Legislature(2001 - 2002)
04/30/2002 03:08 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 30, 2002
3:08 PM
TAPE HFC 02 - 98, Side A
TAPE HFC 02 - 98, Side B
TAPE HFC 02 - 99, Side A
TAPE HFC 02 - 99, Side B
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 3:08 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Representative Mary Kaspner; Representative Jeanette James;
Representative Mike Chenault, Sponsor; Representative Sharon
Cissna; Wendy Redman, Vice President, Statewide Programs,
University of Alaska; Richard Schmitz, Staff, Representative
James; Eddy Jeans, Manger, School Finance and Facilities
Section, Department of Education and Early Development;
William Craig, AIRRES; John Bitney, Legislative Liaison,
Alaska Housing Finance Corporation, Department of Revenue;
Sue Wright, Staff, Representative Chenault; Janet Seitz,
Staff, Representative Rokeberg; Janet Parker, Division of
Retirement and Benefits, Department of Administration; Tom
Turner, President, Alaska Association of Health
Underwriters, Anchorage; Bob Lohr, Director, Alaska Division
of Insurance.
PRESENT VIA TELECONFERENCE
Tom Turner, President, Alaska Association of Health
Underwriters, Anchorage.
SUMMARY
HB 175 "An Act making an appropriation to the Alaska
Industrial Development and Export Authority for
power projects; and providing for an effective
date."
HB 315 "An Act requiring a single insurance provider for
all state employees and allowing small employers
to join as a group; and providing for an effective
date."
CSSSHB 315 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a fiscal
impact note by the Department of Administration.
HB 370 "An Act relating to the issuance of state-
guaranteed revenue bonds by the Alaska Housing
Finance Corporation to finance mortgages for
qualifying veterans; and providing for an
effective date."
HB 370 was REPORTED out of Committee with a "do
pass" recommendation and with two previously
published fiscal notes: REV #1 and GOV #2.
HB 464 "An Act relating to statewide school district
correspondence study programs."
CSHB 464 (EDU) was REPORTED out of Committee with
a "do pass" recommendation and with a previously
published fiscal note: EED #2.
HB 489 "An Act relating to cruelty to animals."
CSHB 489 (JUD) was REPORTED out of Committee with
a "do pass" recommendation and with two previously
published fiscal notes: COR #1 and LAW #2.
HB 524 "An Act relating to the issuance of general
obligation bonds for the purpose of paying the
cost of design, construction, and maintenance of
schools and state facilities; and providing for an
effective date."
HB 524 was heard and HELD in Committee for further
consideration.
HB 525 "An Act relating to the issuance of general
obligation bonds for the purpose of paying the
cost of deferred maintenance of public facilities;
and providing for an effective date."
HB 525 was heard and HELD in Committee for further
consideration.
HB 528 "An Act relating to programs of state
reimbursement for debt payments for certain
capital projects; and providing for an effective
date."
HB 528 was heard and HELD in Committee for further
consideration.
GENERAL OBLIGATION BONDS
Co-Chair Mulder noted that there were $1.4 billion dollars
in general obligation (GO) bond requests. The attorneys
indicated that they could not be included in one ominous
bond bill. The intent was to use as few vehicles as possible
and identify consistent themes. He observed that HB 524
contains GO bonds for new schools and university
construction. House Bill 525 contains GO bonds for deferred
maintenance of public facilities. Bond debt reimbursement
was used for projects that did not fit into a GO bond
package, because they were previously leveraged [HB 528].
Representative Lancaster's energy bill [HB 175] was utilized
for the final component. House Bill 524 and HB 525 would
appear on the November general election ballot.
Co-Chair Mulder observed that projects were prioritized. The
priority lists were strictly used with one exception. In new
school construction, out of the first six schools: three
were in [Representative Kaspner's] district and three were
in Representative Foster's district. The proposed committee
substitute took the first two [in Representative Kaspner's
district] and the first two from Representative Foster's.
HOUSE BILL NO. 175
"An Act making an appropriation to the Alaska
Industrial Development and Export Authority for power
projects; and providing for an effective date."
