Legislature(2013 - 2014)HOUSE FINANCE 519
03/31/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Angela Rodell, Department of Revenue | |
| HB21 | |
| HB127 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 127 | TELECONFERENCED | |
| += | HB 21 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 31, 2014
8:35 a.m.
8:35:38 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:35 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mark Neuman, Vice-Chair
Representative Lindsey Holmes
ALSO PRESENT
Angela Rodell, Commissioner Designee, Department of
Revenue; Daniel George, Staff, Co-Chair Stoltze; Michael
Hanley, Commissioner, Department of Education and Early
Development; Kathy Lea, Deputy Director, Division of
Retirement and Benefits, Department of Administration; Andy
Mills, Special Assistant to the Commissioner, Department of
Administration; Beth Leibowitz, Assistant Ombudsman, Office
of the Ombudsman.
PRESENT VIA TELECONFERENCE
Linda Lord-Jenkins, State Ombudsman, Anchorage
SUMMARY
HB 21 FOUR-DAY SCHOOL WEEK
CSHB 21(FIN) was REPORTED out of committee with
no recommendation and with one new zero fiscal
note from Department of Education and Early
Development and one new zero fiscal note from
Department of Administration.
[Note: Action to report CSHB 21(FIN) from
committee was rescinded on April 1, 2014. Further
discussion on the bill and fiscal notes occurred
and the bill was reported out of committee at
that time. See minutes for the April 1, 2014,
8:30 a.m. meeting for detail.]
HB 127 OMBUDSMAN
HB 127 was HEARD and HELD in committee for
further consideration.
^CONFIRMATION HEARING: ANGELA RODELL, DEPARTMENT OF REVENUE
8:37:03 AM
Co-Chair Stoltze
ANGELA RODELL, COMMISSIONER DESIGNEE, DEPARTMENT OF
REVENUE, introduced herself as the commissioner designee
for the Department of Revenue (DOR). She gave a brief
overview of her public service and education history. She
revealed that her work as a financial advisor and
investment banker in New York City first connected her with
the Alaska Housing Finance Corporation (AHFC). She shared
that her visit state in 1996 had made a lasting impression
on her. She felt that Alaska had weathered well its oil
price based, volatile financial system and had continued to
develop and grow while attracting new residents. She
relayed that she jumped at the opportunity for the position
of Deputy Director for the Department of Revenue. She
appreciated the opportunity to influence discussions and
make a difference. She looked forward to future
opportunities.
8:42:34 AM
Representative Gara appreciated the polite nature of the
commissioner designee. He expressed dismay about SB 21 and
the latest revenue forecast from DOR.
Ms. Rodell appreciated the kind words. She spoke to
Alaska's future maneuvering in light of the national
financial climate.
8:45:28 AM
Representative Gara wondered if the commissioner was
working on the issue of reducing the over 7 percent student
loan interest rate in the state.
Ms. Rodell replied that she was on the board of the
corporation and had reviewed multiple options for
improvement. She said that currently the market penalized
student loan borrowers who had no collateral. She relayed
that the federal government had applied structures
governing loan programs. She mentioned a statute passed by
the legislature that provided assistance to the corporation
through a letter of credit that would help to recalibrate
the balance sheet and make them more competitive.
8:48:15 AM
Representative Costello asked what Ms. Rodell thought the
state's greatest challenges would be in the future, and how
the designee was suited face the challenges.
Ms. Rodell replied that the state would need to maintain
patience in order to see through to fruition the policies
that had been enacted. She mentioned SB 21, and explained
that it would take time to see how the new tax regime
worked and would generate results. She felt that the
greatest challenge facing the state was the willingness to
be patient and to take on some risk for huge benefits 5 to
10 years in the future.
8:50:19 AM
Representative Thompson asked whether Ms. Rodell would be
able to successfully lead the department with possibly
fewer personnel due to Alaska's lean economic future.
