Legislature(2009 - 2010)HOUSE FINANCE 519
03/27/2009 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| HB161 | |
| HB199 | |
| Adjourn | |
| Start | |
| HB127 | |
| HB35 | |
| HB161 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 127 | TELECONFERENCED | |
| += | HB 35 | TELECONFERENCED | |
| + | HB 161 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 199 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 27, 2009
1:40 p.m.
1:40:35 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:40 p.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
Patrick Gamble, President & CEO, Alaska Railroad
Corporation; Bill O'Leary, Chief Financial Officer, Alaska
Railroad Corporation; Representative John Coghill, Sponsor;
William Hogan, Commissioner, Department of Health and Social
Services; Mike Lesmann, Community Relations Manager &
Legislative Contact, Office of Children's Services,
Department of Health and Social Services; Representative
Cathy Munoz, Sponsor; Vern Jones, Chief Procurement Officer,
Department of Administration; Larry Persily, Staff, Co-Chair
Mike Hawker; Dan Spencer, Director, Division of
Administrative Services, Department of Public Safety; Jo
Ellen Hanrahan, Senior Policy Analyst, Office of Management
and Budget, Office of the Governor; Alison Elgee, Assistant
Commissioner, Finance and Management Services, Department of
Health and Social Services; Guy Bell, Assistant
Commissioner, Department of Labor and Workforce Development;
Tom Nelson, Director, Employment Security Division,
Department of Labor and Workforce Development.
PRESENT VIA TELECONFERENCE
Craig Tillery, Deputy Attorney General, Department of Law;
Jeff Jessee, Chief Executive Officer, Alaska Mental Health
Trust Authority; Harry Noah, Executive Director, Alaska
Mental Health Trust Land Office; Dan Fauske, CEO/Executive
Director, Alaska Housing Finance Corporation, Department of
Revenue; Robert M. Pickett, Chairman, Regulatory Commission
of Alaska; Bob Stoller, Attorney, Regulatory Commission of
Alaska, Anchorage; Bryan Butcher, Director, Government
Affairs and Public Relations, Alaska Housing Finance
Corporation, Department Of Revenue.
SUMMARY
HB 127 ALASKA RAILROAD BUDGET
HB 127 was HEARD and placed in a subcommittee
consisting of Representative Stoltze as chair, and
Representative Fairclough, Representative Joule,
Representative Gara, Representative Foster, and
Representative Kelly.
HB 35 NOTICE & CONSENT FOR MINOR'S ABORTION
CSHB (FIN) 35 was REPORTED out of Committee with
no recommendations and two previously published
fiscal notes: FN1 (LAW), FN2 (HSS).
HB 161 JUNEAU SUBPORT BLDG/AHFC BLDG
HB 161 was HEARD and HELD in Committee for further
consideration.
HB 199 APPROPS: NON-TRANSPORTATION STIMULUS
HB 199 was HEARD and HELD in Committee for
further consideration.
HOUSE BILL NO. 127
"An Act providing that the Alaska Railroad Corporation
is subject to the Executive Budget Act and providing
that expenditures of the Alaska Railroad Corporation
are subject to appropriation; and providing for an
effective date."
1:41:14 PM
Co-Chair Stoltze presented an overview of the day's bills.
PATRICK GAMBLE, PRESIDENT & CEO, ALASKA RAILROAD
CORPORATION, stressed the significance of the bill and
provided history leading up to the state assuming operation
of the railroad. The Alaska Railroad Corporation Act of 1985
provided guidance for the innovative relationship between
the state and the railroad, including a management board.
1:45:52 PM
Mr. Gamble detailed the goal of making the corporation
financially sustainable. The corporation had to be able to
make enough money to turn revenues into capital projects
that would benefit the state, especially connecting the
Railbelt. The corporation was formed in 1985 and reviewed by
the legislature in 1997. He saw the purpose of the current
meeting as a review of conditions to determine the viability
of the original model.
1:48:59 PM
Mr. Gamble presented the committee with a document
summarizing the railroad's performance (copy on file). He
suggested that consultants and lawyers could study and
rewrite the 1985 act if the legislature believes the budget
act requires a deeper review. He referred to the
corporation's 14 percent combined annual growth rate over
the 24-year period.
1:51:52 PM
Co-Chair Stoltze agreed that the policy issue was important
and referred to active debates and criticisms of the
corporation. He thought there was foundational support for
state government having oversight of and responsibility for
the railroad. He referred to earlier concerns.
1:54:49 PM
Representative Gara questioned the ramifications of putting
the railroad under the executive budget act.
Co-Chair Stoltze thought there would be differences of
opinion. His intent was to have little or no day-to-day
oversight of operations. He referred to initial fears that
have not been realized and did not think the changes would
be significant.
1:57:39 PM
Representative Gara asked if the railroad corporation would
submit a budget like other agencies and queried how the
budget process works currently. Mr. Gamble replied that the
budget goes through the board of directors.
Representative Gara questioned language on page 2 related to
the concurrence of the governor.
BILL O'LEARY, CHIEF FINANCIAL OFFICER, ALASKA RAILROAD
CORPORATION, clarified that current language states that the
corporation may request an appropriation from the
legislature; the change would require it to request
appropriations.
Representative Gara asked if the corporation receives state
money outside of the capital budget. Mr. O'Leary responded
that the corporation has not received state funds. Mr.
Gamble added that the corporate act provided for the
corporation going to the legislature for funding if it could
not pay its own way.
2:00:56 PM
Representative Austerman queried the corporation's plans
regarding the legislation. Co-Chair Stoltze stated that
subcommittee hearings would be needed and did not think the
legislation would move through quickly. He hoped for
meaningful input from the corporation regarding the changes.
2:03:36 PM
Representative Gara referred to concerns he had with the
railroad corporation and reviewed past legal cases against
the railroad. He questioned high management salaries and a
sense of an insider club, and stated concerns about the
corporation's status as a "quasi state agency." He thought
the corporation acted either as a state agency or a private
company depending on its own interests. He asked if the
state currently reviewed management salaries.
2:06:58 PM
Mr. Gamble replied that his salary is the only one that is
public information, so he could provide only statistical
information and not information about the salaries of
individuals. He would be able to compare corporation
salaries with those in the Lower 48.
Representative Gara reiterated historic concerns related to
management salaries. Mr. Gamble thought that the issue had
changed since the railroad had downsized in recent years.
Individual actions must go through him. He speculated that
illegal actions may have taken place at one time. He now has
three lawyers and a human resource person overseeing
personnel actions.
Mr. Gamble commented on remarks that the corporation acted
sometimes as a state agency and sometimes as a private one,
opining that the flexibility to do so was part of the genius
of the Alaska Railroad Corporation Act, and has brought
millions of federal dollars into the state. He believed the
ability to operate both ways was an advantage. He commented
that the tax code is unique in the U.S.
2:11:09 PM
Representative Gara wanted assurance that railroad property
would be public property. Mr. Gamble acknowledged the right
to protest on railroad property as long as individuals are
not standing in the right-of-way.
Representative Crawford questioned how workers would be
treated if the railroad came under the federal system,
especially related to retirement contributions.
Co-Chair Stoltze stated that the intent was to have employee
status remain the same.
2:13:25 PM
Mr. Gamble agreed and recommended the issue be examined
closely, as it is complex. In general, anything involving
hiring, wages, or benefits could be affected by outside
control and employees will be concerned. He wanted to
protect benefits. He referred to a letter in the committee
packet from a long-time labor representative on the board
(copy on file). He wanted human resources issues to be
carefully vetted. He referred to a two-year gap in the
corporation's formation process during which some rights
were lost and emphasized his desire to make sure that would
not happen again.
2:16:18 PM
Representative Gara stated an affinity for railroad rank-
and-file workers, and discussed salary requests that were
denied because the corporation claimed to be financially
stressed. He wanted the committee to review management
salaries and bonuses over the past three years and asked if
the figures could be seen if the names of the individuals
were deleted. Mr. Gamble replied that he needed to ask his
lawyers; he did not have a problem with the request. He
thought statistical information compared with other
statistical information might be possible.
Representative Gara wanted the information by position. Mr.
Gamble pointed out that management salaries were currently
frozen. To address revenue loss, there was a hiring freeze
in 2007, positions were reduced in 2008, and a management
salary freeze was implemented in 2009.
2:20:19 PM
Representative Foster liked way the railroad was being run
and questioned the time being spent on the legislation.
2:23:15 PM
Representative Kelly asked if there were a list of problems
with the railroad.
Co-Chair Stoltze did not want a list of grievances. He
believed the legislation dealt with long-term institutional
questions and policy issues.
Representative Kelly queried the number of unresolved labor
grievances. Mr. Gamble offered to get the information. He
thought the number was a high average.
Representative Kelly asked about dividends. Mr. Gamble
replied that the issue has come up, although not recently.
Representative Kelly asked about the quality of the current
board. Mr. Gamble spoke positively of the board.
Representative Kelly asked if the corporation's unfunded
liability was included in the state's unfunded liability.
Mr. Gamble responded that the corporation's entitlements,
such as retirement and post-retirement medical are paid for
out of earnings and not out of the Public Employee
Retirement System (PERS). The entitlements went down with
the economic downturn; there is currently 80 percent funding
for retirement.
2:28:43 PM
Representative Kelly queried the sunset date.
Representative Fairclough volunteered to be on the sub-
committee. She relayed that her constituents have had
problems with the railroad. She mentioned conflict with the
port in Anchorage. Constituents have also expressed concern
regarding rail straightening.
Co-Chair Stoltze emphasized that the broader policy issue is
related to budget concerns. He acknowledged the existence of
many complaints related to the railroad, but did not think
it would be productive to bring them before committee. He
appointed the subcommittee with himself, Represented Joule,
Representative Fairclough, Representative Gara,
Representative Foster, and Representative Kelly. He invited
the public to call his office with comment.
2:31:57 PM
HB 127 was HEARD and placed in a subcommittee consisting of
Representative Stoltze as chair, and with Representative
Fairclough, Representative Joule, Representative Gara,
Representative Foster, and Representative Kelly.
HOUSE BILL NO. 35
"An Act relating to notice and consent for a minor's
abortion; relating to penalties for performing an
abortion; relating to a judicial bypass procedure for
an abortion; relating to coercion of a minor to have an
abortion; relating to reporting of abortions performed
on minors; amending Rule 220, Alaska Rules of Appellate
Procedure, and Rule 20, Alaska Probate Rules, relating
to judicial bypass for an abortion; and providing for
an effective date."
2:33:50 PM
REPRESENTATIVE JOHN COGHILL, SPONSOR, provided history of
the legislation and spoke to anticipated amendments.
Representative Gara referred to a request from the
Department of Health and Social Services (DHSS) regarding
the issue of consent from foster parents and guardians.
Co-Chair Stoltze asked whether Commissioner William Hogan
had designated someone to answer the question.
Representative Coghill did not know the answer. He had
questions regarding how many young teens under foster care
have sought abortions.
2:36:17 PM
Representative Austerman queried the version of the bill
before the committee. Representative Coghill replied that he
had introduced version A as the version that had been
significantly amended in committees during the previous
legislature. He stated that the version was a compromise for
him.
Co-Chair Stoltze clarified that a previous committee had not
amended the bill.
Representative Foster reported that his rural district was
83 percent Native and that they valued human life. He
referred to historic high fatality rates and how those
affected child rearing in the present. He did not think
there was an issue with abortion in the past and noted that
getting an abortion in the present requires traveling long
distances at high expense. He thought the bill pertained
more to people in urban areas.
2:39:35 PM
Co-Chair Stoltze brought up the issue of amendments.
Representative Gara told the committee that he was open to
feedback and that he did not plan to introduce all the
amendments. He did not believe a fiscal note from DHSS would
change the mind of committee. He referenced statements
during the previous legislature regarding accurate fiscal
notes, and requested one from DHSS before introducing
amendments to the bill.
Co-Chair Stoltze replied that DHSS had been asked for the
fiscal note and could not explain why it was not there.
Representative Coghill added that information was needed
regarding how many female foster care teens would be in
state custody and how many have chosen to elect for an
abortion. He pointed out that there are no rules or
restrictions at present related to foster care teens who
seek an abortion, so the state cannot know the numbers.
Co-Chair Stoltze felt that the question was legitimate.
Representative Coghill stated that he was open for
discussion but that time is running out.
2:43:43 PM
Representative Fairclough requested additional information
regarding previous testimony by Dr. Whitefield, specifically
the 48-hour notice for parents and medical complications
that might require a faster abortion.
Representative Coghill replied that the 48-hour waiting
period would be a legal question. He noted the concurrent
nature of the waiting period. He disagreed with the charge
that the waiting period was restrictive and believed that it
allowed for planning and communication. He referred to a
U.S. Supreme Court case regarding the issue, and quoted:
"The 48-hour delay provides the parents the opportunity to
consult with his or her spouse, family physician to inquire
into the competency of the abortion doctor and to discuss
the decision on religious moral implications with the minor,
and provide needed guidance and counsel on how the decision
will affect their future. The delay imposes only a minimal
burden on the minor's rights."
Representative Coghill added that another issue was where
the pregnant teen lived. Whether she lived in an urban or
rural area, the teen would not be able to get a pregnancy
test one day and abortion the next. The process takes three
days; notification follows a similar timeline.
2:47:00 PM
Representative Coghill continued that the emergency medical
issue was a separate legal question. He had asked Dr. Jay
Butler, Alaska's Chief Medical Officer, who believed that
the medical instability mentioned on page 2, line 29 is open
to interpretation by medical doctors. He was open to an
amendment to clarify the language; however, Dr. Butler also
said that the remaining language regarding a doctor's
judgment about what constitutes a medical emergency was very
clear.
Representative Fairclough felt that the medical emergency
language in the bill needed to be revisited to clarify what
a doctor needed to do. She asked about the judicial bypass.
She mentioned public testimonies given regarding pregnancies
caused by incest and questioned the necessity of a second
signature for the judicial bypass.
2:49:59 PM
Representative Coghill directed attention to page 3, which
discusses the issue of minors being a victim of abuse. He
clarified that it was not judicial bypass, but bypass of the
judicial system. A court hearing is not required, only a
signed statement and a witness that is knowledgeable of the
abuse. He stressed that he did not want to create loopholes
for perpetrators. He felt that having a witness to the
signature was wise.
2:51:39 PM
Representative Fairclough shared from personal experience
the difficulty in identifying sexual abuse of a minor
because of delays in reporting and the lack of physical
evidence.
Representative Gara felt that everyone on the committee
would agree about the importance families having open
dialogue about the issues. He had questions about the 48-
hour waiting period, and the court process with the
affidavit. Regarding the 48-hour waiting period, the bill
requires a pregnant minor and her parent to first talk about
the pregnancy and come to a decision. Then the bill requires
the family to wait another day. A family from a rural area
would have to stay in a hotel the two days. He agreed that
the family should talk; he questioned the law requiring them
to wait two days after talking.