Representative Lancaster MOVED to ADOPT Amendment 1:
Page 1, line 6, through page 3, line 28:
Delete all material and insert:
Section 1. ALASKA ENERGY AUTHORITY. (a) me unobligated
and unencumbered balance of the Railbelt energy fund
(AS 37.05.520) on the effective date of this Act is
appropriated to the Alaska Energy Authority for
investment by the authority to secure repayment of
bonds issued by the authority under AS 44.83 for the
following power and intertie projects:
(1) the sum of $20,300,000 is allocated to
upgrade and extend the Anchorage-Fairbanks power
transmission intertie to the Teeland substation;
(2) to make grants to the recipients named, for
the purposes described, and in the amounts set out
below:
Homer Electric Association replacement power
supply for Seldovia $2,000,000
Anchorage Municipal Light and Power Ekiutna
project transmission line upgrade 19,300,000
Golden Valley Electric Association line extension
872,000
Matanuska Electric Association line extension 500,000
(b) It is the intent of the legislature that, once the
bonds described in (a) of this section have been
repaid, the Alaska Industrial Development and Export
Authority will bring to the legislature a prioritized
list of energy projects that can be funded from the
revenue stream from the funds appropriated in (a) of
this section.
* Sec. 2. LAPSE OF APPROPRIATION. The appropriation
made by sec. 1(a) of this Act is to capitalize a fund
and does not lapse.
* Sec. 3. This Act takes effect immediately under AS
01.10.070(c)."
He explained that the amendment makes minor changes. He
observed that the amendment would also allow the Alaska
Industrial Development and Export Authority (AIDEA) to
compile a priority list for future consideration by the
legislature. The legislation would still be $43 million
dollars. The legislation utilizes the revenue stream from
the securitization of the Rail Belt Energy Fund, which would
no longer exist if the legislation were adopted.
Representative John Davies pointed out that the legislation
contains a smorgasbord of projects in terms of size and
duration of the debt repayment. He questioned if the intent
was to wait until the last project is repaid before the
revenue stream could be utilized again. Representative
Lancaster responded that it would be a function and a
request of AIDEA.
Representative John Davies MOVED to ADOPT an amendment on
page 2, line 2: insert "the."
Co-Chair Mulder explained that $73 million dollars would be
securitized; $43 million dollars would come off of the bonds
sales to pay for the projects. The interest off of the $73
million dollars pays for the bonds. The revenue stream is
driven from the interest on the bonds not the projects.
Representative John Davies questioned if some of the
projects would be paid off quicker than others. Co-Chair
Mulder stated that they would not. Representative John
Davies stressed that the intent is not to wait until the
last project is paid before there are new projects.
Representative Lancaster explained that funds would flow
immediately. The revenue stream, through AIDEA, from the
intertie fund would pay the bonds back. He observed that $43
million dollars would already be spent.
Representative Croft acknowledged that AIDEA will make the
decision, but expressed concern with the deletion of "with
the assistance of AREAC and the Denali Commission."
Co-Chair Mulder observed that the concern was that the focus
of the Denali Commission has been on economic development in
rural Alaska. He pointed out that the Rail Belt Energy Fund
centers on the rail belt energy grid. He felt that it was
not a compatible relationship. Representative Lancaster
agreed. Most projects are discussed through the Alaska
Industrial Development and Export Authority (AIDEA). It was
felt that it would be better to collect the bonds through
AIDEA.
Representative Hudson questioned what would happen to
communities like Cordova. Representative Lancaster explained
that Cordova is included in the debt reimbursement bond,
which would not require a vote.
Representative Lancaster MOVED to ADOPT Amendment 1. There
being NO OBJECTION, it was so ordered.
HB 175 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 524
"An Act relating to the issuance of general obligation
bonds for the purpose of paying the cost of design,
construction, and maintenance of schools and state
facilities; and providing for an effective date."
Co-Chair Mulder provided members with proposed committee
substitute, work draft LS1725\C, dated 4/29/02 (copy on
file.) He observed that HB 524 contains the new construction
component of schools and learning facilities. He observed
that in order to get the bonds to pass there needs to be a
broad statewide perspective.
