Legislature(2009 - 2010)HOUSE FINANCE 519

03/27/2009 08:30 AM House FINANCE


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Audio Topic
08:37:08 AM Start
08:38:01 AM HB199
10:27:01 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 199 APPROPS: NON-TRANSPORTATION STIMULUS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 27, 2009                                                                                           
                         8:37 a.m.                                                                                              
                                                                                                                                
8:37:08 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Hawker  called the  House Finance Committee  meeting                                                                   
to order at 8:37 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas, Jr., Vice-Chair                                                                                     
Representative Allan Austerman                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Karen  Rehfeld, Director,  Office of  Management and  Budget,                                                                   
Office  of the Governor;  Mike Maher,  Director, Division  of                                                                   
Administrative   Services,   Department    of   Environmental                                                                   
Conservation;  Larry  Persily,  Staff, Co-Chair  Hawker;  Les                                                                   
Morse,  Deputy  Commissioner,  Department  of  Education  and                                                                   
Early  Development;  Mark  Lewis,   Director,  Administrative                                                                   
Services, Department of Education and Early Development.                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
None                                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 199    "An  Act  making  supplemental  appropriations  and                                                                   
          capital appropriations; amending appropriations;                                                                      
          and providing for an effective date."                                                                                 
                                                                                                                                
          HB 199 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
8:38:01 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 199                                                                                                            
                                                                                                                                
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair  Hawker  noted  that  this  hearing  addresses  non-                                                                   
transportation  items in the  stimulus package.  He requested                                                                   
that  committee  members  feel  free  to  discuss  additional                                                                   
unscheduled components.                                                                                                         
                                                                                                                                
8:40:45 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker listed the documents:  "Items Not Included in                                                                   
the March 19  Economic Stimulus Bill" and  "Alaska Department                                                                   
of Labor  and Workforce  Development" "American  Recovery and                                                                   
Reinvestment Act  Unemployment Insurance Modernization  March                                                                   
27,  2009"  and  the programs  to  be  discussed:  education,                                                                   
environmental    conservation,   revenue,   and    employment                                                                   
insurance modernization.                                                                                                        
                                                                                                                                
8:43:27 AM                                                                                                                    
                                                                                                                                
Representative   Gara   requested    information   from   the                                                                   
administration  regarding  federal   "strings  attached."  He                                                                   
admitted finding very few "strings" himself.                                                                                    
                                                                                                                                
Representative  Kelly requested  that written testimony  from                                                                   
Tim Stanton be included in members'  packets. Co-Chair Hawker                                                                   
assured that all submitted written comments were included.                                                                      
                                                                                                                                
8:46:13 AM                                                                                                                    
                                                                                                                                
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE  OF  THE  GOVERNOR,  addressed  Representative  Gara's                                                                   
question.  She related  that  some items  in  HB 199  require                                                                   
statutory  and regulatory  changes.  Any sub-recipient  falls                                                                   
under  state   requirements.  The  state  must   assemble  an                                                                   
internal team  to track and meet the additional  requirements                                                                   
placed on  the federal  grant programs. Other  sub-recipients                                                                   
will be asked if they can meet the required assurances.                                                                         
                                                                                                                                
Ms. Rehfeld explained the expectation  to target the one-time                                                                   
funds and  seek benefits for Alaskans  that do not  build the                                                                   
expectation for  state general  funds when the  federal funds                                                                   
are no longer available. She noted  that new information from                                                                   
the  federal  government  is  continuously  forthcoming.  The                                                                   
current focus is achieving the  best information possible for                                                                   
the best decision  making process. She informed  that written                                                                   
guidance  received  from  the  United  States  Department  of                                                                   
Energy  stating that  the required  assurances  apply to  the                                                                   
state  energy program  only  and exclude  weatherization  and                                                                   
energy efficiency grants.                                                                                                       
                                                                                                                                
8:49:45 AM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld   recommended  viewing  each   assurance  noting                                                                   
requirements at  state and local  levels. She hoped  that the                                                                   
hearing could generate necessary information.                                                                                   
                                                                                                                                
Co-Chair  Hawker  asked  if the  committee  is  wasting  time                                                                   
holding  the  hearing  without   the  governor's  input.  The                                                                   
governor may choose  to not pursue these funds.  He wished to                                                                   
have  assurance that  the governor  is  receptive to  working                                                                   
with the legislature.                                                                                                           
                                                                                                                                
