Legislature(2013 - 2014)BARNES 124

04/04/2013 08:00 AM COMMUNITY & REGIONAL AFFAIRS


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08:03:00 AM Start
08:03:56 AM HB193
08:18:52 AM HB174
08:49:25 AM Presentation: Fy 2014 State Plan for the Community Services Block Grant Program
09:28:41 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 174 PERS CONTRIBUTIONS BY MUNICIPALITIES TELECONFERENCED
Moved CSHB 174(CRA) Out of Committee
*+ HB 193 MUNICIPAL TAXATION OF TOBACCO PRODUCTS TELECONFERENCED
Moved Out of Committee
+ Presentation: FY14 State Plan for the Community TELECONFERENCED
Services Block Grant Program by Dept. of
Commerce, Community & Economic Development
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         April 4, 2013                                                                                          
                           8:03 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Gabrielle LeDoux, Co-Chair                                                                                       
Representative Benjamin Nageak, Co-Chair                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Lora Reinbold                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Kurt Olson                                                                                                       
Representative Harriet Drummond                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 193                                                                                                              
"An Act relating to the  joint administration of tobacco taxes by                                                               
the state and a municipality."                                                                                                  
                                                                                                                                
     - MOVED HB 193 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 174                                                                                                              
"An  Act  requiring  each municipality  with  a  population  that                                                               
decreased  by more  than 25  percent between  2000 and  2010 that                                                               
participates  in   the  defined   benefit  plan  of   the  Public                                                               
Employees'  Retirement  System of  Alaska  to  contribute to  the                                                               
system an amount  calculated by applying a rate of  22 percent of                                                               
the  total of  all  base  salaries paid  by  the municipality  to                                                               
employees  of the  municipality  who are  active  members of  the                                                               
system during  a payroll  period; reducing  the rate  of interest                                                               
payable by  a municipality  with a  population that  decreased by                                                               
more than 25 percent between 2000  and 2010 that is delinquent in                                                               
transmitting employee  and employer contributions to  the defined                                                               
benefit  plan  of  the Public  Employees'  Retirement  System  of                                                               
Alaska;   giving   retrospective   effect  to   the   substantive                                                               
provisions of the Act; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED CSHB 174(CRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PRESENTATION:  FY  2014 STATE  PLAN  FOR  THE COMMUNITY  SERVICES                                                               
BLOCK GRANT PROGRAM                                                                                                             
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 193                                                                                                                  
SHORT TITLE: MUNICIPAL TAXATION OF TOBACCO PRODUCTS                                                                             
SPONSOR(s): REPRESENTATIVE(s) PRUITT                                                                                            
                                                                                                                                
04/01/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/01/13       (H)       CRA, FIN                                                                                               
04/04/13       (H)       CRA AT 8:00 AM BARNES 124                                                                              
                                                                                                                                
BILL: HB 174                                                                                                                  
SHORT TITLE: PERS CONTRIBUTIONS BY MUNICIPALITIES                                                                               
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
03/18/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/13       (H)       CRA, L&C                                                                                               
03/28/13       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/28/13       (H)       Heard & Held                                                                                           
03/28/13       (H)       MINUTE(CRA)                                                                                            
04/04/13       (H)       CRA AT 8:00 AM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DIRK CRAFT, Staff                                                                                                               
Representative Lance Pruitt                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 193 on behalf of the sponsor,                                                               
Representative Pruitt.                                                                                                          
                                                                                                                                
DAN MOORE, Treasurer                                                                                                            
Treasury Division                                                                                                               
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided information on HB 193.                                                                          
                                                                                                                                
GREG MOYER, Interim Manager                                                                                                     
City of Galena                                                                                                                  
Galena, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 193.                                                                                     
                                                                                                                                
SCOTT RUBY, Director, Division of Community & Regional Affairs                                                                  
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     During  hearing  of   HB  174,  answered                                                             
questions.                                                                                                                      
                                                                                                                                
JIM PUCKETT, Director                                                                                                           
Division of Retirement and Benefits                                                                                             
Department of Administration                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     During  hearing  of   HB  174,  answered                                                             
questions.                                                                                                                      
                                                                                                                                
PAUL LABOLLE, Staff                                                                                                             
Representative Foster                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     During  hearing  of   HB  174,  answered                                                             
questions on behalf of the sponsor, Representative Foster.                                                                      
                                                                                                                                
PAULETTA BOURNE, Grant Supervisor                                                                                               
Fairbanks Regional Office                                                                                                       
Division of Community & Regional Affairs                                                                                        
Department of Commerce, Community & Economic Development                                                                        
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:    As the  administrator  of  the  Community                                                             
Services Block Grant (CSBG) Program, reviewed the program.                                                                      
                                                                                                                                
DAVID HARDENBERGH, Executive Director                                                                                           
Rural Alaska Community Action Program (RurAL CAP)                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  a  presentation  regarding  the                                                             
Community Services Block Grant.                                                                                                 
                                                                                                                                
SARAH SCANLAN, Deputy Director                                                                                                  
Rural Alaska Community Action Program (RurAL CAP)                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  a  presentation  regarding  the                                                             
Community Services Block Grant within RurAL CAP.                                                                                
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:03:00 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  GABRIELLE   LEDOUX  called  the  House   Community  and                                                             
Regional  Affairs Standing  Committee  meeting to  order at  8:03                                                               
a.m.    Representatives  Herron, Foster,  Reinbold,  Nageak,  and                                                               
LeDoux were present at the call to order.                                                                                       
                                                                                                                                
         HB 193-MUNICIPAL TAXATION OF TOBACCO PRODUCTS                                                                      
                                                                                                                                
8:03:56 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced that the  first order of business would                                                               
be  HOUSE   BILL  NO.  193,   "An  Act  relating  to   the  joint                                                               
administration   of   tobacco   taxes   by  the   state   and   a                                                               
municipality."                                                                                                                  
                                                                                                                                
8:04:14 AM                                                                                                                    
                                                                                                                                
DIRK  CRAFT, Staff,  Representative  Lance  Pruitt, Alaska  State                                                               
Legislature, began  by informing  the committee  that HB  193 was                                                               
brought  forward by  Anchorage to  help create  a more  efficient                                                               
process  to collect  tobacco taxes.    He clarified  that HB  193                                                               
isn't  an increase  or decrease  in the  tobacco tax  rather it's                                                               
creating  a  more  efficient  process   by  partnering  with  the                                                               
Department of  Revenue (DOR) to help  municipalities that collect                                                               
tobacco  taxes.    Section  1   amends  AS  43.05.230  under  the                                                               
administration of revenue  laws such that it allows  the state to                                                               
share  tax information  it collects  with municipalities  for the                                                               
purposes of  tax collections.    Section  2 amends  AS 43.50.150,                                                               
the  administration  of  the  Cigarette   Tax  Act,  that  allows                                                               
municipalities in  the state  to jointly  collect both  state and                                                               
municipal tobacco  taxes and also  allows for the  joint auditing                                                               
and  distribution of  stamps  and collection  of  money on  those                                                               
stamps.                                                                                                                         
                                                                                                                                
