  been done  for  the past  few                                                                    
years. She did not know a further answer.                                                                                       
                                                                                                                                
Co-Chair  Seaton noted  the subcommittee  would look  at the                                                                    
history and designated uses of the fund.                                                                                        
                                                                                                                                
Representative  Kawasaki commented  that  he  would like  to                                                                    
know whether the trust fund was solvent.                                                                                        
                                                                                                                                
Co-Chair  Seaton   stated  the  high-level   overview  would                                                                    
identify areas  needing answers in subcommittee,  as well as                                                                    
indicating for the department which  answers they would need                                                                    
to present.                                                                                                                     
                                                                                                                                
Representative Pruitt  noted some of the  designated general                                                                    
fund (DGF) had  been changed in the past  several years that                                                                    
he  had  disagreed  with.  He  wondered  about  the  aquatic                                                                    
facility at  Mount Edgecumbe. He  asked for a repeat  of the                                                                    
information.                                                                                                                    
                                                                                                                                
Ms. Teshner  answered that the facility  was currently under                                                                    
construction and  set to  open in  November 2017.  The total                                                                    
operating cost  was $583,000. The  request for  $100,000 was                                                                    
to  keep the  facility in  warm  storage until  it could  be                                                                    
fully operational.  There were currently no  revenue sources                                                                    
to open the facility.                                                                                                           
                                                                                                                                
Representative  Pruitt   noted  the  information   had  been                                                                    
brought up in  an audit. He stated the  audit had identified                                                                    
the facility may  not be needed. He wondered  if there would                                                                    
ever be  a request to  complete the facility or  whether the                                                                    
legislature would be asked for  funding to keep the building                                                                    
warm year after year.                                                                                                           
                                                                                                                                
Ms. Teshner  answered that other revenue  sources were being                                                                    
pursued in  Sitka, including opening  it for public  use and                                                                    
developing  a  fee structure.  She  did  not know  the  time                                                                    
frame. The department  wanted to find the  revenue to ensure                                                                    
that it could open.                                                                                                             
                                                                                                                                
1:56:56 PM                                                                                                                    
                                                                                                                                
Representative Wilson  spoke to boarding home  grants, youth                                                                    
in  detention and  special  schools on  slide  9. She  asked                                                                    
whether the  Base Student Allocation  (BSA) was  included in                                                                    
the amounts on the slide.                                                                                                       
                                                                                                                                
Ms. Teshner answered  that the BSA was  only included within                                                                    
the foundation  program itself. The others  were in addition                                                                    
to the BSA.                                                                                                                     
                                                                                                                                
Representative Wilson  noted that  the boarding  home grants                                                                    
called for $16,784 each, however  the slide showed $3,055 to                                                                    
Youth  in  Detention and  $4,949  for  Special Schools,  and                                                                    
asked about  the significant  difference. She  remarked that                                                                    
the boarding  home and detention facility  would not require                                                                    
as much for transportation.                                                                                                     
                                                                                                                                
Ms.  Teshner  answered  that the  programs  had  a  specific                                                                    
formula set in statute. For  example, the boarding homes saw                                                                    
funds through  a statewide program and/or  a stipend program                                                                    
and  a set  amount  went to  the  Special Education  Service                                                                    
Agency which was also set in statute.                                                                                           
                                                                                                                                
Representative Wilson  hoped the subcommittee would  look at                                                                    
the  large  difference.  She  asked  if  the  formula  money                                                                    
followed a child  in a boarding home rather  than going into                                                                    
the district,  and whether it  was half to the  district and                                                                    
half to the boarding home, or  whether all of the money went                                                                    
to one place.                                                                                                                   
                                                                                                                                
Ms. Teshner responded  there was a variable term  and a 180-                                                                  
day term.  For the 180-day  term, the money would  stay, for                                                                    
example,  in  Galena  in its  residential  school.  For  the                                                                    
variable term,  she gave the  example of the  Chugach Voyage                                                                    
to Excellence Program,  where the students come  in for two-                                                                    
week periods.  She detailed that  if the students  came from                                                                    
Kashunamiut,  the funding  would remain  in Kashunamuit  and                                                                    
Chugach would only  receive funding to board  the pupils for                                                                    
the two-week period.                                                                                                            
                                                                                                                                
1:59:53 PM                                                                                                                    
                                                                                                                                
Representative  Ortiz  referred to  slide  6  and the  graph                                                                    
showing  a reduction  in funding  for teaching  and learning                                                                    
support services.  He asked  what kinds  of things  were not                                                                    
happening in  teaching and learning support  that did happen                                                                    
when larger funding sources had been available.                                                                                 
                                                                                                                                
Ms.  Teshner  said  that  the peaks  showing  in  the  graph                                                                    
indicated   funding   from   the   American   Recovery   and                                                                    
Reinvestment  Act  (ARRA)  which  were  one-time  items  for                                                                    
school districts. Since  then there had been  a decline from                                                                    
FY 13 to  the FY 18 governor's budget.  The Alaska Statewide                                                                    
Mentor  Project  (ASMP) had  ended,  and  the Alaska  Native                                                                    
Science and  Engineering Program (ANSEP) no  longer received                                                                    
state funding.                                                                                                                  
                                                                                                                                
Representative  Ortiz asked  about  the statewide  mentoring                                                                    
program.                                                                                                                        
                                                                                                                                
Ms.  Teshner did  not  have the  background  history on  the                                                                    
program.  The  department would  address  the  issue in  the                                                                    
subcommittee.                                                                                                                   
                                                                                                                                
Representative  Guttenberg  spoke  to slide  13  related  to                                                                    
Online with  Libraries and e-rates.  He brought up  the huge                                                                    
differential  in costs  between  different communities.  The                                                                    
state had  cut its  participation in  the previous  year. He                                                                    
asked about the impact.                                                                                                         
                                                                                                                                
Ms. Teshner deferred to a colleague.                                                                                            
                                                                                                                                
                                                                                                                                
2:02:50 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  for  a  graph showing  the                                                                    
different costs  that libraries  faced for  broadband around                                                                    
the  state and  what e-rate  covered, which  he thought  was                                                                    
around 90 percent. He asked  whether there was a coordinated                                                                    
plan to deal with costs  of library operations and broadband                                                                    
for schools and how that was broken out.                                                                                        
                                                                                                                                