Ms.  Rehfeld  relayed that  the  governor  wishes to  have  a                                                                   
public  discussion and  the legislative  process  is part  of                                                                   
that  discussion.  She  believed   that  the  hearing  was  a                                                                   
positive use of committee time.                                                                                                 
                                                                                                                                
8:52:11 AM                                                                                                                    
                                                                                                                                
Representative  Kelly  requested  a  list  of  new  employees                                                                   
required  for the implementation  of the  stimulus funds.  He                                                                   
wished for communication  with the governor. He  made a point                                                                   
that "productive"  could result in declining  stimulus funds.                                                                   
He expressed concern about the increasing budget.                                                                               
                                                                                                                                
8:54:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  found the process productive  and wished to                                                                   
continue the  dialogue and dispel hyperbole.  Co-Chair Hawker                                                                   
agreed that the process was important.                                                                                          
                                                                                                                                
Representative  Gara rejected  the governor's  idea that  the                                                                   
stimulus money is a "bribe".                                                                                                    
                                                                                                                                
8:56:55 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker suggested beginning  with item #34 " Air Non-                                                                   
Point  Mobile   Source  Stimulus"  with  the   Department  of                                                                   
Environmental Conservation  (DEC). This is a  $2 million item                                                                   
with  projects   including  diesel  emission   reduction  and                                                                   
increased fuel  efficiency of stationary source  diesel power                                                                   
generation in Alaska villages.                                                                                                  
                                                                                                                                
Ms.  Rehfeld reported  that the  Department of  Environmental                                                                   
Conservation (DEC)  currently has an existing  program with a                                                                   
small   grant.  Through   the   economic  stimulus   package,                                                                   
approximately  $2  million  is available  for  a  competitive                                                                   
grant program  to help meet  emission standards  by upgrading                                                                   
generation  capabilities.  She explained  that  DEC does  not                                                                   
have  granting  authority,  which  necessitates  a  statutory                                                                   
change.                                                                                                                         
                                                                                                                                
8:59:47 AM                                                                                                                    
                                                                                                                                
MIKE MAHER,  DIRECTOR, DIVISION  OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT  OF  ENVIRONMENTAL   CONSERVATION,  explained  the                                                                   
details  of  the  Air Non-Point  Mobile  Source  in  the  air                                                                   
quality division.  He acknowledged the small  grant currently                                                                   
available,   which  is   utilized   in   the  Department   of                                                                   
Transportation and Public Facilities  (DOT) for railroad use.                                                                   
He requested a statutory change.                                                                                                
                                                                                                                                
Co-Chair  Hawker asked  if new  funds or  positions would  be                                                                   
required  for the  program.  Mr. Maher  replied  that no  new                                                                   
funds or personnel are required.                                                                                                
                                                                                                                                
Representative  Austerman asked  if prepared legislation  was                                                                   
available  for  discussion.  Mr.  Maher  responded  that  the                                                                   
legislation was pending appropriate language.                                                                                   
                                                                                                                                
Representative Gara asked for  the name of the grant program.                                                                   
Mr.  Maher replied  that the  name was  Air Non-Point  Mobile                                                                   
Source grant.  Representative Gara  asked to know  the amount                                                                   
of  the  grant.  Mr.  Maher  responded  $2  million  and  the                                                                   
required statutory change.                                                                                                      
                                                                                                                                
9:03:21 AM                                                                                                                    
                                                                                                                                
Representative Gara suggested  improving energy efficiency in                                                                   
existing diesel plants  and wondered if these  funds could be                                                                   
utilized. Mr. Maher responded  yes. Representative Gara asked                                                                   
if  the intention  was to  use  the funds  to improve  energy                                                                   
efficiency in existing diesel  plants. Mr. Maher noted that a                                                                   
grant program  for the purpose specified must  be identified,                                                                   
but the DEC has no objection to the concept.                                                                                    
                                                                                                                                
Representative  Fairclough inquired  about the  cost of  fuel                                                                   
following  the  measure of  emissions  in rural  Alaska.  She                                                                   
wondered if the  addition of low sulfur fuel  would raise the                                                                   
cost of fuel in rural Alaska.                                                                                                   
                                                                                                                                
