Legislature(1995 - 1996)
02/14/1996 01:40 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
FEBRUARY 14, 1996
1:40 P.M.
TAPE HFC 96 - 36, Side 1, #000 - end.
TAPE HFC 96 - 36, Side 2, #000 - end.
TAPE HFC 96 - 37, Side 1, #000 - end.
TAPE HFC 96 - 37, Side 2, #000 - #094.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Nancy Slagle, Director, Budget Review, Office of Management
and Budget, Office of the Governor; Janet Clarke, Director,
Division of Administrative Services, Department of Health
and Social Services; Jim Nordlund, Director, Division of
Public Assistance, Department of Health and Social Services;
Barbara Ritchie, Deputy Attorney General, Civil Division,
Department of Law; Richard Pegues, Director, Administrative
Services, Department of Law; Laurie Otto, Deputy Attorney
General, Criminal Division, Department of Law; Carol Carol,
Director, Division of Administrative Services, Department of
Military and Veterans Affairs; Nico Bus, Director, Division
of Administrative Services, Department of Natural Resources;
Craig Tillery, (Testified via teleconference), Assistant
Attorney General, Environmental Section, Department of Law,
Anchorage; Christopher Kennedy, (Testified via
teleconference), Assistant Attorney General, Environmental
Section, Civil Division, Department of Law, Anchorage;
Vincent Usera, Assistant Attorney General, Commercial
Section, Civil Division, Department of Law; Bill Church,
Retirement Supervisor, Division of Retirement and Benefits,
Department of Administration; John Bitney, Legislative
Liaison, Alaska Housing Finance Corporation, Department of
Revenue; Marylou Burton, Budget Director, University of
Alaska; Boyd Brownfield, Deputy Commissioner, Department of
Transportation and Public Facilities; Carol Taylor,
Planning, Department of Transportation and Public
1
Facilities.
SUMMARY
HB 468 An Act making supplemental appropriations for the
expenses of state government and making and
amending appropriations; ratifying certain state
expenditures; and providing for an effective date.
HB 468 was HELD in Committee for further
consideration.
HOUSE BILL 468
"An Act making supplemental appropriations for the
expenses of state government and making and amending
appropriations; ratifying certain state expenditures;
and providing for an effective date."
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, provided
Committee members with a letter addressing the Governor's
supplemental legislation and amendment changes. [Attachment
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided the
Committee with a handout addressing timing and funding
acquisitions for professional services for the information
system which would implement welfare reform. [Attachment
become effective October 1, 1996. Nevertheless, the use of
the FY96 supplemental budget request in the amount of $3.5
million general fund dollars was necessary to implement
welfare reform in a timely way. The procurement process, if
successful can take anywhere from 90 to 160 days. It is
urgent that the Department make the changes as soon as
possible.
Ms. Clarke added that when welfare reform passes at the
federal level, every state will be making automated system
changes. Because most states do not have existing resources
to modify or build new systems, most will be competing for
limited contractual support.
Ms. Clarke emphasized, federal rule indicates that money
must be spent to receive the grant match.
JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, noted that the
2
greatest part of the request was for $1.5 million dollars,
which would be used for a software developer to implement
welfare reform changes. The supplemental funding would
"buy" the Department four months of critical time.
Mr. Nordlund agreed that uncertainty exists with federal
changes to the welfare reform system, although, he stressed
that the Eligibility Information System (EIS) needs change
regardless. The proposal would allow a system to track
recipients, create a diversion program with additional
sanctions on recipients, shelter cost reductions and
seasonal benefits. The Department must implement these
changes with or without a welfare reform.
Co-Chair Hanley pointed out that a lot of money has already
been spent on the EIS system, and he questioned the cost
projection of the system enhancement. Ms. Clarke noted that
there has been $1 million general fund dollars spent over
the past six years, matched by $3.5 million federal fund
dollars.
The requested $3.5 million dollars would cover charges for a
new system with PC front-end capabilities, using the old
mainframe for a data warehouse.
Co-Chair Hanley inquired if the Legislature should allocate
the supplemental request and the federal government provides
the match, how much general fund dollars would be required.
Ms. Clarke offered to make that information available.
Representative Brown voiced caution in upgrading an old
system and trying to make it flexible enough to deal with
future needs. She acknowledged that the Department has
scrutinized various plans and choose the least expensive one
available. Mr. Nordlund replied that the option chosen by
the Department takes advantage of the current mainframe. He
noted that there is a tremendous amount of data stored on
that system. Mr. Nordlund stressed that the concept chosen
was a "forward looking" design.
Ms. Slagle addressed Section #9(c)(1&2) supplemental budget
request transfer of $250 thousand dollars, a decrease to
Family and Youth Services to fund Youth Facilities. These
funds would be used for the McLaughlin and Johnson Youth
Centers.