Finance Committee Substitute for House Bill 524 authorizes a
vote of the people on general obligation bonds issued by the
state of Alaska for the construction of educational
facilities. The proposal, totaling $149,795,595 dollars,
provides for new schools, University of Alaska projects and
a portion of a museum expansion in Anchorage. The new school
projects include facilities in Tuluksak, Akiak, Scammon Bay,
Teller and Anchorage. The University of Alaska funding
includes projects on campuses in Fairbanks, Juneau, Homer,
Valdez, Anchorage, Kenai, Sitka, Homer, and Ketchikan. The
bond question would be on the November ballot. If approved
by the voters, projects could commence early in 2003.
Representative Croft observed that the third school on the
priority list, Akiachak, was skipped. Co-Chair Mulder
explained that the intent was to balance the two districts.
Representative Croft observed that Anchorage schools, which
were ranked 48, 49, 53, and 54, were added. Co-Chair Mulder
pointed out that they were schools passed by the Anchorage
voters. He stressed the need to assure the greatest support
for passage of the bond package. The Anchorage schools are
partially funded. He observed that there was a error on the
Bartlett High School appropriation, which should be $1.9
million dollars. The Chugiak High School appropriation was
also in error and should be $3.655,728 dollars.
Representative Croft noted that Chugiak would be completely
funded, but Barlett High School would only be funded for
phase 2 and 3. He noted that parts of several schools were
being funded. Co-Chair Mulder explained that the legislation
contains the state share for projects proposed by the
Anchorage School Board and accepted by the voters.
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY
OF ALASKA, provided information on HB 524. She noted that
the Board approved the projects and rankings. The Fairbanks
and Anchorage classroom projects represent board-approved
phases for the facilities. The Lena Point facility was
originally $18 million dollars, which was reduced in half in
order to fit into the appropriation amount. The project was
not designed to be phased. Other projects are as they were
on the Board's priority list. She explained that pieces of
their deferred maintenance needs are contained in other
legislation. The University's top $50 million dollars in
capital requests were funded, excluding deferred
maintenance, which might show up in the capital budget bill.
She did not know where the University Center would be
funded. Delay in funding would be a problem for the Center,
which was not in any of the funding bills.
Vice-Chair Bunde questioned if the University of Alaska had
discussed local contribution for the expansions. Ms. Redman
noted that the Fairbanks campus would be contributing $30
million dollars. Overhead on the science and laboratory
facilities would also be contributed in Anchorage.
Representative Hudson questioned if the University has
dropped the joint University of Alaska Southeast and
Military and Veterans Affairs readiness facility. Ms. Redman
noted that the project is a high priority but was submitted
in the Military and Veterans Affairs budget. She stressed
that the joint use/recreational facility is a high priority
for the Alaska National Guard and University. Co-Chair
Mulder stated that he was willing to work with
Representative Hudson and the University to fund the
project.
Ms. Redman referred to the University Center, Anchorage
campus. Co-Chair Mulder observed that the University
indicated that the funding was needed earlier than later and
bonding might be problematic. The intent is to provide
funding through another vehicle.
Representative Croft clarified that Tuluksak is in
Representative Morgan's district.
Representative Hudson referred to section 5. There is a $5
million dollar appropriation in the Department of Community
and Economic Development for an educational museum facility
design. He observed that the state has the opportunity to
acquire several acres of land from the Alaska Electric Light
and Power Company (AELP). The cost would be $1.9 million
dollars, which covers the land acquisition and $500 thousand
dollars to design a multi-facility that would be an
expansion of the state museum and archives; both of which
are in tough shape. He emphasized that the purchase must
occur in the current year.
HB 524 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 525
"An Act relating to the issuance of general obligation
bonds for the purpose of paying the cost of deferred
maintenance of public facilities; and providing for an
effective date."
Co-Chair Mulder provided members with proposed committee
substitute, work draft LS1735\C, dated 4/29/02 (copy on
file.) The proposal, totaling $203,744,270, provides for
repair of: schools, University of Alaska facilities, state
owned docks and harbor facilities, and state owned
buildings.
The proposal provides $121,269,770 dollars for 90 school
projects around the state. The list includes those schools
approved by the department of Education and Early
Development for major maintenance.
The $5,560,000 dollars designated for the University of
Alaska includes repair to facilities on campuses in Valdez,
Palmer, Ketchikan, Kodiak, Fairbanks, Kotzebue, Nome, and
Bethel.