LARRY PERSILY,  STAFF, CO-CHAIR HAWKER, opined  that the cost                                                                   
of  fuel would  remain  constant. He  explained  the goal  of                                                                   
restructuring  already existing  diesel plants for  increased                                                                   
efficiency.  There is  no requirement  to  convert diesel  to                                                                   
low-sulfur fuel. Representative  Fairclough believed the fuel                                                                   
costs increased  in Anchorage following the addition  of low-                                                                   
sulfur fuel.  She commented  that public testimony  mentioned                                                                   
the  use  of  byproducts  from   fish  oil  and  other  waste                                                                   
vegetables as potential methods of energy reduction.                                                                            
                                                                                                                                
Co-Chair  Hawker added  that the  program is  not limited  to                                                                   
low-sulfur  diesel. Mr. Maher  replied that  a wide  range of                                                                   
alternatives  are available for  consideration. He  mentioned                                                                   
the  various technologies  available  from the  Environmental                                                                   
Protection Agency (EPA).                                                                                                        
                                                                                                                                
9:06:25 AM                                                                                                                    
                                                                                                                                
Representative  Kelly  voiced   concern  about  this  program                                                                   
increasing fuel  burning expenses  in rural areas.  He opined                                                                   
that more regulation would not stimulate the economy.                                                                           
                                                                                                                                
Mr.  Maher  said  these  grants   are  applied  for  by  each                                                                   
community with  collective decisions  made about how  best to                                                                   
utilize the  funds. Representative  Kelly reiterated  concern                                                                   
about added  regulations. He maintained  that smog was  not a                                                                   
problem in rural areas, yet other problems do exist.                                                                            
                                                                                                                                
9:08:52 AM                                                                                                                    
                                                                                                                                
Representative Salmon  asked if the villages  could apply for                                                                   
the grants. Mr. Maher replied yes.                                                                                              
                                                                                                                                
Representative Salmon  asked about the intended  goal for the                                                                   
$2 million.  Mr. Maher  replied  that the goal  is to  lessen                                                                   
diesel emissions  in a  variety of  ways. He emphasized  that                                                                   
the department  would  work with the  communities to  improve                                                                   
air quality for people living near the diesel plants.                                                                           
                                                                                                                                
9:10:10 AM                                                                                                                    
                                                                                                                                
Mr. Persily highlighted  one benefit of the  grant program is                                                                   
increasing   fuel   efficiency    by   lessening   emissions.                                                                   
Representative  Salmon mentioned  that some  of the  villages                                                                   
are limited in resources and specialized  parts might lead to                                                                   
excessive future costs.                                                                                                         
                                                                                                                                
Representative Joule  thought the funds required  no specific                                                                   
commitment.  Mr. Maher  reported  that the  department  would                                                                   
work with the  communities if they choose to  apply. He noted                                                                   
that   the  goal   was  efficiency,   not  increased   costs.                                                                   
Representative  Joule  asked  if  applying  for  funds  would                                                                   
commit the  community to converting  to low-sulfur  fuel. Mr.                                                                   
Maher stated  that the  application for  the funds  would not                                                                   
lead to that commitment.                                                                                                        
                                                                                                                                
Representative  Kelly  quoted  the  Alaska  Village  Electric                                                                   
Cooperative (AVEC)  stating that  "coupling use of  ultra low                                                                   
sulfur diesel  with oxidative catalyst or  particulate traps,                                                                   
development and use of fish oil  and vegetable oil, biodiesel                                                                   
and  installation of  anti-idling  technologies" all  concern                                                                   
him. He  thought more  personnel would  be required  as well.                                                                   
Mr. Persily offered  to provide research about  the prior use                                                                   
of  the  grants  along  with  alternative  uses  for  the  $2                                                                   
million.                                                                                                                        
                                                                                                                                
9:15:16 AM                                                                                                                    
                                                                                                                                
Representative  Foster did  not see  employment generated  in                                                                   
the bush  areas as a  result of HB  199. He pointed  out that                                                                   
the  money in  this  bill would  generate  funding for  urban                                                                   
areas.                                                                                                                          
                                                                                                                                
Co-Chair Hawker  asked if  the money would  do any  good. Mr.                                                                   
Maher  thought the  grants and  the  efficiencies would  save                                                                   
money.                                                                                                                          
                                                                                                                                
Representative  Joule  used  the  term  "smart  grid"  as  it                                                                   
applies to  generators. He  wondered whether the  application                                                                   
qualified for this money. Mr.  Maher responded that while the                                                                   
smart grid system  is possible, the grant program  is not yet                                                                   
established.  The  division  does not  currently  have  grant                                                                   
authority and  has not  explored the details.  Representative                                                                   
Joule noted that unanswered questions exist.                                                                                    
                                                                                                                                