8:06:21 AM                                                                                                                    
                                                                                                                                
DAN   MOORE,  Treasurer,   Treasury  Division,   Municipality  of                                                               
Anchorage,  agreed  that   Section  1  of  HB   193  would  allow                                                               
information sharing that would allow  the state to coordinate and                                                               
be more  efficient and  effective with taxes  that are  common to                                                               
both state  and local  jurisdictions, which  are the  tobacco tax                                                               
and  the  rental vehicle  tax.    Although there  is  information                                                               
sharing from discovery or audits  in relation to tax evaders, the                                                               
information  remains  confidential  on the  state  and  municipal                                                               
side.   This sharing of  information allows the  full enforcement                                                               
of  the tax  at the  state  and local  level.   The principle  of                                                               
Section 1  is based on a  similar one that exists  in the statute                                                               
of many  states that  allow the state  to share  information with                                                               
the local jurisdiction.  Section 2  is focused on the tobacco tax                                                               
and  the use  of the  tobacco  tax stamp.   He  noted that  other                                                               
jurisdictions   in    the   nation,   particularly    in   larger                                                               
jurisdictions with major populations, use  what he referred to as                                                               
a  "joint/combo tobacco  stamp."   The Municipality  of Anchorage                                                               
doesn't currently have  a tobacco tax stamp, but may  want one in                                                               
the  future.   Discussions  with private  industry  have made  it                                                               
clear  that it  would be  very problematic  to have  two separate                                                               
stamps,  a city  stamp and  a state  stamp, on  a single  pack of                                                               
cigarettes.   Discussions  with  a major  stamp vendor  revealed,                                                               
however,  that it  is possible  to  create a  single joint  stamp                                                               
representing that  the tax has  been paid  to both the  state and                                                               
the city.   In  this situation in  which part of  the goal  is to                                                               
gain efficiency,  besides just  a single  joint stamp,  Mr. Moore                                                               
requested that  the state DOR  be the central administrator  of a                                                               
joint  tobacco  tax  stamp  program.     Therefore,  the  private                                                               
industry would  have a  one-stop shop in  terms of  acquiring the                                                               
stamps and  remitting the  funds.  The  state would  then collect                                                               
funds on  behalf of  local jurisdictions and  then pay  the local                                                               
jurisdictions each month.   Section 2 requests  authority for DOR                                                               
to enter  into individual agreements with  local jurisdictions so                                                               
that  the terms  can  be  laid out  in  advance,  before a  joint                                                               
tobacco tax stamp  is even considered.  A key  provision within a                                                               
memorandum   of   understanding   (MOU)   would   be   the   cost                                                               
reimbursement  from the  local jurisdiction  that  would ask  the                                                               
state to issue tobacco stamps  and collect money on their behalf.                                                               
He pointed out  that the fiscal note is focused  on Section 2 and                                                               
shows the cost  impact if there were no  reimbursement.  However,                                                               
page 2  of the fiscal  note specifies that  if there is  a formal                                                               
agreement in which jurisdictions  agree to reimburse costs, there                                                               
would  be  no   costs  to  Section  2.    He   related  that  the                                                               
Municipality of  Anchorage is fully committed  to reimbursing any                                                               
incremental cost  that is caused  by the request to  partner with                                                               
the state on a joint tobacco  tax stamp, and thus the legislation                                                               
would be cost neutral to the state.                                                                                             
                                                                                                                                
8:11:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON inquired as  to how much additional revenue                                                               
Anchorage would realize if this MOU was entered into.                                                                           
                                                                                                                                
MR.  MOORE pointed  out that  the MOU  is particular  to the  tax                                                               
stamp  program  in  that  it's   a  matter  of  more  efficiently                                                               
collecting the money.  Section 1,  he stated, provides more of an                                                               
opportunity  for  increased   revenue  because  with  information                                                               
sharing the  city or the  state can  talk about things  they have                                                               
found in terms of tax evasion  and that can be shared because the                                                               
tax  is owed  on both  the  state and  city  side.   In terms  of                                                               
quantifying Section  1, Mr. Moore  estimated that if there  was 5                                                               
percent tax evasion with cigarettes  in Anchorage and $22 million                                                               
a year is collected from the  cigarette tax, 5 percent of that is                                                               
about $1 million  per year of revenue that could  be recovered or                                                               
realized  as  a  result  of   joint  audit  information  sharing.                                                               
Furthermore, it  sends a  message that the  state and  cities are                                                               
more coordinated and effective in  enforcing the tobacco tax law.                                                               
Although it's more  difficult to estimate or  quantify leakage or                                                               
abuse, the same can be said about  car rental taxes.  In fact, in                                                               
recent years  the state had a  major finding in a  rental vehicle                                                               
agency in  Anchorage that  amounted to  $600,000 of  unpaid state                                                               
tax.    Unfortunately,  since  the  information  sharing  statute                                                               
didn't exist,  Anchorage couldn't recover  what was found  in the                                                               
state's  audit.   The [Municipality  of Anchorage]  performed its                                                               
own  audit, albeit  it  didn't  cover as  broad  a  range as  the                                                               
state's  audit,  and  thus  the  municipality  lost  out  on  the                                                               
collection  of  revenue  legally  due  to it.    Mr.  Moore  then                                                               
mentioned that  the information sharing is  reciprocal, such that                                                               
if  the state  agrees to  share with  a local  [municipality] its                                                               
local code includes sharing with the state.                                                                                     
                                                                                                                                
8:14:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  inquired as to how  many wholesalers would                                                               
apply this tobacco tax stamp.                                                                                                   
                                                                                                                                
MR. MOORE answered  that there are five or less  entities that do                                                               
stamping of which three to four  do their own direct stamping and                                                               
one to two that do stamping on behalf of many entities.                                                                         
                                                                                                                                
8:15:51 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX, upon determining no  one else wished to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
8:16:03 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  NAGEAK moved  to report  HB 193  out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
The committee took an at-ease from 8:16 a.m. to 8:18 a.m.                                                                       
                                                                                                                                
          HB 174-PERS CONTRIBUTIONS BY MUNICIPALITIES                                                                       
                                                                                                                                
8:18:52 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced  that the next order  of business would                                                               
be HOUSE BILL  NO. 174, "An Act requiring  each municipality with                                                               
a population that decreased by  more than 25 percent between 2000                                                               
and 2010  that participates  in the defined  benefit plan  of the                                                               
Public Employees'  Retirement System  of Alaska to  contribute to                                                               
the system an amount calculated by  applying a rate of 22 percent                                                               
of the  total of all  base salaries  paid by the  municipality to                                                               
employees  of the  municipality  who are  active  members of  the                                                               
system during  a payroll  period; reducing  the rate  of interest                                                               
payable by  a municipality  with a  population that  decreased by                                                               
more than 25 percent between 2000  and 2010 that is delinquent in                                                               
transmitting employee  and employer contributions to  the defined                                                               
benefit  plan  of  the Public  Employees'  Retirement  System  of                                                               
Alaska;   giving   retrospective   effect  to   the   substantive                                                               
provisions of the Act; and providing for an effective date."                                                                    
                                                                                                                                
8:19:35 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX reminded the committee  that public testimony had                                                               
remained open.                                                                                                                  
                                                                                                                                
