Legislature(1999 - 2000)
02/08/1999 01:37 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 8, 1999
1:37 P.M.
TAPE HFC 99 - 18, Side 1.
TAPE HFC 99 - 18, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:37 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Vice-Chair Bunde Representative Kohring
Representative Austerman Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
Dave Pree, Staff, Co-Chair Mulder; Diane Barrans, Executive
Director, Postsecondary Education Commission, Department of
Education; Robert Poe, Commissioner, Department of
Administration; Nancy Slagle, Director, Division of
Administrative Services, Department of Transportation; Mary
Lou Burton, Director, Budget Development, University of
Alaska.
SUMMARY
HB 27 "An Act relating to graduate student loans; and
providing for an effective date."
CSHB 27 (HES) was REPORTED out of Committee with a
"do pass" recommendation and with a fiscal impact
note by the Department of Education, dated 2/8/99.
HB 64 "An Act making appropriations for year 2000
assessment, compliance, and remediation projects;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska; and providing
for an effective date."
CSHB 64 (FIN) was REPORTED out of Committee with a
"do pass" recommendation.
HOUSE BILL NO. 27
"An Act relating to graduate student loans; and
providing for an effective date."
Co-Chair Mulder, Sponsor explained that he introduced HB 27
as a response to comments by his constituents. In the past,
the state of Alaska secured positions in the Western
Interstate Commission on Higher Education (WICHE) program as
a direct grant program. In 1997, the state of Alaska decided
that it could no longer afford the grant process. Under the
WICHE program students are allowed to pursue degrees in
selected programs in other state institutions. Student fees
are at a reduced rate. Rates are either at the in-state rate
or at a reduced out-of-state rate. The program helps reduce
costs and secure positions at other WICHE schools. Students
are allowed opportunities to get degrees at a greatly
reduced rate.
Co-Chair Mulder explained that the original legislation was
amended in the House Health, Education and Social Services
Committee. He observed that repayment of the loan portion
was in AS 14.44.040. Legislative Legal Division drafters
felt that the program should be placed in AS 14.44.030. The
committee substitute incorporates this technical change.
Representative Bunde expressed support for the legislation.
He observed concerns by students regarding opportunities to
enter into programs at WICHE institutions. He maintained
that students are willing to repay the state of Alaska for
the cost of their education if they have the opportunity for
a seat in the program.
In response to a question by Representative Bunde, Co-Chair
Mulder explained that the department would set appropriate
fees under section 3 on page 3. He did not know the interest
rate.
In response to a question by Co-Chair Therriault, Co-Chair
Mulder reviewed the changes made by HB 27. Sections 1 and 2
relocate the program to AS 14.44.030. The changes proposed
by Co-Chair Mulder are incorporated in sections 3, 4, and 5.
Section 6 is the effective date.
Co-Chair Therriault observed that the state used to
negotiate with Washington, Alaska, Montana, Idaho Medical
Education Program (WAMI) schools for the number of spots
that would be reserved for Alaskan students.
DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION
COMMISSION, DEPARTMENT OF EDUCATION provided information on
HB 27. She noted that the Commission did not have a position
because it had not yet reviewed the legislation. She pointed
out that the Commission is supportive of an effort to
increase access. She observed that the legislation would
increase access. The mechanism will remain the same. The
WICHE administrative office would continue to manage the
program. Students would apply with the Commission for
certification in the Professional Student Exchange Program.
The Commission acts as a conduit for Alaskan residents to
get their name into the WICHE pool for the schools that
participate. The WICHE administrative staff would negotiate
what the support fee would be in each field. Students would
have to sign a contract agreeing to pay the support fee plus
interest. The Commission sets the fee and the students sign
a promissory note. There would be a direct transmittal
through the WICHE administrative offices to the institution.