PATIENCE  FREDERIKSEN,  DIRECTOR,   DIVISION  OF  LIBRARIES,                                                                    
ARCHIVES,  AND MUSEUMS,  DEPARTMENT OF  EDUCATION AND  EARLY                                                                    
DEVELOPMENT,                                                                                                                    
                                                                                                                                
                                                                                                                                
Ms. Frederiksen  answered that  library operations  were not                                                                    
shown in the charts.                                                                                                            
                                                                                                                                
Representative  Guttenberg stated  that he  was looking  for                                                                    
graphs.  He asked  what portion  of broadband  was used  for                                                                    
Live Homework Help and whether it was also discounted.                                                                          
                                                                                                                                
Ms.  Frederiksen  indicated  that  Live  Homework  Help  was                                                                    
provided over  the web to  students directly, so  there were                                                                    
no  internet  costs  for  that  service.  Additionally,  the                                                                    
legislature  had provided  $138,200 for  Live Homework  Help                                                                    
annually, and that had been  supplemented with library grant                                                                    
funding to  make the remaining  cost. Each  tutoring session                                                                    
was  $7.50 and  federal  funds were  covering the  remaining                                                                    
amount. There were no internet  costs associated with it, as                                                                    
students were using it in their homes.                                                                                          
                                                                                                                                
Co-Chair Seaton  asked the  department to  bring performance                                                                    
data on Live Homework Help to the subcommittee.                                                                                 
                                                                                                                                
Ms. Frederiksen complied.                                                                                                       
                                                                                                                                
2:05:51 PM                                                                                                                    
                                                                                                                                
Vice-Chair Gara spoke to  the merit-based Alaska Performance                                                                    
Scholarship (APS)  and questioned  whether it  represented a                                                                    
stable or rising cost.                                                                                                          
                                                                                                                                
Ms. Teshner deferred the question to a colleague.                                                                               
                                                                                                                                
Co-Chair Seaton asked for clarification on the question.                                                                        
                                                                                                                                
Vice-Chair  Gara clarified  he  was only  interested in  the                                                                    
information related  to the  non-needs-based portion  of the                                                                    
scholarship.                                                                                                                    
                                                                                                                                
STEPHANIE BUTLER,  EXECUTIVE DIRECTOR, ALASKA  COMMISSION ON                                                                    
POSTSECONDARY EDUCATION,  DEPARTMENT OF EDUCATION  AND EARLY                                                                    
DEVELOPMENT, replied that  now that there was  a full cohort                                                                    
of  students, costs  were fairly  stable. Total  rewards had                                                                    
been  $11.5  million  and  the program  was  asking  for  an                                                                    
additional  $250,000  for  FY  18  and  did  not  expect  an                                                                    
increase.                                                                                                                       
                                                                                                                                
2:08:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton mentioned  the  Parents as  Teachers and  a                                                                    
pre-K pilot project. He asked  the department to provide any                                                                    
performance data  to the subcommittee. He  was interested in                                                                    
comparing the results of the programs.                                                                                          
                                                                                                                                
Ms. Teshner replied in the affirmative.                                                                                         
                                                                                                                                
Representative  Wilson spoke  to the  teaching and  learning                                                                    
component.  She  asked  if  the  department  had  looked  at                                                                    
financial participation by the  school districts rather than                                                                    
the money coming from the  state. She asked the subcommittee                                                                    
to look at the detail.                                                                                                          
                                                                                                                                
2:10:05 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:12:02 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^FY 18 BUDGET OVERVIEW: DEPARTMENT OF PUBLIC SAFETY                                                                           
                                                                                                                                
2:12:18 PM                                                                                                                    
                                                                                                                                
WALT  MONEGAN, COMMISSIONER-DESIGNEE,  DEPARTMENT OF  PUBLIC                                                                    
SAFETY,   introduced   a  PowerPoint   presentation   titled                                                                    
"Department  of  Public  Safety Department  Overview,  House                                                                    
Finance Committee"  dated January  26, 2017 (copy  on file).                                                                    
He  referred to  the  department's mission  on  slide 2  and                                                                    
pointed to various website links included on the slide.                                                                         
                                                                                                                                
KELLY   HOWELL,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT OF  PUBLIC SAFETY,  addressed slide  3                                                                    
showing  a  10-year  lookback  of  the  department's  budget                                                                    
produced by  the Legislative Finance Division.  She spoke to                                                                    
growth in  the Alaska State Troopers,  Village Public Safety                                                                    
Officer (VPSO), and Council on  Domestic Violence and Sexual                                                                  
Assault  (CDVSA) appropriations.  The FY  18 budget  request                                                                    
was slightly over  FY 12 levels, with a  difference of about                                                                    
$2.2 million. The  chart on slide 4  showed the department's                                                                    
budget by  line item.  The travel line  item was  lower than                                                                    
the FY 08 level.                                                                                                                
                                                                                                                                
2:15:31 PM                                                                                                                    
                                                                                                                                
Ms.  Howell  spoke  to  slide 5  which  provided  a  10-year                                                                    
lookback at  the General Fund (GF)  budget by appropriation.                                                                    
Alaska State Troopers  made up 71 percent of  the budget and                                                                    
included both  State Troopers and Alaska  Wildlife Troopers.                                                                    
Statewide  support, Fire  and Life  Safety, and  Alaska Fire                                                                    
Standards Council  appropriations were  below FY  12 levels.                                                                    
The Alaska State  Troopers and VPSO levels were  below FY 13                                                                    
levels,  with  the  Domestic  Violence  and  Sexual  Assault                                                                    
appropriation close to FY 13 levels.                                                                                            
                                                                                                                                
2:16:23 PM                                                                                                                    
                                                                                                                                
Ms. Howell turned to slide  6 and addressed the department's                                                                    
appropriations   for  all   funds.  Alaska   State  Troopers                                                                    
represented  67 percent,  the  largest share  of  the FY  18                                                                    
proposed  budget.  The  note from  the  Legislative  Finance                                                                    
Division identified that a portion  of the appropriation was                                                                    
attributable  to  funding  from the  American  Recovery  and                                                                    
Reinvestment  Act  (ARRA)  and capital  improvement  program                                                                    
receipts  for the  Bureau of  Highway Patrol.  She moved  to                                                                    
slide  7 and  addressed  the department's  total funding  by                                                                    
fund  group.  The  unrestricted general  fund  (UGF)  budget                                                                    
category  comprised 81  percent  of the  department's FY  18                                                                    
proposed budget.  The next five slides  provided a breakdown                                                                    
of the  department's budget  by allocation.  She highlighted                                                                    
some of the significant budget changes proposed for FY 18.                                                                      
                                                                                                                                