2:54:33 PM
Representative Coghill reiterated the concurrent nature of
the waiting period. He thought the question was more
appropriate for families from urban areas. He quoted the
U.S. Supreme Court ruling: "The states' 48-hour waiting
period is necessary to enable notified parents to consult
with their daughters or their physicians so if they so wish
results in a little or no delay, and therefore is
constitutional." He thought the notification was appropriate
to allow for family deliberation.
Representative Gara believed the bill worked if the family
is perfect, but all families are not prefect. He gave a
hypothetical example illustrating the problem with the 48-
hour waiting period. He questioned the family having to wait
after making a decision.
2:56:49 PM
Representative Coghill believed that 48 hours is a small
period of time given the circumstance. He considered the
wait an opportunity for deliberation. He outlined a possible
series of events. He did not think the waiting period was
unreasonable. He thought it was a notification issue.
Co-Chair Stoltze asked that the discussion focus on
amendments.
Representative Gara informed the committee that he would not
offer an amendment on the 48-hour waiting period. He
reiterated his desire for a response from DHSS.
Co-Chair Stoltze agreed that the question was pertinent.
Representative Joule spoke to the importance of fiscal notes
for the Finance Committee. He thought the administration
should provide the information to the committee.
Representative Coghill repeated his commitment to finding
the requested information. He admitted he had not written to
any department head for the fiscal note.
3:02:27 PM AT EASE
3:23:03 PM RECONVENED
WILLIAM HOGAN, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, apologized to the committee regarding the fiscal
note.
Representative Gara asked for clarification about how the
legislation would apply to foster children, especially
regarding who would give consent.
Commissioner Hogan explained that the state takes over
guardianship and makes decisions either directly or with the
courts in foster care situations where parental rights have
been terminated. If parental rights have not been
terminated, DHSS would continue to work with the guardian or
natural parents to make the best decision regarding the
child.
3:25:35 PM
Representative Coghill added that the minor is free to go to
court without the custodian's knowledge and have someone
assigned to them at no charge, regardless of whether the
parents or the state is the custodian. He thought the real
question is what would happen if the minor seeks to avoid
consent from the state.
Representative Gara reiterated that the bill works for good
families where the minor has support. He was concerned about
the others the bill will affect: the 2,000 children in the
state who are in the foster care system, plus many others in
bad circumstances in their families.
Representative Gara asked whether a minor in foster care
would have to get parental consent if the guardian is still
the parent who is not living with her. Commissioner Hogan
thought the practice would be to talk to the natural
parents.
3:28:00 PM
Representative Coghill explained that the minor could seek
emancipation if a minor in state custody was in a situation
with parents who did not care.
Representative Gara asked how emancipation would occur for a
pregnant minor who has deadlines. Representative Coghill did
not know the details. He did know that a minor must
demonstrate the ability to be self-sufficient in order to
gain emancipation; such a person could seek an abortion
without consent.
Representative Gara asked for further clarification.
Commissioner Hogan explained that the child protective
services system first tries to reunite kids with their
families. When that is not possible, the next step is to
seek placement outside the home. He added that much depends
on the minor's history with the family and noted that all
decisions about the child's status are made through the
court.
Co-Chair Stoltze asked if Representative Gara's questions
would lead to an amendment to provide a focus for the
discussion.
3:32:43 PM
Representative Gara stated that his focus was that the bill
has been around for six years and no one has considered how
it would work in a foster care situation. He wanted the
information before he put together an amendment. He did not
want one law for minors with parents that required minors in
foster care to go to court.
Representative Gara asked what would happen for a minor who
is in foster care but the natural parent is still the
guardian. Commissioner Hogan pointed out that the described
situation applies to the typical child who first enters the
foster care system. The state must determine over time if
the family can be reunited. The intent is to keep the family
together if possible.
Representative Gara thought it might be unhealthy to make a
child obtain consent from a parent who does not take care of
her anymore. Commissioner Hogan agreed.
Representative Gara asked if those children would then have
to go to court and wondered if that would be healthy in a
torn family. Commissioner thought the child would have to go
to court. He acknowledged the difficulty of the decision. He
thought the state would go to court but try to make the
process as easy as possible.
3:36:18 PM
Representative Gara asked whether social work staff would be
involved in the process. Commissioner Hogan answered that
social work staff would be involved.
Representative Coghill added that current law provides only
minimal protection. A child abused while in the foster care
system could be coerced by the perpetrator to get an
abortion without anyone's consent, even if the minor is in
state custody. House Bill 35 would provide recourse for the
minor; she can appeal without costs to herself. She can go
directly to a doctor or some other adult and make an appeal
for an abortion.
3:38:01 PM
Representative Gara referred to statistics showing that
approximately 50 percent of youth in foster care end up
pregnant before age 18. Commissioner Hogan thought the
number seemed high and offered to get figures.
Representative Gara speculated that additional staff would
be needed if the statistics were high. Commissioner Hogan
thought that all child protective service workers should
have the skills needed and did not believe the department
would need additional staff. He noted that the department
has increased staff training.
3:39:26 PM
Representative Gara requested clarification regarding the
training. Commissioner Hogan reported that the department
had implemented new training in January 2009.
Representative Gara asked who would be the guardian if
parental rights had been terminated but the minor has not
been assigned a foster care placement.
Commissioner Hogan replied that the state would be the
guardian; regulations would be needed specifying who that
would be. He thought the courts should also be involved.
Representative Gara expressed alarm at a federal review
reporting that social workers do not see youth more than
once every eight months in 30 percent of cases. Commissioner
Hogan did not recognize the exact statistic but agreed that
the state needs to see youth in foster care more often.
Representative Gara wondered if social workers did not know
foster children well in many circumstances. Commissioner
Hogan hoped that the social worker would develop a
relationship with the child.
3:42:17 PM
Representative Gara asked if there were cases where the
social worker did not spend the necessary time. Commissioner
agreed that that does happen on occasion.
Representative Crawford described experience with the foster
care system. In the four years he had a foster child during
an adoption process, the social worker visited once per
year. When they called with questions, they sometimes did
not get an answer for a month. The state had explained that
there is less contact with a stable family; others might
have had real problems. He felt the foster care system was
understaffed and overworked in Alaska.
Commissioner Hogan hoped that the system would respond
better to foster parents and that calls would be returned
promptly. He emphasized the importance of foster families
and apologized.
3:45:55 PM
Representative Crawford emphasized that he was not trying to
fault social workers, but when the timing was as critical as
it would be for a pregnant teen, the system had to respond.
Commissioner Hogan agreed.
Representative Gara pointed out that in his experience
foster youth feel like different rules apply to them. He
asked if there could be psychological damage if a foster
child was told they must go to court. Commissioner Hogan
responded that the state tries to be sensitive to what a
foster child needs and works hard to not make the child feel
different.
3:48:59 PM
Representative Gara wanted a pregnant minor without a stable
family to consult with an adult in making decisions. He
wondered if the emphasis in the legislation could be on
giving notice rather than requiring consent. Commissioner
Hogan pointed out that the bill is about consent, not
notification. He stated that the department supports
Representative Coghill's bill, although it would be willing
to work on language.
3:52:29 PM
MIKE LESMANN, COMMUNITY RELATIONS MANAGER & LEGISLATIVE
CONTACT, OFFICE OF CHILDREN'S SERVICES, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES, detailed the Alaska statute related to
a parent's residual rights (AS47.10.084). Under residual
rights, birth parents have the right to consent to major
medical procedures. If the child is in state custody, state
staff is absolutely not authorized to consent to a non-
emergency major medical procedure; parents approval are
required unless the parent's rights have been terminated by
the court. If the parent is not willing to give consent, a
court order is required in order for the procedure to take
place.
Representative Coghill added that the parental rights law
did not apply to abortion, which was one of the reasons he
thought HB 35 was necessary. The courts have been trying to
figure out for years how to balance the rights.
3:54:45 PM
Co-Chair Stoltze observed that the bill had not been amended
to date and thought it would be amended on the House floor.
Representative Gara repeated concerns about expecting a
child to obtain consent from a parent who has not been
involved. He did not want a social worker or judge who does
not know the child to be able to override the child's
decision. He wanted a child to have someone rational and
caring to talk to.
Representative Coghill responded that when someone is in
state custody, there is a legal conundrum regarding who
should give consent. However, a minor has the right to
bypass the legal guardian. A judge would consider the
maturity of the minor and the level of stress created by the
circumstances. The judge could be a rational decision maker.
There could be other rational persons, including the social
worker.
3:58:19 PM
Representative Gara wanted to know for the record the
average tenure of a social worker at the Office of
Children's Services. Commissioner Hogan thought a social
worker tended to stay two to two and a half years; after
that length of time, they tended to stay longer. He added
that the vacancy rate was down.
3:59:38 PM
Representative Gara wanted language in the legislation
stipulating that it applied to good families. Representative
Coghill responded that four out of five parts of the bill
are targeted for people in less than good circumstances.
Representative Gara did not like one of the ways to get out
of parental consent, which is to go to a judge that does not
know the child. He also did not like a second way, which
says a child's affidavit is not good enough, that there must
be another witness to the abuse who signs an affidavit.
Co-Chair Stoltze asked for amendments. As there were none,
he turned to the fiscal notes.
Commissioner Hogan spoke to fiscal note number 2 by DHSS,
explaining that it was indeterminate because the department
did not know which minors enrolled in Medicaid had consent
from a parent or guardian; the department does not require
consent. He indicated the explanation for costs for
abortions and qualifications connected with the Hyde
amendment. He stressed the difficulty in finding a dollar
amount.
CRAIG TILLERY, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW
(via teleconference), commented regarding indeterminate
fiscal note number 1 by the Department of Law (LAW). He
explained that LAW does not put anticipated litigation costs
into fiscal notes; the department tried to provide the
committee with information that would give an idea of
potential costs involved with litigation. He opined that
litigation is likely; the last time a similar law was
litigated, LAW ended up spending approximately $500,000 on
the case. Both in-house and outside counsel were used in the
case. In addition, there was a court award of $940,000 to
the prevailing party against the state. He anticipated that
in future the state would make every effort to litigate in-
house. He thought that costs would be in the $300,000 to
$400,000 range. In addition, there would be court award
costs depending on who won the case.
4:04:23 PM
Representative Gara asked if Mr. Tillery had read the bill
and the court opinion declaring the last similar law
unconstitutional. Mr. Tillery responded in the affirmative.
Representative Gara pointed out that the last decision had
determined that the parental consent part of the law was
unconstitutional. He asked if the court might make a similar
determination again about parental consent. Mr. Tillery
responded that it was not a foregone conclusion that the law
would be declared unconstitutional, although he was not
predicting that response again from the court as the vote
was close the last time. House Bill 35 modifies the previous
law in a way that brings the law closer to the majority
opinion that struck it down. In particular, HB 35 adds an
exception, a victim of documented abuse, with respect to
judicial bypass. In terms of time and ability to navigate
the system, HB 35 reduces the time from five business days
to three business days; it also reduces appeal time from
nine days to eight days. The new proposed law also provides
a confidential form for school excuse for a hearing. He
added that at least two of the justices will have changed,
which could affect a new decision.
Representative Gara requested an explanation of the concept
"stare decisis." Mr. Tillery explained that "stare decisis"
indicates that when faced with a similar situation that has
been previously ruled on by a court, the court will continue
with the ruling in order to provide some certainty to the
way people order their affairs, unless the situation has
dramatically changed. Changes could be those in the bill
itself, or changes in social mores. He did not believe stare
decisis would play a large role because the court, by the
very nature of its analysis, would be determining whether
there have been sufficient changes in the law to allow it to
be declared unconstitutional.
4:08:02 PM
Co-Chair Hawker MOVED to REPORT HB 35 from Committee with
individual recommendations and attached fiscal notes.
Representative Gara OBJECTED.
Co-Chair Hawker WITHDREW the MOTION.
Representative Gara MOVED Amendment 1:
1. Page 2, lines 3-4:
Following "notice":
Delete "and consent"
2. Page 3, lines 7-8:
Following "performed":
Delete "and the parent, legal guardian, or
custodian has consented in writing to the
performance or inducement of the abortion"
3. Page 3, lines 10-11:
Following "notice":
Delete "and consent"
4. Page 3, lines 13-14:
Following "notice":
Delete "and consent"
5. Page 5, line 5:
Following "to":
Delete "and the consent of"
6. Page 5, line 8:
Following "to":
Delete "or the consent of"
7. Page 5, line 17:
Following "to":
Delete "or the consent of"
8. Page 5, lines 20-21:
Following "notice to":
Delete "or the consent of"
9. Page 5, line 24:
Following "the":
Delete "consent of"
Insert "notice to"
10. Page 6, line 7:
Following "to":
Delete "or the consent of"
11. Page 6, line 11:
Following "such":
Delete "consent"
Insert "notice"
12. Page 6, line 27:
Following "to":
Delete "or the consent of"
13. Page 6, line 30-31:
Following "to"
Delete "or the consent of"
14. Page 8, lines 15-16:
Following "to":
Delete "and the consent of"
15. Page 8, line 25:
Following "to":
Delete "and the consent of"
16. Page 9, line 18:
Following "to":
Delete "and the consent of"
17. Page 9, lines 30-31:
Following "to":
Delete "or the consent of"
Representative Fairclough OBJECTED.
Representative Gara explained that the amendment says it is
fine to give a non-abusive family notice that the minor is
pregnant and seeking an abortion so that the family can
discuss the matter, but that consent is not required in
cases where consent seems impossible, such as from a foster
parent who has not seen the child for two years. Since he
did not know how to word the amendment, Representative Gara
WITHDREW Amendment 1.
Representative Gara MOVED Amendment 2:
Page 3, lines 20-28:
Delete all text.
Co-Chair Hawker OBJECTED.
Representative Gara detailed that Amendment 2 addresses an
exception on page 3 that the child does not have to go to
court if the child is the victim of physical or sexual abuse
but needs a second witness to the abuse. In a small town,
the abusive parent who the child is trying not to tell might
find out. The amendment says that the second witness might
be the abuser or the abuser's spouse; the minor may not be
able to secure the second witness statement. Amendment 2
says the minor's affidavit is enough.
Representative Coghill objected to the amendment. He
asserted that the purpose of the list is to protect the
minor in cases of abuse, and that abusers could pressure a
minor to go to a doctor for an abortion.
4:13:33 PM
Representative Gara clarified that the amendment has to do
with page 3, line 20. He thought all could agree that a
parent who physically abuses a child loses the right to
consent. However, in order for the minor to comply, the
minor must fill out the affidavit and then find someone with
personal knowledge of the abuse. He pointed out that there
may not be another person with personal knowledge to fill
out the second affidavit. He thought requiring the second
witness would make the provision unusable.