Mr. Maher hoped that communities  would apply for the grants.                                                                   
He reiterated  that interested  communities and the  division                                                                   
would communicate the details regarding the grants.                                                                             
                                                                                                                                
9:19:56 AM                                                                                                                    
                                                                                                                                
Representative Gara summarized  that the grants would be used                                                                   
to help communities and to increase  the efficiency of diesel                                                                   
plants.  Mr. Maher  agreed  that  efficiency  is the  intent.                                                                   
Representative  Gara pointed  out that  the governor  has the                                                                   
opportunity to use the money appropriately.                                                                                     
                                                                                                                                
9:21:59 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked  what "Air Non-Point  Mobile                                                                   
Source  Stimulus"  means.  She  listed the  goals  to  reduce                                                                   
diesel emissions and improve fuel  efficiency. She asked what                                                                   
non-point means.  Mr. Maher offered to research  the term and                                                                   
report to the committee.                                                                                                        
                                                                                                                                
Mr.  Persily added  that the  grant program  is optional  for                                                                   
communities.  He also  offered to  seek detailed  information                                                                   
for the committee regarding the grant's name.                                                                                   
                                                                                                                                
9:23:42 AM                                                                                                                    
                                                                                                                                
Representative  Foster spoke of  misleading earmarks  for the                                                                   
bush.  He maintained  that the  money  will be  used to  fund                                                                   
experts from  urban areas.  He requested  that funds  be sent                                                                   
directly to the bush for the short term.                                                                                        
                                                                                                                                
9:24:59 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas reported  that  he receives  four to  five                                                                   
emails a  day about the expense  of fuel in his  district. He                                                                   
stressed that the  state should accept the money  in order to                                                                   
address this problem.                                                                                                           
                                                                                                                                
Representative  Foster wished  for  prior communication  from                                                                   
the department  regarding the  item. Co-Chair Hawker  did not                                                                   
know if  the departments  were free  to speak to  legislators                                                                   
about this issue.                                                                                                               
                                                                                                                                
9:27:22 AM                                                                                                                    
                                                                                                                                
LES MORSE, DEPUTY  COMMISSIONER, DEPARTMENT OF  EDUCATION AND                                                                   
EARLY  DEVELOPMENT,  reported  on  the  organization  of  the                                                                   
funds. The formula funds include  items #4, #5, and #7, which                                                                   
would  increase the  amount of  money  in currently  existing                                                                   
programs.  The  funds  would   be  distributed  to  districts                                                                   
through the current formulas.                                                                                                   
                                                                                                                                
Co-Chair  Hawker asked  which  formula.  Mr. Morse  responded                                                                   
that #4 is  the Elementary Secondary Education  Act (ESEA) as                                                                   
authorized by No Child Left Behind.  The second item includes                                                                   
Title IID or  funds to support the integration  of technology                                                                   
in  education.  He  continued  that  item  #7  addressed  the                                                                   
Individual Disabilities  and Education Act (IDEA)  or special                                                                   
education  funds.  The funds  are  formula funds  that  would                                                                   
require current authorization.                                                                                                  
                                                                                                                                
9:31:27 AM                                                                                                                    
                                                                                                                                
Mr. Morse reported on item #8  addressing state stabilization                                                                   
funds. He noted  that the funds were new. He  stated that the                                                                   
funds require  assurances. These assurances  include progress                                                                   
toward   rigorous   college    standards   and   assessments,                                                                   
establishing   a  pre-K  to   college  career  data   system,                                                                   
improvements  in teacher  effectiveness  and distribution  of                                                                   
highly  qualified   teachers,   and  intensive  support   and                                                                   
effective interventions for the  lowest performing schools in                                                                   
the state.                                                                                                                      
                                                                                                                                
Mr.  Morse reported  that  the  assurances were  designed  to                                                                   
supplement a  gap. If a gap  does not exist, the  funds would                                                                   
be distributed to local agencies  related to Title 1 dollars.                                                                   
                                                                                                                                
9:35:05 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker summarized that  the money must first be used                                                                   
to  "backfill"  if there  has  been  a reduction  in  program                                                                   
funding.  Mr. Morse concurred with Co-Chair Hawker.                                                                             
                                                                                                                                