2:18:00 PM                                                                                                                    
                                                                                                                                
Ms. Howell spoke  to fire and life safety on  slide 8. There                                                                    
was a proposed reduction of  $170,000 in two permanent full-                                                                    
time  positions,   namely  a  building  plans   examiner  in                                                                    
Anchorage  and office  assistant II  position in  Fairbanks.                                                                    
The Alaska  State Troopers detachments (slide  9) allocation                                                                    
was the  fourth row down  and was the largest  allocation in                                                                    
the department's budget in terms  of cost and personnel. The                                                                    
allocation  saw a  total reduction  of $403,100  by deleting                                                                    
three    administrative   positions    at   the    Anchorage                                                                    
headquarters, namely  a state  trooper captain  position, an                                                                    
environmental services journey position  in Fairbanks, and a                                                                    
criminal  justice  technician  position  in  Anchorage.  She                                                                    
spoke  to   the  Alaska  Wildlife  Troopers   allocation  on                                                                    
slide 9. Two positions were vacant in Ketchikan and Kodiak.                                                                     
                                                                                                                                
2:20:20 PM                                                                                                                    
                                                                                                                                
Ms.  Howell   skipped  to   slide  11   and  spoke   to  the                                                                    
administrative    services    and   statewide    information                                                                    
technology  services allocations.  Some  positions would  be                                                                    
transferred  to  Department   of  Administration  under  the                                                                    
Office  of Shared  Services and  the  Office of  Information                                                                    
Technology for a total savings  to the department of $25,100                                                                    
in  UGF.   One  significant  change  was   in  the  prisoner                                                                    
transport  allocation   on  slide  8.  The   department  was                                                                    
proposing  a $500,000  reduction based  on a  decreased need                                                                    
for  physical  prisoner transportation  due  to  the use  of                                                                    
video arraignments.                                                                                                             
                                                                                                                                
Co-Chair Seaton  asked for verification she  was speaking to                                                                    
the line at the bottom of slide 8.                                                                                              
                                                                                                                                
Ms. Howell  answered in the affirmative.  The allocation was                                                                    
primarily  composed of  travel  and  services for  troopers,                                                                    
whether  they  be in  the  judicial  services or  detachment                                                                    
allocations.  The  funding was  also  used  to assist  local                                                                    
police  departments  when   they  assisted  in  transporting                                                                    
prisoners.                                                                                                                      
                                                                                                                                
2:23:08 PM                                                                                                                    
                                                                                                                                
Ms.  Howell remained  on slide  8. She  highlighted a  newly                                                                    
proposed  fund under  the Alaska  Bureau of  Highway Patrol,                                                                    
the  Alaska Transportation  Maintenance  Fund,  which was  a                                                                    
significant change in the governor's FY 18 proposed budget.                                                                     
                                                                                                                                
Ms. Howell  turned to  slide 10 and  addressed the  CDVSA in                                                                    
the last row.  The department was requesting  an increase of                                                                    
$1 million in  federal receipt authority due  to an increase                                                                    
in  federal  grants.  The   $1  million  designated  general                                                                    
fund (DGF) was associated  with the passage of SB  91 in the                                                                    
previous   session   and  reflected   recidivism   reduction                                                                    
efforts.                                                                                                                        
                                                                                                                                
2:25:03 PM                                                                                                                    
                                                                                                                                
Ms. Howell turned to slide  11 and the $1.2 million increase                                                                    
related  to   the  transfer  in   of  nine   positions  from                                                                    
Department  of   Revenue  (DOR).  These   were  investigator                                                                    
positions  which  would  operate within  the  commissioner's                                                                    
office and would focus  on revenue investigations concerning                                                                    
tax, child  support, and Permanent Fund  Dividend fraud. She                                                                    
spoke  to  the  statewide  information  technology  services                                                                    
allocation   request  for   $600,000   in  federal   receipt                                                                    
authority  for  the grant  funds  related  to improving  the                                                                    
history  of  criminal  records and  National  Instant  Check                                                                    
System  (NICS) improvement  program grants  which assist  in                                                                    
transmitting mental health records to the court system.                                                                         
                                                                                                                                
Representative  Ortiz asked  about overall  staff reductions                                                                    
in the Alaska State Troopers and how those were determined.                                                                     
                                                                                                                                
Ms. Howell deferred the question to Commissioner Monegan.                                                                       
                                                                                                                                
Commissioner  Monegan   cited  Haines  as  an   example  and                                                                    
explained  that  its  police department  would  continue  to                                                                    
staff a  wildlife trooper for the  community. The department                                                                    
would hesitate  to pull  staff from an  area in  which there                                                                    
was not another form of law enforcement.                                                                                        
                                                                                                                                
Representative  Ortiz   spoke  to  total   existing  trooper                                                                    
forces. He asked  about the percentage of  troopers in areas                                                                    
with no other law enforcement agency.                                                                                           
                                                                                                                                
Commissioner Monegan would follow up with the information.                                                                      
                                                                                                                                
Representative  Ortiz   asked  if  it  would   also  include                                                                    
communities without VPSOs.                                                                                                      
                                                                                                                                
Commissioner  Monegan  replied   the  department  recognized                                                                    
there were  about 100  communities in  rural Alaska  with no                                                                    
form  of law  enforcement. The  goal was,  at a  minimum, to                                                                    
provide  support  to  communities   with  no  protection  by                                                                    
operating  out of  a hub  location. He  gave the  example of                                                                    
Bethel and  the 56  villages in  the area.  It was  based on                                                                    
which community had the greatest need.                                                                                          
                                                                                                                                
2:29:33 PM                                                                                                                    
                                                                                                                                
Representative   Guttenberg   asked   about  CDVSA   and   a                                                                    
$1 million  savings from  SB 91  [omnibus crime  legislation                                                                    
passed in 2016]. He asked where the savings had come from.                                                                      
                                                                                                                                
Ms. Howell  answered that the Recidivism  Reduction Fund had                                                                    
been created with $1 million to  the CDVSA. She did not know                                                                    
the formula for how the fund was filled.                                                                                        
                                                                                                                                
