Legislature(2003 - 2004)
03/01/2004 09:04 AM House FIN
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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
March 01, 2004
9:04 A.M.
TAPE HFC 04 - 32, Side A
TAPE HFC 04 - 32, Side B
TAPE HFC 04 - 33, Side A
CALL TO ORDER
Co-Chair Harris called the House Finance Committee meeting
to order at 9:04 A.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
Representative Mike Chenault
ALSO PRESENT
Representative Carl Morgan; Kevin Jardell, Assistant
Commissioner, Department of Administration; Eric Swanson,
Director, Division of Administrative Services, Department of
Administration; Al Clough, Deputy Commissioner, Department
of Community & Economic Development; Tom Lawson, Director,
Administrative Services, Department of Community and
Economic Development; Marc Antrim, Commissioner, Department
of Corrections: Jerry Burnett, Director, Division of
Administrative Services, Department of Corrections; Eddie
Jeans, Manager, School Finance and Facilities Section,
Department of Education and Early Development; Mark Lewis,
Budget Analyst, Department of Education & Early Development
PRESENT VIA TELECONFERENCE
None
GENERAL SUBJECT(S):
DEPARTMENT FY05 BUDGET OVERVIEWS
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 23rd Legislative Session, contact 465-
2156. After the 23rd Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG SPEAKER DISCUSSION
TAPE HFC 04 - 32
SIDE A
000 Co-Chair Harris Convened the House Finance Meeting at
9:04 A.M.
DEPARTMENT OF ADMINISTRATION
Co-Chair Harris Stated that he would like the Governor's
department amendments to reflect the
numbers incorporated in the HFC
subcommittee reports.
056 MR. KEVIN JARDELL, He observed that the subcommittee
ASSISTANT proposed a $232.8 funding change from
COMMISSIONER, general funds to interagency receipts in
DEPARTMENT OF the Commissioner's Office. He maintained
ADMINISTRATION that this would amount to an unallocated
cut to the department. The reduction
would be distributed through their
agencies. The Division of Motor Vehicles
would be reduced by $20,000.
210 Mr. Jardell The Division of Finance has a proposed
$470 thousand reduction in general funds,
which is of great concern to the
department. The Division performs
essential functions. As a result of the
funding cut, 6 accountants would have to
be laid off. They would also be unable to
do the Comprehensive Annual Financial
Report. This could significantly affect
bonding. The report is essential to
maintaining credibility.
395 Mr. Jardell Spoke to the proposed reduction in the
Division of Labor Relations of $96
thousand, which is a vacant position. He
maintained that this would reduce the
ability to address problems in FY05.
0504 Mr. Jardell Explained General Services Purchasing
would have a general fund reduction of
$18.8 thousand, which would require the
department to keep a position vacant. He
observed that the position aids the
department's attempts to reduce costs.
0591 Mr. Jardell The Retirement & Benefits reduction of
$240 thousand will have minimum impact
due to a change of direction and
philosophy.
0634 Co-Chair Harris Questioned travel, asking if there has
been an effort to work out an arrangement
with Alaska Airlines to achieve savings.
0713 Mr. Jardell Responded that the state is pursuing cost
savings aggressively.
Mr. Jardell The $22 thousand dollar reduction to
group health insurance would have a
minimal impact.
0750 Mr. Jardell The reduction to leases would be
extremely detrimental to the budget. The
department would need to come back for a
supplemental if they are not funded.
0829 Co-Chair Harris Asked if all leases are long-term and if
there are any leases currently in
negotiation. Mr. Jardell replied it is
difficult to renegotiate 10 percent
savings repeatedly. Many leases have
already negotiated downward decreases.
0957 Representative Croft Asked the source of the non-general fund
amount in the Division of Group Health.
0022 MR. ERIC SWANSON, Explained that the fund source would be
DIRECTOR, DIVISION state benefit systems Receipts such as
OF ADMINISTRATIVE SBS, and health insurance. Administrative
SERVICES, DEPARTMENT costs, such as travel, are paid through
OF ADMINISTRATION other fund sources.
1057 Mr. Jardell In response to a question by to
Representative Croft, noted that the
department identified areas of efficiency
and cost cutting, which were incorporated
into the Governor's budget.