The range of fees would be between $7,000 per year for a
three-year program, or $15,000 for a four-year program. The
fifteen fields available are divided into two categories;
those that need WICHE support to get the WICHE slot and
those fields of study that do not require WICHE support for
entry. Support would be focused on fields that require
WICHE support. This is the area of greatest need.
In response to a question by Representative J. Davies, Ms.
Barrans explained that there may be as many as 7 schools
participating in the physical therapy program. If a student
were admitted to the Professional Student Exchange Program,
in the North Dakota or California programs they would pay
that state's resident rate plus the support fee. The support
fee would be constant. The WICHE staff, based on a range of
differentials, negotiates the support fee. For some schools
it is in excess of the non-resident rate. The benefit for
the student would vary depending on which program they
attend. Ms. Barrans explained that students would not be
considered for admission to some programs, except as a
certified WICHE student. The surcharge that the student pays
in some schools provides them consideration and admission
into the program.
In response to a question by Representative J. Davies, Ms.
Barrans explained that students must be a one-year resident
of the state of Alaska in order to apply for certification
in the program.
Representative Bunde noted that Alaska has maintained its
membership in the program even though the program was not
funded. Ms. Barrans confirmed that the state of Alaska
maintained its membership fees. She observed that Alaskan
students have continued to participate in the Western
Regional Graduate and Undergraduate exchange. She observed
that 800-900 Alaskans participate annually. These benefits
are available as a member state.
Representative Bunde questioned if the reluctance to embrace
loans has been addressed.
Ms. Barrans noted that the WICHE Commission has not been
notified of Alaska's return to the program. If HB 27 is
adopted the program would operate under new terms. She
anticipated that the Commission would restate concerns that
students are incurring debts without the opportunity for a
service obligation that would allow them to retire the debt
through service in the state. She observed that the
Commission recognizes that, due to Alaska's economic
condition, the program can only operate under these terms.
In response to a question by Representative Bunde, Ms.
Barrans explained that each institution retains its ability
to decide admissions.
Representative Bunde observed that there is a zero fiscal
note attached to the legislation. Ms. Barrans explained that
there is no forgiveness attached to the legislation.
Co-Chair Mulder acknowledged that it is the desire of the
WICHE Council to have a forgiveness clause. He pointed out
that the state forgiveness would be $500 to $750 thousand
dollars a year, if half of the participating students
returned to the state to reduce their obligation. He pointed
out that there are fiscal restraints.
Representative Mulder MOVED to report CSHB 27 (HES) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 27 (HES) was REPORTED out of Committee with a "do pass"
recommendation and with a fiscal impact note by the
Department of Education, dated 2/8/99.
HOUSE BILL NO. 64
"An Act making appropriations for year 2000 assessment,
compliance, and remediation projects; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska; and providing for an effective
date."
Co-Chair Mulder provided members with a proposed committee
substitute, 1-GH1052\D, Cramer 2/8/99; and a spreadsheet
detailing appropriations authorized by the proposed
committee substitute (copies on file).
Co-Chair Therriault MOVED to ADOPT the proposed committee
substitute 1-GH1052\D, Cramer 2/8/99. There being NO
OBJECTION, it was so ordered.
DENNY DEWITT, STAFF, CO-CHAIR MULDER observed that the
legislation designates federal funds to various departments
for various purposes associated with the Y2K issue. The bill
allocates the federal funds to the departments that have
federal contracts for Y2K uses. There are areas that have
split appropriations.
Mr. Dewitt reviewed the spreadsheet. He discussed the Y2K
request for the Department of Administration. Funding for
the retirement system, BENECALC would be split between the
Teachers' Retirement System and the Public Employees
Retirement System funds. The split would be relative to the
ratio of use. The mainframe test environment appropriation
remains a general fund obligation. The Department of
Administration will be able to secure program receipts to
fund the Public Guardian appropriation. The Y2K Project
Administration cost was reduced from $868 thousand dollars
to $711 thousand dollars.