Representative  Guttenberg  noted  that  many  of  the  fund                                                                    
sources had not yet materialized.  He was concerned that the                                                                    
department was  factoring in  the funding  that had  not yet                                                                    
come  about.  He recognized  that  it  was not  possible  to                                                                    
compare  Alaska  to  other  states.  There  were  no  police                                                                    
officers in  his borough. He  was concerned about a  lack of                                                                    
backup for troopers  in the field. He asked if  a report was                                                                    
available  showing  the  appropriate   level  of  staff.  He                                                                    
related a report  from a trooper who had said  his backup in                                                                    
a given situation was 30 miles away.                                                                                            
                                                                                                                                
2:32:27 PM                                                                                                                    
                                                                                                                                
Commissioner Monegan  answered it was a  true statement that                                                                    
haunted the  department on  a daily  basis. There  were many                                                                    
challenges related to the safety  of troopers and the people                                                                    
that the department  was aiming to protect.  He believed all                                                                    
police   departments  nationwide   were  having   difficulty                                                                    
finding  enough qualified  individuals to  apply. He  stated                                                                    
there  was an  unfavorable  light  cast upon  the  job of  a                                                                    
police  officer due  to recent  events in  the Lower  48. He                                                                    
believed  everything   was  cyclical   and  the   number  of                                                                    
applicants  would increase.  The department  had some  small                                                                    
ideas  about how  to increase  recruitment. He  related that                                                                    
Colonel  Jim Cockrell,  Director, Division  of Alaska  State                                                                    
Troopers,  Department of  Public  Safety,  would agree  that                                                                    
troopers  were   being  asked  to  work   without  immediate                                                                    
assistance.  He   believed  it   spoke  volumes   about  the                                                                    
character of the employed individuals.                                                                                          
                                                                                                                                
2:34:56 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg clarified  the finger pointing was                                                                    
at  the  legislators  as  policy  makers,  and  not  at  the                                                                    
department.                                                                                                                     
                                                                                                                                
Representative  Grenn turned  to  rural  trooper housing  on                                                                    
slide 9. He asked for detail.                                                                                                   
                                                                                                                                
Ms.  Howell  turned  to  the  second row  of  the  slide  to                                                                    
explain. The  state provided housing for  troopers stationed                                                                    
in  remote areas  of the  state.  The collective  bargaining                                                                    
agreement provided housing for  troopers in remote areas and                                                                    
allowed  rent to  be charged  or, if  the agreement  was not                                                                    
applicable, then  the troopers  were charged rent  at market                                                                    
value and the  rent was deposited back  into the allocation.                                                                    
A  portion of  the  facilities were  state-owned, some  were                                                                    
from  federal sources,  and the  majority  were leased  from                                                                    
private landlords.                                                                                                              
                                                                                                                                
Representative Grenn  asked if  the allocation  pertained to                                                                    
VPSOs as well.                                                                                                                  
                                                                                                                                
Ms. Howell  answered that VPSOs  were not covered  under the                                                                    
collective  bargaining unit.  They were  employees of  other                                                                    
entities   and  therefore   were  not   covered  under   the                                                                    
allocation.                                                                                                                     
                                                                                                                                
Vice-Chair  Gara stated  that one  of the  problems was  the                                                                    
state was  not able to  pay a competitive rate  for troopers                                                                    
and  that  municipalities  generally  paid  more.  He  asked                                                                    
whether the department could address the issue.                                                                                 
                                                                                                                                
2:38:05 PM                                                                                                                    
                                                                                                                                
Commissioner   Monegan  spoke   to  unique   challenges  for                                                                    
troopers  in  Alaska. He  stated  that  when the  department                                                                    
engaged with  communities, villages,  and tribes,  it needed                                                                    
to  engage  via  acts  of  kindness  and  role-modelling  to                                                                    
inspire the  youth to do the  same. He referred to  an email                                                                    
from Colonel Jim  Cockrell which related an  act of kindness                                                                    
performed  by  a trooper,  and  how  it demonstrated  mutual                                                                    
respect and  trust. He hoped  it would inspire others  to do                                                                    
the same.                                                                                                                       
                                                                                                                                
Vice-Chair  Gara  asked  how   many  unfilled  Alaska  State                                                                    
Trooper positions there were at  present. He asked about the                                                                    
differential  in  pay  with police  departments  around  the                                                                    
state.                                                                                                                          
                                                                                                                                
Commissioner   Monegan  answered   there  were   19  trooper                                                                    
vacancies.  The   two  largest  police  entities   were  the                                                                    
Anchorage  Police  Department  (APD) and  the  Alaska  State                                                                    
Troopers. The difference  in starting pay was  $10 per hour.                                                                    
The department had  recently lost four troopers  to the APD.                                                                    
He did not  know how to address the  issue without hindering                                                                    
something  else in  the  budget.  The department  recognized                                                                    
that once the  fiscal gap had been filled  perhaps the issue                                                                    
could be revisited.  He recalled when he had  worked for APD                                                                    
many years earlier, he was  earning about $6.25 per hour. He                                                                    
stated  that  money  was  valued,   but  the  hope  was  the                                                                    
tradition  of  standing  up  to  do  something  bigger  than                                                                    
oneself  was important.  He did  not see  a quick  answer at                                                                    
present.                                                                                                                        
                                                                                                                                
2:44:02 PM                                                                                                                    
                                                                                                                                
Representative  Wilson spoke  about nine  individuals moving                                                                    
over from  DOR [to the  Department of Public  Safety (DPS)].                                                                    
She  stated  that the  move  was  related to  the  legalized                                                                    
marijuana industry  and the  fact they  would be  carrying a                                                                    
gun. She asked  if the individuals would  go through trooper                                                                    
training. She  was concerned about  safety. She  wondered if                                                                    
it was really where the individuals belonged.                                                                                   
                                                                                                                                
Commissioner   Monegan    answered   that   most    of   the                                                                    
investigators  transferring  over   were  former,  certified                                                                    
officers  under DPS  and had  been  trained. The  department                                                                    
wanted  to ensure  that the  individuals underwent  the same                                                                    
training as the Alaska State Troopers.                                                                                          
                                                                                                                                
Representative Wilson  did not want  to send a message  to a                                                                    
legalized  business   that  the   officers  would   be  more                                                                    
endangered than in another business.  She did not know if it                                                                    
was the message they wanted to send.                                                                                            
                                                                                                                                
Co-Chair Seaton  believed part of  the issue was  related to                                                                    
cash and whether  the state wanted to send  someone in where                                                                    
there was  a large  cash situation without  personal defense                                                                    
or training. He  indicated that this would be  dealt with in                                                                    
subcommittee.                                                                                                                   
                                                                                                                                