1157 Vice-Chair Meyer Asked if there has been a savings from
outsourcing purchasing.
1228 Mr. Jardell Replied that the department has issued
intent to award a contract. He was
unsure if the proposed savings were taken
into account.
1307 Mr. Jardell Discussed reductions to lease
administration, which helps save the
state money if funded.
1358 Co-Chair Harris Asked if the proposed cut would eliminate
a position. Mr. Jardell responded that
the position is vacant.
1429 Co-Chair Harris Asked if the department has negotiated a
lease for less than its previous amount
in the past six years. Mr. Jardell
observed that they have successfully
reduced lease costs through negotiation.
1526 Co-Chair Harris Mr. Jardell did not think that there was
bargaining strength in a reduced budget
for leases. Landlords understand the
huge costs of moving offices. Supply and
demand sets the cost.
1655 Mr. Jardell Discussed the public broadcasting
reduction. He noted that 3-6 radio
stations would have to be shut. There
would be a resulting loss in federal
match of $185 thousand. There are
currently 27 stations, the majority of
which are in rural Alaska.
1742 Representative Croft Asked if some of the rural stations would
be shut down. Mr. Jardell anticipated
that the smaller stations would be those
eliminated.
1819 Representative Joule Asked how much public radio stations
generate through fundraisers.
1841 Mr. Jardell Unable to respond, but acknowledged that
they do a significant amount of
fundraising.
1921 Representative Joule Spoke in favor of fundraising efforts of
stations.
1940 Mr. Jardell Discussed the Satellite structure. The
department is not sure if funding can go
halfway: continue public radio or not.
The result of a $1.18 million reduction
represents the rent to the satellite
transponder. Public TV in 255 communities
would be eliminated; distance delivery of
education would go away.
2040 Representative Pointed to a huge development of
Hawker commercial infrastructure in rural
Alaska. He questioned if the state is
providing something that is available
commercially.
2127 Mr. Jardell Noted that the department has scrutinized
this question. The Governor supports
maintaining these services and did not
feel that services to rural Alaska were
duplicated. The level of funding has
been stagnant for a number of years.
2314 Representative Joule Asked if the state would lose federal
money. Mr. Jardell affirmed that federal
matching money would be lost. All public
television, except Anchorage and
Fairbanks would be eliminated.
2418 Representative Croft Asked who owns the satellite.
Mr. Swanson Noted that AT&T Alascom is the vendor.
Representative Croft Ascertained that UAA distance delivery
courses and Gavel to Gavel would be
affected. He noted that the intent is to
allow Alaskans to communicate with each
other in remote areas. He maintained that
there are no duplicate commercial
services.
2517 Representative Fate Asked if medical consultations would be
affected.
2552 Mr. Jardell Stated that he would research the
question.
2615 Co-Chair Harris Asked about increased satellite costs,
which increased by $900 thousand between
FY03 and FY04.
2652 Mr. Swanson Thought that the increase could have been
due to maintenance work.
2719 Representative Observed that the increase is statutorily
Hawker designated receipts. Mr. Swanson
recalled that the authorization would
allow local communities to fundraise to
pay for maintenance. This amount has not
been completely utilized.
2759 Co-Chair Harris Asked if fundraising efforts were
represented in the statutory designated
receipts. Mr. Swanson stated that they
are not a part of their budget.
2850 Representative Croft Asked if this eliminates the entire
general fund appropriation. Mr. Swanson
agreed that all of the satellite funding
would be eliminated.
2951 Mr. Jardell Referred to Mr. Fink's efforts at
reorganizing and cost savings in the
Office of Public Advocacy. He observed
that results won't be seen until later,
so it is hard to predict the impact of a
$50 thousand reduction.
3044 Mr. Jardell The reduction would cost 3 attorneys,
which do an average of 960 cases per
year. The Office would lose the
resources for 960 cases. He observed that
the reduction is to an increment, which
would be cut in half. Emphasized that it
is difficult to predict the impact, but
observed that the agency was under-funded
this year.
3156 Co-Chair Harris Clarified that the Office of Public
Advocacy and the Public Defender Agency
receive court appointed cases. They don't
solicit business.