Mr. Dewitt discussed the Y2K request for the Department of
Commerce and Economic Development. He noted that the Alaska
Public Utilities Commission (APUC) would use APUC receipts
to fund its Y2K appropriation of $75 thousand dollars.
Mr. Dewitt discussed the Y2K request for the Department of
Corrections. Constitutional Budget receipts would be used
for correctional facilities embedded systems, the Cook Inlet
pre-trail central control system and to replace data
processing hardware. He observed that no other fund source
was identified and that the items are reasonable. The $574
thousand dollar appropriation for modification of the OBSCIS
and HOFA systems would be paid for through an appropriation
from the Federal Bureau of Justice. This expands a FY99
capital appropriation.
Mr. Dewitt discussed the Y2K request for the Department of
Environmental Conservation. He observed that $75 thousand
dollars from the Drinking Water Fund and $75 thousand
dollars from Oil/Hazardous Prevention and Response Fund
would be used to help with the department's Y2K
expenditures.
Mr. Dewitt observed that the community waste water systems
Y2K study was estimated to cost $28 thousand dollars. The
project was completed for $8.5 thousand dollars. This would
be paid for through the Constitutional Budget Reserve.
Mr. Dewitt discussed the Y2K appropriation for the
Department of Health and Social Services. He noted that $4
thousand dollars would be used to replace an imbedded code
chip. There is a $53 thousand dollar project for the
telephone system at the McLaughlin Youth Center. The
legislation contains $30 thousand dollars in Constitutional
Budget Reserve funds for this project. The $10 thousand
dollars needed for the Public Health Lab would come from
program receipts. He noted that the Division of Occupational
Licensing concluded that it would not be effective to use
their system to tie into the Emergency Medical Service (EMS)
system. He noted that the Mental Health Trust Fund might be
a funding source for the $100 thousand dollars needed at the
Alaska Psychiatric Institute. The Medicaid management
information system would be paid for in part with federal
funds. They have an ongoing ability to update their
management system at a 75/25 percent share. The state of
Alaska's 25 percent share would be $600 thousand dollars.
Mr. Dewitt he observed that the $225 thousand dollar request
in the Recorders Office, Department of Natural Resources was
not funded because it is not needed for Y2K compliance.
Mr. Dewitt discussed the Y2K appropriation for the
Department of Transportation and Public Facilities. The $4
million dollar federal appropriation for statewide public
facilities will be sufficient to cover the department's Y2K
needs. He noted that the Highway Working Capital Fund would
be used for the nonfederal share needed for state equipment
fleet emissions test equipment replacement. He maintained
that the funding source is appropriate since federal funding
pays for the maintenance of this equipment. He observed that
Amendment 1 would add marine "vessel assessment" to the
appropriation for Alaska Marine Highway System remediation
(copy on file, see below). The actual cost for Y2K upgrades
of the Kennicott would be $26 thousand dollars. Other ships
would cost $50 thousand dollars each. A total of $476
thousand dollars would be needed to cover all vessels.
Federal funds and Alaska Marine Highway System funds would
be used. He observed that the Kennicott is not funded
separately in the proposal. It is included in the total
amount.
Mr. Dewitt discussed the Y2K appropriation for the
University of Alaska. He observed that the University of
Alaska received a $63 million dollar capital appropriation
for maintenance in FY99. He noted that $354.1 thousand
dollars of this was used for facility items. There are
$4,659,800 million dollars remaining for Y2K upgrades.
Mr. Dewitt discussed the Y2K appropriation for the Alaska
Court System. He explained that there are no alternative
funding sources for the Y2K telephones and security
upgrades. These upgrades will cost $182,500 thousand
dollars.
Co-Chair Mulder explained that he felt that it was important
to fund adequate Y2K protections due to the statewide
importance. He stressed that they looked to alternative
sources for funding. He acknowledged that the legislation
was not reduced as much as some would have liked. He pointed
out that the Governor has made attempts to reduce FY99
funding. The Governor is also working on a net zero
supplemental. He observed that it would be difficult to ask
the departments to absorb all of their Y2K expenses.