Ms. Clarke pointed out that these two services are currently
in separate appropriations within Family and Youth Services,
which causes continual problems in program management. The
Division of Family and Youth Services has had difficulty in
adapting to the vacancy base recruitment program that the
Division of Personnel began using a few years ago.
3
Ms. Clarke referenced Section #9(c)(3)(d) supplemental
budget request for a $3.5 million dollar reduction in the
Medicaid program in order to fund the welfare reform
proposal for the Alaska Family Independence (AFI) program.
Growth rate for the Medicaid program is down. Co-Chair
Hanley was not comfortable placing a specific dollar amount
to this category based on legislation which sets guidelines
in that account. Representative Brown asked if the account
currently exists or if it was part of the welfare reform
package. Ms. Clarke stated that it is part of that package,
and that the section would be conditioned with passage of
the legislation.
Ms. Clarke continued, Section 9(e) supplemental budget
request in the amount of $426.9 thousand dollars would be
used for the judgement in Helmuth v. State - API employee
social services settlement. Co-Chair Hanley asked why the
Department of Health and Social Services would be handling
the financing for those charges.
Ms. Slagle pointed out that the Department of Law would have
been claiming it if the request for the concern was for
attorney fees. She indicated that unless the judgement was
large or specific to a department, there are no "hard and
fast" rules and that it could be addressed by one or another
of the two departments involved.
BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, provided information regarding the case
referenced in Section 9(e), resulting from a hostel work
environment. Ms. Clarke added that the case resulted from
lay-offs at Alaska Psychiatric Institute (API) in FY92.
Representative Parnell and Ms. Ritchie discussed the date of
each judgement and settlement. Ms. Clarke responded to
Representative Brown's question regarding the climate at API
which created the charge. She noted that new policies and
staff training have currently been implemented so as to
avoid future problems.
DEPARTMENT OF LAW
Ms. Slagle spoke to Section #10(a) supplemental budget
request in the amount of $369.3 thousand dollars to be used
for judgments and claims.
CHRISTOPHER KENNEDY, (TESTIFIED VIA TELECONFERENCE),
ASSISTANT ATTORNEY GENERAL, ENVIRONMENTAL SECTION, CIVIL
DIVISION, DEPARTMENT OF LAW, spoke to the Toksook Bay versus
State of Alaska judgement in the amount of $1.2 million
dollars.
4
Ms. Ritchie explained the Burger versus State judgement, a
case based on the sale of Permanent Fund Dividend (PFD)
checks. Mr. Burger was doing business as Frontier Financial
Services, and entered into transactions with three thousand
PFD recipients, selling them an amount per dividend check in
exchange for assigning their rights to his company.
The Department of Revenue began to investigate the number of
change of address forms they received, following research,
they adopted a regulation clarifying that the State would
decline to honor a PFD assignment other than to a
governmental agency. The action resulted in Mr. Burger
filing a law suit. The plaintiff is represented in the case
by the attorney Mark Sandburg.
(Tape Change, HFC 96-36, Side 2).
Representative Mulder suggested the repay come from the
Permanent Fund account. Ms. Slagle advised that effect
would pro-rate that amount from the dividend fund, showing
as a reduction to next year's dividend checks.
Representative Mulder inquired if the Permanent Fund
Corporation held a fund for previous years escrow claims.
Ms. Slagle stated that there was some money held, but did
not know the net effect of the holding.
Ms. Ritchie clarified that the individuals sold their
dividend to Frontier Financial Services for $325 dollars and
then signed a confession of judgement. Later, the State of
Alaska, Department of Revenue determined that the assignment
was invalid and in violation of the small loan act. The
State would not honor that assignment, and at that point,
they sent the Permanent Fund Dividend check back to the
dividend recipient.
Co-Chair Hanley asked if the individuals receiving the
dividend back were being held responsible. Ms. Ritchie
noted that the State of Alaska has not gone after these
people. She suggested that would be a different case from
the one before the Committee.
Representative Navarre pointed out that all the legal
possibilities regarding the case had been exhausted. He
asked if the only scenario left would be to settle with Mr.
Burger. Ms. Ritchie advised that the Department of Law has
requested the Supreme Court to reconsider; they declined.
Currently, it is back in the Superior Court for calculation
of what is due Mr. Burger. Representative Navarre
questioned how the obligation of the State could be reduced.
Ms. Ritchie advised that the supplemental request reduces
what the State has to pay in negotiation efforts.
5
Co-Chair Hanley recommended removing the item from the
supplemental budget request until a "solid" figure had been
determined by the courts.