4:15:02 PM
Representative Coghill disagreed. He referred to testimony
by people who had reached out to minors and found it
improbable that no one would know about the abuse. His
primary concern was for the minor.
Representative Kelly stated that in a chaotic situation, the
default position is that someone dies; he would opt for the
keeping someone alive. He supported the legislation, while
acknowledging that it is not perfect. He believed DHSS would
help. He placed equal value on the unborn child and the
minor.
4:20:17 PM
Representative Gara WITHDREW Amendment 2. He thought the
problem with the amendment reflected the problem with the
bill. He thought government was bad on how people should
communicate within their home. He stressed that he did not
believe that the victim of any abuse should have the duty to
go to the abuser to get consent for an abortion.
4:21:38 PM AT EASE
4:26:29 PM RECONVENED
Representative Gara indicated that he would not be offering
Amendment 3.
Representative Gara MOVED Amendment 4:
Page 7, line 25:
Following "have":
Insert "or refrain from having"
Co-Chair Hawker OBJECTED.
Representative Gara took issue with Section 9 of HB 35. He
believed it should be a crime to coerce someone to have an
abortion. Coerced is defined as to "restrain or dominate a
minor by force, threat of force, deprivation of food,
support, or shelter." He did not think the committee should
take sides in the pro-life or pro-choice debate; both
forcing someone to have an abortion and forcing someone not
to have an abortion should be a crime. He intended Amendment
4 to balance the bill.
Representative Coghill asserted that the bill's purpose was
regulating abortions, not regulating the decision whether to
have one. He agreed that coercion is bad in many cases, but
did not think the issue was coercion.
Co-Chair Hawker MAINTAINED his OBJECTION.
Representative Gara argued that the amendment was
appropriate to the bill, and that the bill was about
abortion. He turned to page 7, line 25, which says that a
person may not coerce a minor who is pregnant to have or
refrain from having an abortion. He agreed with the part of
the bill that wanted families to talk about the issue, but
the amendment did not relate to that part of the bill. He
did not want to create a crime that makes those on the pro-
life side of the issue happy but discriminates against those
on the pro-choice side of the issue. He did not want to
protect minors who decide not to have an abortion and not
protect minors who do decide to have one when the decision
is legal.
4:30:31 PM
Representative Kelly expressed reluctance to force lawyers
on everyone who is counseling the minor against abortion.
Representative Coghill repeated that the bill intends to
protect the minor if she chooses to have the baby. Should
she choose not to have the baby, she would have to
demonstrate maturity. He thought part of the question
related to an immature person choosing to have an abortion.
The amendment would strike at the parental consent part. The
legal question would be that a parent disagreeing with a
minor about having an abortion could be portrayed as
coercion. He maintained that the measure is about the
regulation of abortion.
Representative Coghill argued the legitimacy of the question
of maturity; many other statues address the issue. He read a
statement by the Alaska Association of School Boards on
maturity: "Students who have not yet graduated from high
school are too young to make the life-changing decision to
forego basic education." He maintained that accepting the
amendment would result in a legal challenge to coercion.
4:34:12 PM
Representative Crawford thought it would be wrong to force a
child to have an abortion when she did not want one, but it
would also be wrong to coerce the minor to do what they
wanted by withholding food or shelter. He acknowledged the
difficulty of the issue.
Representative Austerman pointed out that the whole bill
would be legally challenged, not just the part of the bill
that would be affected by the amendment.
Representative Coghill reported that he had been told by the
American Civil Liberties Union (ACLU) and Planned Parenthood
that they definitely intended to challenge the measure. He
stressed that he did not like coercion, but maintained that
the section of the bill addressed by the amendment relates
to coercion and opens the door to legal challenge.
4:38:50 PM
Representative Gara asserted that the bill would be
challenged.
Representative Coghill did not think the issue was so clear.
He read part of the Supreme Court decision saying that the
relocation of fundamental right from minors to parents is
"constitutionally suspect." He thought the court was very
definite that the parents had the right and definite that
the minors are immature in their choices. The Supreme Court
was looking for less restrictive means; he believed less
restrictive means were crafted into HB 35.
Representative Gara understood the philosophical points, but
pointed out that the amendment was narrower. He did not
believe it was right to have a law that made it a crime if a
person was coerced into having an abortion, but would not
stand behind a person who is coerced to not have a legal
abortion. He asserted that the amendment says that either
kind of coercion should be illegal.
A roll call was taken on the motion.
IN FAVOR: Crawford, Gara, Joule, Salmon, Austerman
OPPOSED: Fairclough, Foster, Kelly, Thomas, Stoltze, Hawker
The MOTION FAILED (5-6).
4:43:03 PM
Representative Gara MOVED Amendment 5:
Page 2, line 27:
Following "death":
Insert "or a substantial risk to the minor's
health"
Page 2, line 28-30:
Delete all text.
Co-Chair Stoltze OBJECTED.
Representative Gara explained that the bill has a provision
that says that in the case of a medical emergency, the
doctor can perform an abortion to save the minor from
physical harm or death. He thought the wording was
difficult. On line 29, the bill says that the physical harm
that would be avoided must be proved to be irreversible. He
asserted that a doctor cannot always know if the injury is
irreversible; a doctor could be subject to criminal
prosecution. The amendment would clarify that in a medical
emergency, an abortion can be performed if necessary to
prevent death, or to prevent serious risk to the minor's
health.
Representative Coghill responded that he would object less
to the amendment if it said to "physical health" so that it
would not be open to a subjective interpretation.
Representative Gara agreed and offered an amendment to
Amendment 5, to insert the word "physical" before "health."
There being NO OBJECTION, it was so ordered.
Co-Chair Stoltze asked if there was continued objection to
Amendment 5 as amended.
Representative Kelly OBJECTED.
Representative Coghill stated that he would not speak
against the amendment.
Representative Kelly WITHDREW his OBJECTION.
There being NO further OBJECTION, it was so ordered.
Amendment 5 as amended was PASSED.
Co-Chair Hawker MOVED CSHB (FIN) 35 from Committee with
individual recommendations and attached fiscal notes.
4:49:51 PM
Representative Gara OBJECTED for discussion. He thought the
main part of the bill presents legitimate discussion. He
wanted minors to discuss matters such as abortion with their
parents. However, he did not know how a law could be written
to require families to talk to one another, especially when
the family is dysfunctional or when the minor does not have
a family. He had concerns about foster children in
particular. He took issue with a provision in the bill that
states that there has to be a 48-hour wait after a parent
consents to a minor's abortion. He pointed out that
legislative researchers reported that there is no 48-hour
waiting period for any other procedure in Alaska. He thought
the provision was disrespectful to the parent's choice. He
reiterated concerns about the second person required to sign
an affidavit.
4:52:44 PM
Representative Kelly agreed that the bill was a very
difficult one. He opined that the default position should be
choosing life and not death in a confusing and chaotic
situation. He thought the sponsor had found a balance.
Representative Joule thought the issue was highly charged
and he appreciated the respectful tone of the debate.
4:55:13 PM
Representative Crawford concurred that the issue is tough.
He discussed his views of abortion and the topic of when
life begins. He pointed out that there were abortions before
it was made legal, and conjectured that there would still be
abortions if they were made illegal. He believed that
Planned Parenthood had reported that there were 18 in the
past year that HB 35 would have covered; 14 of the girls had
involved parents and 4 did not. He feared that HB 35 would
force the four to have underground abortions and questioned
whether the bill would fix the problem it was purporting to
fix. He emphasized his desire to pass legislation that would
not have unintended negative consequences.
4:59:40 PM
There being NO further OBJECTION, it was so ordered.
CSHB (FIN) 35 was REPORTED out of Committee with a no
recommendations and two previously published fiscal notes:
FN1 (LAW), FN2 (HSS).
Representative Foster noted that in the Bush, hospitals fall
under federal guidelines and are exempt from state
regulations. The doctors and nurses answer to other laws. He
wondered if Bush hospitals still operate this way.
Co-Chair Hawker noted that Commissioner Hogan would get a
formal response to the question.
5:02:08 PM AT EASE
5:12:00 PM RECONVENED
HOUSE BILL NO. 161
"An Act relating to the Alaska Mental Health Trust
Authority Subport Office Building; authorizing the
issuance of certificates of participation for
construction of the building and authorizing the use of
up to $25,000,000 from the mental health trust fund for
construction of the building; approving leases of all
or part of the building by the Department of
Administration; and providing for an effective date."
REPRESENTATIVE CATHY MUNOZ, SPONSOR, spoke in support of HB
161 and introduced several people who could answer questions
regarding the legislation.
5:14:18 PM
Representative Munoz informed the committee that HB 161 was
introduced on behalf of the Alaska Mental Health Trust
Authority (AMHTA) so that the trust could develop a piece of
property in the subport area in downtown Juneau. She
explained that the plan calls for the construction of an
office building that will house approximately 500 state
employees.
Representative Munoz added that a primary mission of AMHTA
is to develop land that it holds throughout the state. For
many years, the trust has viewed the subport property as a
top development priority. She pointed to a critical need in
Juneau for office space; two of the state facilities are
aging and face immediate renovation costs of approximately
$8.5 million. In addition, both facilities will need to be
replaced in the future. The Department of Fish and Game
(DFG) building in Douglas is nearly 50 years old, and the
Department of Public Safety (DPS) building downtown is about
40 years old. The DPS building was constructed in 1970; the
intent was to use it for ten years. A lease on the third
facility, the Department of Labor (DOL) building, is due to
expire soon. The state will need to find replacement space
for approximately 300 DOL employees.
5:16:10 PM
Representative Munoz listed four key points regarding the
legislation:
· Over the life of the lease, the state will save
approximately $13 million.
· The trust is allowed to develop a key land holding,
which will provide a stable and dependable revenue
stream for beneficiaries of the trust.
· As land owner, the trust provides the land and half the
construction costs, or approximately $22.7 million.
· The state, in partnership with the trust, is able to
meet a critical space need for around 525 state
employees, and agrees to bond an equal amount of
approximately $22.7 million, with the lease payments as
security on the bonds.
Representative Munoz emphasized that timing is crucial. In
order for the project to work, enabling legislation must
happen in the current session, as the DOL lease expires in
1012.
5:17:47 PM
Representative Foster opined that the bill was the best he'd
ever heard.
Representative Crawford agreed and asked if the legislation
would be under the state's prevailing wage law.
Representative Munoz did not know but offered to find the
answer.
Vice-Chair Thomas asked who owns the building being vacated.
Representative Munoz answered that the state of Alaska owns
the DPS facility on Willoughby Avenue and the DFG building
in Douglas. The DOL facility is owned privately by a family
who lives outside of Alaska.
Vice-Chair Thomas wondered what the Department of
Administration planned for the two state-owned facilities.
Representative Munoz replied that the buildings would
probably be torn down and the property sold for mixed
development such as housing.
Vice-Chair Thomas queried if the proposal included funds to
tear the buildings down. Representative Munoz responded that
the legislation does not provide for demolition costs.
Vice-Chair Thomas hoped there was a plan. He had seen school
districts burdened with old buildings after erecting new
ones. Representative Munoz explained that the state planned
to take the DPS facility down and put in additional parking
for the area. There was also discussion about using the
facilities for things such as record storage.
5:21:36 PM
Representative Austerman wondered if parking space would be
lost in the downtown area with the new construction.
Representative Munoz replied that the facility would require
on-site parking to meet the planning and zoning needs of the
space. She assured him that the needs could be met on-site.
In addition, the city is constructing a parking garage at
Main Street and Egan Drive; this garage is not associated
with the proposed project.
Co-Chair Stoltze queried possible parking variances.
Representative Munoz replied that the project has not gone
through a permitting process yet, but she understood that
there would be enough on-site parking.
5:24:04 PM
JEFF JESSEE, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH
TRUST AUTHORITY (via teleconference), testified that when
the Department of Administration approached the trust about
the possibility of constructing the office building, the
trust saw a unique opportunity to develop its resources. The
land office has relied on more tradition methods of land
management such as leases and sales of property. The project
would offer the trust the option of being a developer. The
trustees considered and decided the project was an excellent
investment for the trust. The $22.7 million that AMHTA would
invest in the building would return around 7.5 percent,
which is comparable to the return on the trust's permanent
fund over time. In the current economic environment, being
able to guarantee the return over a 30-year period would
help secure the endowment of the trust. During the 30 years,
the payout would be offset and after the 30 years, the
entire lease would go to the trust, making it an excellent
investment. The state has the advantage of seeing its lease
payments ultimately return to the non-profits that serve
trust beneficiaries in furtherance of the mental health plan
of the state. The mental health needs are expected to
increase, so the additional revenue will be good.
5:28:59 PM
Representative Fairclough asked for further information
regarding the benefit to the state of using the $22.7
million general fund. Mr. Jesse understood that the $22.7
million will come from certificates of participation; the
state will not be fronting general funds. Private investors
will put up the capital. Through the lease payments, the
certificates of participation will be paid off over a 20-
year period of time.
5:30:12 PM
Representative Crawford suggested that the design not
include a flat roof, which does not make sense in Juneau.
Vice-Chair Thomas queried the acreage of the land and who
owns it. Representative Munoz replied that the trust owns
the land.
HARRY NOAH, EXECUTIVE DIRECTOR, ALASKA MENTAL HEALTH TRUST
LAND OFFICE (via teleconference), recollected the size as
approximately four acres.
Vice-Chair Thomas asked the property value of the land. Mr.
Noah replied that comparable appraisals in the area had been
made, but he did not have the data. He offered to get the
numbers.
Vice-Chair Thomas asked why the parking area had the best
view. Mr. Noah answered that the subport area is extremely
valuable land. Initially, the intent was to take (through
the trust land replacement program) the land where the DPS
building stands and build the parking garage. However, the
cost of the parking garage was $20 million. The project
could not offset the high number with lease payments. The
trust has reluctantly decided to use the area where the old
subport building was as surface parking until there is some
economic reason to change. Then the parking garage would be
constructed and the area where the old subport building was
would be developed. He called the measure an interim one.
The trust has no specific use currently for the land. When a
good one comes along, the trust intends to build a parking
garage and further develop the area that will be used for
surface parking.
5:34:37 PM
Representative Gara voiced concern about taking $22.7
million from assets that generate income for the trust. He
wanted to make sure there would be enough. Mr. Jesse replied
that there will be no interruption of cash flow. He
explained that at the end of the fiscal year, the trust pays
out a percentage of its assets held by the permanent fund.
In this case, the $22.7 million will still be in the
permanent fund at the end of FY10; payout will be available
in FY11. For 2012, the lease payments will begin at the
start of the fiscal year, and the lease payments will be
available subsequently.