Representative  Fairclough expressed  concern  that the  vice                                                                   
president of the  Alaska Federation of Natives  would sue the                                                                   
state  if  Alaska  does not  provide  equitable  funding  for                                                                   
schools.  Mr. Morse clarified  that the  funding is  adequate                                                                   
and the unresolved item is not a question.                                                                                      
                                                                                                                                
Co-Chair  Hawker  strongly suggested  that  every  legislator                                                                   
read the Moore Decision in its entirety.                                                                                        
                                                                                                                                
9:37:35 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas asked  about item  #8 and  the repair  and                                                                   
modernization of  school facilities.  He wondered if  the $93                                                                   
million  could address  the major maintenance  list with  the                                                                   
legislature  in  compliance.  Mr.  Morse  understood  that  a                                                                   
district could  make the individual  decision to  address all                                                                   
of their  major maintenance issues  as long as  the decisions                                                                   
comply  with   the  law.  Vice-Chair  Thomas   asked  if  the                                                                   
legislature could employ sidebars  to require specific use of                                                                   
the  funds. Mr.  Morse said  the  intent was  to allow  local                                                                   
school districts to make those decisions.                                                                                       
                                                                                                                                
Vice-Chair  Thomas  thought  participation  in  the  stimulus                                                                   
package would  benefit smaller school districts.  Mr. Persily                                                                   
said  the Federal  Department  of Education  anticipates  the                                                                   
release of more information regarding  stabilization funds on                                                                   
Monday.  Mr. Persily  clarified  that Part  A  of the  fiscal                                                                   
stabilization ($93 million) is  the portion discussed now. He                                                                   
explained that  Part B ($20.7  million) has been  accepted by                                                                   
the governor at the discretion of the legislature.                                                                              
                                                                                                                                
Co-Chair  Hawker asked  if it  is possible  to accept Part  B                                                                   
without accepting Part A. Mr.  Persily understood that Part B                                                                   
cannot be accepted without Part  A. Co-Chair Hawker asked Mr.                                                                   
Morse if  that was his impression  as well. Mr.  Morse stated                                                                   
that  the  department  was  without a  clear  answer  to  the                                                                   
question,  but  he hoped  for  additional guidance  from  the                                                                   
federal government.                                                                                                             
                                                                                                                                
9:41:10 AM                                                                                                                    
                                                                                                                                
Representative  Austerman requested  the written  information                                                                   
cited by  the department.  Mr. Morse  offered to provide  his                                                                   
briefing statements  that were  also presented to  the school                                                                   
districts. He  informed that the United States  Department of                                                                   
Education has  released briefing  sheets as well.  He offered                                                                   
to provide  the requested information  to the  committee. Co-                                                                   
Chair Hawker  offered to distribute the  upcoming information                                                                   
and ensure that it becomes part of public record.                                                                               
                                                                                                                                
Representative  Salmon referred  to the  proposed use  of the                                                                   
money. He wondered  if the money could be used  for operation                                                                   
expenses. He mentioned that the  school district in Tanana is                                                                   
in financial  trouble and he wondered  if the money  might be                                                                   
used to help. He asked about the  distribution system for the                                                                   
funds.  Mr.  Morse  responded  that only  item  #8  is  being                                                                   
discussed now  and operating expenses  would not  be allowed.                                                                   
One  exception is  teachers  funded for  Title  I or  special                                                                   
education.  The  funds are distributed based  on the relative                                                                   
amount  received  in Title  I.  Co-Chair Hawker  requested  a                                                                   
brief explanation of Title I.                                                                                                   
                                                                                                                                
9:44:45 AM                                                                                                                    
                                                                                                                                
Mr. Morse  explained that  Title I  funds serve  economically                                                                   
disadvantaged students. Co-Chair  Hawker asked if all schools                                                                   
qualify. Mr. Morse  said all qualify, but two  districts have                                                                   
not applied for the funds.                                                                                                      
                                                                                                                                
Representative  Joule  spoke   of  major  maintenance  issues                                                                   
versus the challenge  of meeting graduation rates  and opined                                                                   
the funds  should go toward  student enhancement  rather than                                                                   
building maintenance.                                                                                                           
                                                                                                                                
Mr.  Persily  pointed  out that  the  Federal  Department  of                                                                   
Education  would distribute 50%  of the  Title I and  special                                                                   
education  funds next  week. Co-Chair  Hawker clarified  that                                                                   
the funds will be distributed if accepted and appropriated.                                                                     
                                                                                                                                