2:47:12 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:50:37 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^FY  18   BUDGET  OVERVIEW:   ALASKA  MENTAL   HEALTH  TRUST                                                                  
AUTHORITY                                                                                                                     
                                                                                                                                
2:50:37 PM                                                                                                                    
                                                                                                                                
GREG JONES,  INTERIM CHIEF EXECUTIVE OFFICER,  ALASKA MENTAL                                                                    
HEALTH    TRUST   AUTHORITY,    introduced   a    PowerPoint                                                                    
presentation   titled   "Legislative   Presentation,   House                                                                    
Finance Committee" dated January 26, 2017 (copy on file).                                                                       
He reviewed slide 2:                                                                                                            
                                                                                                                                
     Trust Duties                                                                                                               
     · Enhance and protect the trust                                                                                            
     · Provide    leadership    in    advocacy,    planning,                                                                    
        implementing, and funding of a Comprehensive                                                                            
        Integrated Mental Health Program                                                                                        
     · Propose a budget for the Comprehensive Integrated                                                                        
        Mental Health Program                                                                                                   
     · Coordinate with state agencies on programs and                                                                           
        services that affect beneficiaries                                                                                      
     · Report to the Legislature, the governor and the                                                                          
        public about the Trust's activities                                                                                     
                                                                                                                                
2:52:42 PM                                                                                                                    
                                                                                                                                
Mr. Jones  stated that he was  the interim CEO of  the rust,                                                                    
charged  with guiding  it through  a  series of  challenges,                                                                    
including an ongoing legislative  audit. He briefly outlined                                                                    
the  background   of  the  audit.  A   few  years  previous,                                                                    
commodity prices, upon with the  trust based the bulk of its                                                                    
revenue, began to drop. Subsequently,  it began investing in                                                                    
commercial  real estate  with great  success for  about five                                                                    
years. However,  there had been  questions raised  about its                                                                    
authority to  do so, and  the audit  was in place  to remove                                                                    
any cloud from the trust.                                                                                                       
                                                                                                                                
2:54:00 PM                                                                                                                    
                                                                                                                                
Mr. Jones  stated that the  trust had about $460  million in                                                                    
the Permanent  Fund currently. It  took a payout  every year                                                                    
based  on a  4-year trailing  average of  the percentage  of                                                                    
market value (PMV) of its  portion. Each year the trust took                                                                    
4.25 percent,  and while this  percentage grew each  year as                                                                    
it  funded  its  budget reserve  and  inflation-proofed  the                                                                    
fund, the trust was comfortable with 4.25 percent.                                                                              
                                                                                                                                
2:54:54 PM                                                                                                                    
                                                                                                                                
JOHN  MORRISON,  EXECUTIVE   DIRECTOR,  TRUST  LAND  OFFICE,                                                                    
ALASKA MENTAL  HEALTH TRUST AUTHORITY, reviewed  slide 7. He                                                                    
explained  that  the  Trust  Land  Office  was  tasked  with                                                                    
managing  the 1  million acre  land base  for the  trust. He                                                                    
stated that his office could be  thought of as a "mini DNR."                                                                    
In  regulation,  their  task   had  a  five  point  mission:                                                                    
maximize revenue, protect the  corpus, enhance the long-term                                                                    
productivity of  trust land,  and diversify  revenue streams                                                                    
prudently and  with accountability to the  trust. He pointed                                                                    
to the  diverse revenue streams  portrayed in the  slide and                                                                    
how  these had  changed  over time.  He  explained that  the                                                                    
majority of  the revenue was principle-based.  The principle                                                                    
related to  one time activities  and revenue that had  to be                                                                    
reinvested.  He pointed  to the  blue bar  representing real                                                                    
estate investments.                                                                                                             
                                                                                                                                
2:56:55 PM                                                                                                                    
                                                                                                                                
Mr. Morrison  jumped to  slide 23.  He discussed  the forest                                                                    
service  land exchange  and timber  revenue over  the years.                                                                    
The trust had endeavored to  proceed with the Forest Service                                                                    
land  exchange   in  Southeast  Alaska,   a  value-for-va1ue                                                                    
exchange with  18,000 acres of  trust land for  20,000 acres                                                                    
of US Forest  Service land. On the federal  level, there was                                                                    
legislation in  place (S.131 & H.R.513)  He highlighted that                                                                    
there was  a need  for accompanying state  legislation which                                                                    
he believed was coming up for consideration.                                                                                    
                                                                                                                                
2:58:25 PM                                                                                                                    
                                                                                                                                
Mr. Jones  returned to slide  8 and addressed  AMHTA funding                                                                    
history.  He moved  to  the  top three  numbers  on slide  9                                                                    
including  payout   for  FY  18   of  $21   million  payout,                                                                    
$3 million  prior year's  average  lapse,  and $4.5  million                                                                    
land office  income, for a  total of just under  $29 million                                                                    
for  the current  year. He  emphasized the  trust was  fully                                                                    
self-supporting  and  did  not  receive  GF.  Just  over  25                                                                    
percent of  funds was  used to run  the Trust  Authority and                                                                    
Land Office.                                                                                                                    
                                                                                                                                
3:00:24 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  referred  to  slide 9.  He  spoke  to  the                                                                    
$3 million in  lapsed unused  grant funds.  He asked  if the                                                                    
amount was normal and whether  it was allocated for treating                                                                    
beneficiaries.                                                                                                                  
                                                                                                                                
Mr. Jones answered that the  number was not unusual and that                                                                    
it varied  from year to  year. He addressed  new initiatives                                                                    
and  underlined  that these  were  sometimes  harder to  get                                                                    
started than  one may think,  and therefore the  funds would                                                                    
lapse back.                                                                                                                     
                                                                                                                                
Co-Chair Seaton  asked that they  bring the numbers  for the                                                                    
past three years before the subcommittee.                                                                                       
                                                                                                                                
Representative  Guttenberg   addressed  Trust   Land  Office                                                                    
spendable  income.  He  noted  the  office  had  received  a                                                                    
$4 million   appropriation   the   prior   year   from   the                                                                    
legislature.  He wondered  whether that  was different  from                                                                    
the spendable income.                                                                                                           
                                                                                                                                
Mr.  Jones  answered  that  the  bulk  of  the  revenue  was                                                                    
principle, which  the trust  had to  reinvest and  could not                                                                    
spend  on programs.  He thought  the  representative may  be                                                                    
referring to operating costs.                                                                                                   
                                                                                                                                