The 31,887,500 dollars allocated for docks and harbors will
refurbish facilities in Whittier, Seldovia, Juneau,
Ketchikan, Sitka, Cordova, Wrangell, Yakutat and Kiawock.
In addition there is $48,500,000 dollars for dire
maintenance needs throughout the state. He observed that the
governor introduced a bill for Certificate of Participations
deferred maintenance for state facilities at approximately
$200 million dollars. He explained that he was concerned
that a straight state facilities deferred maintenance
general obligation bond would fail to be pass by the public.
The intent was to create a category that could satisfy the
most urgent concerns. He observed that the list could
change. The Administration indicated that there might be
items that are higher in the prioritization. The list
provided by the state director was used to compile the
legislation and might change as a response to submissions by
the Governor's Office.
Co-Chair Mulder added that funding for the Juneau Douglas
High school remodel was added. Representative Hudson
observed that the low bid was $3 million dollars higher
[than the previously appropriated amount].
Representative Croft noted that the list was followed to
item 81 and Anchorage, Kenai, Juneau and Nome were picked
up. He referred to item 51, Kenai school fire alarm upgrade.
He questioned the funding level. There were some life health
and safety code violation concerns. The funds for the
Juneau-Douglas High school would complete the project.
Co-Chair Mulder reviewed section 4 and noted that it
contains deferred maintenance projects as brought forward by
the University.
Co-Chair Mulder referred to section 5. He observed that a
bond debt reimbursement for ports and harbors, which many
communities did not want to participate in had been passed
in a previous year. They are included as general obligation
bonds under deferred maintenance. Ports and harbor projects
fail into two categories. He explained that projects for
existing ports and harbors are listed under deferred
maintenance. Other ports and harbors in the debt
reimbursement package are for new design and planning.
Representative Croft observed that the state had offered to
turn certain ports and harbors to local communities, which
did not want to assume responsibility because they had not
been maintained. This raised the issue of how they could be
raised to a level where the municipalities could take them
over. Co-Chair Mulder clarified that there are a variety of
mechanisms that could be used. He stressed that there is
nothing more important to economic development in costal
communities than ports and harbors. The intent is to be
sympathetic to fishing communities that are having tough
times.
Vice-Chair Bunde referred to subsection (4) in section 6:
Mt. Edgecumbe High School and Alaska Vocational Technical
Center major deferred maintenance. Co-Chair Mulder explained
that the Department of Transportation and Public Facilities
manages the deferred maintenance program. State rankings
were taken, but projects were listed alphabetically.
Representative Hudson clarified that the Alaska Vocational
Technical Center is in Seward; both are state facilities.
Co-Chair Mulder noted that section 6, statewide ADA
compliance might need to be modified.
Representative John Davies asked if the maintenance stations
had been addressed. Co-Chair Mulder did not know. He stated
that they would be considered. The intent is to stay below
$400 million dollars.
Representative John Davies observed that there was a public
facility in Ketchikan with major maintenance concerns. Co-
Chair Mulder thought that it had been included.
HB 525 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 528
"An Act relating to programs of state reimbursement for
debt payments for certain capital projects; and
providing for an effective date."
Co-Chair Mulder reviewed House Bill 528, which provides
state reimbursement to local entities for debt incurred for
schools and projects that contribute to economic
development. The legislation would replace the debt
reimbursement package (adopted two years earlier) with
Unalaska, Akutan, Chignik and False Pass and expansion of
the Port of Anchorage. The total cost would be $70,405,000
dollars. The legislation also contains funding for power
projects, which have been previously leveraged and are
therefore not eligible for GO bonding. The legislation would
provide debt reimbursement for the following energy
projects: Nyman Combined Cycle Cogeneration Plant in Kodiak;
the Power Creek Hydropower Project in Cordova; the
Cogeneration Project in Valdez; and the Southeast Intertie
(Swan Lake to Lake Tyee). Debt reimbursement would allow
Cordova Electric Cooperative to end its draw on the power
cost equalization program.
Representative John Davies referred to section 1, line 7. He
noted that the authorization would be increased to $10
million dollars, but the school only anticipates a need for
$7 - $8 million dollars.