Representative Gara asked whether there would be a risk if
tenancy did not occur or if construction were delayed. Mr.
Jesse responded that no business deal is entirely free from
risk; however, there are major incentives to make sure the
building is completed on time, including that the state
lease on the current facility expires at same time the new
building will be completed. He added that even if there were
some delay in the commencement of the lease payments, the
amount of money involved is $900,000 a year, an amount that
he believed trust could plan for and absorb without
affecting its goals.
5:38:12 PM
Representative Gara stated that he is fine with the risk if
the trust is fine with it. Mr. Jesse replied that he is
definitely fine with the risk, particularly because at 20
and 30 years out, the investment becomes an excellent deal
for future trustees.
Co-Chair Hawker queried how the state could rationalize
building on expensive Class A real estate. Mr. Jesse replied
that the AMHTA intends to provide the state with quality,
energy efficient, aesthetically appropriate office space
without the health and safety concerns caused by the state's
current space.
Representative Munoz added that rates at other comparable
spaces, such as at the Goldbelt and Sealaska buildings, were
comparable. In addition, the renegotiated DOL lease would be
considerably more than what is currently being paid.
5:41:07 PM
Representative Foster asked what the Department of
Administration thought about the provision.
VERN JONES, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF
ADMINISTRATION, directed attention to the fiscal note and
analysis. He reported that DOA thought the proposition was a
good deal. He mentioned the DOL building lease that was
expiring. If the building does not get built, the
department's other option is to put out an RFP the coming
summer. The department's analysis shows that over the 30-
year life of the lease, the AMHTA option would be $13.5
million less expensive than a lease in the private sector
and maintaining the two older buildings that require a great
deal of deferred maintenance. He pointed out that the fiscal
note was understated; the cost showed for maintaining the
old buildings and continuing the lease is probably low. In
addition, the capital costs for the Douglas Island building
and the DPS building only have the known existing deferred
maintenance projects listed. Over the next 30 years, other
work would need to be done.
Mr. Jones added that DOA analysis calculates the square foot
price at about $353. The department thinks the price is a
bargain for the quality of space being contemplated.
5:44:24 PM
Co-Chair Hawker asked if he was referring to cost to
construct or leasehold costs. Mr. Jones responded the number
represents a cost per square foot under a lease. He pointed
out that the number is a ceiling to negotiate under, not
necessarily the price that will be paid for the building.
Co-Chair Hawker stated his inclination to support the
concept. He referred to arguments by the current owner of
one of the buildings that they could do a better job for
less money. Mr. Jones replied that he had heard the
arguments; departmental analysis does not support them.
Co-Chair Hawker wanted to see a direct response to the
arguments with the financial analysis.
Representative Munoz requested that the committee consider
what the state has invested in the facility. Close to $50
million has been invested in the old building. She thought
it was important for the state to find space that would
allow the department to function better. She reported
numerous, well-documented problems. She believed there would
be good benefit for all the parties involved.
Co-Chair Hawker asserted that the state has to pay for the
property. He wanted questions answered.
Co-Chair Stoltze wanted numbers from the administration.
5:48:45 PM
Representative Kelly was not convinced that the deal was
great. He questioned putting state employees in Class A
space. The trust could also construct a building and rent it
out to doctors and attorneys to make money.
Representative Munoz believed the current cost for the DOL
building was $2.33 per square foot. She asked if the
committee wanted an analysis of comparable space.
Representative Kelly wanted a comparison with costs for
Class B or C space, which he thought was more appropriate.
He referred to criticisms he was hearing about the measure.
5:52:23 PM
Representative Foster relayed his experience with office
space. He opined that space with good parking can be
important for employees.
Mr. Jones reiterated that the $3.53 per square foot is a
ceiling cost and that the price is still not negotiated. He
pointed out that the state is not a typical tenant; it is a
high quality but expensive tenant. Technology needs are much
higher and more expensive to service than for a typical
private tenant. There are higher natural light requirements
as well, which drive up the cost of space. He suggested that
it is not fair to compare to what might be available at a
mall or Class C space. The department projects that the
expectations for price in the RFP will be in the $3.80 to
$4.00 per square foot range. The department thinks it has
good backup to justify those expectations.
5:56:08 PM
Co-Chair Stoltze talked about the information needed by the
committee.
Vice-Chair Thomas wondered if there were letters of support
from the municipality. Representative Munoz responded that
the City and Borough of Juneau had unanimously passed a
resolution of support.
5:58:50 PMRECESSED until 9:00 AM March 28, 2009
9:09:48 AM RECONVENED
HOUSE BILL NO. 199
"An Act making supplemental appropriations and capital
appropriations; amending appropriations; and providing
for an effective date."
Co-Chair Hawker referred to previous testimony related to
the legislation and questions raised for the Department of
Education and Early Development.
9:11:51 AM
Co-Chair Hawker listed items that were added to the original
list, items where the administration is going to add
personnel in order to accept American Recovery and
Reinvestment Act (ARRA) funds: Item 12, Healthcare Services
Administration; Item 19, Labor Employment Training Services;
Item 27, Public Safety State Troopers; Item 13, Child Care
Benefits Grants; Item 22, Workforce Development Training.
Co-Chair Hawker noted that the entire committee was present
except for Representative Foster, who had a medical excuse.
9:14:08 AM
LARRY PERSILY, STAFF, CO-CHAIR MIKE HAWKER, began with two
follow-up items from the previous day's meeting. First, he
indicated a packet containing the information that
Representative Austerman had asked for from the Department
of Education. Second, regarding questions about the
Department of Conservation (DEC) air quality grants he
explained that in FY08, DEC received about $300,000 under
the program. Rather than granting the money out (the
department does not have granting authority) DEC used RSAs
(reimbursable services agreements) within state agencies.
Some went to the Department of Transportation and Public
Facilities for diesel equipment retrofits. Some went to the
Alaska railroad for diesel retrofits. The $2 million
available for grants would need statutory authority. State
agencies, non-profit organizations, local governments, port
authorities, and anyone with jurisdiction over
transportation or energy would be eligible for the grant
program. He listed examples of things the money could be
used for.
Co-Chair Hawker clarified that the DEC air quality grants
were contained in Item 34.
9:16:35 AM
Representative Fairclough had a question about carbon
credits. Mr. Persily offered to get the information.
Representative Kelly asked if the legislature could put
limits on the DEC grants. Mr. Persily replied that the
legislature cannot appropriate to specific recipients; the
grant program would go through DEC. Representative Kelly
asked if the legislature can instruct DEC about the grants,
such as limiting them to diesel retrofits. Mr. Persily said
he would get back to committee.
Co-Chair Hawker thought the question of how much constraint
could be applied through intent was related to the
Department of Education and Early Development (DEED) as
well.
Representative Kelly asked if similar limits could be put
education, such as accepting only money that would be used
for deferred maintenance. Mr. Persily did not believe so. He
would get the answer to the how question of much direction
and instruction could be used.
9:20:12 AM
Representative Fairclough asked whether the money could be
held and dispersed [by the legislature] to rural communities
through an RSA process to limit how it could be used. Mr.
Persily did not believe so.
Co-Chair Hawker explained that the RSA is used between state
agencies. The legislature does not have the ability to move
money to another public entity's budget, only within the
state budget. The legislature has to empower an agency
through a grant process to pass the money to the other
agencies. There was a discussion about limiting the use of
the $2 million.
9:22:37 AM
Representative Gara thought that most of federal money
allows for a menu of expenditures. He suggested the easiest
way to direct where the money went would be to go through an
agency. Otherwise there must be a statutory grant program to
specify how it is spent. Cooperation with the administration
would be required.
DEPARTMENT OF PUBLIC SAFETY
9:24:17 AM
Co-Chair Hawker asked for details regarding the Department
of Public Safety (DPS) Item 27, the State Trooper/Narcotic
Task Force.
DAN SPENCER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF PUBLIC SAFETY, gave an overview of the justice
assistance grant program, which is a formula program. The
ARRA stimulus funds operate similar to the regular federal
justice assistance grants program, with some changes.
Supplanting rules have been removed and some of the
reporting is different, but the purpose remains the same,
and the grants can be used for just about anything that
improves crime fighting.
Mr. Spencer detailed that about $9.6 million is allocated to
Alaska; about $4 million goes directly from the U.S.
Department of Justice to municipal governments. Another
$5,821,000 comes to the state; of that, $1,252,900 will be
passed to local governments. The application for the funds
is due by April 9, 2009. The stimulus funds do not have to
be used for personnel, but DPS plans to ask for that.
Mr. Spencer continued that the justice assistance grants
program requires the department to provide to the
legislature and to the public a minimum of 30 days notice
before applying for the funds. Public review has to be in
place before the money is spent. In the past, DPS has put
together the grant application, sent a letter to each
presiding body, and given online public notice.
9:28:03 AM
Mr. Spencer reported that there would be a written document
with line item detail for legislative review. There will be
an option of change once the money is approved by the
Department of Justice, but the public and the legislature
has to be notified. There will be full disclosure of all
proposals.
9:30:15 AM
Mr. Spencer responded to earlier remarks about how the
stimulus funds would require more transparency than other
funds. He maintained that DPS is already fully accountable.
Mr. Spencer informed the committee that the overall plan is
to increase investigative capacity with six positions,
including five investigators in Anchorage, Fairbanks,
Soldotna, and Palmer. There would also be an administrative
position, probably based in Fairbanks. Once the positions
are filled, DPS intends to give roughly $150,000 per year to
the Department of Law (DOL) to bring on an additional
prosecutor. In addition, the crime lab would receive funding
for sexual assault exam kits and other equipment, and
funding would go to local government for investigations.
Mr. Spencer anticipated that the plan would cost $5.8
million over three years. The question will then be where
the money would come from to continue the programs. He
asserted that DPS would have proposed increasing the
investigative program even if the federal funds were not
available. He pointed out that Alaska has the highest rate
of sexual assault in the country; several of the positions
would focus on that, as well as on internet and financial
crimes. He added that more details would be forthcoming.
9:33:51 AM
Co-Chair Hawker noted how the proposed program would grow
government.
Representative Fairclough asked for expected costs in three
years and queried the number of new positions at the state
level. Mr. Spencer replied that there would be seven new
positions for $5 million over five years, including the
attorney at DOL. The money would cover the personnel and all
the related training, equipment, travel, and the money to
the crime lab.
Representative Fairclough thought that was a lot of money
for seven positions. Mr. Spencer answered that the new
trooper positions in the first year would cost close to $1
million; the second year would be less because the vehicles,
guns, and so on would have been purchased. He stated there
were no hidden costs related to the positions.
Representative Fairclough clarified that the amount included
$1.3 million for local government. Mr. Spencer added that a
number of municipal governments are getting nearly $4
million from the Department of Justice.
Representative Fairclough asked if that funding stream to
local governments would continue. Mr. Spencer replied that
that had not been discussed; he believed the funding would
continue because it would increase investigative ability
overall.
9:36:39 AM
Representative Gara questioned whether there was double
funding, specifically for the crime lab. Mr. Spencer assured
him there was not.
Representative Gara acknowledged shortfalls in investigation
units. He questioned the money going toward internet crime,
since the federal government already did that work. Mr.
Spencer replied that he would get more information. He
believed the issue would be addressed in the forward of the
grant application.
Representative Gara asked if there would be seven trooper
positions over the three years. Mr. Spencer clarified that
there would be five trooper investigator positions, one
administrative position, and funding to DOL for a prosecutor
position.
Representative Gara pointed to trooper positions that the
state has not been able to fill and asked why the money
should be used for new ones. Mr. Spencer responded that all
the trooper positions were filled or would be filled soon.
He was hopeful that the department would continue to be able
to fill positions.
9:40:12 AM
Representative Gara asked whether positions had been
eliminated rather than filled. Mr. Spencer answered that DPS
started with around 50 vacant positions. The previous
summer, seven trooper positions were reclassified to court
services officers; previously troopers had filled those
positions. The reclassification freed up seven troopers. He
noted that court services officers are easy positions to
fill.
Representative Gara questioned whether the department would
have to come to the legislature in three years if the funds
were approved.
Representative Austerman questioned why the items were not
included on the original legislation. Mr. Spencer believed
that additional requirements such as the need for the public
process affected their inclusion in the original bill.
Co-Chair Hawker remembered that the Office of Management and
Budget (OMB) immediately rejected anything involving
additional personnel.
Representative Austerman asked for clarification.
9:44:58 AM
JO ELLEN HANRAHAN, SENIOR POLICY ANALYST, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained
that the items were not included on the list because they
would increase operating costs; requests with positions were
immediately rejected.
Representative Austerman asked if the governor's office was
moving forward with the application without public comment.
Ms. Hanrahan responded that all agencies were instructed to
continue the application process in order to meet all
deadlines.
9:46:56 AM
Mr. Spencer added that items could later be modified if the
legislature decided, for example, not to include positions.
Co-Chair Hawker noted an opinion issued by the governor.
Mr. Persily clarified that Item 27 was for $5.8 million that
would go directly to the state; a separate allocation under
the stimulus bill of $3.8 million would go directly to 19
different cities and boroughs around the state. For example,
the Municipality of Anchorage would get $2.7 million of that
amount, Fairbanks North Slope Borough, Unalaska, the City of
Bethel, Bristol Bay Borough, and so on would get
disbursements separate of legislative action. The deadline
for the state's $5.8 million is April 9, 2009; the cities
and boroughs have until May 18, 2009. The state and the
cities and boroughs will have to go through the same 30-day
public revenue of applications. He added that of the $5.8
million the state would get, $1.2 million has to go to local
governments not covered by the $3.8 million. There are some
restrictions: the money can be used for new positions and
other things, but the federal law stipulates that the funds
cannot be used directly or indirectly for security
enhancements, and the money may not be given to non-
governmental entities that are not engaged in criminal
justice, public safety, or victim compensation.
Mr. Spencer clarified that some of the $1,282,000 that is
passed through the local governments can go to larger
municipalities, although the intent is to ensure that
smaller municipalities receive funds.
9:50:03 AM
Representative Salmon asked whether money was earmarked for
Village Public Safety Officers (VPSO) for smaller
communities. Mr. Spencer replied no for the proposal under
discussion. He explained that a VPSO is not a law
enforcement position in the normal definition. However,
three other competitive grant programs that the department
intends to apply for, including: the $1 billion Community
Oriented Policing Program (COPS), which is specifically
oriented to creating new police officers; the $225 million
Edward Byrne Memorial (Byrne) Competitive Grant program,
which could apply; and a rural law enforcement program
[Assistance to Rural Law Enforcement to Combat Crime and
Drugs Program] aimed at a variety of things. The department
has not finalized plans, but intends to apply for at least
another five positions through the COPS program; those come
with a "general funds kicker right up front." The COPS
program will only pay for the entry-level salary and
benefits, not for training, equipment, merit increases, etc.