Representative Guttenberg noted AMHTA  had received a direct                                                                    
appropriation to  the Land Office and  asked about spendable                                                                    
income.                                                                                                                         
                                                                                                                                
Mr. Jones answered that the  $4.4 million was overhead cost,                                                                    
the  $4.5 million  was  separate and  invested  in the  Land                                                                    
Trust Office,  and a third  amount was principle  income for                                                                    
reinvestment.                                                                                                                   
                                                                                                                                
Representative Guttenberg was  specifically asking about the                                                                    
$4 million. He was trying to determine the difference.                                                                          
                                                                                                                                
3:03:26 PM                                                                                                                    
                                                                                                                                
Mr. Morrison  replied that the  Trust Land  Office generated                                                                    
income and  principle though  its activities.  The principle                                                                    
must be  reinvested, whereas the  income went into  a 4-year                                                                    
average, and  the average was  what was available  for Trust                                                                    
activities in the subsequent fiscal year.                                                                                       
                                                                                                                                
Co-Chair Seaton believed  clarification was needed regarding                                                                    
a line item from GF from the previous year.                                                                                     
                                                                                                                                
Mr.  Jones  clarified  there  was   a  Mental  Health  Trust                                                                    
Authority  Authorized  Receipts  (MHTAAR) grant  of  roughly                                                                    
$4.5 million  that went to  Department of  Natural Resources                                                                    
for  the TLO  and  which  the legislature  had  to agree  to                                                                    
accept. He  thought this might  have been  the appropriation                                                                    
that the representative was referring to.                                                                                       
                                                                                                                                
Representative  Guttenberg asked  whether the  proposal that                                                                    
was about  to be  rewarded of  $25,000 was  to go  to public                                                                    
relations campaigns.                                                                                                            
                                                                                                                                
Mr. Jones replied  in the affirmative; the  funds would come                                                                    
from the normal annual operating budget.                                                                                        
                                                                                                                                
Vice-Chair  Gara  asked  for   verification  the  costs  for                                                                    
running the land  office were not $4 million  and the office                                                                    
was only generating $4.5 million.                                                                                               
                                                                                                                                
Mr. Jones  responded that it  was generating much  more than                                                                    
that. The  money from  the principle had  to be  invested in                                                                    
stewardship of the  land to increase its value,  in the real                                                                    
estate program,  or in  the Permanent  Fund. The  amount was                                                                    
well above the $4.5 million.                                                                                                    
                                                                                                                                
Vice-Chair Gara spoke to an  investment controversy with the                                                                    
Attorney General's  Office. He  asked whether the  trust had                                                                    
begun to invest separately from the TLO.                                                                                        
                                                                                                                                
Mr. Jones clarified  that the TLO was  making investments on                                                                    
behalf of the trust.                                                                                                            
                                                                                                                                
Vice-Chair  Gara  surmised the  TLO  was  also investing  in                                                                    
items which were not related to  the land given to the trust                                                                    
by the state.                                                                                                                   
                                                                                                                                
Mr.  Jones  replied  in  the   affirmative.  The  trust  was                                                                    
purchasing new real estate.                                                                                                     
                                                                                                                                
Vice-Chair Gara asked  whether Mr. Jones had  an estimate on                                                                    
how  much   was  being   spent  on   that  portion   of  the                                                                    
investments.                                                                                                                    
                                                                                                                                
Mr.  Jones  asked  whether  he was  referring  to  how  much                                                                    
overhead was being spent or how much had been invested.                                                                         
                                                                                                                                
Vice-Chair Gara was interested in the overhead.                                                                                 
                                                                                                                                
3:07:54 PM                                                                                                                    
                                                                                                                                
Mr. Morrison  replied the  number was very  low and  the TLO                                                                    
did  not even  have an  entire position  dedicated to  those                                                                    
operations in the administrative budget.                                                                                        
                                                                                                                                
Co-Chair   Foster   believed   the   controversy   concerned                                                                    
investments made outside of Alaska.                                                                                             
                                                                                                                                
Mr. Jones answered  the trust had investments  in Alaska and                                                                    
in the Lower  48. The real estate investments  were based on                                                                    
the strength  of tenants and the  type of lease, as  well as                                                                    
location and quality of the property.                                                                                           
                                                                                                                                
Co-Chair  Foster  asked  for verification  the  out-of-state                                                                    
nature of the investments was not the issue.                                                                                    
                                                                                                                                
Mr. Jones agreed.                                                                                                               
                                                                                                                                
Co-Chair Seaton  asked whether the controversy  regarded the                                                                    
use of  cash assets to  reinvest while the  statute required                                                                    
that those assets be managed by the Permanent Fund.                                                                             
                                                                                                                                
Mr.  Jones agreed  that  the allegation  was  as stated.  He                                                                    
stated that the trust was  working with the Attorney General                                                                    
to determine whether it had the authority to do so.                                                                             
                                                                                                                                
Co-Chair  Seaton stated  it was  not the  management of  the                                                                    
land, but  rather that the  board had decided to  invest the                                                                    
money instead of the Permanent Fund.                                                                                            
                                                                                                                                
Mr. Jones believed the assessment was fair.                                                                                     
                                                                                                                                
Co-Chair  Seaton believed  they would  get further  into the                                                                    
topic during the subcommittee meetings.                                                                                         
                                                                                                                                
Mr. Jones  turned to  slide 11  showing a  representation of                                                                    
the beneficiaries of the Trust.                                                                                                 
                                                                                                                                
                                           34,000                                                                               
     · Mental Illness                                                                                                           
                                           13,000                                                                               
     · Developmental Disabilities                                                                                               
                                           20,000                                                                               
     · Chronic       Alcoholism/Substance-                                                                                      
        Related Disorders                                                                                                       
                                           6,000                                                                                
     · Alzheimer's Disease and Related                                                                                          
        Dementias                                                                                                               
                                           12,000                                                                               
     · Traumatic Brain Injury                                                                                                   
                                                                                                                                
Mr.  Jones  believed that  those  served  in Alaska  totaled                                                                    
around 85,000. He  clarified that the slide  numbers did not                                                                    
represent a census, but was based on national averages.                                                                         
                                                                                                                                
3:10:31 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton asked  about the  trust's role  in treating                                                                    
mental  illness.  He  asked  if the  trust  was  working  on                                                                    
preventing disabilities.                                                                                                        
                                                                                                                                
