Legislature(2013 - 2014)BARNES 124
04/04/2013 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB193 | |
| HB174 | |
| Presentation: Fy 2014 State Plan for the Community Services Block Grant Program | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 174 | TELECONFERENCED | |
| *+ | HB 193 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | 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.