8:20:05 AM                                                                                                                    
                                                                                                                                
GREG  MOYER,  Interim  Manager,  City  of  Galena,  reminded  the                                                               
committee  that  in 2008  the  largest  industry in  Galena,  the                                                               
military, 600  airman, left and  June 30, 2008, the  salary floor                                                               
for the  Public Employees'  Retirement System  (PERS) was  set in                                                               
law.      Therefore,   the   population   of   Galena   decreased                                                               
significantly  and  is  still  reeling  from  the  aforementioned                                                               
circumstances.     Although   it's   a  blessing   to  have   the                                                               
infrastructure from the base, Galena  doesn't have the population                                                               
to support  it as the population  has dropped from around  800 to                                                               
under 500.   As the interim manager,  he said his job  is to save                                                               
Galena from  not being a first  class city.  The  salary floor in                                                               
Galena  is $1.5  million, which  are the  salaries Galena  has to                                                               
have  otherwise  it  is  penalized plus  interest.    Galena,  he                                                               
emphasized, will never met that  salary floor as Galena is almost                                                               
half of  that now  and is  looking to  gain more  efficiencies by                                                               
cutting more  in the next budget.   Mr. Moyer opined  that Galena                                                               
is looking  for a  legislative fix  [without] re-opening  all the                                                               
PERS issues.  Although he  understood that it's difficult to help                                                               
a  couple of  communities when  other communities  also fall  [in                                                               
arrears with  the salary  floor].  This  legislation, HB  174, is                                                               
structured such  that communities have  to have had  a population                                                               
change in 2000-2010.  He noted  that there has been discussion of                                                               
changing  the floor  amount for  Galena to  June 30,  2012, which                                                               
would  help.   However, a  legislative fix  is necessary  to save                                                               
Galena so that other steps can be taken to move on and survive.                                                                 
                                                                                                                                
8:24:53 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX inquired  as to what happens  if this legislation                                                               
isn't  passed and  the  communities don't  pay  what is  required                                                               
under existing law.                                                                                                             
                                                                                                                                
8:25:19 AM                                                                                                                    
                                                                                                                                
SCOTT RUBY,  Director, Division of Community  & Regional Affairs,                                                               
Department  of   Commerce,  Community  &   Economic  Development,                                                               
explained  that  similar  situations  have  happened  to  smaller                                                               
municipalities,  which have  basically  become nonfunctional  and                                                               
any revenue  that they  have received  has been  used to  pay off                                                               
their debt.   For example, several cities  in the Yukon-Kuskokwim                                                               
Delta  dissolved in  the  early 1990s.   The  tax  debt of  those                                                               
municipalities, including Tuluksak, Newtok,  and Tununak, was not                                                               
on  the  scale of  what  is  being targeted  with  HB  174.   The                                                               
aforementioned  municipalities maintained  the minimum  amount of                                                               
government by having  a budget and holding a  council meeting and                                                               
elections  each  year, but  stopped  providing  services.   These                                                               
municipalities only existed  in order to continue  to qualify for                                                               
the revenue  sharing program until  the debt was repaid  at which                                                               
point they  were allowed  to dissolve.   Mr. Ruby  explained that                                                               
prior to dissolving  any corporation, whether it  be a nonprofit,                                                               
for-profit, or municipal corporation, it  must be free of debt or                                                               
have  an entity  that is  willing  to accept  liability for  that                                                               
debt.  The issue with Galena is  that it has much more debt, such                                                               
that  the  revenues  from  revenue   sharing  and  other  sources                                                               
wouldn't  outpace the  rate at  which they're  accumulating those                                                               
debts.   Therefore,  the most  likely scenario  [without HB  174]                                                               
would be  for Galena  to stop functioning  as a  municipality and                                                               
the school  would likely return  to a Rural  Education Attendance                                                               
Area (REAA).   Although Galena  would likely try to  dissolve, it                                                               
would legally  exist until  it resolved  all of  its debts.   Mr.                                                               
Ruby  pointed out  that Galena  can't declare  bankruptcy because                                                               
there is no such statute  allowing municipalities to go bankrupt,                                                               
which  is a  requirement of  the Internal  Revenue Service  (IRS)                                                               
code.                                                                                                                           
                                                                                                                                
8:28:05 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX inquired  as to  what the  state would  do if  a                                                               
municipality continued to function but didn't pay.                                                                              
                                                                                                                                
MR. RUBY deferred to the PERS Board.                                                                                            
                                                                                                                                
8:28:50 AM                                                                                                                    
                                                                                                                                
JIM  PUCKETT,  Director,  Division of  Retirement  and  Benefits,                                                               
Department  of   Administration,  stated   that  the   only  tool                                                               
available to intercept funds is through revenue sharing.                                                                        
                                                                                                                                
8:29:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON   inquired  as  to   the  administration's                                                               
position on this specific circumstance.                                                                                         
                                                                                                                                
MR. PUCKETT answered  that the administration has  no position on                                                               
HB 174, but  clarified that's not to say  that the administration                                                               
doesn't  recognize   that  these   communities  that   have  lost                                                               
population simply don't have a  means to address their situation.                                                               
He said a fix will have to come from the legislature.                                                                           
                                                                                                                                
8:29:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER highlighted that  Galena's salary floor was                                                               
set at $1.5 million in 2008  while today its total salary base is                                                               
$700,000-$750,000.  He further highlighted  that Galena is paying                                                               
22 percent on  the about $750,000 difference;  these are salaries                                                               
that they  don't even have.   Therefore,  Galena is going  to get                                                               
farther and  farther behind  with no  way in  which to  catch up.                                                               
The  legislation before  the  committee,  therefore, attempts  to                                                               
rectify a situation that wasn't foreseen  in 2008 and is no fault                                                               
of Galena.                                                                                                                      
                                                                                                                                
8:31:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  NAGEAK asked  whether HB  74 is  limited to  only those                                                               
municipalities  with operations  that decreased  by more  than 25                                                               
percent.                                                                                                                        
                                                                                                                                
8:31:52 AM                                                                                                                    
                                                                                                                                
PAUL   LABOLLE,  Staff,   Representative  Foster,   Alaska  State                                                               
Legislature, replied  yes, HB 174 only  applies to municipalities                                                               
that have lost  more than 25 percent of  their population between                                                               
census years 2000 and 2010.   The committee packet should include                                                               
a  spreadsheet  listing all  the  PERS  municipalities and  their                                                               
population loss or gain during the 2000-2010 census period.                                                                     
                                                                                                                                
8:32:29 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  NAGEAK   inquired  as  to  whether   HB  174  addresses                                                               
municipalities that  experience a 25 percent  population decrease                                                               
in the future.                                                                                                                  
                                                                                                                                
MR. LABOLLE  answered that  the legislation only  speaks to  a 25                                                               
percent  reduction  in  population during  the  2000-2010  census                                                               
period,  and  thus  future  population  loss  would  have  to  be                                                               
revisited by the legislature.                                                                                                   
                                                                                                                                
8:33:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON asked  what the  catalyst was  for the  25                                                               
percent designation.                                                                                                            
                                                                                                                                
MR.  LABOLLE responded  that it  was a  bright line  that reached                                                               
[the goal].                                                                                                                     
                                                                                                                                
8:33:29 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON noted that the  debt will remain, and asked                                                               
whether there  should be a way  to ratify the debt  that can't be                                                               
paid off.                                                                                                                       
                                                                                                                                
MR.  LABOLLE pointed  out that  HB 174  includes a  retroactivity                                                               
clause that goes back to 2009  such that the 2008 would no longer                                                               
apply and  basically erode the  existing liability.   He directed                                                               
attention to the  fiscal note that includes  a large supplemental                                                               
payment  in  fiscal year  (FY)  13,  which is  the  retroactivity                                                               
portion of the legislation.                                                                                                     
                                                                                                                                
8:34:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  questioned  whether it  would  make  more                                                               
sense to ratify, forgive, an amount than to pay an amount.                                                                      
                                                                                                                                