Ms. Slagle referenced Section #10(b)(c) supplemental budget
transfer in the amount of $66.6 thousand dollars, reducing
FY96, oil and gas litigation in order to fund an additional
prosecutor in Bethel resulting from increased case loads.
LAURIE OTTO, DEPUTY ATTORNEY GENERAL, CRIMINAL DIVISION,
DEPARTMENT OF LAW, provided an overview of the critical
situation currently existing in Bethel. The prosecuting
attorneys in that area work three times as much as other
ones around the State and the area has the highest crime
rate in Alaska. She emphasized that the region is grossly
under staffed.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
Ms. Slagle spoke to Section #11(a) supplemental budget
request in the amount of $1.4 million dollars for increased
costs for the National Guard Retirement Fund based on
updated actuarial reports. The current liability is funded
at only 17%.
BILL CHURCH, RETIREMENT SUPERVISOR, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, pointed out that
over the years there have been changes to the National Guard
system. The 1988 change had the greatest impact, when a
retirement option was introduced and passed for lump sum
payout value to those retiring from the National Guard or
the Militia retirement system. Currently, 70% of those
retiring, are opting for this service, creating an unusual
condition for the funding ratio in that system.
Mr. Church responded to Representative Brown's question
noting that the option was only applicable to this system
and no other State retirement systems. Representative Brown
suggested that the pay out option was not "supportable".
CAROL CAROL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, explained that
the Department has considered options to "fix" the fund.
One of the options would be to eliminate the "lump sum".
The Department decided that option would not be appropriate
until meeting with those persons who would be the most
affected by that decision.
Representative Brown asked the additional amount of
liability which would accrue next year. Mr. Church
6
responded that in the next two fiscal years, the Department
will be required to contribute $2.5 million dollars. The
current unfunded liability is $11 million dollars. For the
year ending 1994, it would be $1.8 million dollars
distributed, whereas, total contributions received would be
$1.1 million dollars.
Representative Mulder recommended "fixing" the system and
making it like the State's retirement system which would
also provide greater accountability. Mr. Church commented
that everyone in the National Guard, currently, is eligible
for the lump sum payment. If the law is changed, it would
act prospectively.
Discussion followed among Committee members, Mr. Church and
Ms. Carol regarding the retirement incentive program in the
National Guard. Mr. Church pointed out that most people in
the Guard program do not expect to live on their sum for
retirement. The average amount of an individuals retirement
in the fund is between $10-$12 thousand dollars. Once an
individual has completed 20 "good" years within the guard
system, either active service, reserve time or guard time,
they can retire and have access to that fund, regardless of
their age. Mr. Church was not aware of any other states
offering similar programs.
(Tape Change, HFC 96-37, Side 1).
Ms. Slagle referenced Section #11(b) supplemental request in
the amount of $557.3 thousand dollars for payment relief
from disasters which have already been declared.
Co-Chair Hanley requested a breakdown of each disaster and
the corresponding costs. Ms. Carol explained an allocation
would also be granted to the Fort Yukon mitigation. When
the flood disaster occurred last year, the Department
borrowed money from every relief fund.
Co-Chair Hanley asked if that allocation would be reimbursed
by the federal government. Ms. Carol stated that the
requested amount was the State's portion.
DEPARTMENT OF NATURAL RESOURCES
Ms. Slagle noted Section #12 supplemental request in the
amount of $5.258 million dollars would be allocated for fire
suppression covering spring fire contracts and anticipated
fire activity through the end of the fiscal year.
NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF NATURAL RESOURCES, noted that the FY96 fire
suppression budget was allocated $3.5 million dollars. The
7
Department has spent $3 million dollars of that allocation
from July 1, 1995 through January, 1996. Currently,
contracts exist for the spring fire season.
DEPARTMENT OF REVENUE
Ms. Slagle referenced Section #13(a) supplemental budget
request in the amount of $198.2 thousand dollars
unanticipated lease costs for AHFC. She noted those funds
should be corporation receipts, not general fund receipts.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION (AHFC), DEPARTMENT OF REVENUE, advised that
Section 8 vouchers were currently in place; AHFC needs a new
lease center. The intent would be to continue leasing
headquarter space in a new location. The Department of Law
informed AHFC that they would need legislative approval for
the new lease space.
Ms. Slagle continued, Section #13(b) would transfer $67
thousand dollars between fund sources in the Alaska State
Pension Investment Board.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
Ms. Slagle advised that Section #14(a) supplemental budget
request in the amount of $4 million dollars would be used
for highway and bridge repair costs related to Southcentral
flood disasters. She pointed out that $1.1 million would
originate from the general fund with the remainder federal
fund receipts.
BOYD BROWNFIELD, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), explained that
the request resulted from two distinctive parts:
1. Emergency repair match for the federal aid money.
2. Additional requirement in the amount of $201
thousand dollars to be used to repair the
facilities.