3225 Co-Chair Harris Asked the amount of the FY03
supplemental.
3258 Mr. Swanson Replied $1.1 million for OPA and $650
thousand for the Public Defenders Office.
3300 Mr. Jardell Referred to the $150 thousand general
fund reduction to the Violent Crimes
Compensation Board. The reduction would
affect 75 victims, who would not receive
compensation. They would also lose $90
thousand in federal match.
3337 Mr. Jardell Clarified that the entire general fund
appropriation for the Violent Crimes
Compensation Board would be eliminated.
The Board asked for $150 thousand to hold
them harmless from a reduction in
collections. The Administration supports
the request, which is the result of
smaller permanent fund dividend amounts.
3517 Mr. Jardell Observed that the funding change to the
Division of Motor Vehicles will have no
impact.
3727 Mr. Swanson Discussed amendments to the initial
request. He observed that there is a
request to transfer positions into the
central mail unit from the Department of
Transportation and Public Facilities and
the Department of Fish and Game.
3758 Co-Chair Harris Questioned if there were transfers for
lease budgets in individual departments.
Mr. Swanson stated that the
Administration decided not to reallocate
the lease budget. The lease budget would
be centralized in the department.
3828 Mr. Swanson Observed that there would be a transfer
from the department of Public Safety of
just under $10 thousand to provide
facility rent for the Violent Crimes
Compensation Board, which is now in
DOTPF.
3908 Mr. Swanson Noted that the last two amendments were
for the Division of Risk Management.
There is a $219 thousand increased to
cover a rate increase for the Department
of Law.
3941 Representative Croft Clarified that items 4 and 5 are part of
the state's self-insurance.
3958 Mr. Swanson Explained that the there was a slight
rate increase for workers' compensation.
The increase would pay for legal services
as part of Department of Administration's
risk management.
4037 Mr. Swanson Observed that the administrative fee paid
to the Department of Labor and Workforce
Development was increased for their
worker's compensation, the amount should
have been in the original budget ($141
thousand).
4145 Mr. Swanson Explained that $990 thousand in facility
rent would be transferred from the
Department of Public Safety to pay for
the Violent Crimes Compensation Board
lease space. This was previously housed
in the Department of Public Safety and
has been transferred to Department of
Administration.
DEPARTMENT OF COMMUNITY & ECONOMIC
DEVELOPMENT
4230 MR. AL CLOUGH, Noted that the subcommittee goals were
DEPUTY COMMISSIONER, met.
DEPARTMENT OF
COMMUNITY & ECONOMIC
DEVELOPMENT
4333 Representative Croft Asked for more information regarding the
subcommittee report.
Representative Fate Observed that $1.2 million in general
funds was replaced with business license
receipts. The subcommittee also
recommended the reestablishment of the
film office.
4440 Mr. Clough Discussed proposed amendments. He noted
that there are three items in the Office
of Economic Development, which center
around the transfer of the trade function
to the Governor's Office. The first item
returns less senior trade staff; the
second transfers more senior trade staff;
and the third transfers money out to the
Governor's Office. Pointed out that
there is a $65.3 thousand reduction.
4618 Representative Croft Asked the purpose of the transfer. Mr.
Clough replied that the transfer was made
through executive order.
TAPE HFC 04 - 32, Side B
4616 Co-Chair Harris Clarified that funding is being
transferred into the Governor's office
and questioned if there is already a
decent size contingency fund.
4504 Mr. Clough Couldn't respond.
4447 MR. TOM LAWSON, Discussed Regulatory Commission of Alaska
DIRECTOR, audits and the investigations program,
ADMINISTRATIVE which was implemented by EO 111. The
SERVICES, DEPARTMENT Regulatory Commission of Alaska's public
OF COMMUNITY & advocacy function was transferred to the
ECONOMIC DEVELOPMENT Department of Law.
4331 Mr. Clough In response to a question by
Representative Joule, stated that there
has been on going dialog regarding the
lack of revenue sharing and safe
community dollars.
4228 Representative Joule Questioned if communities are beginning
to petition the Local Boundary Commission
to dissolve.