MR. LABOLLE deferred to PERS, but  speculated that the goal is to                                                               
make the  system whole because  if no [municipality]  pays [their                                                               
debt] it  would contribute  to the  unfunded liability  that PERS                                                               
already  has.     In   response  to   Co-Chair  LeDoux,   if  the                                                               
municipality  continues to  function without  paying, the  system                                                               
continues to  get an unfunded  liability.  Therefore, it's  not a                                                               
good  solution for  the  system.   If  a  municipality becomes  a                                                               
nonfunctioning government  and only revenue sharing  is collected                                                               
as  an   intercept,  then   [the  system]   misses  out   on  the                                                               
current/existing salaries  on which  the municipality  is paying.                                                               
Currently, Galena  is unable to pay  on $1.5 million but  is able                                                               
to pay on the approximately $750,000 in existing salaries.                                                                      
                                                                                                                                
8:35:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER  recalled a question from  the last meeting                                                               
regarding  how  many  communities  are  close  to  the  threshold                                                               
provided in HB 174.                                                                                                             
                                                                                                                                
MR. LABOLLE, referring  to a spreadsheet, pointed  out the column                                                               
specifying  the population  percentage  decrease  and noted  that                                                               
those over 25  percent are highlighted.  If  the committee wanted                                                               
to use  another percentage,  say 20  percent, then  Angoon, Kake,                                                               
Nulato, and Tanana would qualify.                                                                                               
                                                                                                                                
8:37:57 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  inquired as  to why 25  percent was  chosen when                                                               
there are other communities that just miss that cut off.                                                                        
                                                                                                                                
MR. LABOLLE responded that 25  percent was a placeholder to start                                                               
the discussion.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  FOSTER  interjected  that  the  percentage  is  a                                                               
policy call for the committee.                                                                                                  
                                                                                                                                
MR. LABOLLE  encouraged the  committee to  obtain input  from the                                                               
department before  changing the percentage because  he understood                                                               
the department's neutral position on HB  174 is due to its narrow                                                               
focus and limited fiscal impact.                                                                                                
                                                                                                                                
8:39:48 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON opined  that there  has to  be recognition                                                               
that  Anderson,  Galena,  Pelican,   and  even  St.  George  lost                                                               
population because of major industry  [withdrawal].  He expressed                                                               
the  need  to have  sideboards  [with  regard to  the  population                                                               
change] in  order to avoid including  cities experiencing natural                                                               
attrition.                                                                                                                      
                                                                                                                                
8:41:33 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NAGEAK reminded the committee  that HB 174 is limited to                                                               
[population changes]  during the 2000-2010 census  period and any                                                               
[population] changes in the future would have to be revisited.                                                                  
                                                                                                                                
MR. LABOLLE confirmed  that anything in the future  would have to                                                               
be revisited by the legislature.                                                                                                
                                                                                                                                
8:42:25 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  commented that even those  communities that lose                                                               
population slowly will be in the  same position.  Although HB 174                                                               
fixes things  for four communities,  she said she wasn't  sure it                                                               
gets to the real problem that may be a systematic problem.                                                                      
                                                                                                                                
MR.   LABOLLE  mentioned   that   there   is  termination   study                                                               
legislation  that is  reviewing the  system as  there is  lots of                                                               
agreement  that the  system needs  work.   However, HB  174 isn't                                                               
targeting the  system but rather  attempting to save a  couple of                                                               
communities.                                                                                                                    
                                                                                                                                
8:43:46 AM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
8:44:40 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  NAGEAK moved  to adopt  CSHB 174,  Version 28-LS0656\U,                                                               
Wayne, 4/1/13, as the working document.                                                                                         
                                                                                                                                
REPRESENTATIVE REINBOLD objected for purposes of discussion.                                                                    
                                                                                                                                
8:45:03 AM                                                                                                                    
                                                                                                                                
MR.  LABOLLE   explained  that  Version   U  is  the   result  of                                                               
Representative Herron's  previous discussion  regarding obtaining                                                               
a new  snapshot.  The  legislation is  now simpler such  that the                                                               
following language is added to Section 1(a)(2):                                                                                 
                                                                                                                                
     ", or, if  the employer is a municipality  in which the                                                                
     population decreased  by more  than 25  percent between                                                                
     2000  and  2010,  according  to  the  decennial  census                                                                
     conducted  by  the  United States  Census  Bureau,  the                                                                
     corresponding  payroll  period   for  the  fiscal  year                                                                
     ending June 30, 2012.                                                                                                  
                                                                                                                                
8:46:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD withdrew her objection.                                                                                 
                                                                                                                                
There  being  no further  objection,  Version  U was  before  the                                                               
committee.                                                                                                                      
                                                                                                                                
8:46:39 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  commented that  she wasn't  sure HB  174 totally                                                               
solves all  the problems with the  system, but noted that  it has                                                               
another committee of referral.                                                                                                  
                                                                                                                                
8:46:59 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NAGEAK  moved to report  CSHB 174,  Version 28-LS0656\U,                                                               
Wayne, 4/1/13,  out of committee with  individual recommendations                                                               
and the  accompanying fiscal  notes.   There being  no objection,                                                               
CSHB  174(CRA) reported  from the  House  Community and  Regional                                                               
Affairs Standing Committee.                                                                                                     
                                                                                                                                
8:47:36 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 8:47 a.m. to 8:49 a.m.                                                                       
                                                                                                                                
^Presentation:  FY 2014  State Plan  for  the Community  Services                                                               
Block Grant Program                                                                                                             
  Presentation: FY 2014 State Plan for the Community Services                                                               
                      Block Grant Program                                                                                   
                                                                                                                              
8:49:25 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced  that final order of  business would be                                                               
a  presentation  on the  fiscal  year  2014  state plan  for  the                                                               
Community Services Block Grant (CSBG) Program.                                                                                  
                                                                                                                                
8:49:53 AM                                                                                                                    
                                                                                                                                
PAULETTA  BOURNE, Grant  Supervisor,  Fairbanks Regional  Office,                                                               
Division  of   Community  &   Regional  Affairs,   Department  of                                                               
Commerce, Community & Economic  Development, paraphrased from the                                                               
following written testimony [original punctuation provided]:                                                                    
                                                                                                                                
         Thank you, Co-Chairs and other members of the                                                                          
     Community and Regional Affairs Committee.                                                                                  
                                                                                                                                
     I am pleased to participate in this hearing concerning                                                                     
     the Draft State Plan for the Community Services Block                                                                      
     Grant Program for Federal Fiscal Year 2014.                                                                                
                                                                                                                                
     The  Department of  Commerce,  Community, and  Economic                                                                    
     Development  would like  to  accept  comments from  the                                                                    
     public on  the proposed  use and distribution  of these                                                                    
     funds.                                                                                                                     
                                                                                                                                
     Community Services  Block Grant funds are  allocated to                                                                    
     the Department  from the U.S. Department  of Health and                                                                    
     Human  Services.    Federal requirements  restrict  the                                                                    
     grantees  to Community  Action  Agencies. Rural  Alaska                                                                    
     Community Action Program, better  known as RurAL CAP is                                                                    
     the  only recognized  Community  Action  Agency in  the                                                                    
     state of Alaska.  We anticipate receiving approximately                                                                    
     $2M in FFY 2014 although  that number could increase or                                                                    
     decrease slightly.  By statute, ninety five  percent of                                                                    
     CSBG  funds received  are granted  to RurAL  CAP.   The                                                                    
     Department  is authorized  to keep  5%  funds to  cover                                                                    
     administrative costs.                                                                                                      
                                                                                                                                