He noted that damage amounted to $8 million dollars. The
federal government has provided the State, $7.5 million
dollars in emergency relief. Through prior authorization,
the Department currently has $4.5 million dollars of
unobligated authority, requiring an additional $3 million
dollars authority to match what is needed for federal
receipts.
Co-Chair Hanley questioned how much money was intended for
the Copper River Bridge project. Mr. Brownfield responded
8
that the bridge was in Phase 1, correcting flood damage.
That cost would be in the amount of $2.1 million dollars,
including a $2.6 million dollar state-match which would
create a stable condition. Co-Chair Hanley stated that he
would not support spending the allocation on repair of that
project. Mr. Brownfield advised that the money requested
would only stabilize the bridge and would not repair it for
transportation use. He stressed that another flood in that
area will create significant environmental problems.
Mr. Brownfield explained that the total estimated cost of
repairing the bridge would be $6.9 million dollars.
Emergency funds are available and can be used only to repair
the damage.
Representative Brown asked how much money would be needed
eliminate the bridge. Mr. Brownfield replied that cost
would be $441 thousand dollars state matching money. The
State would not need the additional authorization of $4
million dollars federal funds. He added, if that portion of
the bridge is not repaired, a domino effect could occur and
that part of the pier could create an additional span fall
across the river.
Co-Chair Hanley asked if the stabilization would prevent
another flood of that magnitude creating the same extensive
damage. Mr. Brownfield stated that it would. Mr.
Brownfield remarked that he was not aware of costs
associated with removal of the entire bridge.
Representative Brown referenced Section #14(b) supplemental
budget
request in the amount of $720 thousand dollars for the
Copper River Highway restoration recent settlement. Mr.
Brownfield replied that the request resulted from a lawsuit
with the federal government.
CRAIG TILLERY, (TESTIFIED VIA TELECONFERENCE), ASSISTANT
ATTORNEY GENERAL, DEPARTMENT OF LAW, ANCHORAGE, concurred
that the decree was filed with the Court and would require
certain rectifying activities. Representative Brown asked
why the appropriation was deemed an emergency. Mr.
Brownfield responded that the Department has specific items
which must be addressed and that will not be a matter of
negotiation for the State.
UNIVERSITY OF ALASKA
Ms. Slagle addressed Section #15(a) supplemental budget
request in the amount of $455 thousand dollars for the 1995
monetary terms agreement with Classification Employee
Association (CEA). Section #15(b) request in the amount of
9
$473 thousand dollars would be used for the 1995 monetary
terms agreement with Alaska Community College Federation of
Teachers (ACCFT).
MARYLOU BURTON, BUDGET DIRECTOR, UNIVERSITY OF ALASKA,
responded that Section #15(b) had not yet been before the
Committee. The request resulted from an arbitration ruling
that occurred late last Session. The Legislature had not
acted on the 1995 portion, whereas, the 1996 portion did not
come to the Legislature because it was too late in the
Session to submit it. Ms. Burton clarified that the request
language should read: "To satisfy the FY96 monetary terms
of the collective bargaining agreement" for both Sections
15(a)(b).
Representative Martin reminded Committee members that the
Legislature did turn down the 1995 monetary terms. Ms.
Burton clarified that the Legislature did not turn down the
contracts. Last year, there were two vehicles before the
Legislature, HB 305 which covered FY95 & FY96 costs for the
classified positions. In addition, the FY95 costs for
teachers came as part of the supplemental request of the
Governor which was not acted upon by the Legislature.
Ms. Burton commented that both the contract terms and the
practice has been appropriated and that the monetary terms
for contracts require separate action from the Legislature.
Representative Navarre asked if there were increases given
to non-covered employees. Ms. Burton stated that no
University employee received increases in FY95 or FY96. She
added, that the arbitration ruling has come down and that
the University is in the middle of a lawsuit regarding
payment of the funds without separate appropriation.
Ms. Burton clarified that the request deals with two
different categories, one being the Classified Employees
Association. That arbitration ruling applied only to the
community college teachers. Discussion followed between Ms.
Burton and Committee members regarding negotiations and the
compensation plan put forth for other faculty.
Representative Navarre asked when the contracts were
negotiated. Ms. Burton replied that they were negotiated
and went into effect Spring, 1995. No request was made for
employees last year. The Board had suspended the 3%
provision, hence, it did not apply to that particular group.
Representative Navarre pointed out that in FY91 & FY92, the
Legislature did not provide the University the requested
increase, although the University did provide that increase
to non-covered employees.
10
(Tape Change, HFC 96-37, Side 2).
Ms. Burton explained that the collective bargaining
agreement has language which specifies separate legislative
appropriation.