Co-Chair Mulder noted that the combined state/local share is
$10 million dollars. The state share for the Ambler School
is $7 million dollars.
Representative Davies referred to section 2 on page 4.
TAPE HFC 02 - 98, Side B
Co-Chair Mulder clarified that Valdez and Nome are still
authorized; these two communities are still going forward
with debt reimbursement.
Representative Croft questioned if the Akutan Small Boat
Harbor request is $3 or $4 million dollars. Co-Chair Mulder
noted that it was originally submitted at $3 but that the
backup indicated that the amount needed is $4 million
dollars.
Co-Chair Mulder clarified that the Anchorage port needs $14
- $16 million dollars.
HB 528 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 370
"An Act relating to the issuance of state-guaranteed
revenue bonds by the Alaska Housing Finance Corporation
to finance mortgages for qualifying veterans; and
providing for an effective date."
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, spoke in support of the
legislation. He explained that the legislation would provide
authorization on the general election ballot for $500
million dollars in mortgage-backed, guaranteed revenue bonds
through the Alaska Housing Finance Corporation (AHFC).
Alaska is one of five states that are able to take advantage
of these tax-exempt bonds. The requirement for the state to
capture the tax exemption is that the bonds must have an
unconditional guarantee by the state in which the program is
administered. The state Constitution requires that a
guarantee of that nature have a vote of the people. The
bonds are structured to only relate to the mortgages that
the bond proceeds are used to purchase. The state's general
obligation capacity would not be affected. Congress
authorized the tax exemption in 1978 and 1979. Alaska was
one of five states that issued bonds when the program was
first made available. Congress subsequently closed the
window in the early 1980's; those states that were in the
program were grandfathered. The bond proceeds would be used
to fund the Veterans Mortgage Program. To qualify, veterans
would have to have been in active duty service prior to
January 1, 1977 and not been discharged more than 30 years
prior to the application date of their loan. There would be
a diminishing pool of qualified veterans. This would be the
fifth and last time that AHFC would anticipate coming before
the legislature for this type of bond authorization. He
pointed out that the bonds are well supported by the general
public.
Co-Chair Mulder questioned what would happen if the ballot
issue did not pass. Mr. Bitney explained that AHFC would
finish with the authorization from 1986, which is close to
$50 million dollars; this would allow them to finish out the
year.
Co-Chair Mulder questioned if they would need to be on a
statewide general election or could they be on a primary
election. Mr. Bitney did not know.
Co-Chair Mulder stressed that too many questions on the
ballot may lead to the downfall of one of the questions and
suggested that it may behooved the legislation to be on the
primary ballot. Mr. Bitney clarified that the authorization
is needed in the current year.
In response to a question by Representative Lancaster, Mr.
Bitney observed that there is a generous cap. He did not
think that all of the authorization beyond the 30-year
timeframe would be needed. There are bills pending in
Congress, which could require additional authorization if
passed.
Co-Chair Mulder stressed that the ballot issue should be on
the primary election where it would not be confused with any
other ballot question.
Representative Foster MOVED to report HB 370 out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
HB 370 was REPORTED out of Committee with a "do pass"
recommendation and with two previously published fiscal
notes: REV #1 and GOV #2.
RECESSED:
The Committee Recessed at 4:00 p.m.
TAPE HFC 02 - 99, Side A
RECONVENED:
The Committee Reconvened at 4:45 p.m.
HOUSE BILL NO. 464
"An Act relating to statewide school district
correspondence study programs."
RICHARD SCHMITZ, STAFF, REPRESENTATIVE JAMES, testified in
support of the legislation on behalf of the sponsor. He
explained that the legislation would address school district
correspondence study programs. The first school district
correspondence study program was the Alyeska Central School,
which delivers public education to students that are not in
"brick and mortar" schools. Correspondence study programs
have been successful and are popular with parents and
students. This year, the Department of Education and Early
Development instituted regulations that were distressing to
a number of the parents. The intent of the legislation is to
give the department direction in writing regulations.
Mr. Schmitz observed that the legislation provides for a
five-year review. The original provision was for a one-year
review, which was felt to be onerous. He pointed out that
charter schools are reviewed and approved every 10 years.