     The purpose  of the  Community Services Block  Grant is                                                                    
     to  impact the  causes and  conditions of  poverty. The                                                                    
     Draft  State Plan,  on which  we are  accepting comment                                                                    
     today,  outlines  how  the Department  administers  the                                                                    
     CSBG  program  and  the   activities  which  RurAL  CAP                                                                    
     proposes   to  undertake   during  fiscal   year  2014.                                                                    
     Because  the  State Plan  is  lengthy,  I will  briefly                                                                    
     outline the  major components which the  Department and                                                                    
     RurAL CAP have identified for the program.                                                                                 
                                                                                                                                
     RurAL CAP  will utilize CSBG funds  to serve low-income                                                                    
     people   throughout  the   State  in   several  program                                                                    
     components.    These include  Administrative  Services;                                                                    
     Supportive   Housing;   Child  Development;   Community                                                                    
     Development;  Planning  and  Construction;  and  Public                                                                    
     Policy  and  Advocacy.   Each  of  these components  is                                                                    
     described in detail in the State Plan.                                                                                     
                                                                                                                                
     Also included in this year's  Plan are Outcome Measures                                                                    
     for each  of the  program components.   Program results                                                                    
     are tracked and reported on  a quarterly basis in terms                                                                    
     of  the   number  of  clients   who  achieve   a  given                                                                    
     milestone.   Progress is reviewed  by staff who  use it                                                                    
     to evaluate results and make changes when necessary.                                                                       
                                                                                                                                
     Both  the  Department  and RurAL  CAP  place  a  strong                                                                    
     emphasis  on promoting  maximum participation  by rural                                                                    
     residents  in   the  elimination  of  the   causes  and                                                                    
     conditions of  poverty.  I have  personally worked with                                                                    
     RurAL  CAP  in the  daily  administration  of the  CSBG                                                                    
     grant for two years.   They have demonstrated a sincere                                                                    
     interest  in  helping  low   income  Alaskans  and  are                                                                    
     recognized  nationally as  a  leader  in providing  not                                                                    
     only innovative programs which meet  the needs of their                                                                    
     clientele, but  also in developing  commendable Outcome                                                                    
     Measures.   They  are to  be applauded  for their  hard                                                                    
     work and their  success. I recommend when  you have the                                                                    
     time to read the Village Voice newsletter.                                                                                 
                                                                                                                                
     Thank you for  your time today. My purpose  today is to                                                                    
     educate  the public  about the  program  and to  accept                                                                    
     comment on the proposed  use and distribution of funds.                                                                    
     If you have  any questions, I would be  happy to answer                                                                    
     them.                                                                                                                      
                                                                                                                                
8:53:41 AM                                                                                                                    
                                                                                                                                
DAVID  HARDENBERGH, Executive  Director,  Rural Alaska  Community                                                               
Action  Program  (RurAL  CAP),  paraphrased  from  the  following                                                               
written testimony [original punctuation provided]:                                                                              
                                                                                                                                
     Good morning,  Co-Chairs LeDoux and Nageak  and members                                                                    
     of the  Community and Regional  Affairs Committee.   My                                                                    
     name  is  David  Hardenbergh  and I  am  the  Executive                                                                    
     Director of the Rural  Alaska Community Action Program,                                                                    
     also  known  as   RurAL  CAP.    Thank   you  for  this                                                                    
     opportunity to present this  information with our state                                                                    
     partner  about the  Community Services  Block Grant,  a                                                                    
     federal   funding   source  that   supported   critical                                                                    
     services  in  81  communities  throughout  Alaska  last                                                                    
     year.                                                                                                                      
                                                                                                                                
     RurAL  CAP is  a  private, statewide,  501(c) (3)  non-                                                                    
     profit  organization.   It is  one of  more than  1,000                                                                    
     Community Action Agencies in  the nation which all work                                                                    
     to  build self-sufficiency  and empowerment  among low-                                                                    
     income people who  desire to pull themselves  up out of                                                                    
     poverty.                                                                                                                   
                                                                                                                                
8:54:33 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  requested clarification regarding  the statement                                                               
that  RurAL  CAP is  a  private  501(c)(3)  rather than  a  state                                                               
agency.                                                                                                                         
                                                                                                                                
MR. HARDENBERGH confirmed that RurAL  CAP is a private 501(c)(3).                                                               
In further  response to questions,  Mr. Hardenbergh  related that                                                               
originally RurAL  CAP was  created as  a 501(c)(4)  nonprofit and                                                               
was converted to a 501(c)(3) in the 1980s.                                                                                      
                                                                                                                                
8:55:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX inquired as to the funding streams for RurAL                                                                    
CAP.                                                                                                                            
                                                                                                                                
MR.  HARDENBERGH explained  that the  majority of  the RurAL  CAP                                                               
funding is from  state and federal grants and  contracts, but the                                                               
organization   also   receives    private   funding,   individual                                                               
donations, private foundation funding, and program income.                                                                      
                                                                                                                                
8:55:28 AM                                                                                                                    
                                                                                                                                
MR. HARDENBERGH continued his testimony [original punctuation                                                                   
provided]:                                                                                                                      
                                                                                                                                
     RurAL  CAP   is  governed  by  a   24-member  Board  of                                                                    
     Directors  representing  every   major  region  of  the                                                                    
     state.     The  tripartite   board  is  a   balance  of                                                                    
     representatives from  target area  communities, elected                                                                    
     public  officials  and  private  sector  organizations.                                                                    
     The  board  meets  quarterly, identifies  major  issues                                                                    
     affecting  low-income people,  and sets  agency policy.                                                                    
     The staff  implements board policy through  a strategic                                                                    
     plan and the oversight of programs and services.                                                                           
                                                                                                                                
     Some of  you may be aware  that as RurAL CAP  nears its                                                                    
       th                                                                                                                       
     50  anniversary in  2015; we have had the honor of past                                                                    
     leaders  in  the  positions   of  Board  Presidents  or                                                                    
     Executive  Directors  that   include  Marlene  Johnson,                                                                    
     Gordon Jackson, Ben Nageak,  Andy Ebona, Byron Mallott,                                                                    
     John Shively, and Jeanine Kennedy, among others.                                                                           
                                                                                                                                
     These leaders and current Board  members and staff have                                                                    
     built RurAL  CAP into the  organization it is  today: a                                                                    
     $40 million  a year  nonprofit with  a $10  million per                                                                    
     year  for-profit subsidiary  and a  private foundation.                                                                    
     Our  employees   provide  services  as   determined  by                                                                    
     community   needs   assessments  that   include   early                                                                    
     childhood    education,    weatherization,    self-help                                                                    
     housing, affordable housing,  energy burden reductions,                                                                    
     health,  youth resiliency  and leadership  development,                                                                    
     solid waste management,  substance abuse prevention and                                                                    
     other improvements in local communities.                                                                                   
                                                                                                                                
     The goal  of the CSBG funds  to the State of  Alaska is                                                                    
     to  reduce poverty  through community-based  activities                                                                    
     which lead to a  greater degree of self-sufficiency for                                                                    
     low-income people.  CSBG funding  comes to the Division                                                                    
     of  Community  and  Regional   Affairs  in  the  Alaska                                                                    
     Department   of   Commerce,  Community   and   Economic                                                                    
     Development and  is administered by Grant  Manager Jill                                                                    
     Davis.    RurAL   CAP  has  had  a   long  and  healthy                                                                    
     partnership  with the  State which  is responsible  for                                                                    
     preparing and monitoring the State Plan.                                                                                   
                                                                                                                                