HB 468 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:55 P.M.
HOUSE FINANCE COMMITTEE
FEBRUARY 14, 1996
1:40 P.M.
TAPE HFC 96 - 36, Side 1, #000 - end.
TAPE HFC 96 - 36, Side 2, #000 - end.
TAPE HFC 96 - 37, Side 1, #000 - end.
TAPE HFC 96 - 37, Side 2, #000 - #094.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Nancy Slagle, Director, Budget Review, Office of Management
and Budget, Office of the Governor; Janet Clarke, Director,
Division of Administrative Services, Department of Health
and Social Services; Jim Nordlund, Director, Division of
Public Assistance, Department of Health and Social Services;
Barbara Ritchie, Deputy Attorney General, Civil Division,
Department of Law; Richard Pegues, Director, Administrative
Services, Department of Law; Laurie Otto, Deputy Attorney
General, Criminal Division, Department of Law; Carol Carol,
Director, Division of Administrative Services, Department of
Military and Veterans Affairs; Nico Bus, Director, Division
of Administrative Services, Department of Natural Resources;
11
Craig Tillery, (Testified via teleconference), Assistant
Attorney General, Environmental Section, Department of Law,
Anchorage; Christopher Kennedy, (Testified via
teleconference), Assistant Attorney General, Environmental
Section, Civil Division, Department of Law, Anchorage;
Vincent Usera, Assistant Attorney General, Commercial
Section, Civil Division, Department of Law; Bill Church,
Retirement Supervisor, Division of Retirement and Benefits,
Department of Administration; John Bitney, Legislative
Liaison, Alaska Housing Finance Corporation, Department of
Revenue; Marylou Burton, Budget Director, University of
Alaska; Boyd Brownfield, Deputy Commissioner, Department of
Transportation and Public Facilities; Carol Taylor,
Planning, Department of Transportation and Public
Facilities.
SUMMARY
HB 468 An Act making supplemental appropriations for the
expenses of state government and making and
amending appropriations; ratifying certain state
expenditures; and providing for an effective date.
HB 468 was HELD in Committee for further
consideration.
HOUSE BILL 468
"An Act making supplemental appropriations for the
expenses of state government and making and amending
appropriations; ratifying certain state expenditures;
and providing for an effective date."
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, provided
Committee members with a letter addressing the Governor's
supplemental legislation and amendment changes. [Attachment
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided the
Committee with a handout addressing timing and funding
acquisitions for professional services for the information
system which would implement welfare reform. [Attachment
become effective October 1, 1996. Nevertheless, the use of
the FY96 supplemental budget request in the amount of $3.5
million general fund dollars was necessary to implement
welfare reform in a timely way. The procurement process, if
successful can take anywhere from 90 to 160 days. It is
12
urgent that the Department make the changes as soon as
possible.
Ms. Clarke added that when welfare reform passes at the
federal level, every state will be making automated system
changes. Because most states do not have existing resources
to modify or build new systems, most will be competing for
limited contractual support.
Ms. Clarke emphasized, federal rule indicates that money
must be spent to receive the grant match.
JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, noted that the
greatest part of the request was for $1.5 million dollars,
which would be used for a software developer to implement
welfare reform changes. The supplemental funding would
"buy" the Department four months of critical time.
Mr. Nordlund agreed that uncertainty exists with federal
changes to the welfare reform system, although, he stressed
that the Eligibility Information System (EIS) needs change
regardless. The proposal would allow a system to track
recipients, create a diversion program with additional
sanctions on recipients, shelter cost reductions and
seasonal benefits. The Department must implement these
changes with or without a welfare reform.
Co-Chair Hanley pointed out that a lot of money has already
been spent on the EIS system, and he questioned the cost
projection of the system enhancement. Ms. Clarke noted that
there has been $1 million general fund dollars spent over
the past six years, matched by $3.5 million federal fund
dollars.
The requested $3.5 million dollars would cover charges for a
new system with PC front-end capabilities, using the old
mainframe for a data warehouse.
Co-Chair Hanley inquired if the Legislature should allocate
the supplemental request and the federal government provides
the match, how much general fund dollars would be required.
Ms. Clarke offered to make that information available.
Representative Brown voiced caution in upgrading an old
system and trying to make it flexible enough to deal with
future needs. She acknowledged that the Department has
scrutinized various plans and choose the least expensive one
available. Mr. Nordlund replied that the option chosen by
the Department takes advantage of the current mainframe. He
noted that there is a tremendous amount of data stored on
that system. Mr. Nordlund stressed that the concept chosen
13
was a "forward looking" design.
Ms. Slagle addressed Section #9(c)(1&2) supplemental budget
request transfer of $250 thousand dollars, a decrease to
Family and Youth Services to fund Youth Facilities. These
funds would be used for the McLaughlin and Johnson Youth
Centers.