Mr.  Jones answered  the trust  worked  hard on  prevention,                                                                    
diagnosis  and early  treatment. The  goal was  to intercept                                                                    
conditions as early as possible.                                                                                                
                                                                                                                                
Representative Ortiz  spoke to the state's  aging population                                                                    
and  increasing problem  with Alzheimer's.  He  asked how  a                                                                    
resident of  Alaska could access  the resources  provided by                                                                    
the trust.                                                                                                                      
                                                                                                                                
JEFF  JESSEE,  LEGISLATIVE  LIAISON,  ALASKA  MENTAL  HEALTH                                                                    
TRUST AUTHORITY, answered that the  trust could be viewed as                                                                    
venture capital. He stated that  the trust did not provide a                                                                    
lot of base  services, but looked to use the  trust funds to                                                                    
improve  efficiency or  effectiveness of  the mental  health                                                                    
system.  It   worked  to  improve  training   by  developing                                                                    
programs.  The  trust did  not  want  to create  a  separate                                                                    
system  of care,  but  to  act as  venture  capital for  the                                                                    
system already in place.                                                                                                        
                                                                                                                                
3:13:05 PM                                                                                                                    
                                                                                                                                
Mr.  Jones turned  to slide  13 titled  "General Fund/Mental                                                                    
Health Base." There was a  separate capital budget including                                                                    
bonds and construction for beneficiary  housing. He moved to                                                                    
slide  15  and  spoke  to  MHTAAR  grants,  which  were  the                                                                    
authorized receipts which went out  to agencies, and must be                                                                    
legislatively approved.                                                                                                         
                                                                                                                                
3:14:06 PM                                                                                                                    
                                                                                                                                
Mr.  Jones  moved  to slide  16  titled  "Established  Focus                                                                    
Areas:                                                                                                                          
                                                                                                                                
   1. Disability Justice                                                                                                        
   2. Substance Abuse Prevention & Treatment                                                                                    
   3. Beneficiary Employment & Engagement                                                                                       
   4. Housing and Long-term Services & Supports                                                                                 
                                                                                                                                
Mr. Jesse relayed  there was a repeating theme  in the focus                                                                    
areas. He  spoke to treatment  and support, safe  and secure                                                                    
housing,  and  employment  as  the   key  priorities  for  a                                                                    
beneficiary  to be  successful.  He moved  to  slide 17  and                                                                    
addressed  current  priorities including  Medicaid  redesign                                                                    
and justice reinvestment. He stated  if the efforts of SB 91                                                                    
                           th                                                                                                   
from the  previous year [29   Legislature] were going  to be                                                                    
successful  and whether  it was  necessary to  view Medicaid                                                                    
differently,  and  not  just as  medical  model  paying  for                                                                    
activity rather  than for outcomes.  The current  system was                                                                    
unsustainable, in that it paid  for events. The more service                                                                    
provided, the more  they were able to  bill. Similarly, with                                                                    
justice reinvestment, if there  is no upfront investment for                                                                    
treatment services,  beneficiaries that already  have higher                                                                    
rates of recidivism  and serve longer sentences  will not be                                                                    
successful in the community.                                                                                                    
                                                                                                                                
3:17:31 PM                                                                                                                    
                                                                                                                                
Mr.  Jessee  addressed  legislative  priorities  briefly  on                                                                    
slide 18:                                                                                                                       
                                                                                                                                
   · Criminal Justice Reform + Reinvestment                                                                                     
   · Medicaid Reform Efforts                                                                                                    
   · Alcohol Excise Tax                                                                                                         
   · Title 4 Revisions                                                                                                          
   · Forest Service Land Exchange -Trust Land Office                                                                            
                                                                                                                                
Mr. Jessee turned to slide  19 and spoke to criminal justice                                                                    
reform and reinvestment:                                                                                                        
                                                                                                                                
   · Continue efforts to ensure the successful diversion                                                                        
     and re-entry of beneficiaries                                                                                              
   · Committed nearly $4 million in FY18 for community                                                                          
     prevention, diversion and re-entry programs                                                                                
   · Support Criminal Justice Commission recommendations                                                                        
                                                                                                                                
Mr.  Jessee noted  he was  a member  on the  Alaska Criminal                                                                    
Justice  Commission. He  said that  the term  "reinvestment"                                                                    
was  not accurate.  The  savings  anticipated from  criminal                                                                    
justice reform would not happen  right away, but would occur                                                                    
downstream. This  would occur not  only in  corrections, but                                                                    
in public safety  and the court system. In  order to achieve                                                                    
the savings,  it was essential  to make  investment upfront.                                                                    
In  the  beginning  it  was  not  reinvestment  because  the                                                                    
savings  had  not  yet   occurred.  The  investment  upfront                                                                    
enabled  the  system to  reap  the  long-term financial  and                                                                    
societal benefits.  Investing upfront  was a problem  in the                                                                    
current fiscal  environment. He spoke  to the  previous year                                                                    
and the fiscal  notes for SB 91. Senator  Anna Mackinnon had                                                                    
been creative in using prospective  marijuana tax funds as a                                                                    
way to  jump start  the services. He  explained there  was a                                                                    
risk  of not  achieving goals  established by  SB 91  if the                                                                    
state  was  unable  to  resource  the  services  individuals                                                                    
needed in order to get out of the criminal justice system.                                                                      
                                                                                                                                
3:20:21 PM                                                                                                                    
                                                                                                                                
Mr. Jessee turned to slide  20 and addressed Medicaid reform                                                                    
efforts:                                                                                                                        
                                                                                                                                
   · Approved nearly $10 million on reform efforts over                                                                         
     three years                                                                                                                
   · Advocating for maintaining same optional services that                                                                     
     the    state    currently   provides    which    allows                                                                    
     beneficiaries to remain in their community and often                                                                       
     at a lower cost of care                                                                                                    
   · Build flexibility into programs to accommodate                                                                             
     potential federal funding changes                                                                                          
                                                                                                                                
Mr. Jessee  elaborated that trustees  had approved  over $10                                                                    
million over three years to  support the department with the                                                                    
resources they  needed to make  good on commitments  made in                                                                    
SB  74 of  the previous  year  [Medicaid reform  legislation                                                                    
passed  by the  29  Legislature].  The trust  was hoping  it                                                                    
could  work with  the  legislature in  the  current year  to                                                                    
avoid doing  things to the  Medicaid program that  would not                                                                    
only harm  beneficiaries but put  the success of  the entire                                                                    
reform  program  at  risk,  just  to  gain  some  short-term                                                                    
savings.                                                                                                                        
                                                                                                                                