9:48:08 AM                                                                                                                    
                                                                                                                                
Representative Kelly questioned  Parts A and B. He understood                                                                   
that Part A was  also categorized as item #8 and  Part B is a                                                                   
portion of the $34 million in  item #7. He asked about Part B                                                                   
and  its  location  in  the  committee  packet.  Mr.  Persily                                                                   
answered that Part B is not included  on the list because the                                                                   
governor approved  it. Co-Chair Hawker announced  that Part B                                                                   
is found in the spreadsheet of "included items."                                                                                
                                                                                                                                
Co-Chair Hawker asked if the funds  would lead to stronger or                                                                   
weaker schools.  Mr. Morse replied that any  funding requires                                                                   
a plan that focuses on student  achievement. He believed in a                                                                   
potential for a positive impact with focused planning.                                                                          
                                                                                                                                
9:51:01 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker posited a positive  hypothetical situation of                                                                   
measured  improvement  in  the   schools.  He  wondered  what                                                                   
happens in  two years  when the  funding level is  decreased.                                                                   
Mr.  Morse agreed  that  decreased  funding could  present  a                                                                   
potential problem  without forced proper  planning. Oversight                                                                   
in  distribution of  funds and  follow up  are essential.  He                                                                   
recommended  seeking appropriate  uses for one-time  dollars.                                                                   
He agreed that the risk exists without proper planning.                                                                         
                                                                                                                                
Co-Chair  Hawker  added  that  the  planning  process  should                                                                   
include an  exit strategy. Mr.  Morse reported that  any plan                                                                   
must include "what will you do when the money is gone".                                                                         
                                                                                                                                
Representative  Kelly had  a problem  trusting that  a system                                                                   
that fails  to graduate  4 out  of 10  students will  provide                                                                   
planning  for a delicate  exit.  He wondered  if $500 on  the                                                                   
Base  Student  Allocation  (BSA)   would  be  a  problem.  He                                                                   
commended the  governor on her  acceptance of the  funds that                                                                   
she did deem helpful. He worried about an exit strategy.                                                                        
                                                                                                                                
Larry  Persily  sympathized  with  Representative  Kelly  but                                                                   
education is the largest item  in the stimulus bill. He noted                                                                   
that he was  working with Senator Murkowski on  this issue on                                                                   
the federal level. Remember these  are one-time funds so they                                                                   
need  to  focus  on  short  term   investments  and  one-time                                                                   
programs.                                                                                                                       
                                                                                                                                
Co-Chair  Hawker  acknowledged   these  cited  comments  were                                                                   
received from  federal agencies required to  administrate the                                                                   
funds.  He asked  if  the department  has  a  sense of  their                                                                   
ability  to  exercise  legislative  intent  in  appropriating                                                                   
these funds.                                                                                                                    
                                                                                                                                
9:58:41 AM                                                                                                                    
                                                                                                                                
Mr. Morse  stated that  the department  had a  responsibility                                                                   
and  accountability to  the federal  dollars.  He admitted  a                                                                   
greater  challenge  with  the   acceptance  of  stabilization                                                                   
dollars.                                                                                                                        
                                                                                                                                
Representative  Crawford  requested  focus  on  the  goal  of                                                                   
educating  Alaskan  children.  It  is  also  a  deficit  when                                                                   
Alaskan students fail to graduate,  as important as financial                                                                   
deficit. He opined that an exit  strategy was not possible as                                                                   
the  birth rate  in  our country  has  increased, which  will                                                                   
increase the  number of students  requiring an  education. He                                                                   
recommended increasing  teachers and aides as  opposed to new                                                                   
carpet in the classrooms.                                                                                                       
                                                                                                                                
10:01:49 AM                                                                                                                   
                                                                                                                                
Representative  Austerman  mentioned   the  public  testimony                                                                   
indicating  that   one-time  money  can  be   used  to  train                                                                   
teachers. He  asked if  a requirement to  spend a  portion of                                                                   
the funds on teacher training might be implemented.                                                                             
                                                                                                                                
10:03:03 AM                                                                                                                   
                                                                                                                                
Mr. Morse did not  know if it was that simple.  Many programs                                                                   
are  designed   to  help   students  with  disabilities.   He                                                                   
recommended the  provided approach, especially  with one-time                                                                   
funds. He opined that other strategies  might prove difficult                                                                   
to find.  The specific requirement  must comply  with federal                                                                   
law.                                                                                                                            
                                                                                                                                
10:04:04 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker  warned that the committee would  not proceed                                                                   
beyond  the  education  component   of  the  bill  today.  He                                                                   
recommended a Saturday meeting.                                                                                                 
                                                                                                                                