The condition of applying for the positions is that the
federal government will fund the entry level salary for each
of three years; after that, whatever entity created the
positions has to agree to continue the positions for a
fourth year. The department will apply for additional
positions through the Byrne competitive grant. The
department plans to ask for three trooper positions
dedicated to VPSOs through the rural law enforcement
program. He stressed that the applications were not at the
final stages and he would come back when there is more
information.
Co-Chair Hawker expressed concerns about the growth of
government caused by obtaining one-time funds. He saw it as
a way of bypassing the legislature and wondered if the
legislature should not pass a law to stop it. Mr. Spencer
did not agree that the department was going around the
legislature. He emphasized that even if the funding is
received, the legislature has to give the authority to spend
the money and the governor has to sign off on the
expenditures. He called law enforcement a government
program.
9:54:13 AM
Co-Chair Hawker asked if the government was sanctioning the
growth of government. Mr. Spencer replied that the
department had been told to work on applications for what it
deems appropriate purposes. Public discussion will determine
whether it goes forward, but the intent is to apply by the
deadline.
Representative Kelly thought that a state employee position
was hard to cut once it was created, while construction
workers are laid off when the job ends. He maintained that
the record shows that state positions will not be easily cut
after three years.
Representative Joule referred to the five positions that the
department planned to apply for under the COPS program. He
asked if any of the positions were related to the VPSO
program. Mr. Spencer answered that the positions were not
specifically dedicated to VSPO positions.
Representative Joule heard the answer as no. Mr. Spencer
concurred.
Representative Joule asked if the three positions that the
department planned to apply for [through the rural law
enforcement program] would translate to more VPSO positions.
Mr. Spencer replied that VPSOs are not certified police
officers, which is the focus of the programs.
Representative Joule asked if the VPSOs are public safety
workers. Mr. Spencer replied that they were, but his
understanding was that the programs require that the
positions be law enforcement positions. He offered to get
more information.
9:57:34 AM
Representative Gara referred to the fact that the department
had filled the trooper positions for which there had
previously been a shortage. He was supportive of that. He
stated that the highest crime, lowest served areas are high-
crime urban areas, which have local police forces; troopers
will not solve those problems. He questioned why the
positions would not go to rural areas where they are most
needed. Mr. Spencer denied saying that the positions would
not go to rural areas. The troopers are still working on
their proposal; he did not know where they planned to put
the positions. The five positions covered in Item 27 are
investigator positions. He understood the issue of getting
positions to rural areas; some may go to Bethel.
10:00:10 AM
Representative Austerman asked who would oversee the public
scrutiny of programs outside the legislative budget process,
such as the COPS grant. Mr. Spencer referred to earlier
testimony indicating that the Legislative Budget and Audit
Committee (BUD) [would perform the function]. He pointed out
that the receipts would be federal, and would be tracked
separately; since the funds were not anticipated and did not
have expenditure authority, he expected to go before BUD
during the interim.
Co-Chair Hawker asked for clarification. Mr. Spencer
explained that the department had federal authority in the
budget. Sometimes the department gets the money it needs,
but sometimes it gets less. When there is excess federal
receipt authority, or less federal money coming in, the
department can use the federal receipt authority to use
federal money from other sources. He emphasized that the
stimulus money was different. He likened it to a capital
appropriation, in that they have a defined purpose. He
assumed there would be a mechanism for legislative review on
the competitive grant proposals.
Co-Chair Hawker cautioned against assuming anything. Mr.
Spencer acknowledged that the legislature could change any
assumption he had.
10:02:58 AM
Ms. Hanrahan agreed that normally, an agency may apply for
competitive grants throughout the year if it has excess
federal authority, and that the stimulus money is different.
She said that the focus has been to identify the funds that
they know are coming to the state and have public debate
about those funds. The next layer is the competitive
process. However, there is no assurance about whether the
state would receive any of the money through the competitive
process. Some of the grants have stipulations which make it
unlikely that Alaska would get the money. She emphasized
that until more information was obtained, the administration
was focusing on the direct grants. She believed the only
potential review for the direct grants is through BUD.
Co-Chair Hawker added that the mechanism works because in
the operating budget there is an appropriation of all
federal funds that may be received. The appropriation goes
through a review by the Legislative Budget and Audit
Committee. However, he warned that the BUD review is a
"toothless tiger" in that even if the committee says no to
the appropriation, the administration may still accept it
after a 45-day waiting period.
Mr. Spencer expanded by saying that few governors have taken
that prerogative. Co-Chair Hawker emphasized that compliance
with the committee is voluntary. Mr. Spencer agreed.
10:05:27 AM
Representative Salmon asked what a VPSO is considered if not
law enforcement. He wanted to know what it would take for a
VPSO to become legitimate law enforcement. Mr. Spencer
explained that VPSOs are public safety officers. They have a
wide variety of duties; they do deal with crimes in some
circumstances, but they are not a certified police officer
under Alaska Police Standards Council certification rules.
The primary purpose of a VSPO is not to arrest, investigate,
and help to prosecute. They do have probation and parole
responsibilities, which helped in improving the pay
schedule. They also have public safety roles such as working
with villages with code red firefighting apparatus. He did
not know what it would take to get a VPSO certified and
offered to get the information to the committee.
10:07:24 AM
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
Co-Chair explained that the Department of Health and Social
Services (DHSS) would cover Items 12 and 13. He detailed
that Item 12 involves additional personnel and Item 13 has
significant dollar value.
ALISON ELGEE, ASSISTANT COMMISSIONER, FINANCE AND MANAGEMENT
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
introduced Item 12, Health Information Technology. The
program has been proposed through ARRA with a slightly
longer timeframe than most stimulus programs. The money
would be made available soon, but the program dollars will
be available through FY15. The item will be primarily
capital dollars. As yet, there is only very limited guidance
from the federal government about exactly how the money will
be made available. Nationally, there is $20 billion for the
information technology.
Ms. Elgee reported that the health information technology
program is designed to move the country into an electronic
health records environment. The benefits have been
identified for some time as improving health care quality,
preventing medical errors, reducing health care costs,
increasing administrative efficiencies, decreasing
paperwork, and expanding access to affordable care.
Ms. Elgee noted the tremendous planning effort that will be
required to establish health information technology in the
state of Alaska. The department will create a health
information exchange that will allow providers to access
health records from other providers through a very
controlled environment that assures the protection and
privacy of the health records.
Ms. Elgee offered that DHSS is proposing to establish
positions to begin the planning effort. The department
believes that a project coordinator, data processors, and
additional support personnel will be needed.
10:10:22 AM
Co-Chair Hawker asked for more background regarding
electronic medical records. He wondered how long the
practice had been around and if it was voluntary. He did not
regard electronic data as secure. Ms. Elgee responded that
planning is needed to protect the records. A very secure
environment is essential. She explained that the protection
of health records runs throughout the business that DHSS
does. She emphasized that there are extensive federal
requirements under the Health Insurance Portability and
Accountability Act (HIPPA) that the department will need to
comply with in creating the health information technology
environment.
Ms. Elgee pointed out that the potential for cost savings
are tremendous. For example, tests are ordered for an
individual by a primary physician. If the individual goes to
a different doctor, currently most of the tests are
duplicated. In a health records environment, a provider
would be able to access the original tests and not have to
repeat them. The program will help the safety of individuals
because the records will contain information such as
allergies.
Co-Chair Hawker asked if the initiative was a state
initiative. Ms. Elgee replied that it was a federal
initiative but that the state has put a great deal of energy
into planning with providers what it might look; there has
been no money to make it happen.
Larry Persily added that part of the electronic medical
records provisions in the stimulus bill is a grant program
that states will administer to health care providers. The
funds that will be available will be administered by the
states and will provide as much as $67,000 to each health
care provider spread over six years. The amount would depend
on costs; the maximum grant would be $21,250 the first year,
and up to $8,500 each year for the next five years,
depending on costs. Hospitals, doctors, clinics, nurses,
midwives, and anyone who qualifies could then obtain the
grant funds to help pay the cost of converting to electronic
medical records, which eventually every health care provider
will have to do. He emphasized that there will be a lot of
money flowing to health care providers in Alaska to help
with the conversion over several years.
10:13:44 AM
Co-Chair Hawker wanted to know if the conversion is already
federally mandated. Ms. Elgee understood that the change is
not currently federally mandated. The program is intended as
incentive to move states in the direction of electronic
records. She could not predict the timing of federal
mandating but noted a federal process in place planning
around the effort.
Mr. Persily believed that there would be a federal mandate
at some point, which was why it was a key part of the
stimulus bill.
Co-Chair Hawker thought the item would give money to the
state to administer the process, but asked if it would
administer the grants to providers. Ms. Elgee responded that
the money was to begin the planning effort necessary to be
positioned to accept the remaining health information
technology funds, which will include provider incentive
payments.
10:15:26 AM
Representative Joule wondered whether major health care
providers were heading towards electronic health records,
either with or without the DHSS. Ms. Elgee responded that
there has been planning underway. She referred to an
organization created specifically to look at the development
of an electronic health records environment. Dr. Butler
represents DHSS on the board of directors. She noted a lot
of provider interest.
Representative Joule asked if the providers interested were
organizations like Providence, Regional, Memorial, and
others. Ms. Elgee answered in the affirmative.
Representative Joule wondered if there would be a need for
additional capital commitment from the state. He had heard
of a requirement for a match of $1.3 million. Ms. Elgee
responded that the department has received very little
guidance for the program, so she could not confirm or deny a
future need for a state capital match.
10:17:28 AM
Mr. Persily introduced another concern related to electronic
medical records: the issue of privacy. He pointed out that
there are already strict privacy rules related to medical
records, and that the stimulus bill includes pages of even
tighter privacy restrictions. For example, ARRA prohibits
the sale of records and use of records in marketing. An
audit trail of people having access to the information is
required. There are also mandates for standards for
technology systems to restrict the sensitive information,
use data encryption, to notify people of breaches. There are
monetary penalties for violation of privacy and requirements
for monitoring the contracts and compliance. He emphasized
that the issue of privacy was taken seriously in the writing
of the law.
10:18:35 AM
Representative Gara asked why the state needs so much
database infrastructure, since it does not itself provide
medical care or share medical records with others. He wanted
to know what the state staff would be doing. Ms. Elgee
explained that the underlying technology is called a help-
information exchange, a means by which providers can
exchange records in a secure environment. Once a doctor at
Providence indicates a need obtain records from a provider
in Kotzebue, they will query the health information exchange
for the records. The exchange will then retrieve the records
and pass the information on. Records can be made available
quickly and duplication of tests can be avoided.
Mr. Persily added that the exchange ensures a secure safe
system, rather than passing records on through email
attachments.
10:21:09 AM
Representative Kelly pointed out that the list the committee
was looking at consisted of projects that the governor did
not put in, putting the departments in the position of
asking for something that she did not request funds for. He
hoped that presenters would clarify whether the governor had
changed her mind regarding any of the items discussed.
Co-Chair Hawker asked if the department would like to get
the funds. Ms. Elgee acknowledged that the department would
like to receive the funds and believed there was tremendous
benefit in the program in terms of controlling health care
costs. She observed that SB 133 would address the same
subject matter; the department had been advised to work on
the bill.
Representative Kelly did not want to hear what the
department wanted but whether the administration had changed
its position on the items. He assumed that the governor had
not changed her mind regarding any of the 39 items on the
spreadsheet. Co-Chair Hawker expressed frustration with a
lack of communication with the governor.
Ms. Hanrahan felt that the governor was clear that while
many of the items could benefit the state, she wanted public
discussion regarding the associated costs.
10:27:03 AM
Representative Kelly reiterated a desire for a clear
indication that the governor had changed her position on
individual items.
Co-Chair Hawker queried what authority Ms. Hanrahan had in
speaking to the committee. Ms. Hanrahan believed that the
goal was giving as much information to the public as
possible so that the public could decide whether they wanted
the funds. Co-Chair Hawker asked if she felt the departments
had been giving fair and complete presentations. Ms.
Hanrahan affirmed that departments have identified the full
spectrum of the issues. She felt that there could be more
discussions on costs or obstacles that might be associated
with the items.
10:29:25 AM
Representative Gara concluded that the governor has not
changed her position of not wanting the funds. He asked if
there had been any discussion with the governor regarding
the technology energy funds. Ms. Elgee noted that the
department presented information to OMB and supports the
request, but noted they have gotten little information from
the federal government.
Representative Gara asked if there was an understanding at
OMB that the projects would be presented to the legislature.
Ms. Hanrahan explained that OMB was instructed to identify
the benefits and costs of the items. She emphasized how
little information had been provided by the federal
government.
10:33:49 AM
Representative Gara commented that he was hearing different
things from the agencies and from the governor through the
press.
Representative Kelly cited experience dealing with the
budgeting process. He found the reports from the departments
clear and reasonable. He only wanted to know if the
departments were aware of a change in the governor's stance
regarding the stimulus money. He did not intend to stir up
controversy.
10:37:15 AM
Vice-Chair Thomas talked about experience dealing with
health records. He opined that the governor would support
the department's project, as she has approved money for
electronic records in the past. He emphasized the value of
letting the public hear detailed discussion about the
various items.
Representative Crawford thought the important question was
whether such things as electronic health care records,
troopers, or teachers are needed. He thought the items were
needed and that the funds would be requested if even the
stimulus money was not there. He opined that getting money
from the federal government for the next few years would be
a good thing and that the legislature needs to decide
whether to make a commitment, regardless of what the
governor does. He felt the question of whether funds would
be available in three years was a separate question.
10:42:17 AM
Ms. Elgee turned to Item 13, Public Assistance and Child
Care Benefits. She explained that the childcare development
block grant funding being proposed through ARRA includes
$4,360,000 for the state of Alaska. She believed the money
would be available through 12/31/2010. The intent was to
improve the quality of childcare services and expand
programs. The money cannot be used to supplant general
funds; existing programs must be maintained. Within the
allocation, $333,660 is specifically targeted for quality
expansion and $193,232 for activities that improve the
quality of infant and toddler care.
Ms. Elgee continued that the program is partially addressed
in the governor's proposed FY10 budget. The department put
forward an increment in the amount of $3 million in general
funds to increase the reimbursement level for low-income
families that qualify for childcare assistance. The
department is aware of issues relative to the eligibility
standards being used and are looking at other barriers to
childcare access. In addition, DHSS has been working with
the Department of Education and Early Development and the
Best Beginnings organization to identify needed
improvements. The department believes the stimulus money
could be used on a one-time basis and would not necessarily
commit the state to on-going expense. However, the
department would probably come back to the legislature for
continued funding to the degree that the money increased the
level of childcare assistance reimbursement.