Ms. Clarke pointed out that these two services are currently
in separate appropriations within Family and Youth Services,
which causes continual problems in program management. The
Division of Family and Youth Services has had difficulty in
adapting to the vacancy base recruitment program that the
Division of Personnel began using a few years ago.
Ms. Clarke referenced Section #9(c)(3)(d) supplemental
budget request for a $3.5 million dollar reduction in the
Medicaid program in order to fund the welfare reform
proposal for the Alaska Family Independence (AFI) program.
Growth rate for the Medicaid program is down. Co-Chair
Hanley was not comfortable placing a specific dollar amount
to this category based on legislation which sets guidelines
in that account. Representative Brown asked if the account
currently exists or if it was part of the welfare reform
package. Ms. Clarke stated that it is part of that package,
and that the section would be conditioned with passage of
the legislation.
Ms. Clarke continued, Section 9(e) supplemental budget
request in the amount of $426.9 thousand dollars would be
used for the judgement in Helmuth v. State - API employee
social services settlement. Co-Chair Hanley asked why the
Department of Health and Social Services would be handling
the financing for those charges.
Ms. Slagle pointed out that the Department of Law would have
been claiming it if the request for the concern was for
attorney fees. She indicated that unless the judgement was
large or specific to a department, there are no "hard and
fast" rules and that it could be addressed by one or another
of the two departments involved.
BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, provided information regarding the case
referenced in Section 9(e), resulting from a hostel work
environment. Ms. Clarke added that the case resulted from
lay-offs at Alaska Psychiatric Institute (API) in FY92.
Representative Parnell and Ms. Ritchie discussed the date of
each judgement and settlement. Ms. Clarke responded to
Representative Brown's question regarding the climate at API
which created the charge. She noted that new policies and
14
staff training have currently been implemented so as to
avoid future problems.
DEPARTMENT OF LAW
Ms. Slagle spoke to Section #10(a) supplemental budget
request in the amount of $369.3 thousand dollars to be used
for judgments and claims.
CHRISTOPHER KENNEDY, (TESTIFIED VIA TELECONFERENCE),
ASSISTANT ATTORNEY GENERAL, ENVIRONMENTAL SECTION, CIVIL
DIVISION, DEPARTMENT OF LAW, spoke to the Toksook Bay versus
State of Alaska judgement in the amount of $1.2 million
dollars.
Ms. Ritchie explained the Burger versus State judgement, a
case based on the sale of Permanent Fund Dividend (PFD)
checks. Mr. Burger was doing business as Frontier Financial
Services, and entered into transactions with three thousand
PFD recipients, selling them an amount per dividend check in
exchange for assigning their rights to his company.
The Department of Revenue began to investigate the number of
change of address forms they received, following research,
they adopted a regulation clarifying that the State would
decline to honor a PFD assignment other than to a
governmental agency. The action resulted in Mr. Burger
filing a law suit. The plaintiff is represented in the case
by the attorney Mark Sandburg.
(Tape Change, HFC 96-36, Side 2).
Representative Mulder suggested the repay come from the
Permanent Fund account. Ms. Slagle advised that effect
would pro-rate that amount from the dividend fund, showing
as a reduction to next year's dividend checks.
Representative Mulder inquired if the Permanent Fund
Corporation held a fund for previous years escrow claims.
Ms. Slagle stated that there was some money held, but did
not know the net effect of the holding.
Ms. Ritchie clarified that the individuals sold their
dividend to Frontier Financial Services for $325 dollars and
then signed a confession of judgement. Later, the State of
Alaska, Department of Revenue determined that the assignment
was invalid and in violation of the small loan act. The
State would not honor that assignment, and at that point,
they sent the Permanent Fund Dividend check back to the
dividend recipient.
Co-Chair Hanley asked if the individuals receiving the
dividend back were being held responsible. Ms. Ritchie
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noted that the State of Alaska has not gone after these
people. She suggested that would be a different case from
the one before the Committee.
Representative Navarre pointed out that all the legal
possibilities regarding the case had been exhausted. He
asked if the only scenario left would be to settle with Mr.
Burger. Ms. Ritchie advised that the Department of Law has
requested the Supreme Court to reconsider; they declined.
Currently, it is back in the Superior Court for calculation
of what is due Mr. Burger. Representative Navarre
questioned how the obligation of the State could be reduced.
Ms. Ritchie advised that the supplemental request reduces
what the State has to pay in negotiation efforts.
Co-Chair Hanley recommended removing the item from the
supplemental budget request until a "solid" figure had been
determined by the courts.