The legislation also places in statute parameters for
monitoring students. Monitoring would not be so strict as to
be restrictive. Quarterly review by certified teachers would
be required. Under the proposed regulations, a certificated
teacher would be involved in every aspect of monitoring the
student's progress. The legislation would allow [parents and
students] the freedom to operate as they feel works best.
Mr. Schmitz observed that parents taking part in
correspondence study programs have received funding through
stipends or reimbursements for textbooks or curriculum
materials. Due to the separation of state and church,
materials were not allowed to have a religious content. A
question arose regarding the parents ability to use
materials with a religious nature if the parent purchased
the materials without state funds. The issue was resolved by
adding: "Nothing in this section precludes a correspondence
study student, or the parent or guardian of a correspondence
study student, from privately obtaining or using textbooks
or curriculum material not provided by the school district."
Vice-Chair Bunde summarized that the legislation is an
attempt to hold correspondence students to the same standard
as other schools. Mr. Schmitz agreed.
Mr. Schmitz observed that the sponsor did not agree with the
accompanying fiscal note by the Department of Education and
Early Development.
EDDY JEANS, MANGER, SCHOOL FINANCE AND FACILITIES SECTION,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, clarified
that the department requested funding for a position to
assist school districts with monitoring and compliance for
the statewide correspondence programs. He noted that there
is a substantial amount of work with the program. The
department went through a regulatory process with the
expectations of providing clarity on family allotment
accounts. Through the regulatory process persons associated
with the program were heard. The department worked with the
Galena and Nenana school districts to amend the regulations
to their satisfaction. He referred to page 2, line 7: "An
enrolled student shall be monitored by a certificated
teacher or appropriately trained personnel employed by the
governing body." The department feels that a certified
teacher is the appropriate person to evaluate student's
work.
REPRESENTATIVE JEANETTE JAMES, SPONSOR, spoke in support of
the legislation, which includes most of the regulations. She
emphasized that correspondence schools are satisfied with
the process. She discussed the fiscal note, which was added
when the regulations were included in the legislation. She
pointed out that the legislation does not require any more
work than what was required under the regulations. The
department indicated that they are short-funded. She pointed
out that the need is not the result of the legislation. She
emphasized that the funding should be placed in the budget.
She is sympathetic to the department's needs, but did not
think it was appropriate for the funding to be attached to
the legislation because the legislation is not the cause of
shortage.
Mr. Jeans thought that there was a fiscal note attached to
the original legislation, which was taken out in a previous
committee. Co-Chair Mulder noted that the department is not
being asked to do anything new. He questioned if the
workload was being expanded. Mr. James observed that the
programs are relatively new and have been expanded. The
department is attempting to ensure that the program is
working. The program has taken a large portion of the
department's time. Staff is needed in order to provide the
legislature with information.
Co-Chair Mulder observed that the fiscal note could be
considered in the conference committee.
Representative John Davies MOVED to ADOPT Amendment 1:
delete "or appropriately trained personnel". Co-Chair Mulder
OBJECTED. Representative Davies spoke in support of the
amendment. He supported the department's position that it is
appropriate to have certification by a certified teacher.
Co-Chair Mulder spoke against the amendment. He noted that
there are instances where supervision is not by a
certificated teacher. He did not see the necessity of having
a certified teacher if the child is hitting the mark.
In response to a question by Representative Whitaker,
Representative James explained that appropriately trained
personnel would be employed by the governing body, which is
the school.
Co-Chair Mulder pointed out that grading is done quarterly
by certified teachers. Representative Bunde noted that the
day to day corrections would not have to be made by a
certified teacher and emphasized that the quarterly review
by certified teachers would allow mid course corrections.
A roll call vote was taken on the motion.
IN FAVOR: Davies
OPPOSED: Bunde, Foster, Harris, Hudson, Lancaster,
Whitaker, Williams, Mulder
Representatives Moses and Croft were absent from the vote.
The MOTION FAILED (1-8).
Representative Foster MOVED to report CSHB 464 (EDU) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 464 (EDU) was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
note: EED #2.
HOUSE BILL NO. 489
"An Act relating to cruelty to animals."