     As the  only Community  Action Agency in  Alaska, RurAL                                                                    
     CAP  is the  single eligible  recipient for  state CSBG                                                                    
     funds.    For  FY  2014,  RurAL  CAP  has  applied  for                                                                    
     Alaska's formula-based  $2.5 million  in CSBG  funds to                                                                  
     support  programs and  services for  low-income people.                                                                    
     We expect there  will be revisions to  this amount with                                                                    
     sequestration cuts.                                                                                                        
                                                                                                                                
8:58:09 AM                                                                                                                    
                                                                                                                                
SARAH  SCANLAN, Deputy  Director, Rural  Alaska Community  Action                                                               
Program (RurAL CAP), began by  noting that each year a legislator                                                               
has served on the [RurAL CAP  Board] and this year the legislator                                                               
is Representative  Nageak.   Each year  after the  board endorses                                                               
the plan it is brought before  the legislature for approval.  She                                                               
then paraphrased  from the following written  testimony [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Good morning  and thank you  again for  the opportunity                                                                    
     to speak with you.   As mentioned earlier, CSBG's funds                                                                    
     leverage approximately $40 million  in other public and                                                                  
     private   sector   resources  to   benefit   low-income                                                                    
     Alaskans.    RurAL CAP  employs  more  than 400  people                                                                  
     annually  in  regular  positions  in  rural  and  urban                                                                  
     communities  across Alaska  through  Head Start,  Early                                                                    
     Head  Start, Parents  as  Teachers, Child  Development,                                                                    
     Child   Care,   AmeriCorps,  VISTA,   Housing,   Energy                                                                    
     Conservation,  and Weatherization  programs.   We  also                                                                    
     employ  more than  600  Alaskans  annually in  locally-                                                                  
     hired temporary positions.                                                                                                 
                                                                                                                                
     One  of   my  responsibilities  is  oversight   of  the                                                                    
     Community Services  Block Grant.   RurAL  CAP's mission                                                                    
     is to  improve life for low-income  Alaskans throughout                                                                    
     the  state,  with most  of  our  resources directed  to                                                                    
     rural  communities where  poverty  rates are  typically                                                                    
     three times  higher than in  urban Alaska.  Yet  as the                                                                    
     only community  action agency in Alaska  with a mandate                                                                    
     to serve people statewide, RurAL CAP also provides:                                                                        
                                                                                                                                
        · Head Start services to pre-school children and                                                                        
          their parents in Ketchikan;                                                                                           
        · Home weatherization to qualifying low-income                                                                          
          residents in Juneau and Anchorage;                                                                                    
        · Affordable and self-help housing opportunities to                                                                     
          families in Anchorage and on the Kenai; and                                                                           
        · Child care and housing first services in                                                                              
          Anchorage.                                                                                                            
                                                                                                                                
     The  State  Plan  before you  today  contains  detailed                                                                    
     examples of  outcome measures for  each of  RurAL CAP's                                                                    
     CSBG-supported  programs.     This  system  of  Results                                                                    
     Oriented  Management and  Accountability, or  ROMA, has                                                                    
     received  national recognition  within  the network  of                                                                    
     social  service  and  community action  agencies  as  a                                                                    
     model of comprehensive outcome evaluation.                                                                                 
                                                                                                                                
     With attention  focused on identifying  and documenting                                                                    
     measurable changes  in the conditions of  the people we                                                                    
     serve,  RurAL CAP's  system of  program evaluation  and                                                                    
     accountability   focuses    on   producing   measurable                                                                    
     results.                                                                                                                   
                                                                                                                                
     Here is a sampling of  the difference we made last year                                                                    
     through a variety of programs  we hope to continue this                                                                    
     year and next.                                                                                                             
                                                                                                                                
       · Employed 1,023 Alaskans in 81 communities with a                                                                   
          total payroll of more than $16 million.                                                                             
                                                                                                                                
        · Purchased a larger Child Development Center in                                                                      
         Anchorage that doubles the number of children                                                                        
          that can be served to 64.                                                                                           
                                                                                                                                
        · Renovated the Stebbins Teen Center to an Early                                                                        
          Learning Center to provide space for a more                                                                           
          functional early education facility.                                                                                  
                                                                                                                                
        · Served 1,465 children in child development                                                                          
          programs, birth through preschool in 29                                                                             
          communities.                                                                                                          
                                                                                                                                
        · Through a private-public partnership funded                                                                           
          primarily by NANA Regional Corporation, 573 homes                                                                   
          and residents in 6 northwest Alaska rural                                                                           
          communities received energy-efficiency upgrades                                                                       
         and education through the Energy Wise Program                                                                          
         that employed 50 rural Alaskans with a minimum                                                                       
         documented savings of $600 annually per home.                                                                        
                                                                                                                                
       · Among the many healthy communities' initiatives,                                                                       
          the first year of a 3-year partnership with                                                                         
         Kawerak to address underage and binge drinking                                                                       
          through local wellness coalitions was completed,                                                                      
          as well as a successful Rural Providers                                                                               
          Conference (RPC) in Dillingham with over 300                                                                          
          attendees.  This and next year's RPC will be                                                                          
          hosted by the Tanana Chiefs Conference in                                                                             
          Fairbanks.                                                                                                            
                                                                                                                                
        · 1,188 homes (up from 488 last year) were                                                                            
          weatherized in 11 communities that increased the                                                                    
          safety, energy-efficiency and comfort of the                                                                          
          homes providing employment to nearly 300 locally-                                                                   
          hired carpenters and weatherization workers and                                                                       
          field supervisors that included two of the                                                                            
          typically highest unemployment regions, Western                                                                       
         and Northwest Alaska, as well as Anchorage and                                                                         
          Juneau.                                                                                                               
                                                                                                                                
        · Nine families in Kenai became home owners through                                                                   
          the Self-Help Housing program, bringing the total                                                                     
          to 36 homes constructed, with 18 more homes                                                                       
          funded for the next two years.                                                                                        
                                                                                                                                
        · Housing First's Karluk Manor opening in December,                                                                     
          2011 in Fairview added 46 units of safe and                                                                         
          secure rental housing for long-term chronically                                                                       
          homeless, increasing affordable housing units in                                                                      
          Anchorage to 118-it has seen good results in its                                                                    
          first year of operation.                                                                                              
                                                                                                                                
     In closing  I would  like to  reiterate that  RurAL CAP                                                                    
     strives to  be a  responsible steward of  public funds.                                                                    
     We run some  of the most scrutinized  federal and state                                                                    
     programs  in the  nation including  Head Start,  Alaska                                                                    
     Housing Finance  Corporation programs,  AmeriCorps, and                                                                    
     CSBG.   We pride ourselves  on being a grantee  in good                                                                    
     standing  for all  of our  programs and  services.   We                                                                    
     place  a  high value  on  getting  clean financial  and                                                                    
     program  audits,   and  we  strive  to   provide  cost-                                                                    
     effective services that get results.                                                                                       
                                                                                                                                
     This concludes our testimony for the FY 2014 Community                                                                     
     Services Block Grant State Plan.                                                                                           
                                                                                                                                
     Thank you; we are happy to answer any questions.                                                                           
                                                                                                                                
9:04:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD  inquired as  to  the  total budget  for                                                               
RurAL CAP.                                                                                                                      
                                                                                                                                
MR. HARDENBERGH answered that the  total budget for the nonprofit                                                               
portion of RurAL CAP is $40 million a year.                                                                                     
                                                                                                                                