Co-Chair Hawker clarified that currently nearly $10 million
of federal money goes to childcare benefits. He asked if the
money could be brought into the program and free up the
federal money to be used elsewhere. Ms. Elgee did not think
so but would have to confirm. Co-Chair Hawker verified that
the department would look for continued general funds if the
stimulus money was accepted.
Representative Gara asked if $3 million of the stimulus
money could be used for the childcare expansion considered
by the governor. Ms. Elgee answered yes.
10:46:58 AM
Representative Fairclough clarified that the funds would not
supplant a program that the legislature has not approved
funding with general funds.
Representative Gara thought $3 million could be taken out of
the operating budget and the stimulus funds used instead.
Ms. Elgee explained that the House version of the budget
contains $1.5 million in general funds for the purpose. When
the Senate was closing out its budget, the federal economic
stimulus funds were better understood; they chose to
eliminate the general funding in deference to the policy
debate regarding the stimulus funds.
Co-Chair Hawker pointed out that the gamble is the governor
rejecting the stimulus funds and the budget going to
conference committee.
Representative Gara still thought that some general funds
could be freed up if the legislature could do what the
governor and both houses want to do with the stimulus funds
regarding childcare. He described what could be done for
foster care youth with $1.5 million.
10:48:45 AM
Representative Austerman verified that $3 million in general
funds was requested for the same program in the FY10
governor's budget. He asked for further clarification. Ms.
Elgee explained that the governor's proposed FY10 budget had
gone through exhaustive review. The stimulus money came
after the committee review and the governor wanted
discussion to take place.
Co-Chair Hawker asked if the administration believed the
department's presentation had adequately described the
challenges of the item. Ms. Hanrahan replied yes, costs as
well as benefits had been described in a transparent manner.
10:51:16 AM
Representative Gara asked if the governor had proposed a $3
million increment in her operating budget for some of what
is covered in the $4 million amount, after which the House
moved the amount to $1.5 million, and finally the Senate was
thinking about how to use stimulus money for the program.
Ms. Elgee agreed with his analysis. Representative Gara
thought that the governor's rejection of the stimulus money
is rejection of federal money to pay for something the state
was going to pay for. Ms. Elgee stressed that the governor
had not rejected the money, but has called for additional
conversation.
Representative Fairclough requested the definition
"supplanting." Mr. Persily explained that money that is
already budgeted cannot be supplanted. The increment in the
FY10 proposal has not been approved, and so is not being
supplanted. He defined supplanting as replacing dollars, as
in not spending a dollar that had been budgeted,
appropriated, and planned on spending, but replacing the
dollar with a federal dollar.
Representative Fairclough pointed out that Alaska is caught
in a quandary because a budget had been submitted in
November before the federal stimulus legislation came about.
She described the chain of events. She thought if the
federal government reviewed the situation, it would look
like supplanting.
Ms. Hanrahan agreed with Mr. Persily's definition that funds
not officially in the budget cannot be supplanted.
10:54:54 AM
Representative Austerman did not understand why the governor
would put the item in the budget but not request the
stimulus funds. Ms. Hanrahan responded that one of the
concerns about the stimulus package is that there will be
unprecedented accountability and requirements above and
beyond some of the state's formula programs. She believed
the governor was providing a chance for more debate
regarding any stimulus money that would come to the state.
10:56:57 AM AT EASE
11:06:05 AM RECONVENED
DEPARTMENT OF REVENUE
Co-Chair Hawker explained that the committee would next
approach items 35, 36, and 37. He noted that there had been
a lot of confusion about the three programs: the State
Energy Program, the Weatherization Program, and the
Efficiency and Conservation Block Grants.
11:06:53 AM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE (via teleconference),
provided an overview of the three programs, beginning with
the $28.5 million listed for the state energy program (SEP).
The Alaska Housing Finance Corporation (AHFC) has received
federal funds for many years, though not as much as offered
by the stimulus funds. The corporation has had a
reimbursable services agreement (RSA) with the Alaska
Industrial Development and Export Authority (AIDEA) for
around ten years. The corporation shares the federal money
with AIDEA; AHFC deals on the demand side of the energy
equation and AIDEA or the Alaska Energy Authority (AEA)
deals with the supply side. The item has raised questions
because the federal legislation requires a state-wide energy
code.
Mr. Fauske continued that AHFC also receives money every
year from the federal government for weatherization, though
not as large as the stimulus amount. For many years the
money was used for people at 60 percent of median income.
Now, with the approval of the revised weatherization rebate
program, there is about $200 million in weatherization; the
stimulus money would go to that program.
Mr. Fauske explained that the $8.5 million for the block
grants are funds for energy efficiency and conservation
activities for communities. Providers would compete for the
funds to provide the services required by the legislation.
Mr. Fauske stated that AHFC could certainly put the money to
use. Whether the money can be accepted or not because of
code requirements is dependent on policies being developed.
He pointed out that most building codes in most areas of the
state equate to a four-star-plus energy code. By statute the
corporation cannot purchase mortgages unless they meet
certain standards.
11:12:29 AM
Co-Chair Hawker asked if Item 37 (the block grant program)
was a new program for the corporation. Mr. Fauske answered
that it was. Co-Chair Hawker questioned whether additional
resources would be needed from the state to administer the
program. Mr. Fauske replied that the program would be
project based, so any additional money needed would be
limited. Once the money was gone, the position would go
away.
11:13:30 AM
Mr. Persily spoke to the question of energy efficiency codes
and utility rates. He stated that there is no requirement to
change state utility regulation or energy efficiency codes
for the weatherization program funds or the energy
efficiency and conservation block grants. The requirements
under ARRA apply only to the state energy program funds
(Item 35, for $28.5 million).
Co-Chair Hawker queried whether OMB or anyone else believes
otherwise. He emphasized the importance of correct
information.
Mr. Persily clarified the two requirements under ARRA for
the $28.5 million for the state energy program. Regarding
the first requirement, he read from the act:
The applicable state regulatory authority [the
Regulatory Commission of Alaska (RCA) in Alaska] will
seek to implement in appropriate proceedings for
electric and gas utilities a general policy that
ensures that utility financial incentives are aligned
with helping their customers use energy more
efficiently, and that provide timely cost recovery and
a timely earnings opportunity for utilities associated
with cost-effective and measureable, verifiable
efficiency savings in a way that sustains or enhances
utility customer incentives to use energy.
Mr. Persily added that the provision is also referred to as
"rate decoupling." He assured the committee that other
states have already accomplished the requirement by sending
a letter the U.S. Department of Energy certifying
compliance, and that such assurance has been accepted.
Co-Chair Hawker underlined the key point that the prefacing
condition is that the states "seek" to implement the
provision; there is no mandate to include a decoupling
arrangement. Mr. Persily concurred.
ROBERT (BOB) M. PICKETT, CHAIRMAN, REGULATORY COMMISSION OF
ALASKA (RCA) (via teleconference), testified that the RCA
commissioners had taken the matter up at a March 11, 2009
public meeting. He stressed that decoupling is one of the
tools towards the end; it is not mandated nor the only tool.
He was authorized by the commissioners to draft a letter to
Governor Palin. He read part of the letter:
The Regulatory Commission of Alaska assures you that it
will seek to implement in appropriate proceedings for
each electric gas and electric utility in Alaska for
which the RCA has rate-making authority a general
policy that ensures that utility financial incentives
are aligned with helping their customers use energy
more efficiently and that provides timely cost recovery
and a timely earnings opportunity for utilities
associated with cost-effective, measurable, and
verifiable efficiency savings in a way that sustains or
enhances utility customers' incentives to use energy
more efficiently.
Mr. Pickett believed that the letter provides the necessary
assurances to the governor.
11:17:27 AM
BOB STOLLER, ATTORNEY, REGULATORY COMMISSION OF ALASKA
ANCHORAGE (via teleconference), testified that RCA has
regulations on the books that date back to 1984. The precise
citation setting out the pricing objectives or the pricing
of electricity is found in Title 3 Alaska Administrative
Code Chapter 48, Section 510. There are five itemized
objectives; number four is explicitly conservation, and
number five is explicitly "optimal use, which includes
considerations of efficiency."
Mr. Stoller read from 3 AAC 48.520:
The fundamental basis for establishing rates in order
to meet pricing objectives is costs. The Commission
will, in its discretion, for appropriate reasons,
consider non-cost standards in establishing electricity
rates.
Mr. Stoller added that RCA applies similar policies in its
gas rate design and gas revenue requirement determinations.
11:18:36 AM
Co-Chair Hawker asked for copies of the letter and the
regulations cited.
Mr. Persily turned to the second requirement under ARRA for
the $28.5 million for the state energy program, which deals
with energy efficiency codes for buildings. The act requires
that within eight years of the date of enactment, or until
February 2017:
The state shall have achieved compliance on at least 90
percent of new and renovated residential and commercial
square footage.
Mr. Persily emphasized that there were two separate
standards for residential and commercial buildings. He
referred to a handout depicting how many states are at the
required level. The law requires that the state meet the
most recent or equivalent international energy conservation
code for commercial buildings; for residential buildings,
the state must meet or exceed the equivalent of the American
Society of Heating, Refrigerating, and Air-Conditioning
Engineers (ASHRAE).
Mr. Persily pointed out that on the map, the 26 states in
green (for commercial energy codes) either meet, exceed, or
are just one addition away from the most recent ASHRAE
codes; 22 states meet the residential energy codes.
Mr. Persily detailed that the ASHRAE codes for energy
efficiency deal with lighting levels, insulation, windows,
and so on; they are not geared towards advanced technology
or high performance on proven technology. The codes are
practical and doable; the intent is to be cost effective.
Co-Chair Hawker clarified that the codes are strictly energy
related and not plumbing or structural. Mr. Persily
explained that the energy efficiency codes could be part of
a building code. The requirements deal with 90 percent of
square footage for energy efficiency codes standards. To
receive the funds, the state would have to certify that the
codes would be in place within eight years.
Mr. Persily reported that he had asked the U.S. Department
of Energy what would happen after eight years if a new or
renovated building is found to be at less than 90 percent;
the response was that they did not know.
11:22:36 AM
Co-Chair Hawker asked if AHFC had concerns about the codes.
Mr. Fauske answered that the corporation had two concerns.
First, the energy code is for both residential and
commercial buildings, but AHFC does not deal with commercial
buildings and cannot estimate those costs. Second, the
corporation was concerned about the cost of enforcement.
Mr. Persily emphasized that the commercial compliance
applied only to new and renovated buildings; he thought most
new buildings would already meet the codes. He noted that
the state would have to accumulate the data.
Mr. Persily disclosed that his brother is vice-president of
ASHRAE. His brother had confirmed that most new construction
would meet the codes, which are required in order to get new
financing. The challenge for the state would not be
enforcement as much as how to gather the data needed to
certify that the standards were being met.
Mr. Persily added that voluntary compliance on new and
renovated commercial structures would help the state towards
the 90 percent goal in eight years, since commercial
buildings are larger, and since the square footage is
cumulative and made of the combined totals of residential
and commercial structures.
Representative Austerman asked if the code issues affected
the energy efficiency provision in Item 37. Mr. Persily
assured him that the codes apply only to Item 35.
Co-Chair Hawker queried how to measure voluntary compliance
and how voluntary compliance would affect the totals. Mr.
Persily did not know. He opined that the state would have to
figure out whether reporting would be voluntary and how to
accumulate the data.
Co-Chair Hawker questioned whether the state was required to
adopt the codes or if compliance to the standard was the
issue. Mr. Persily replied that though the requirement is 90
percent, the law says that the state will implement the
energy code for residential and the energy code for
commercial buildings. At some point during the eight years,
the state would have to adopt the energy codes and gather
the data.
Mr. Fauske interjected that currently the energy rating for
compliance for residential buildings costs approximately
$300.
In a response to a question by Co-Chair Hawker, Mr. Persily
reported that his brother has tested federal buildings in
Alaska, which involves running plastic tubing throughout the
building, closing the doors, blowing fans, and seeing which
way the air moves.
11:27:48 AM
Vice-Chair Thomas asked if state office buildings or schools
would fall under the requirements. He did not think some
buildings had been built to be energy efficient. Mr. Persily
was not aware of anything in the law exempting public
buildings from meeting the energy efficiency codes.
Mr. Fauske pointed out that AHFC represents about 20 to 25
percent of residential mortgages in Alaska. Regarding
compliance, he noted that Fanny Mae, Freddie Mac, and other
mortgage companies do not have to adhere to Building Energy
Efficiency Standards (BEES) requirements, although they do
adhere to building codes. He had just attended a federal
home loan bank board meeting (he is a board member) where
the issue was discussed; they concluded that a great deal of
money was at stake.
11:30:12 AM
Representative Gara wondered how much money would be lost if
the state did not comply with the energy efficiency codes.
If the state did certify compliance with the codes, he
wondered whether the $28 million could be used for renewable
energy projects. Mr. Persily thought the state would have
wide latitude on how to use the money.
BRYAN BUTCHER, DIRECTOR, GOVERNMENT AFFAIRS AND PUBLIC
RELATIONS, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF
REVENUE (via teleconference), replied that, per previous
agreement with AEA, the funds would be split 50-50 between
AHFC and AEA. He listed estimated amounts of money that
could be used for the different programs:
· $2 million: weatherization and rebate support, software
enhancements, expanding an energy audit program to deal
with commercial, school, and state buildings
· $4 million: home-based renewable energy program, with
smart metering, net metering, ways of gathering
information
· $1.8 million: consumer education
· $4.5 million: weatherization community building
retrofit
· $2 million: statewide energy efficiency standards for
public buildings, including developing the commercial
energy code
Representative Gara asked whether the agreement to split the
money with AEA could be adjusted. Since AHFC was already
getting weatherization and other money, he did not think the
50-50 split would be good policy. Mr. Butcher replied that
the agreement could be adjusted. If the ARRA funds were
received, there would be policy meetings discussing how to
use the funds in the time allotted. He noted that
information was still being gathered. Mr. Fauske added that
both agencies would want all the money.
11:35:36 AM
Representative Gara emphasized his desire to use the funds
to deal with Alaska's energy crisis. Mr. Fauske thought the
legislature and the governor could set policy on the issue.
Mr. Persily stressed that meeting the energy efficiency
standards would take a lot of work. He referred to
legislation in the Senate that addressed the issue by
exempting structures without running water or utilities. He
referred to communities moving towards compliance but making
the process relevant and doable for Alaska. He opined that
the policy call was deciding whether the funds were wanted
and could be used well, and then adopting an interim
project.
Representative Kelly noted that the private sector was
moving ahead on the codes and asked if the federal
government would be satisfied with codes already in place.