Ms. Rodell replied that she had complete confidence in the
department's staff. She stressed that she strove to arrive
at solutions to operating with less. She felt that the
investment in technology coupled with the creativity of the
staff would continue to deliver positive results for the
state.
8:51:56 AM
Representative Munoz asked how Ms. Rodell viewed the
state's financial future. She wondered how the state's
retiree security compared to Virginia and Illinois.
Ms. Rodell replied that the state was on solid financial
footing because of its reserve position. She applauded the
legislators for not taking the reserves for granted. The
unfunded liability provided the flag for investors and
outsiders. She noted that the actuarial required
contributions were always made and benefits were always
paid. She felt that it was incumbent on the state to meet
its responsibility in term of past obligations. She said
that Virginia had figured out a way to include the funding
requests. Illinois turned funding of pensions and
retirement into one-shot questions each year, and started
using it to balance, or not balance, their budget, causing
their unfunded liability to grow.
8:56:09 AM
Representative Guttenberg thought that Ms. Rodell's
confidence was reassuring. He wondered how the state would
balance the opposing forces of moving from a taxing
regulatory agency to being a commercial partner.
Commissioner Rodell replied that balancing the two would
provide a challenge for Alaska. She believed that only
being a taxing regulatory agency placed the state in an
adversarial role that cost the state time, legal fees, and
lost revenue collection. By moving into a commercial
partnership the state would move onto the same side of the
table as industry and would ensure that revenues were not
impacted as they had been in the past. She believed that
the change would result in future revenue growth to the
state, ensure commercialization of North Slope gas, and get
gas to Alaskans.
8:59:37 AM
Representative Guttenberg queried Ms. Rodell's experience
working with other entities involved in commercial and
regulatory processes.
Commissioner Rodell replied that the closest comparison she
could offer included privatizing the electric system in
California, which had failed miserably. She worked with the
state on an $11 billion bale out of the privatization
effort. She believed that the experience, although not
directly connected to the oil and gas issues of Alaska,
provided her enough skills to handle a large project in a
regulatory environment.
9:01:26 AM
Co-Chair Austerman discussed volatility of being a resource
export state. He wondered whether Ms. Rodell had considered
the work that would need to be done by the state in its new
commercial partner role.
Commissioner Rodell replied that the state had over $100
billion under the management Alaska Permanent Fund
Corporation and the Department of Revenue. She believed
that there were tremendous financial resources in the state
that could be used to stimulate the growth of an industry.
She thought that there was an opportunity to generate
different types of work; technology had changed how the
world worked and the state needed to look beyond natural
resources for generating jobs. She said that management of
asset allocation would continue to need to be monitored in
order to ensure that the state maintained a certain amount
of revenue. She said that hedging against oil production
and oil price had been discussed and would continue to be
considered. She relayed that some policies were easier and
less expensive to pursue when there were more resources and
a better rating. She stressed that people were more willing
to lend money to an entity with plenty of money and a good
credit rating.
9:05:24 AM
Co-Chair Austerman commented that it would take some time
to change the economics of a state that was based on
nonrenewable resources. He was hopeful that the economic
base would be determined sooner rather than later.
Representative Gara paraphrased quote from Roger Marks in a
March 28, 2014, Alaska Dispatch article that spoke to the
state's scoping investment and 25 percent responsibility in
the gasline. He expressed concern that the risk the state
was taking was disproportionate to the benefit it would
reap.
9:08:24 AM
Commissioner Rodell replied that government take in Alaska
included federal take. She said that BP, Exxon and
ConocoPhillips would take on all of the liabilities
associated with federal income tax. She shared that the
royalty in value vs. royalty in-kind study had highlighted
what the royalty take would need to be; in most other
countries the royalty take was significantly reduced and
production tax take was increased. In Alaska royalty went
not only to the state general fund, but also to the
permanent fund. The department had made a conscience effort
to not ask for any reduction in royalty, which meant that
the other factor for adjustment would be the production
tax. She disagreed with Mr. Mark's assessment. She said
that there was a possibility that the gasline would not go
forward, but the state should still be at the investment
table.