Mr. Dewitt commended the Administration for its willingness
to look for other options.
Co-Chair Therriault referred to the $75 thousand dollar
appropriation from the Oil and Hazardous Prevention Response
Fund. Mr. Dewitt explained that the appropriation would be
used to replace equipment in systems that involved in lab
testing. He stressed that expenditures would be focused on
items that would be appropriate to the funding source.
ROBERT POE, COMMISSIONER, DEPARTMENT OF ADMINISTRATION
explained that the money would be spent for laboratory
testing equipment that is related to oil spills and
fingerprinting oil. Maintenance of this system currently
comes from the same funding source.
The funding would be spent for laboratory equipment used in
testing samples for regulated chemical concentration, to
fingerprint oil collection for spills and to monitor and
verify water body conditions for areas such as the Cook
Inlet.
In response to a question by Representative Bunde,
Commissioner Poe explained that upgrades of equipment for
fleet emissions testing would only be for those areas that
require emissions testing, Anchorage and Fairbanks.
Representative Williams noted that the Governor requested
$600 thousand dollars for the Alaska Marine Highway System.
The legislation only authorizes $476 thousand dollars.
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION explained that the bill
inadvertently identified the Kennicott as a separate item
from the amount requested for vessel upgrades. The Kennicott
request was also included in the Governor's request for $600
thousand dollars. She observed that there is a federal
amendment to the Statewide Transportation Improvement
Program (STIP) for $600 thousand dollars to bring all
vessels into Y2K compliance. She explained that the
department still needs $600 thousand dollars. She explained
that $476 thousand dollars are needed for remediation. The
additional amount is needed for the assessment portion. She
clarified that $600 thousand dollars is needed to take care
assessment and remediation of the entire fleet. Some work on
the Kennicott is being dealt with under warranty, but there
is still a lot to do. She explained that 90 percent of the
funding would be through federal dollars.
Co-Chair Mulder observed that if the federal line were
amended to approximately $540 thousand dollars and the other
funds line to approximately $60 thousand dollars the total
appropriation would be at the Governor's request of $600
thousand dollars.
Ms. Slagle clarified that there would be $545,800 thousand
dollars in federal funds and $54,200 thousand dollars from
the Alaska Marine Highway System Fund in other funds. She
noted that the Alaska Marine Highway System Fund is composed
of general fund dollars that are set aside for the operation
of the Marine Highway System.
Representative J. Davies asked why there are Y2K problems
with the Kennicott, which was just commissioned. Ms. Slagle
explained that the Kennicott project began several years
ago. At that time, Y2K problems were not dealt with in the
design. The vessel has a complicated computer system.
(Tape Change, HFC 98 - 18, Side 2)
Representative J. Davies asked why the request for the
Recorder's Office was not authorized for appropriation.
Commissioner Poe explained that the equipment did not need
to be replaced due to Y2K issues. The equipment needs to be
replaced for other reasons. He explained that they only
included systems that were required for Y2K reasons.
Co-Chair Therriault questioned what would be required in
regards to reporting to the Legislature. Commissioner Poe
observed that he would continue to report monthly and that
he would include a summary on the expenditures.
In response to a question by Co-Chair Therriault, Co-Chair
Mulder explained that the legislation was originally setup
as a capital grant, which would allow the life of the
expenditure to be five years. Under the current version, the
appropriation would be made as an operating expenditure and
the lapse date would be March 31, 2000.
MARY LOU BURTON, DIRECTOR, BUDGET DEVELOPMENT, UNIVERSITY OF
ALASKA noted that the University of Alaska has looked at the
possibility of using their deferred maintenance
appropriation for Y2K upgrades. She anticipated that this
could be done in most cases. She stated that the University
of Alaska could live with what they have.
Co-Chair Mulder explained that $340 thousand dollars of
systems upgrade would be billed to the deferred maintenance
appropriation in the University of Alaska in order to reduce
the draw on the Constitutional Budget Reserve.