4210 Mr. Clough Did not know of any petitions.
4156 Mr. Lawson Referenced Section #26, Power Cost
Equalization. He noted that it would
amendment the language section. The
amendment removes $3.7 million in general
funds. Money would be used out of the PCE
Endowment, which would allow funds to
remain in the PCE Fund for use in FY05.
4047 Tom Wright, Staff, Pointed out that the language was
Co-Chair Harris contained on page 7, Line 140.
4026
DEPARTMENT OF CORRECTIONS
3954 MR. MARC ANTRIM, Voiced appreciation for Representative
COMMISSIONER, Hawker and all the work of the
DEPARTMENT OF Subcommittee.
CORRECTIONS
3912 MR. JERRY BURNETT, Spoke to the cuts recommended by the
DIRECTOR, DIVISION subcommittee. The FY05 Governor's
OF ADMINISTRATIVE proposed budget required the department
SERVICES, DEPARTMENT to absorb $2 million in fixed PERS and
OF CORRECTIONS lease costs. He pointed out that the
department had implemented some
efficiencies prior to the subcommittee's
recommendation. The subcommittee's
proposed funding level represents a
significant reduction. He spoke to cuts
in inmate gratuities. He acknowledged
that actual gratuities paid have been
below the authorized amount. However, the
reduction would be an actual cut of $670.
Gratuities are used to pay inmates to
work at facilities, which benefits the
state and the inmates. Stated that it
would have a detrimental effect on inmate
behavior.
3706 Co-Chair Harris He asked if gratuities were paid by the
contractor.
3641 Mr. Burnett Replied that the state pays the
gratuities. The state is attempting,
through negotiation of a new contract, to
have the contractor pay inmate
gratuities. The subcommittee budget
assumes that gratuities would be paid by
the contractor.
3543 Vice-Chair Meyer Asked if that payment would go toward
health and dental insurance.
3529 Mr. Burnett Explained that there is a co-payment fee.
3517 Commissioner Antrim Noted that inmates are charged $4 dollars
the first time the inmate sees a
physician on a particular medical issue.
Subsequent visits are not charged.
3500 Vice-Chair Meyer Questioned when the co-pay was
implemented.
3448 Commissioner Antrim The co-pay has not been changed since it
was put in place 3 years ago.
3431 Representative Explained that gratuities have been
Hawker eliminated in out-of-state facilities.
The actual amount authorized and paid to
inmates was ½ the budgeted amount, which
was further reduced by a factor of .5%.
The subcommittee did not touch employee
salary funds.
3255 Representative Croft Clarified that the intent was to find a
realistic amount for gratuities within
the system.
3241 Representative Agreed and noted that the amount was an
Hawker estimation.
3209 Representative Croft Asked the purpose of deleting gratuities
from the out of state facilities.
3153 Mr. Burnett Replied that currently the contractor has
control over how much work the inmates do
and who benefits from it. The rate
should include the payment for the
gratuities. Then there would be no extra
incentive to over utilize gratuities.
3102 Mr. Burnett Addressed the elimination of a
superintendent position. He emphasized
the need for the position and pointed out
that it provides the first level of
supervision. He maintained that level in
the department is currently too thin.
3005 Commissioner Antrim Pointed out that the department has
eliminated a couple of those positions on
their own. The ones currently in place
are in operational positions, which
address supervision issues.
2840 Representative Stated that the effort was not to
Hawker devastate the ability of the front line
function. Last year, the Governor issued
Administrative Order 207, which
stipulated that the position would be
eliminated. He noted that the titles had
been changed. The subcommittee looked at
high level administration positions, two
of which are already vacant. The
subcommittee looked at all the assistant
superintendent positions.
2650 Mr. Burnett Addressed cuts to probation and parole
regions, which would be unallocated
personal service cuts. The cuts will
result in higher caseloads for probation
officers. There are increasing number of
people under supervision each year. The
personal services costs are running below
the level authorized as a result of
complex difficulties in hiring staff this
year. Those positions need to be filled.
2518 Mr. Burnett Noted that there is a 20 percent
reduction to the training academy.
Training requirements have been increased
during FY04. He spoke to travel costs.