Ms. Slagle referenced Section #10(b)(c) supplemental budget
transfer in the amount of $66.6 thousand dollars, reducing
FY96, oil and gas litigation in order to fund an additional
prosecutor in Bethel resulting from increased case loads.
LAURIE OTTO, DEPUTY ATTORNEY GENERAL, CRIMINAL DIVISION,
DEPARTMENT OF LAW, provided an overview of the critical
situation currently existing in Bethel. The prosecuting
attorneys in that area work three times as much as other
ones around the State and the area has the highest crime
rate in Alaska. She emphasized that the region is grossly
under staffed.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
Ms. Slagle spoke to Section #11(a) supplemental budget
request in the amount of $1.4 million dollars for increased
costs for the National Guard Retirement Fund based on
updated actuarial reports. The current liability is funded
at only 17%.
BILL CHURCH, RETIREMENT SUPERVISOR, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, pointed out that
over the years there have been changes to the National Guard
system. The 1988 change had the greatest impact, when a
retirement option was introduced and passed for lump sum
payout value to those retiring from the National Guard or
the Militia retirement system. Currently, 70% of those
retiring, are opting for this service, creating an unusual
condition for the funding ratio in that system.
Mr. Church responded to Representative Brown's question
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noting that the option was only applicable to this system
and no other State retirement systems. Representative Brown
suggested that the pay out option was not "supportable".
CAROL CAROL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, explained that
the Department has considered options to "fix" the fund.
One of the options would be to eliminate the "lump sum".
The Department decided that option would not be appropriate
until meeting with those persons who would be the most
affected by that decision.
Representative Brown asked the additional amount of
liability which would accrue next year. Mr. Church
responded that in the next two fiscal years, the Department
will be required to contribute $2.5 million dollars. The
current unfunded liability is $11 million dollars. For the
year ending 1994, it would be $1.8 million dollars
distributed, whereas, total contributions received would be
$1.1 million dollars.
Representative Mulder recommended "fixing" the system and
making it like the State's retirement system which would
also provide greater accountability. Mr. Church commented
that everyone in the National Guard, currently, is eligible
for the lump sum payment. If the law is changed, it would
act prospectively.
Discussion followed among Committee members, Mr. Church and
Ms. Carol regarding the retirement incentive program in the
National Guard. Mr. Church pointed out that most people in
the Guard program do not expect to live on their sum for
retirement. The average amount of an individuals retirement
in the fund is between $10-$12 thousand dollars. Once an
individual has completed 20 "good" years within the guard
system, either active service, reserve time or guard time,
they can retire and have access to that fund, regardless of
their age. Mr. Church was not aware of any other states
offering similar programs.
(Tape Change, HFC 96-37, Side 1).
Ms. Slagle referenced Section #11(b) supplemental request in
the amount of $557.3 thousand dollars for payment relief
from disasters which have already been declared.
Co-Chair Hanley requested a breakdown of each disaster and
the corresponding costs. Ms. Carol explained an allocation
would also be granted to the Fort Yukon mitigation. When
the flood disaster occurred last year, the Department
borrowed money from every relief fund.
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Co-Chair Hanley asked if that allocation would be reimbursed
by the federal government. Ms. Carol stated that the
requested amount was the State's portion.
DEPARTMENT OF NATURAL RESOURCES
Ms. Slagle noted Section #12 supplemental request in the
amount of $5.258 million dollars would be allocated for fire
suppression covering spring fire contracts and anticipated
fire activity through the end of the fiscal year.
NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF NATURAL RESOURCES, noted that the FY96 fire
suppression budget was allocated $3.5 million dollars. The
Department has spent $3 million dollars of that allocation
from July 1, 1995 through January, 1996. Currently,
contracts exist for the spring fire season.
DEPARTMENT OF REVENUE
Ms. Slagle referenced Section #13(a) supplemental budget
request in the amount of $198.2 thousand dollars
unanticipated lease costs for AHFC. She noted those funds
should be corporation receipts, not general fund receipts.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION (AHFC), DEPARTMENT OF REVENUE, advised that
Section 8 vouchers were currently in place; AHFC needs a new
lease center. The intent would be to continue leasing
headquarter space in a new location. The Department of Law
informed AHFC that they would need legislative approval for
the new lease space.
Ms. Slagle continued, Section #13(b) would transfer $67
thousand dollars between fund sources in the Alaska State
Pension Investment Board.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
Ms. Slagle advised that Section #14(a) supplemental budget
request in the amount of $4 million dollars would be used
for highway and bridge repair costs related to Southcentral
flood disasters. She pointed out that $1.1 million would
originate from the general fund with the remainder federal
fund receipts.
BOYD BROWNFIELD, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), explained that
the request resulted from two distinctive parts:
1. Emergency repair match for the federal aid money.
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2. Additional requirement in the amount of $201
thousand dollars to be used to repair the
facilities.