9:05:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked  if all the employees  of RurAL CAP                                                               
are nonunion.                                                                                                                   
                                                                                                                                
MR. HARDENBERGH replied yes.  However,  he noted that a year ago,                                                               
RurAL  CAP  competed  for  and  was  awarded  the  weatherization                                                               
program in Anchorage  that had formerly been  administered by the                                                               
Municipality of  Anchorage with union  employees.  Many  of those                                                               
[union employees]  remained with  the weatherization  program and                                                               
became RurAL  CAP employees at  which point they  became nonunion                                                               
employees.                                                                                                                      
                                                                                                                                
9:06:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD  expressed  interest in  whether  [RurAL                                                               
CAP] brings  savings to the state.   She then inquired  as to the                                                               
number of  employees of  RurAL CAP and  the benefit  packages for                                                               
them.                                                                                                                           
                                                                                                                                
MR.  HARDENBERGH  informed  the   committee  that  for  the  2012                                                               
calendar  year just  over  1,000 W2s  were  distributed of  which                                                               
about 600  were considered temporary  employees who worked  up to                                                               
six months and  worked mostly in seasonal  construction jobs with                                                               
the  weatherization  program.    RurAL CAP  also  has  about  400                                                               
employees on a  typical payroll of which those  who are full-time                                                               
employees  are  eligible  for  regular  benefits.    The  benefit                                                               
package for regular employees offers  much less than the state in                                                               
terms of retirement.  He  explained that employees have to remain                                                               
employed  for a  certain time  in order  to be  eligible for  the                                                               
health  insurance, which  has  a $2,000  deductible.   RurAL  CAP                                                               
employees  also  receive  dental  benefits   with  a  cap.    Mr.                                                               
Hardenbergh  related  that RurAL  CAP  tries  to find  a  balance                                                               
between  providing   decent  pay   and  benefits   and  remaining                                                               
competitive;  to that  end  RurAL CAP  has  a federally  approved                                                               
indirect rate of  11 percent, which is fairly  competitive in the                                                               
nonprofit arena.                                                                                                                
                                                                                                                                
9:08:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  remarked that  she didn't  realize RurAL                                                               
CAP was doing all  that it is.  She then inquired  as to where in                                                               
the  audits does  it  show  that RurAL  CAP  is  doing well  with                                                               
programs  such  as  Parents  as  Teachers  and  early  mentorship                                                               
programs.   Such information regarding outcomes  wasn't available                                                               
to  the   [House  Finance  Subcommittee  on   Education  &  Early                                                               
Development]  when it  was  cutting some  of  programs Rural  CAP                                                               
administers.                                                                                                                    
                                                                                                                                
MR. HARDENBERGH offered  to provide members with  copies of RurAL                                                               
CAP's audits.   There is  a large, agency-wide annual  audit that                                                               
is conducted by an independent CPA  firm.  The audit committee on                                                               
the Board of  Directors of RurAL CAP oversees  the audit process.                                                               
Technically, the  auditors work  for the board.   When  an annual                                                               
audit is referred to as clean  it means there are no findings, no                                                               
areas   of  disagreement   with  management,   and  no   material                                                               
weaknesses  in   RurAL  CAP's  accounting/finance  system.     In                                                               
addition  to  the annual  audit,  which  generates the  financial                                                               
statements  for  the entire  organization  for  an entire  fiscal                                                               
year, there are  a number of program audits.   Program audits can                                                               
include an  audit of  the Head  Start program,  which would  be a                                                               
team of  more than 30 national  auditors traveling to all  of the                                                               
state's Head Start communities and  rural sites to go through the                                                               
1,700  performance standards  for  administering  the Head  Start                                                               
program.                                                                                                                        
                                                                                                                                
9:11:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD clarified  that she's  really interested                                                               
in how  many kids learned  how to read  and how much  were energy                                                               
costs lowered for residents.   She highlighted that the state has                                                               
194,000-197,000  people  on  public  assistance  and  that's  not                                                               
sustainable, which is why the legislature  needs to do all it can                                                               
to make these  folks on public assistance as  independent as they                                                               
can be once the  [state] has taken care of them.   She then asked                                                               
whether RurAL CAP makes any policy decisions.                                                                                   
                                                                                                                                
MS.  SCANLAN informed  the committee  that under  the Parents  as                                                               
Teachers  program 377  families  in 20  communities were  served.                                                               
She offered  to provide to the  committee the data RurAL  CAP has                                                               
in  terms  of real  outcomes  for  programs  such as  Parents  as                                                               
Teachers  and Head  Start as  well  as the  Energy Wise  program.                                                               
Some of that data is included in the annual report.                                                                             
                                                                                                                                
9:12:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  said she  would appreciate such  data as                                                               
she doesn't  want to make  the wrong cuts.   She noted  that such                                                               
data  wasn't  provided  to the  [House  Finance  Subcommittee  on                                                               
Education  &   Early  Development].     Representative  Reinbold,                                                               
regarding policy decisions of RurAL  CAP, asked whether RurAL CAP                                                               
is  trying to  encourage economic  development, such  as resource                                                               
development, in order to avoid  leaving people, once programs are                                                               
cut, without support.                                                                                                           
                                                                                                                                
MR. HARDENBERGH  specified that technically  the RurAL  CAP Board                                                               
of Directors approves  agency policies or a strategic  plan.  The                                                               
staff  implements  those  policies and  approves  procedures  and                                                               
writes funding proposals  for new programs.  He  then provided an                                                               
example  of  economic  development   when  years  ago  the  board                                                               
approved  RurAL  CAP exploring  a  for-profit  subsidiary.   That                                                               
private  for-profit venture  has  become a  small company  called                                                               
Rural Energy Enterprises, a wholly  owned subsidiary of RurAL CAP                                                               
the nonprofit.   Rural Energy Enterprises has 12  or so employees                                                               
and $10 million  in annual sales of energy  efficient heating and                                                               
lighting   projects   supports   about  350   small   businesses,                                                               
retailers.   Rural Energy Enterprises is  a wholesale distributor                                                               
that provides  training to  the retailers  and support  for parts                                                               
and service.   Rural Energy Enterprises  sells wholesale products                                                               
for  items such  as Toyo  Stoves across  350 small  businesses in                                                               
Alaska,  Western Canada,  and the  Pacific  Northwest.   However,                                                               
most  of  the customers,  the  retail  businesses, are  based  in                                                               
Alaska  with the  majority being  in  rural Alaska.   The  retail                                                               
business  ranges   in  size  from  large   heating  and  plumbing                                                               
distributors, such as  Spenard Building Supply, to  small mom and                                                               
pop operations in very remote  rural communities.  Although those                                                               
employees  may not  be employees  of [Rural  Energy Enterprises],                                                               
employment  opportunities  are  provided  because  [Rural  Energy                                                               
Enterprises]  supports those  businesses.   Therefore, RurAL  CAP                                                               
encourages   economic   development.     He   then   complimented                                                               
Representative Reinbold  on her line  of questioning in  terms of                                                               
reviewing  measurable outcomes  from the  low income  individuals                                                               
who are  being served.   Through the Results  Oriented Management                                                               
and Accountability (ROMA) system,  RurAL CAP measures such things                                                               
as how  many four- to  five-year-olds are ready  for kindergarten                                                               
in  terms of  reading levels  and health  and dental  screenings.                                                               
The  ROMA  evaluation  system,  he  explained,  breaks  down  the                                                               
experience of those  being served from their perspective.   For a                                                               
homeless  person in  Anchorage, for  example, ROMA  would measure                                                               
when the  first contact  with an outreach  person was  made, when                                                               
the  individual walked  through the  door of  the Homeward  Bound                                                               
program,  what  are  their  personal  goals  for  becoming  self-                                                               
sufficient, and when did they  succumb to an addiction.  Tracking                                                               
various  milestones includes  the  goal  of eventually  achieving                                                               
employment, that  is a  sustainable source  of income  and moving                                                               
into  independent  living.    The  cost  of  getting  a  homeless                                                               
individual off the street, the  cost to achieve 50 percent energy                                                               
efficient for  a home  heating, and  the cost  to move  three- to                                                               
four-year-old children through a  Head Start program prepared for                                                               
kindergarten  are the  types of  outcomes tracked  with the  ROMA                                                               
system.                                                                                                                         
                                                                                                                                