Highly trained officers are essential and
improve officer morale.
2358 Commissioner Antrim Referred to the hiring of Steve Smith,
who has the capability of training a swat
team and stressed the need for training.
2326 Representative Acknowledged the need for training.
Hawker Observed that the department was given
latitude [for fund shifting] in last
year's budget structure. The
subcommittee cleaned up fund shifting. He
stressed that the numbers attending the
academy are projected to decrease and
that there is a need to do more with
less.
2157 Mr. Burnett Reviewed eliminated positions for the
Alaska alternative to incarceration
project established in 2002. There were
nine new positions in 2003. There was a
$611 thousand reduction by the
subcommittee. Probation officers were
brought on to provide alternatives to
incarceration. Electronic monitoring
costs $19 per day. Alternative
supervision is cost-effective.
2006 Commissioner Antrim The average daily count [for alternative
monitoring] is 130. Over the course of a
month there are up to 1200 people, people
otherwise in jail or community
residential centers.
1841 Representative Croft Questioned the effect of reducing
probation and parole officers.
Commissioner Antrim replied that the
classification process is exhausting,
even for short-term offenders. They are
charged not to put high-risk offenders
out on the street and emphasized the
level of associated paperwork.
1652 Mr. Burnett The reductions would be in the
classification section, which is where
they belong.
1605 Mr. Burnett Discussed the elimination of 3
programmers from the Information
Technology (IT) staff, for a $330
thousand reduction. He pointed out that
the existing staff is needed to rewrite
the offender tracking information system
(OTIS).
1503 Representative Croft Questioned if the department had looked
at replacing the system? Mr. Burnett
noted that they had researched the issue
and concluded that no off the shelf
software would work.
1243 Representative Croft Asked if there isn't a single company
that writes both jail and prison
software. Mr. Burnett replied that they
have looked at a number of options.
Programmers have customized it so many
times, which makes it more difficult to
replace. [In house programmers] could do
it over three years for about $750
thousand.
1129 Representative Croft Asked if the intent is for the funding to
come from the capital budget instead.
1119 Representative He noted that there are 14 employees in
Hawker the IT system, with six analyst
programmers. Additional employees were
added during the ramp up period. He
maintained that the process only requires
the critical employees.
0930 Representative Croft Questioned if the program could be done
with slightly fewer resources. Mr.
Burnett replied that the current program
has significant issues. It takes longer
to book inmates on line. The program
still does not work correctly. On the
parole side, it works well. There is an
inefficient use of staff resources.
0800 Representative Croft Pointed out that good information about
recidivism is key for the legislature to
make decisions about what works in the
criminal justice system.
0723 Mr. Burnett Spoke to the reduction of staff in the
Commissioner's office. About half of the
staff would be eliminated. He pointed
out that the eliminated positions have
specific work; the special assistant is
in charge of probation and parole.
Someone must do that job. The Deputy
Commissioner is in charge of all security
operations. The department would have to
take money out of other components or
have work done someplace else.
0550 Commissioner Antrim Pointed out that the department had
already eliminated a number of deputy
director positions.
0523 Representative Discussed the Commissioner's office and
Hawker noted that it had increased positions
since FY03. Some positions in the
Commissioner's Officer are paid out of
other BRUs. There has been a growth in
the higher executive ranks. He felt that
the resources should be distributed
throughout management in the department.
0406 Mr. Burnett Reviewed the change from one
appropriation RDU as proposed by the
department to 9 RDUs. In FY04 the
department was structured under 3 BRU's.
Separate appropriations reduce
flexibility. He acknowledged that money
was moved between components within the
same appropriation but not documented and
identified. He emphasized that management
flexibility is valuable to the
department.
0112 Co-Chair Harris Stressed the need for legislative control
over the money.
0044 Representative Noted that the department was given wide
Hawker latitude in last year's budget to
restructure, which resulted in a real
budget reflecting actual expenditures.
TAPE HFC 04 - 33, Side A
0059 Representative Joule Asked the status of the Kotzebue jail.
0118 Commissioner Antrim Observed that funding for the Kotzebue
jail was removed. People are being
transported to and from Kotzebue for a
savings of $200 thousand.