He noted that damage amounted to $8 million dollars. The
federal government has provided the State, $7.5 million
dollars in emergency relief. Through prior authorization,
the Department currently has $4.5 million dollars of
unobligated authority, requiring an additional $3 million
dollars authority to match what is needed for federal
receipts.
Co-Chair Hanley questioned how much money was intended for
the Copper River Bridge project. Mr. Brownfield responded
that the bridge was in Phase 1, correcting flood damage.
That cost would be in the amount of $2.1 million dollars,
including a $2.6 million dollar state-match which would
create a stable condition. Co-Chair Hanley stated that he
would not support spending the allocation on repair of that
project. Mr. Brownfield advised that the money requested
would only stabilize the bridge and would not repair it for
transportation use. He stressed that another flood in that
area will create significant environmental problems.
Mr. Brownfield explained that the total estimated cost of
repairing the bridge would be $6.9 million dollars.
Emergency funds are available and can be used only to repair
the damage.
Representative Brown asked how much money would be needed
eliminate the bridge. Mr. Brownfield replied that cost
would be $441 thousand dollars state matching money. The
State would not need the additional authorization of $4
million dollars federal funds. He added, if that portion of
the bridge is not repaired, a domino effect could occur and
that part of the pier could create an additional span fall
across the river.
Co-Chair Hanley asked if the stabilization would prevent
another flood of that magnitude creating the same extensive
damage. Mr. Brownfield stated that it would. Mr.
Brownfield remarked that he was not aware of costs
associated with removal of the entire bridge.
Representative Brown referenced Section #14(b) supplemental
budget
request in the amount of $720 thousand dollars for the
Copper River Highway restoration recent settlement. Mr.
Brownfield replied that the request resulted from a lawsuit
with the federal government.
CRAIG TILLERY, (TESTIFIED VIA TELECONFERENCE), ASSISTANT
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ATTORNEY GENERAL, DEPARTMENT OF LAW, ANCHORAGE, concurred
that the decree was filed with the Court and would require
certain rectifying activities. Representative Brown asked
why the appropriation was deemed an emergency. Mr.
Brownfield responded that the Department has specific items
which must be addressed and that will not be a matter of
negotiation for the State.
UNIVERSITY OF ALASKA
Ms. Slagle addressed Section #15(a) supplemental budget
request in the amount of $455 thousand dollars for the 1995
monetary terms agreement with Classification Employee
Association (CEA). Section #15(b) request in the amount of
$473 thousand dollars would be used for the 1995 monetary
terms agreement with Alaska Community College Federation of
Teachers (ACCFT).
MARYLOU BURTON, BUDGET DIRECTOR, UNIVERSITY OF ALASKA,
responded that Section #15(b) had not yet been before the
Committee. The request resulted from an arbitration ruling
that occurred late last Session. The Legislature had not
acted on the 1995 portion, whereas, the 1996 portion did not
come to the Legislature because it was too late in the
Session to submit it. Ms. Burton clarified that the request
language should read: "To satisfy the FY96 monetary terms
of the collective bargaining agreement" for both Sections
15(a)(b).
Representative Martin reminded Committee members that the
Legislature did turn down the 1995 monetary terms. Ms.
Burton clarified that the Legislature did not turn down the
contracts. Last year, there were two vehicles before the
Legislature, HB 305 which covered FY95 & FY96 costs for the
classified positions. In addition, the FY95 costs for
teachers came as part of the supplemental request of the
Governor which was not acted upon by the Legislature.
Ms. Burton commented that both the contract terms and the
practice has been appropriated and that the monetary terms
for contracts require separate action from the Legislature.
Representative Navarre asked if there were increases given
to non-covered employees. Ms. Burton stated that no
University employee received increases in FY95 or FY96. She
added, that the arbitration ruling has come down and that
the University is in the middle of a lawsuit regarding
payment of the funds without separate appropriation.
Ms. Burton clarified that the request deals with two
different categories, one being the Classified Employees
20
Association. That arbitration ruling applied only to the
community college teachers. Discussion followed between Ms.
Burton and Committee members regarding negotiations and the
compensation plan put forth for other faculty.
Representative Navarre asked when the contracts were
negotiated. Ms. Burton replied that they were negotiated
and went into effect Spring, 1995. No request was made for
employees last year. The Board had suspended the 3%
provision, hence, it did not apply to that particular group.
Representative Navarre pointed out that in FY91 & FY92, the
Legislature did not provide the University the requested
increase, although the University did provide that increase
to non-covered employees.
(Tape Change, HFC 96-37, Side 2).
Ms. Burton explained that the collective bargaining
agreement has language which specifies separate legislative
appropriation.
HB 468 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:55 P.M.
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