REPRESENTATIVE MIKE CHENAULT, SPONSOR, spoke in support of
the legislation. He pointed out that it is well documented
that animal abuse is a precursor to child abuse. Studies
suggest that if animal cruelty is identified and treated as
a juvenile problem that a great deal of adult domestic abuse
could be avoided. The legislation would allow a prosecutor
to charge a person with cruelty for each animal found to be
neglected or abused. The legislation encourages courts to
mandate behavioral counseling and makes it a duty to report
abuse to an authority, while holding harmless a person who
in good faith makes the report.
Representative Chenault noted that the legislation was
modified in previous committees. He expressed concern with
the Department of Corrections' indeterminate fiscal note. He
pointed out that cruelty to animals would remain a
misdemeanor and did not think that it would cost the
department to implement the policy.
SUE WRIGHT, STAFF, REPRESENTATIVE CHENAULT, provided
information on the fiscal cost. She observed that there have
been no added costs that they could determine to the states
that have implemented similar policies. She noted that only
extreme cases would trigger the provision, such as the one
in Sterling, where a women had 64 dogs, many of which were
frozen to the ground. In that case, under the legislation,
she could be charged with 64 cases of animal cruelty. Under
the current law she could only be charged with a maximum of
eight counts of animal cruelty.
Vice-Chair Bunde questioned if the legislation would
negatively impact Alaskan kennels that operate under a
reasonable standard. Representative Chenault noted it was
not the intent of the legislation to interfere with dog-
mushing activities or farm practices. He explained that the
animal control staff would make the determination of
cruelty.
Representative Lancaster MOVED to report CSHB 489 (JUD) out
of Committee with the accompanying fiscal note. There being
NO OBJECTION, it was so ordered.
CSHB 489 (JUD) was REPORTED out of Committee with a "do
pass" recommendation and with two previously published
fiscal notes: COR #1 and LAW #2.
HOUSE BILL NO. 315
"An Act requiring a single insurance provider for all
state employees and allowing small employers to join as
a group; and providing for an effective date."
JANET SEITZ, STAFF, REPRESENTATIVE ROKEBERG, testified in
support of HB 315, on behalf of the sponsor. She noted that
the legislation permits the Department of Administration to
obtain a policy or policies of group health insurances for
four entities:
Small businesses - 2 to 5 employees,
Non-profit organizations - no floor or ceiling on
employees,
Special service organizations - which can be sole
proprietors, including childcare facilities,
residential childcare facilities, child placement
agencies, foster home or maternity home, assisted
living home, community based center for adult day care,
or home care services
Small associations for insurance - described as
Businesses or nonprofits or both organized and
operating in Alaska.
Ms. Seitz explained that the Division of Retirements and
Benefits would survey interested parties to determine what
benefits and deductibles are wanted and to arrange premiums.
The Division would offer a RFP that could be a single policy
from a single private insurance carrier or a multitude of
policies covering a "cafeteria plan". The legislation does
not permit the entities to joint the state employee health
insurance pool. The state may not self-insure the pool.
Providers would be private.
Ms. Seitz discussed the fiscal note. She observed that the
Alaska Mental Health Trust Authority would fund part of the
up-front cost. The Trust Authority feels that many of the
non-profit organizations that would profit from the bill
provide services to mental health beneficiaries. Other first
year funding would come from the General Fund. Subsequent
funding would come from payments of premiums. Applicants
would be certified by the Department of Administration.
Ms. Seitz noted that a proposed committee substitute, work
draft 22-LS1177\X, dated 4/25/02, allows for recapture of
the up-front costs and indicates that the recapture of costs
could be spread over a three-year period.
Vice-Chair Bunde MOVED to ADOPT proposed committee
substitute, work draft 22-LS1177\X, dated 4/25/02.
Representative John Davies OBJECTED for the purpose of
discussion. He questioned why the costs would be recaptured
and why a three-year period was chosen. Ms. Seitz explained
that discussion occurred in the House Labor and Commerce
Committee concerning the state fiscal situation and use of
the General Fund. A recommendation was made to recapture the
funds. The Alaska Mental Health Trust Authority indicated
that they would also like to recapture funds. The sponsor
did not have an objection to lengthening the three-year
period. She clarified that the first year costs of $132,800
dollars would be recaptured. Representative Davies WITHDREW
his OBJECTION.
In response to a question by Representative Hudson, Ms.