Mr. Persily did not think so. He believed the legislature
would have to craft legislation that both complies with the
energy efficiency standards required under ARRA and works
for Alaska.
Co-Chair Hawker asked if local government could enact
standards in lieu of the state. Mr. Persily quoted the
legislation: "…the state or the applicable units of local
government that have authority to adopt building codes will
implement the following..."
11:39:52 AM
Representative Kelly stated for the record that just
determining how to deal with federal requirements would not
th
satisfy citizens who want more states rights as per the 10
amendment. He asked if there was some way to get around
federal requirements. Mr. Persily responded that there
probably was not; he thought there would be considerable
discussion regarding the issue.
Representative Austerman queried requirements for Items 36
and 37 and asked why the items were not in the original
budget. Ms. Hanrahan replied that originally the energy
funds assurances applied to all three programs or only to
one. She reported receiving conflicting information
regarding which programs were affected. She added that
another issue tied weatherization was the requirement to use
the prevailing wage, which is not how weatherization has
been operated in Alaska.
11:43:21 AM
Mr. Butcher explained that Davis-Bacon Act wages [a federal
law requiring the payment of prevailing wage on public works
projects] have historically been exempted for federal funds
coming in for weatherization, but ARRA stipulates that the
provision would apply to stimulus funds. All states are
waiting for guidance from the U.S. Department of Energy. He
did know that the Department of Energy would make the
decision, not the individual states.
11:44:24 AM
Mr. Fauske stated that AHFC was anxious to hear back from
the federal government about the issue; the corporation did
not want to "taint" the $200 million currently in
weatherization by adding federal money that requires the
measure.
Representative Gara wondered why the administration had
rejected Items 36 and 37. He felt that the administration's
recent response had been offensive. Ms. Hanrahan stated that
the administration had not taken the decision lightly. She
shared that the administration had been told to be
conservative in its approach until hearing from the U.S.
Department of Energy.
Representative Austerman asked for clarification concerning
federal requirements related to the block grants. Mr.
Persily detailed that the U.S. Department of Energy had
officially determined that $9.6 million would go to the
state for energy efficiency and conservation block grants;
$4.5 million would bypass the state and go directly to the
10 largest cities and boroughs. He specified that in
addition, 60 percent of the state's $9.5 million had to go
to communities too small to received direct funding.
11:48:59 AM
Mr. Fauske replied that AHFC is not aware of strings
attached to the funds. Ms. Hanrahan reiterated that the
department had had no guidance concerning the funds, aside
from the weatherization funds.
Representative Gara wondered how the 90 percent compliance
would be measured. Mr. Persily replied that within eight
years from the act at least 90 percent of new and renovated
residential and commercial buildings space must meet the
requirements. Representative Gara asked for further
clarification. Mr. Persily felt that the answers would come
from the U.S. Department of Energy. He stated that the
definition of "new" was not clear.
11:52:24 AM
Mr. Fauske concurred with Ms. Hanrahan about the issue of
compliance.
Ms. Hanrahan stated that the governor would need to sign
certification that she will comply with the assurances to
implement an energy building code and that the state would
implement a general policy ensuring that utility financial
incentives are in line. She emphasized the issue of
decoupling, which would have a significant impact on Alaska;
the administration wanted to make the assurance without the
decoupling. Regarding the state energy building codes, she
believed the question of preemption of local codes needed to
be answered. She felt that the cost to the homeowner needed
to be addressed; renovating a house in Fairbanks, for
example, would cost around $12,500.
Co-Chair Hawker questioned the relevancy of her remarks
about renovation costs, since the assurances would relate to
new construction. Ms. Hanrahan believed renovation applied.
11:55:20 AM
Mr. Persily stated that any renovation would be voluntary.
Ms. Hanrahan replied that the statewide energy code would
cost private homeowners when there was new construction on a
residential building.
Vice-Chair Thomas felt that Alaskans should learn to help
themselves when it comes to conserving energy in their
homes. He relayed personal experience. He felt that public
buildings, especially schools, need to be brought up to some
kind of standard.
Representative Fairclough noted that the communities of Tok,
Glennallen, and Kodiak had asked the legislature to consider
weatherization.
11:58:43 AM
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT
Co-Chair Hawker wanted to discuss the larger dollar items,
Items 10, 22, and the Unemployment Insurance Modernization.
He pointed out that the last line item was found in a
supplemental document.
GUY BELL, ASSISTANT COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT (DLWD), discussed Item 19, $4.3
million for Employment and Training Services. He explained
that the funding would allow the department to provide
enhanced services to out-of-work Alaskans through a web-
based labor exchange system and would fund eight positions,
including counselors and employment security specialists in
Anchorage, Fairbanks, Wasilla, and Kenai.
Co-Chair Hawker asked if the job centers would provide
services to rural Alaskans. Mr. Bell responded that the
department already provides services to rural areas; the
item would address areas with the largest influx of
unemployed workers.
Representative Gara asked about the closing of the Tok job
center and wondered if it should be reopened.
12:03:35 PM
Mr. Bell replied that job centers in Tok and Glennallen had
been kept open; Delta Junction and Petersburg were closed.
He explained that DLWD workload declines during the good
times and increases in more difficult times; 31 positions
had been eliminated over the past five years through both
layoff and attrition.
Representative Joule asked if the eight positions would be
in places with the highest unemployment. Mr. Bell clarified
that the positions were not necessarily in places with the
highest unemployment but the places with the largest volume
of job center activity.
Representative Joule explained that unemployment numbers in
rural Alaska may not reflect the actual number of
individuals who are unemployed. He wanted attention paid to
people who have given up on getting a job.
12:06:35 PM
Representative Fairclough asked if the 31 positions were
reclassified or if the budget was reduced. Mr. Bell
responded that the number of full-time positions had been
reduced in the budget.
Representative Fairclough queried the year the budget had
been reduced.
TOM NELSON, DIRECTOR, EMPLOYMENT SECURITY DIVISION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, informed the
committee that since 2005, DLWD has reduced 31 positions in
its employment and training component. The department has
been able to manage the workload by reclassification of
remaining staff. He noted that the unemployment rate was 6.2
percent in 2007.
Representative Fairclough asked if she would then see the
dollar reduction to the department in the 2005 budget. Mr.
Bell responded that the reduction in position count could be
seen, as well as a reduction in dollars. He noted that the
Division of Employment Security is nearly 100 percent
federally funded. The reduction in federal funding over the
period was reflected in the budget.
12:08:44 PM
Co-Chair Hawker queried the department's need for the
positions. Mr. Bell acknowledged sensitivity to increasing
staff but assured the public that asking for the funds would
not mean creating long-term costs.
Co-Chair Hawker asked if collective bargaining would allow
the department to hire positions with the up-front
understanding that they would not have a job when the
federal funds ran out. Mr. Bell replied no; however, there
is considerable turnover, which he explained.
12:11:12 PM
Co-Chair Hawker asked if the positions could be hired on a
contractual services basis with a termination date. Mr. Bell
responded that the department could consider non-permanent
positions, with the understanding that the individuals would
not be receiving standard state benefits because they are
project employees. He stated that the department felt it
would be more fair and appropriate to hire the positions
with benefits.
Co-Chair Hawker asked whether the positions should be
filled. Mr. Bell answered in the affirmative; he believed
the criteria could be met and the funds spent creatively in
a way that avoids future commitment from the state.
Ms. Hanrahan pointed out that the agencies had been asked to
describe what could be done with the funds without expanding
government.
Representative Kelly expressed concerns with adding
employees that would not have work in several years. He was
concerned about timing and asked why the positions should be
filled.
12:15:20 PM
Mr. Bell reiterated that the department was accustomed to
jobs coming and going depending on the economy. He thought
the goal to upgrade the skills of Alaskan residents and to
reduce non-resident hires was good. He pointed out that
there are job opportunities for Alaskans.
Representative Kelly reiterated concerns about the timing.
He would rather say no to the effort than get people to work
and cut off later.
12:18:33 PM
Representative Joule talked about references to "Velcro"
describing jobs that the state is stuck with. He thought
there were two sides to the story; for some people, the jobs
would provide an important level of security. He did not
think the question was where the work was but where the work
was going to be when the recession was over. He wanted to
provide vision for the future.
Representative Joule listed the necessities for his
constituents: education, healthcare, transportation, and
some level of resource development. He supported moving
rural people who cannot find work in construction towards
the jobs in education and health care that are being filled
by imported workers. He felt strongly that DWLD's ability to
retrain Alaskans is important and stressed the need for a
vision for Alaska's workforce.
12:21:15 PM
Vice-Chair Thomas told the committee that while doing
research for HB 58 (debt retirement for college students
from Alaska) he was shocked to discover that the state does
not track the need for professional jobs such as engineers,
teachers, or biologists in Alaska. He thought there should
be focus on tracking more than workforce development. He
pointed out that highly trained workers end up leaving
Alaska. He asked if two of the new positions could be
dedicated to determining the needs for professionally
trained workers.
Mr. Bell explained that industry and occupational forecasts
are done by the department's research and analysis section.
Projections for job growth and decline are made by
occupation. The most recent projection covers from 2006 to
2016 and shows there will be a need for 30,000 positions.
Identifying the supply side or how to train for priority
occupations is more difficult. He sympathized with
Representative Thomas regarding HB 58; he hoped to come up
with a workable method to track the need.
12:26:38 PM
Vice-Chair Thomas noted that the lack of inventory of need
made it difficult for families to plan the future related to
returning to Alaska and finding a job. He asked again if two
of the positions could be dedicated to the research.
Mr. Bell commented that the department is waiting for
information on how many jobs would be created by the
stimulus package. He thought there might be a role for
research analysis economists to set up a tracking mechanism.
Vice-Chair Thomas asked if the answer to his question was
no. He did not hear anything from the department about
helping college students. Mr. Bell responded that he was not
saying yes or no. The department acknowledges that the need
is important. He stated that there may be opportunities
within the funding.
12:29:39 PM
Representative Gara relayed a story of a constituent who had
been a job counselor for DLWD. His position had been cut.
The man expressed frustration at being unable to have a job
where he knew he could help multiple people find work, when
there were so many out of work. He asked for an explanation
of how the department operated in terms of getting people
retrained and able to get new jobs, and how this related to
the new positions.
Mr. Nelson explained that DLWD front-line staff (the
counselors and employment security specialists, which the
eight positions would be) helps people get re-employed. In
current conditions, the department is serving an increase of
68 percent of initial unemployment insurance claims; that
activity started in June 2008. The front-line staff tries to
intervene and immediately reconnect the workers to the
workforce. The ideal is to reconnect them in the areas and
industries they worked previously; if that is not possible,
staff tries to find them something suitable. If there are
significant barriers, more intensive services are required.
The counselor positions spend more time dealing with more
complex cases, such as drug and alcohol treatment and
referrals to child services. The system is designed to
facilitate those kinds of referrals. At any one point in
time on the continuum of services, workers can exit into
suitable employment.
12:33:10 PM
Representative Kelly pointed to Vice-Chair Thomas's question
regarding the needed research. He wanted the question
answered. Mr. Nelson responded that part of the answer lies
in two legislative appropriations over the past two fiscal
years. One appropriation was for a variable reporting system
and the other was for a credentialing project. The
combination of both will allow DLWD to inventory the skills
in communities in Alaska and to provide variable reports to
employers who have the needs. For example, if an employer in
a hospital has a need and lists the jobs with DLWD, the
department will be able to tell them ahead of time how many
of the skills or credentials exist in a certain geographic
area. That work along with the research and analysis will
provide the needed information.
Representative Kelly expected an answer to the question. He
expressed concerns that the department dealt more with union
jobs. He thought the department should work with the
university's data.
12:37:11 PM
Mr. Bell moved to Item 22, $9.2 million for the Working
Investment Act, a federal program directed towards re-
training unemployed or dislocated workers. He explained that
in FY09 the department received about $12 million in funding
under the program; the item would increase that amount
significantly.
Mr. Bell detailed that there were three categories to the
program. The first is a program focused on at-risk and
economically disadvantaged youth between the ages of 14 and
24. The $4 million would focus on a summer employment
program to increase work preparedness. The department has
begun contacting agencies that administer youth programs to
get the word out that the program might be available this
summer. The department hoped to serve about 1,600 youth
through the program. The employment opportunities for the
youth would be 100 percent subsidized.
Co-Chair Hawker questioned what would happen when the money
runs out. Mr. Bell replied that they would have a work
skill; the person could go into a trade or continue their
education.
12:40:49 PM
Representative Joule asked if the program would apply to
college students who come home in the summer months. Mr.
Bell replied that the student would need to meet income and
other eligibility criteria; the program is generally
intended more for young people who are disconnected.
Representative Austerman asked if the program would span two
summers. Mr. Bell responded that the funding would expire
June 30, 2011.
12:42:35 PM
Representative Crawford asked who would get the benefit of
the young people's labor and what criteria would be used to
decide who would get the subsidized workers. Mr. Bell
described a similar program in Anchorage. The entities
getting the workers could be in the private, public, or non-
profit sector.
Representative Crawford asked for more information. Mr.
Nelson gave the example of the King Career Center, a
construction academy in Anchorage. The trained youth are
hired by a consortium of construction companies and industry
leaders. The youth learn industry standards and then the
industry hires them. Last year, all but three of more than
70 youth that went through the center were hired. Ideally,
the positions would later be unsubsidized.
Representative Crawford thought companies would fight over
the fully subsidized positions.
12:45:23 PM
Mr. Nelson agreed. One of DLWD's tasks is to develop a
relationship with the employers to promote the programs for
youth as well as adult workers.
Representative Crawford did not understand the 100 percent
subsidy. He described experience of industry giving a 40
percent break for a first-period apprentice. Industry
competes for the 40 percent break. He wondered why there
would be such a high break, when it could be spread out to
more kids at a 50 percent subsidy, for example. Mr. Nelson
pointed out that the emphasis of the incentive funds in the
program is that the full subsidy is better than the normal
50 percent or less. The formula under the workforce
investment act works to develop an on-the-job training
opportunity or federally recognized apprenticeship
opportunity. The incentive is to get more employers
involved. The incentive is short-term.
Representative Crawford spoke of experience with prison
labor contracts that were ended because some businesses were
at a huge advantage with the cheap labor force. He could see
possibility of abuse. He queried the criteria that would be
used to decide which company would get the free workers.
12:48:52 PM
Mr. Bell admitted he did not have all the details and
offered to get more information.
Representative Crawford reported that every year 50,000 to
70,000 or one in four Alaskan jobs are filled by workers
from out-of-state, mainly in tourism, the fishing industry,
and the construction industry. He thought that a better
case could be made for connecting Alaskan kids with those
jobs. He felt the 100 percent subsidy proposed would benefit
employers more than employees.
Mr. Bell promised to get more information about the
perimeters of the program.