Representative   Foster   discussed  the   current   national                                                                   
emergency.  He commented on  those Americans  who are  out of                                                                   
work.  He  requested  items  that aid  in  recovery  now,  as                                                                   
opposed to future recovery.                                                                                                     
                                                                                                                                
10:05:55 AM                                                                                                                   
                                                                                                                                
Mr. Morse explained  that most decisions are made  at a local                                                                   
level.  He  recommended  targeting  programs  toward  certain                                                                   
students. Building  a system may require hiring  a specialist                                                                   
teacher  who then  would teach  the rest of  the staff.  This                                                                   
could  be capacity  building.  He recommended  better use  of                                                                   
technology in Alaska to provide  teachers with better content                                                                   
or build  infrastructure  for the  program. School  districts                                                                   
understand how to plan for grants.                                                                                              
                                                                                                                                
10:08:27 AM                                                                                                                   
                                                                                                                                
Representative  Foster  supported  Mr. Morse's  comments.  He                                                                   
asked if the department can foresee  hiring for jobs in areas                                                                   
like Nome.                                                                                                                      
                                                                                                                                
10:09:26 AM                                                                                                                   
                                                                                                                                
Mr.  Morse  recalled  potential  programs  in  Representative                                                                   
Foster's  district. He  was unsure  about the  origin of  the                                                                   
teachers  hired. He  noted that  paraprofessionals are  often                                                                   
trained  from in rural  communities. He  noted that  progress                                                                   
was  necessary  for educational  transitions  and  head-start                                                                   
programs.  The key to  success is  careful planning  and wise                                                                   
use  of  money.  He stated  that  Commissioner  Ledoux  feels                                                                   
strongly that the funds must impact student achievement.                                                                        
                                                                                                                                
10:10:36 AM                                                                                                                   
                                                                                                                                
Mr. Persily noted that the Department  of Education (DOE) has                                                                   
provided  guidance for  the use of  special education  funds,                                                                   
which    includes   purchasing    equipment   and    training                                                                   
professional  staff for  the school district.  He noted  that                                                                   
there  are many  opportunities  for  creativity.  One of  the                                                                   
allowable  uses  suggested  is  for districts  to  work  with                                                                   
employers  in the  community to  develop  job placements  for                                                                   
students with disabilities.                                                                                                     
                                                                                                                                
10:11:21 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker agreed  that  allowable use  of the  funding                                                                   
includes physical  improvements  in classrooms and  classroom                                                                   
structures   which   have  the   potential   to   precipitate                                                                   
additional employment in the community. Mr. Morse agreed.                                                                       
                                                                                                                                
Representative  Gara asked  if the  department believes  that                                                                   
acceptance of the funds will enhance student achievement.                                                                       
                                                                                                                                
Mr.  Morse responded  that the  intent  is to  work with  the                                                                   
school districts  on planning  targeted assistance  to impact                                                                   
student achievement.                                                                                                            
                                                                                                                                
Representative  Gara clarified  that  hiring  teachers is  an                                                                   
action supported  by the  committee. He  continued that  if a                                                                   
school district decides to hire  people in a time of economic                                                                   
crisis, then that is the best way to enhance education.                                                                         
                                                                                                                                
10:13:10 AM                                                                                                                   
                                                                                                                                
Mr. Morse  noted that  the allowable uses  for the  funds are                                                                   
well defined.  The department's  interest is the  improvement                                                                   
of student achievement.                                                                                                         
                                                                                                                                
Representative  Gara pointed  out that  Title 1 schools  have                                                                   
parent outreach coordinators who  work to involve parents. He                                                                   
understood that the  process works. He presented  one use for                                                                   
the Title  I money  as hiring  additional temporary  staff to                                                                   
encourage even greater parent  involvement, which will lessen                                                                   
future  spending.  Mr.  Morse   believed  that  would  be  an                                                                   
allowable  use of the  Title I  dollars. Representative  Gara                                                                   
asked  if the department  has  an impact on  the decision  or                                                                   
does it rest  with the school districts. Mr.  Morse responded                                                                   
that  the  department   distributes  dollars  based   on  the                                                                   
districts'  plans.  Representative  Gara  encouraged  use  of                                                                   
funds for parent outreach.                                                                                                      
                                                                                                                                