Seitz explained that there is no floor or ceiling for
employees of non-profits. The Department of Administration
would administer and issue a RFP for the policy. A private
third party would administer the policy with Department of
Administration oversight. It would not be a government run
program. The relationship would be between the private
insurance company or companies and the participates. The
department would issue a new RFP every five years and review
the situation. The state would serve as a collection point.
Representative Davies noted that he had received letters,
concerned with the loss of groups with small claim
histories. Ms. Seitz did not think that there would be an
exodus problem, because non-profits are having such a hard
time getting and retaining adequate insurance to retain
employees. The provision would provide a stable source. The
sponsor feels that the larger the group the less the risk.
She reiterated that policies would be reviewed every five
years. There would be no constraint on who is in or out of
the pool.
JANET PARKER, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, explained that legislation
would allow the formation of group policies for private
employees. The Division hopes to develop several plans that
would meet the needs of groups that are having trouble
finding insurance in the current market. The Division would
begin by surveying persons eligible for the program to
determine needs. She was not aware of any other pools
consisting of small non-profits.
BOB LOHR, DIRECTOR, ALASKA DIVISION OF INSURANCE, testified
in support. He stressed that the bill would be an important
first step toward providing access to health insurance
coverage for groups that find it difficult to obtain
coverage in the current market. He acknowledged that adverse
selection is always a concern in the design of an insurance
plan. He noted that problems could arise if a plan attracts
high-risk participants and the healthy do not enroll. The
design will have to address the issue.
In response to a question by Representative Hudson, Mr. Lohr
stated that Division of Insurance does not have authority
over union organized groups that have decided to purchase
their own coverage. Union Trusts are preempted under federal
legislation.
TOM TURNER, PRESIDENT, ALASKA ASSOCIATION OF HEALTH
UNDERWRITERS, ANCHORAGE, testified via teleconference in
opposition to the legislation. He expressed concern but that
the legislation would have a negative impact on the small
group/employer health insurance market and the state of
Alaska employee health plan. He appreciated the effort to
bring affordable health insurance access to small employers,
but noted that other states with similar programs did not
reduce costs over time, but that it did lead to adverse
selection problems.
Mr. Turner noted that employer groups in Alaska might
initially benefit from the lower rate, but claimed that the
state pool would eventually be forced to react to the bad
claims experience from increased premiums. Elimination of
some administration costs for small businesses would be one
timesavings. He observed that small group/small employer
premiums would still be subject to the factors that drive
health insurance premiums: provider costs, pharmaceutical
costs, mandates, technology, increased utilization, and an
aging population, which are not addressed by the
legislation. Other states have tried to implement similar
legislation with limited success. He referred to the state
of Kentucky's Alliance plan.
TAPE HFC 02 - 99, Side B
Mr. Turner expressed concern that the provision could result
in a depletion of options and significant costs to the state
of Alaska.
Representative Hudson questioned how the legislation would
negatively impact the state's program, which would be
segregated.
Mr. Turner acknowledged that he misunderstood. He maintained
that the legislation would have an impact on the number of
carriers and the competition of the carriers in the state of
Alaska.
Representative Bunde pointed out that the initial set-up
costs would be recaptured.
REPRESENTATIVE SHARON CISSNA testified in support of the
legislation. She explained that a work group on affordable
health insurance led to the legislation. Many people cannot
afford insurance. In some cases the cost of insurance
exceeded the cost of the insured's home mortgages. Many were
working for non-profits or were self-employed, but due to
preexisting conditions were unable to obtain affordable
policies. She has received numerous letters in support of
the concept of affordable insurance. An Anchorage survey in
December 2000, demonstrated that people are going to
hospital emergency rooms because they cannot afford to go to
doctors. Many Alaskans cannot find insurance carriers.
Representative John Davies MOVED to ADOPT Amendment 1:
change "3" to "5". There being NO OBJECTION, it was so
ordered.
Representative John Davies MOVED to report CSHB 315 (FIN)
out of Committee with the accompanying fiscal note. There
being NO OBJECTION, it was so ordered.
CSSSHB 315 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a fiscal impact note by the
Department of Administration.
ADJOURNMENT
The meeting was adjourned at 5:44 PM
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