Representative J. Davies clarified that the University of
Alaska's total Y2K cost would be $5,013,900 million dollars.
Only $4,659,800 million dollars would come from the
Constitutional Budget Reserve.
Co-Chair Mulder stated that he was confident that the
University of Alaska could use an existing funding source to
make up any shortfalls.
Co-Chair Mulder provided members with Amendment 1 (copy on
file). He explained that the Office of Public Advocacy could
support $104,000 thousand dollars from program receipts. He
concluded that the Constitutional Budget Reserve draw should
be reduced and general fund program receipts increased. He
added that the Department of Transportation and Public
Facilities wants to assure the Legislature that the funds
requested are for vessels. The amendment changes the funding
source for the Office of Public Advocacy and clarifies that
the Department of Transportation and Public Facilities'
appropriation is for vessel assessment and remediation.
Amendment 1:
On page 4 line 28:
Delete: $14,554,553
Insert: $14,450,553
On page 4 line 7 after "system"
Insert: "vessel assessment and"
On page 4 line 20 after "system"
Insert: "vessel assessment and"
Co-Chair Mulder Moved Amendment 1. There being no objection
it was adopted.
Co-Chair Therriault observed that the problem has to be
identified before it can be fixed. The amendment would
clarify that funding could be used to identify the problems.
There being NO OBJECTION, Amendment 1 was adopted.
Representative Williams MOVED to ADOPT conceptual Amendment
2, to add $600 thousand dollars to the Alaska Marine Highway
System. The breakdown would be $545.8 thousand dollars in
federal funds and $54.2 thousand dollars in other funds. The
other funds would be from the Alaska Marine Highway System
Fund.
In response to a question by Co-Chair Therriault, Ms. Slagle
explained that the amendment would fit into the increased
amount of federal funding that would be received for the
state's STIP entitlement money. It is a direct result of the
gas tax that goes to the federal government and is
appropriated back to the states. She emphasized that the
funding would assure passenger safety and allow vessels to
remain on schedule.
Co-Chair Mulder clarified that assessment and remediation
were incorrectly lumped together. He noted that the only
other source of funding is the general fund.
There being no objection Amendment 2 was adopted.
Co-Chair Therriault MOVED to report CSHB 64 (FIN) out of
Committee with individual recommendations. Representative
Kohring OBJECTED for the purpose of discussion. He
expressed concern that some of the funding may be going to
things that are not directly connected to Y2K upgrades.
Representative Austerman expressed concern that the problem
was created by the computer industry.
Co-Chair Therriault emphasized that the appropriation is
time sensitive. He observed that the funding amount could be
adjusted in the other body or in conference committee.
Representative G. Davis observed that the state has known
about the Y2K problem.
Representative J. Davies agreed with comments by
Representative G. Davis. He emphasized that $20 million
dollars is a relatively small amount to resolve the problem.
He stressed that a lot of work has already been done by the
administration. He pointed out that people did not
anticipate that chips would be used for a 20-year period.
Co-Chair Mulder pointed out that the House passed Y2K
funding in the FY99 budget, but it was not approved in the
Senate. He agreed that it is difficult to approve the
funding, but stressed that it is important to assure
residents that they do not have to worry about problems. He
noted that Y2K problems could effect a variety of essential
services such as stoplights, jail lockups and delivery of
longevity bonus checks. He directed subcommittee chairmen to
continue to monitor the issue. He emphasized that the
question needs to be asked: "is this something that is
wanted, but (or) something that is needed."
Representative Kohring Withdrew his objection. He stressed
that his concerns remain.
There being no objection CSHB 64 (FIN) was moved from
Committee.
CSHB 64 (FIN) was REPORTED out of Committee with a "do pass"
recommendation.
ADJOURNMENT
The meeting adjourned at 2:50 p.m.
HFC 11 2/08/99
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