0144 Mr. Burnett Noted that they estimate that $367
thousand will be spent on prisoner
transport in FY04. The Kotzebue jail
contract was $580 thousand.
0230 Representative Joule Spoke to an audit relating to employees
in the department of Corrections. He
observed that locals in rural areas such
as Nome and Bethel are not applying [for
Department of Corrections jobs] because
others with more seniority are
transferring into these areas to get
their three high years [for retirement].
He questioned if the department is acting
on the recommendations.
0303 Commissioner Antrim Stated that the department agrees with
the points recommended in the audit. The
Legislative Budget and Audit Committee
audit identified Tier 1 employees getting
their high years. Of a workforce of 1500
officers, only 61 employees took
advantage of [the option to transfer to
rural areas]. He observed that the
department started a program in Nome
involving an area-wide effort, which
includes sending mail-outs about
available positions. Pre-certification
involves a background check before a
person can be hired. Locals did not
pursue pre-certification due to the
perception that jobs were unavailable.
The department has made a commitment to
Nome to fix the problem. Bethel employs
53% Alaska Native.
0603 Representative Asked for an update on the out of state
Hawker contract.
0637 Mr. Burnett Explained that the FY05 number is a
placeholder for out-of-state contracts.
The department has received and
considered responses to the RFP, which
was sent out in January. At this point,
the department has not received a
response that would lead to a contract.
There is limited competition nationwide.
He would be surprised if there were price
reductions.
DEPARTMENT OF EDUCATION
0755 MR. EDDY JEANS Provided information regarding the
MANAGER, SCHOOL department's budget proposal. There is
FINANCE AND one increment of $8 million in general
FACILITIES SECTION, funds, which would hold the Foundation
DEPARTMENT OF Formula level with FY 04. The department
EDUCATION AND EARLY will need legislation passed to disburse
DEVELOPMENT the money.
0889 Vice-Chair Meyer Explained that the funding was placed in
the Foundation Formula on the request of
the department.
0923 Mr. Jeans Discussed proposed amendments. There is a
request for an increase in the
postsecondary lease for $288 thousand.
The second request is for an increase in
mining & minerals of $40, which was
eliminated last year. This item was $50
thousand in prior years.
1018 Mr. Jeans Reviewed the reduction in pupil
transportation of $876,600 due to fewer
students. The reduction in students means
that the department does not need the
half million in a CPI increase or the
$300 thousand additional money for the
program.
1109 Co-Chair Harris Asked if there would be fewer bus routes
based on the loss of students.
1200 Mr. Jeans Noted that districts are looking at
reconfiguring the way they provide pupil
transportation due to the change in the
funding mechanism for a reimbursable
program to a grant program. He could not
say if fewer students would translate to
fewer routes.
1295 Co-Chair Harris Speculated that the cost of operating a
bus would not be reduced because there
are five less students on the bus.
1235 Vice-Chair Meyer Expressed appreciation for the increase
in the foundation formula. He pointed to
the challenges with no child left behind
legislation and exit exams. He expressed
the desire to add more funding for school
districts, which are facing [increased
costs in] PERS and TRS.
1356 Representative Croft Noted that the formula was changed in the
last year, allowed for costs to only
increase by half of the rate of
inflation. He stressed that inflation is
being under funded. He maintained that
there is a double trap in pupil
transportation.
1421 Mr. Jeans Noted that the department started with
the reimbursable program in the past
year. He thought that pressure by school
districts would eventually lead to the
end of the grant program and
reinstatement of a reimbursable program,
but felt that the rate would be less than
100 percent. He noted that some districts
have lowered their costs. He felt that
the program was beneficial.
1608 Representative Croft Stressed that the need remains and stated
that funding should not be lapsed.
1648 Representative Observed that there is a tendency to
Hawker overlook funding for archives and
museums, which has eroded steadily for
ten years. He stated that he would like
to take a closer look at these budgets.
1752 Vice-Chair Meyer Stated that the subcommittee did look at
these programs and offered to provide
more information.
1809 Co-Chair Harris ADJOURNMENT
The meeting was adjourned at 10:58 A.M.
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