3:21:14 PM                                                                                                                    
                                                                                                                                
Mr.  Jessee addressed  the alcohol  excise  tax priority  on                                                                    
slide 21:                                                                                                                       
                                                                                                                                
   · Increased alcohol excise tax generates much needed                                                                         
     revenue which could be used to fund programs that                                                                          
     reduce the negative impacts of alcohol abuse and state                                                                     
     general fund costs for the consequences                                                                                    
                                                                                                                                
Mr. Jessee  stated that  it was often  said that  Alaska had                                                                    
one of  the highest alcohol  tax rates in the  country. This                                                                    
was close to  being true if only looking at  the excise tax.                                                                    
He underscored when considering  the total tax burden Alaska                                                                    
was not  near the top in  terms of state taxation.  He moved                                                                    
to Title 4 on slide 22:                                                                                                         
                                                                                                                                
   · Multi-year effort to rewrite Title 4 statue                                                                                
   · Balance the interests of alcohol industry, public                                                                          
     health and public safety                                                                                                   
                                                                                                                                
Mr. Jessee  expounded that the  previous year the  trust had                                                                    
thought  it had  agreement with  the Alaska  Cabaret, Hotel,                                                                    
Restaurant  and  Retailers   Association  (CHARR),  but  the                                                                    
agreement had  not come to  fruition. They had  however been                                                                    
able to  get reforms  in the areas  of minor  consuming, and                                                                    
the makeup of  the Alcohol Beverage Control  board. He spoke                                                                    
to Senator Peter Micchiche's work during the interim.                                                                           
                                                                                                                                
Mr. Jessee moved  to slide 24 and addressed  FY 18 operating                                                                    
increments.  The  Alaska   Justice  Information  Center  had                                                                    
completed a  cost-benefit analysis and had  examined whether                                                                    
the  system was  employing  evidence-based practices.  There                                                                    
were  52  adult  criminal  justice programs  that  had  been                                                                    
reviewed,  56 percent   of  which  were  state   funded.  He                                                                    
specified  that 57 percent  of the  programs had  matched an                                                                    
evidence-based strategy.  However, of  the $23  million that                                                                    
the  state  spent  on  those programs,  89  percent  of  the                                                                    
programs  funded by  the legislature  matched evidence-based                                                                    
practices.  The  Justice   Information  Center  would  begin                                                                    
looking  at  the outcomes  of  the  programs and  track  the                                                                    
system  across   seven  different  criminal   offences.  The                                                                    
increment  on slide  24 was  to take  the operations  of the                                                                    
Justice Information  Center to the  next step to  develop an                                                                    
integrative  data   platform.  Much  information   could  be                                                                    
gathered and analyzed by the  information center in order to                                                                    
receive  feedback. Bring  the  Kids Home  had  been a  data-                                                                    
driven effort as  it was modified as data  was collected and                                                                    
evaluated.  He spoke  to  IT Application/Telehealth  service                                                                    
system improvements  as an advanced  view by the  Senior and                                                                    
Disabilities  Services Division  of  the  use of  telehealth                                                                    
systems  in  their  purview.  The  division  had  been  very                                                                    
proactive and  it had started  when they received  a backlog                                                                    
of  assessments in  the state.  It provided  a mechanism  to                                                                    
maximize  the use  of telehealth  to  assess, evaluate,  and                                                                    
monitor people,  particularly in  rural areas, to  avoid the                                                                    
cost  of transportation  and remote  treatment  and to  deal                                                                    
with  the health  issues early  on before  they became  more                                                                    
expensive.                                                                                                                      
                                                                                                                                
3:28:15 PM                                                                                                                    
                                                                                                                                
Mr.  Jessee turned  to slide  25 and  addressed the  Trust's                                                                    
capital budget.  He stated  that the  trust partner  was the                                                                    
Alaska Housing  Finance Corporation  but that areas  such as                                                                    
the Homeless  Assistance Project  and special  needs housing                                                                    
grants  were largely  operational  in  nature, and  provided                                                                    
operating base  funding for projects that  had been provided                                                                    
previously.  He moved  to slide  26 showing  a "roll  up" of                                                                    
FY 18 mental  health budget bill increments.  He referred to                                                                    
operating totals  and relayed that  the trust  was providing                                                                    
over  $8  million MHTAAR  and  was  looking for  a  $250,000                                                                    
General  Fund  increment.  He   noted  that  the  governor's                                                                    
proposed budget had reduced much  of the funding for capital                                                                    
projects.   He   referred   to  administrative   costs   and                                                                    
underlined that  the trust was self-funded  and reducing the                                                                    
increments did not save the  state any money. He stated that                                                                    
the trust would be working  with the subcommittee to restore                                                                    
the funds in the budget.                                                                                                        
                                                                                                                                
3:29:31 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton asked  the trust  to  bring information  on                                                                    
telehealth compliance rates to the subcommittee.                                                                                
                                                                                                                                
Representative Wilson  stated she  had recently  learned the                                                                    
trust  had put  a  social worker  in  the public  defender's                                                                    
office in Bethel. She requested any data showing how                                                                            
successful it had been. She was interested in considering                                                                       
whether something similar could be done in other areas.                                                                         
                                                                                                                                
Mr. Jessee replied in the affirmative.                                                                                          
                                                                                                                                
Co-Chair Foster addressed the schedule for the following                                                                        
meeting.                                                                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:31:21 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:31 p.m.                                                                                          

Document Name Date/Time Subjects
2017 Leg PowerPoint HFIN.pdf HFIN 1/26/2017 1:30:00 PM
AMHTA Budget Overview FY 18
1-26-17 HFIN Overview FINAL.pdf HFIN 1/26/2017 1:30:00 PM
DEED Budget Overview HFIN
DPS H FIN Dept Overview 01_26_17.pdf HFIN 1/26/2017 1:30:00 PM
DPS Budget Overview HFIN
DEED Response HFIN FY2017 BAG Awards.pdf HFIN 1/26/2017 1:30:00 PM
DEED Budget Overview Response HFIN
DEED HFIN Budget Overview Response Alaska Pre-Elementary Outcome Information 2-17.pdf HFIN 1/26/2017 1:30:00 PM
DEED Overview Response HFIN