12:50:45 PM
Representative Austerman wanted to know, regarding Item 22,
if additional employees would need to be hired to do the
training. Mr. Bell replied that the department did not plan
to add additional staff. The work will be done mostly
through training providers; DLWD will be directing more
people to training. Eligibility criteria is being
established. More people will be trained without increasing
staff.
Co-Chair Hawker queried the strings attached to the item.
Mr. Bell explained that there will be a federal fund
increase in the operating budget. The department will work
with other training providers such as the university rather
than create permanent training programs. He cited other
experience with federal grants for large amounts of money
for specific training. He pointed to good partnerships with
training providers around the state.
Co-Chair Hawker asked if the goal could be accomplished. Mr.
Bell answered yes.
12:53:32 PM
Co-Chair Hawker asked if the governor's office found the
program acceptable in terms of risk. Ms. Hanarahan responded
that the policy issue must be decided by the governor and
the legislature.
Mr. Bell turned to the department's last item, Unemployment
Insurance Modernization. He noted that the issue has been
controversial for other states because of the strings
attached.
Co-Chair Hawker added that the issue had been discussed with
the governor's office. He believed the item would require
careful scrutiny.
Mr. Bell explained that the item was related to the
unemployment insurance program administered by DLWD. In
general, unemployment insurance (UI) is an insurance program
funded in Alaska by both employers and workers. A weekly
benefit is provided to workers who become unemployed to
support them until they are re-employed. The maximum weekly
benefit was increased during the last session to $370 per
week. Alaska is one of three states nationally in which
employees pay a portion of the UI tax; in all other states
the UI tax is paid fully by employers.
12:56:34 PM
Representative Crawford interjected that the legislature had
substantially raised the share that employees paid.
Mr. Bell continued that the ARRA provision offers monetary
incentive to states that adopt certain changes or offer
certain conditions for the purposes of qualifying for the UI
benefits. For Alaska, the incentive would be $15.6 million;
if Alaska met the criteria, the money would be deposited
into Alaska's UI trust by the federal government. He noted
that a legislative appropriation would not be required; the
deposit would automatically occur when the criteria were met
and the state applied for the funds.
Mr. Bell detailed that the first condition to receive one-
third of the incentive would be Alaska adding an alternative
base period for the purpose of qualifying individuals for UI
benefits. The rest of the funding would be dependent on both
the alternate base period and the state meeting at least two
of four specifically identified criteria. The Department of
Law (LAW) has already determined that Alaska meets the
second set of criteria. Therefore, Alaska is compliant.
However, in order to receive anything, the state must meet
the first criteria; Alaska is not compliant on that.
Co-Chair Hawker asked if the committee could stipulate point
two, while recognizing that point one is at issue. Mr. Bell
disclosed that Legislative Legal had raised questions
regarding the issue; LAW believes the criteria are met.
Mr. Bell reported that one of the primary concerns regarding
the provision in other states has been specific language in
ARRA indicating that in order to be in compliance, there
needs to be a change to permanent law. A number of states
have asked what that means. On March 19, 2009, the U.S.
Department of Labor indicated that the change had to be
permanent; however, if a state eventually decides to repeal
or modify any of the provisions, it may do so without
returning the incentive payments.
1:00:07 PM
Co-Chair Hawker asked reaction to the idea of passing the
law with an inherent repeal provision. Mr. Persily replied
that his understanding was that a sunset provision could not
be put in the law. To receive the one-third funds, the law
making the provision permanent in statute could be passed,
and then it could be repealed later.
Mr. Bell provided more information about the alternate base
period. The base period is the period of time that the
department looks at to determine if an individual is
qualified for UI benefits and the amount they will receive.
For example, if a person applied for UI benefits in the
present quarter (January 1, 2009 through March 31, 2009),
the department looks back at the four quarters preceding the
last quarter they could have worked, or September 1, 2007
through September 31, 2008; the most recently completed
quarter is skipped in determining eligibility. The recovery
act would change the law so that a person would be evaluated
under the alternate base if they did not qualify under the
current base.
Mr. Bell continued that the department looked at 2008 to
determine whether making the change would have a fiscal
impact on the UI trust. Individual claims denied in 2008
were re-evaluated to see if the applicants would have
qualified under the alternate base criteria. The department
determined that approximately 1,300 additional individuals
would have qualified for UI benefits; the estimated payout
would have been approximately $1.5 million. The information
was then given to the UI actuary, Jim Wilson, who determined
that the result would be a $10 per employer per year
increase for an annualized worker. The relative cost to the
employer would have gone from $376 to $386.
1:03:45 PM
Representative Kelly asked if raising benefits encouraged
workers to get back to work as soon as possible or to stay
on benefits. Mr. Nelson believed the intent of the UI weekly
amount is only a partial replacement of wages, or about 35
percent. About half of applicants receive the benefits.
Representative Kelly asked if benefits were a stimulus to
employment. Mr. Nelson did not think it was a stimulus to
employment.
Co-Chair Hawker asked if the increase in benefits would
motivate people to return to work or to be deadbeats. Mr.
Nelson stated that the department stimulates people to get
back to work. He did not think the amount of money
accomplished that, but he believed the department did a good
job engaging people in order to re-employ them as soon as
possible.
Representative Crawford interjected that unemployment is a
stimulus to keep workers in Alaska, especially apprentices
and trainees. Otherwise, they go other places where wages
are as high or higher. The legislature raised unemployment
to keep people in the state.
1:07:08 PM
Representative Gara opined that the public might support
rejecting stimulus funds for the item, which does not create
jobs. He reminded the committee that UI money goes to people
who are looking for work and does not subsidizes deadbeats.
He asserted that the benefits support economic recovery; he
estimated $15.6 million would enter the local economy at a
cost of $2 to $3 million to employers.
Mr. Bell spoke to the Unemployment Insurance Trust Fund,
which has a surplus as of Dec 31, 2008. He thought the
system was working well.
1:09:55 PM
Mr. Bell presented the employer's perspective, whose UI tax
burden is lessening from 2008 to 2010. The average employer
rate was 2.5 percent in 2005; in 2009 it is at 1.15 percent.
Mr. Wilson figured the rate impact of an alternate base
period with the 2010 employer share, assuming the state
recognizes 100 percent of the alternate base liability. The
employer rate would be 1.12 percent with the alternate base
period; without it would be 1.1 percent. There would be a
relative increase in cost, but because the employer share is
declining, the relative impact is still trending downward.
Mr. Persily thought the calculations assume that the entire
$15 million put into the trust fund is appropriated out for
eligible items under the program, as opposed to leaving some
behind in the trust fund, which would result in a lower
employer rate. Mr. Bell agreed; the department did not
factor in the additional $15.6 million.
Co-Chair Hawker wanted to be sure the committee was
following the conversation. Representative Gara said he was
not. Co-Chair Hawker referred to a remedy that would be
presented later.
1:13:27 PM
Mr. Bell explained another pertinent provision in ARRA that
does not relate to the alternate base period but that
affects Alaska. In order to meet the criteria of the act,
Alaska also has to be in compliance with all the provisions
of the federal UI act. Alaska is on notice that it does not
conform to the ability to allow federally recognized tribal
entities to become self-insured or reimbursable employers.
Generally speaking, employers in the state are charged a
rate for UI based on experience. A reimbursable employer,
such as some non-profits, the state, and other entities
reimburse the trust for actual experience, or UI benefits
paid to workers that left them. The federal law requires
states to enable federally recognized tribal entities to opt
to become reimbursable employers. There are around 305 such
entities in Alaska. The department did not think very many
of the entities would become reimbursable, but the option
has to be available. The conformity issue exists outside
ARRA, but is also a condition of the act.
1:15:30 PM
Representative Fairclough asked how long the department has
been aware of the non-compliance. Mr. Nelson replied that
the department was made aware in 2002 when Congress
prevented the U.S. Department of Labor from sanctioning
Alaska with federal funds.
Representative Fairclough wondered why legislation had not
been introduced to remedy the situation. Mr. Bell responded
that DLWD hoped legislation was going to be introduced to
address the matter.
Representative Fairclough asked who was reviewing the
provision. Mr. Bell replied that the Attorney General's
Office has reviewed the legislation and aggress that the
state needs to move forward with compliance.
Representative Fairclough wondered if the tribal entities
had given support. Mr. Bell did not think the department had
reached out to tribal entities. He said analysis had shown
that the actual benefit payouts in the aggregate for the
entities is significantly greater than the amount taken in.
When an employer becomes reimbursable, the employer becomes
100 percent responsible for the liability of the UI claims;
the employees do not pay a rate.
1:18:46 PM
Representative Fairclough asked about pooling with other
organizations. Mr. Nelson answered that the tribal entities
are listed on an annual eligibility federal register and
able to receive services from the Bureau of Indian Affairs
the U.S. Department of the Interior. The list includes
tribal employers and sub-entities that they wholly own. The
department had not reached out to the entities because each
one is different.
Co-Chair Hawker asked whether Alaska's child support
division and some block grants require the same recognition
of federally recognized tribal entities as the UI tax
provision. Mr. Nelson replied that the department's
sanctions result in a de-certification to receive funds from
the U.S. Department of Labor Employment and Training
Administration.
1:21:00 PM
Mr. Nelson noted that the state would lose a current 5.4
percent federal unemployment tax act credit, valued at
approximately $111 million. The state would have to start
paying the amount at de-certification. In addition,
approximately $20 million in UI administrative funds would
be lost; potentially job center funding could also be lost.
Co-Chair Hawker believed the Department of Revenue and the
Department of Health and Social Services would be affected
as well. Mr. Nelson agreed. He pointed out that the
requirements would still remain.
Representative Kelly asked whether the law hand to be
changed to accept the stimulus funds. Mr. Nelson replied
that the law would need to be changed.
Representative Gara asked whether other federal money would
be at risk if the legislature does not pass a law by the end
of session. Mr. Bell replied that significant progress needs
to be demonstrated. He did not think there was an absolute
answer to the question.
Representative Crawford asked about timing related to
compliance. Mr. Nelson replied that he did not know.
1:25:42 PM
Co-Chair Hawker said the issue would be revisited in
committee. He believed that the compliance put several other
state programs at risk. He spoke of legislation that had
been introduced to remedy the situation.
Mr. Bell described the progression of events that would take
place with compliance:
· The $15.6 would be deposited into the Alaska UI trust.
· The money would be held by the trust and earn interest.
· The money could be used to pay for benefits.
· Alternatively, subject to legislative appropriation,
the money could be used either for UI program
administration or technology improvements, or for re-
employment services through the job center network.
· There is no time limit on expenditure of the funds.
1:27:41 PM
Co-Chair Hawker asked whether the department factored in
adjustments to the trust for the investment of the $15.6
million. Mr. Bell replied that they did not.
Co-Chair Hawker asked about a possible remedy to the
increase in employer UI rates. Mr. Persily stated that there
had been some objections from employers, the National
Federation of Independent Businesses (NFIB), and the Alaska
State Chamber of Commerce. He explained that the provision
works like a capital appropriation that goes into the UI
trust fund. The fund is then overfunded and earns interest.
The legislature has the option under ARRA of appropriating
out any or all of the $15.6 million to spend on eligible
items. The $10 per year cost to the employer does not kick
in until after three years and only if all of the amount
were appropriated out and never earned interest. He said
that a solution could be found in finding out how much must
stay in the trust fund so that there is no cost to
employers; the rest can be used for eligible items.
Mr. Bell added that the issue is complicated; however, the
$15.6 million would go into the trust and increases the
solvency of the fund and earns interest.
1:30:42 PM
Mr. Bell pointed out that more careful analysis would have
to be made to determine how long the money would cover the
liability.
Mr. Persily noted that the decision about appropriating the
$15.6 million does not need to be made this year. The
current decision is whether the legislature wants to make
the statutory change in the base period to get the $15.6
million into the trust.
Co-Chair Hawker believed only a few million dollars would be
needed to keep employers from an increase in UI rates and
asked how much of the $15.6 million would be used. Mr.
Persily reported that there is preliminary conjecture that
it might be enough to leave $3 million in the fund
permanently, leaving $12 million for appropriation. He
agreed that the department should calculate projections with
its actuary if the intent is to hold employers harmless.
Co-Chair Hawker emphasized that $3 million was an educated
guess and wanted stronger numbers, but noted that the NFIB
and chamber of commerce were supportive of the option.
1:32:54 PM
Representative Gara queried what could be done with the
other $12 million. Mr. Bell replied that the amount could
possibly be used in the general fund as long as it was used
for eligible purposes. He disclosed that the department has
received general funds over the past couple years to cover
salary increases because of the declines in federal funding;
he did not know if the general funds would still be needed.
The department gave up general funds for the UI division,
because workloads were up and federal cash flow increased.
He detailed that there were some general funds still in the
employment services component.
Representative Gara asked if the $12 million could be used
anywhere. Mr. Bell replied that he could not comment on
possible conversations with the chamber of commerce. He
reiterated the need for the department actuary to conduct an
analysis before he could comment. He believed whether DLWD
needed general funds could be re-evaluated.
1:35:57 PM
Representative Gara viewed the money as free money until he
heard otherwise. Co-Chair Hawker believed there was a route
forward, although more calculations needed to be done. He
had originally viewed the ARRA provision as one of the most
problematical.
Mr. Bell noted that the measure would take a statutory
change that will allow more people to become eligible for UI
benefits; therefore, it increases liability to the UI trust.
He reiterated that future legislative committees could
revisit the law if it is passed.
1:38:02 PM
Ms. Hanrahan noted confusions due to uneven guidance and
lack of guidance. She added her appreciation for the
committee and the process.
Co-Chair Hawker pointed to a need for much more policy
discussion.
HB 199 was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 1:39 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| A M E N D M E N T 1 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 2 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| CSHB161 Explanation of Changes from (H)CRA.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Exec Budg Act-HB127-detailed comments 3-23-09.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| AK Railroad briefing.ppt |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| AMHTA Subport HB161 Admin Briefing Paper 3 24 09.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Blank Rome memo to ARRC 032309.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| A M E N D M E N T 3 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 4 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| A M E N D M E N T 5 - Gara.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| CSHB161(CRA)-DOR-TRS-03-27-09FN Corrected.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| DHSS Response 033009.doc |
HFIN 3/27/2009 1:30:00 PM |
HB 35 |
| HB127 Letter AK Miners Assoc..pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB127 Opposition Letter.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB127_Sponsor_Stmt.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 127 |
| HB161 SPONSOR STATEMENT.mht |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| HB161 Labor Bldg. Lease Costs.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep Millet Response from Dept of Admin.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep Millet Response from The Land Trust.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Rep. Millet Questions.pdf |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |
| Subport Architect Presentation.ppt |
HFIN 3/27/2009 1:30:00 PM |
HB 161 |