10:15:31 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas  requested  that  the  funds  be  used  to                                                                   
address Alaska's increased dropout  rate. He requested a list                                                                   
of Alaskan schools'  dropout rates. He opined  that funds for                                                                   
major maintenance were also important.                                                                                          
                                                                                                                                
10:17:37 AM                                                                                                                   
                                                                                                                                
Representative  Austerman recalled  a prior discussion  about                                                                   
the 62 percent dropout rate. He  understood that the No Child                                                                   
Left Behind  Act creates  a barrier  in reporting the  actual                                                                   
dropout  rates.   He  also   requested  an  accurate   number                                                                   
regarding dropout  rates. He wondered  how acceptance  of the                                                                   
stimulus   funds    might   further   complicate    reporting                                                                   
requirements.                                                                                                                   
                                                                                                                                
10:19:30 AM                                                                                                                   
                                                                                                                                
Mr. Morse  addressed the graduation  rate. He  explained that                                                                   
the measure  for graduation  rate is  the number of  students                                                                   
that graduate  within four years. The baseline  data required                                                                   
by the  federal government  is becoming  clear with  some new                                                                   
baseline documentation.  He understood  that the  requirement                                                                   
is progress in  certain areas. Alaska has made  the necessary                                                                   
progress in  the required areas. With thorough  understanding                                                                   
of the  baselines, the  department feels  confident that  the                                                                   
requirements can be met.                                                                                                        
                                                                                                                                
Representative Kelly  asked if the legislature  can stipulate                                                                   
conditions for the use of grants.                                                                                               
                                                                                                                                
MARK LEWIS, DIRECTOR, ADMINISTRATIVE  SERVICES, DEPARTMENT OF                                                                   
EDUCATION  AND  EARLY DEVELOPMENT,  stated  that  he did  not                                                                   
believe the  state could  introduce additional  requirements.                                                                   
Mr. Persily agreed that additional  requirements not included                                                                   
in federal law could not be added.  He commented on how stern                                                                   
intent  language  could  be.   Co-Chair  Hawker  thought  the                                                                   
federal  language   forthcoming   would  address  the   issue                                                                   
further.                                                                                                                        
                                                                                                                                
10:23:30 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  wondered if  there could  be a contract  or                                                                   
documentation,  memoranda of understanding,  with the  school                                                                   
district  as to  the use  of the  money. He  wondered if  the                                                                   
funds  would actually  remain  temporary.  He  referred to  a                                                                   
letter  from  the  superintendent  of  the  Anchorage  School                                                                   
District  indicating that  the funding  is not temporary.  He                                                                   
voiced  concern about  future events  without the  additional                                                                   
funds.  He  expressed  interest in  making  policy  decisions                                                                   
versus micromanaging school district spending decisions.                                                                        
                                                                                                                                
10:27:01 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker emphasized the  importance of addressing this                                                                   
legislation in a timely manner.                                                                                                 
                                                                                                                                
HB  199  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:29 AM.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
2008 Dropout Rates by District.xls HFIN 3/27/2009 8:30:00 AM
HB 199
2008 Graduation Rates by District.xls HFIN 3/27/2009 8:30:00 AM
HB 199
DOL Powerpoint H. Finance 3-27-09.pdf HFIN 3/27/2009 8:30:00 AM
HB 199
Copy of Economic Stimulus Not Included Op and CIP items.xls HFIN 3/27/2009 8:30:00 AM
HB 199
ES_fact_sheet_labor.pdf HFIN 3/27/2009 8:30:00 AM
HB 199
ARRA Cover 3-6 Final.pdf HFIN 3/27/2009 8:30:00 AM
HB 199
ARRA_IDEA.DOC HFIN 3/27/2009 8:30:00 AM
HB 199
ARRA_SFSF.DOC HFIN 3/27/2009 8:30:00 AM
HB 199
ARRA_Title I.DOC HFIN 3/27/2009 8:30:00 AM
HB 199
Dropout Rate Fact Sheet.doc HFIN 3/27/2009 8:30:00 AM
HB 199
Graduation Rate Fact Sheet.doc HFIN 3/27/2009 8:30:00 AM
HB 199
IDEA_fact_sheet_3-6 Final.pdf HFIN 3/27/2009 8:30:00 AM
HB 199
SFSF_fact_sheet 3.6 Final.pdf HFIN 3/27/2009 8:30:00 AM
HB 199
Title_I_fact_sheet_3-6 Final.pdf HFIN 3/27/2009 8:30:00 AM
HB 199