9:17:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON inquired as to  the amount of state general                                                               
fund (GF) dollars RurAL CAP receives.                                                                                           
                                                                                                                                
MR. HARDENBERGH clarified that RurAL  CAP receives no state funds                                                               
for the  Community Services Block  Grant.  However, as  a private                                                               
nonprofit,  RurAL CAP  competes for  other grants  and has  other                                                               
state  grants,   such  as  those   to  support   substance  abuse                                                               
prevention  services.    He  then noted  that  under  the  Alaska                                                               
Housing Finance Corporation (AHFC),  RurAL CAP competes for state                                                               
funds  to run  housing  or weatherization  programs.   Again,  he                                                               
emphasized  that  there are  no  state  funds for  the  Community                                                               
Services Block Grant.                                                                                                           
                                                                                                                                
9:18:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON highlighted  that the  legislature doesn't                                                               
cut  federal  programs and  other  than  the $55,000  that  DCCED                                                               
takes,  it's  all  federal  dollars  for  which  [RurAL  CAP]  is                                                               
responsible.   In  conclusion, Representative  Herron said  RurAL                                                               
CAP is doing a good job.                                                                                                        
                                                                                                                                
9:19:01 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NAGEAK  mentioned that he  has been involved  with RurAL                                                               
CAP for a  very long time.   RurAL CAP is so  thorough and tracks                                                               
everything.   He applauded  all of RurAL  CAP that  has committed                                                               
staff who have been there for a  long time and noted his pride in                                                               
it.   He  noted that  as a  member of  the Bush  caucus, he  is a                                                               
member of the RurAL CAP Board of Directors.                                                                                     
                                                                                                                                
9:21:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON shared that as  a member of the Bush caucus                                                               
he is a  former member of the  RurAL CAP Board of  Directors.  He                                                               
opined that the Community Block  Grant system within RurAL CAP is                                                               
a good system that takes care  of a lot of Alaskans, whether they                                                               
are in rural or urban areas.                                                                                                    
                                                                                                                                
9:22:26 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  recalled hearing  that  while  the results  for                                                               
students in Head Start at  kindergarten level looked good, by the                                                               
time  they   reached  third  grade   there  was   no  discernible                                                               
difference  between those  who had  and  those who  had not  been                                                               
through Head  Start.  She  inquired as  to whether that  study is                                                               
correct.                                                                                                                        
                                                                                                                                
MR. HARDENBERGH said  he didn't have an answer  because there are                                                               
many  conflicting studies.   That  study, which  he noted  he has                                                               
read,  directly conflicts  with  other studies  purporting to  be                                                               
researched  independently  that for  every  $1  invested in  Head                                                               
Start and other high quality  preschool or early education, there                                                               
is a $7  savings to society that carries on  through high school.                                                               
This takes into consideration  incarceration, high school dropout                                                               
rates, teenage  pregnancy, and other performance  standards.  Mr.                                                               
Hardenbergh  likened this  debate  to that  on  research on  both                                                               
sides  of climate  change and  global warming.   One  can find  a                                                               
study on  the Internet  that supports  their particular  point of                                                               
view  with regard  to  Head Start  or  early childhood  preschool                                                               
programs.  He said although he  doesn't know how long the benefit                                                               
lasts, he  knows the measurable  results of three-  to four-year-                                                               
olds in  [RurAL CAP's  Head Start] program  and believe  they are                                                               
better  prepared to  enter the  public school  system than  their                                                               
peers in communities that don't have Head Start.                                                                                
                                                                                                                                
MS. SCANLAN  recalled that her mother  was in the first  batch of                                                               
people trained in  the mid-1960s to teach Headstart.   This was a                                                               
time  of  many  changes  in  rural Alaska,  such  that  life  was                                                               
becoming  easier  with  running   water,  electricity,  and  snow                                                               
machines  while  alcohol and  substance  abuse  were coming  into                                                               
play.   She characterized Head Start  during that time as  a safe                                                               
haven for  many, a  good meal  and a  source of  care, attention,                                                               
love, and learning.  She said  she always felt Head Start was the                                                               
program that  made a difference  for many children in  many ways.                                                               
While there may not always  be measurable differences, she opined                                                               
that the Head  Start program made a huge difference  in the lives                                                               
of many children in the late 1960s.                                                                                             
                                                                                                                                
9:26:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD  emphasized   that  the  [House  Finance                                                               
Subcommittee on Education  & Early Development] did  make cuts to                                                               
Headstart  and  Parents as  Teachers  programs.   Therefore,  she                                                               
urged RurAL  CAP to  go before [the  subcommittee] with  the data                                                               
because it was asked for a number  of times.  She then noted some                                                               
of those  [on the subcommittee]  questioned the cuts  made, which                                                               
she   attributed  to   the  lack   of  data.     In   conclusion,                                                               
Representative  Reinbold  said  she  was  amazed  with  how  many                                                               
programs with which RurAL CAP  is involved and expressed interest                                                               
in the data-driven results.                                                                                                     
                                                                                                                                
MS. SCANLAN  referred Representative Reinbold to  Debbie Baldwin,                                                               
Director,  Child Development  Division,  who was  present at  the                                                               
aforementioned [subcommittee] meetings,  although the opportunity                                                               
for her  to provide the  data did not  present itself.   She said                                                               
she would contact Ms. Baldwin regarding providing the data.                                                                     
                                                                                                                                
9:28:41 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 9:28 a.m.                                                                                                          

Document Name Date/Time Subjects
HB 193 - Sponsor Statement.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB 193 - Sectional Analysis.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB 193 - Ver A MUNICIPAL TAXATION OF TOBACCO PRODUCTS.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB193 - Fiscal Note - DOR-TAX-04-03-13.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB193- Fiscal Note - DCCED-DCRA-04-03-13.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB 193 Letter of Support - Municipality of Anchorage.pdf HCRA 4/4/2013 8:00:00 AM
HB 193
HB 174 Sponsor Statement.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
CSHB 174 Work Draft.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 ver A.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB174-Fiscal-Note-DOA-DRB-3-22-13.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 - 1 Cities & Bouroughs Impacted by Salary Floor.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 - 2 Affected Muniticaplities - PERS Employer Salaries for FY08 - FY12.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 - 3 Affected Muniticaplities -PERS Employer Salaries for FY08 - FY12.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 - 4 Total Active PERS employees.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
HB 174 - 5 Population Decreases - 2010 AK Cities by Population - US Census.pdf HCRA 4/4/2013 8:00:00 AM
HB 174
FFY 14 State Plan CSBG Community Services Block Grant.pdf HCRA 4/4/2013 8:00:00 AM
State of Alaska Division of Community and Regional Affairs