Co-Chair Stoltze supported the advancement of Ms. Rodell's
name for the appointment as commissioner.
9:13:40 AM
Representative Costello MOVED to advance the name of Angela
Rodell for appointment as commissioner for the Department
of Revenue. This name will be forwarded to the full
membership for the Legislature in joint session for
consideration and a final vote. There being NO OBJECTION,
it was so ordered.
9:14:36 AM
AT EASE
9:16:31 AM
RECONVENED
HOUSE BILL NO. 21
"An Act relating to the length of a school week; and
providing for an effective date."
9:16:41 AM
Representative Costello MOVED to ADOPT the proposed
committee substitute for HB 21, Work Draft 28-LS0137\S,
(Mischel, 3/30/14).
Co-Chair Stoltze OBJECTED for the purpose of discussion.
DANIEL GEORGE, STAFF, CO-CHAIR STOLTZE, discussed the CS.
He explained that the version before the committee
mentioned "alternate school term" in place of "four day
school week." He said that Sections 1 and 2 of the bill
defied the criteria required for school boards to address
their application to pursue a calendar that was less than
172 total days. A section was added to provide an
alternative "Days of Service" chart, in which teachers
could receive credits toward their retirement and benefits
while working in a shortened calendar year.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered. The CS was adopted.
Representative Wilson endorsed the changes reflected in the
new bill version. She said that the bill would allow school
districts to operate regularly based on the number of days
in session, or on an alternative schedule based on hours.
9:20:34 AM
Representative Costello relayed that other states had
adopted the practice of measuring the school year in hours.
She believed that the practice would provide for greater
flexibility for crafting curriculum specific to communities
and families. She believed that innovative methods should
be explored for delivering education across the state.
9:22:17 AM
Representative Guttenberg discussed Page 2, line 16. He
asked how the public comment would be gathered and
presented to the commissioner.
Representative Wilson responded that discussion and public
comment would take place at community meetings.
Representative Guttenberg understood that it would be up to
the school districts to demonstrate to the commissioner
that a meeting was held and that public comment was taken.
Representative Wilson agreed. She stressed that a vote of
some sort must occur by district or school in order to
determine support. She stressed the importance of not
micromanaging districts in order to give them flexibility.
9:25:07 AM
Representative Gara understood that school boards would
have to adopt any changes put forth by communities. He
cited stipulations in Section 2.
Representative Wilson replied that a community meeting
would occur first in order to assess the majority
consensus. She stated that the intent of the bill was to
achieve higher attendance rates and to enable student
participation in sports and other activities. She said that
another discussion would occur at the school board level
where public testimony would again be taken.
Representative Gara surmised that the school board would
make the ultimate decision on the school schedule.
9:28:18 AM
Representative Wilson replied in the affirmative. She
clarified that the bill required that there be a public
comment period and that the public opinion, not just the
school board's decision, be taken into consideration by the
commissioner.
Representative Gara requested assurances that students
would be required to be in school for a certain number of
hours, regardless of the number of days, and that there
would be no changes in retirement benefits for teachers.
9:30:16 AM
Representative Wilson said that the bill addressed the
retirement issue; teachers would receive the full year's
retirement credit.
Co-Chair Stoltze OPENED public testimony.
Co-Chair Stoltze CLOSED public testimony.
Co-Chair Stoltze warned of the complications and possible
litigation that could arise from altering schedules.
MICHAEL HANLEY, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, replied that the ability for an
alternate calendar was in current statute. He shared that
the language of the statute specified that the hours needed
to be equivalent to a 180 school year. He said that the
schedule could be crafted in order to meet the time
requirements for retirement benefits. He referenced Page 2,
line 3, which stated that the hours no longer needed to
meet the equivalent of a 180 day school year. He furthered
that the hours currently referenced in statute were minimal
floor hours and were used for situations in which disasters
took place and calendars needed to be adjusted. He said
that by removing the 180 connection the school district
would be allowed to approve a calendar that met the minimal
number of hours and could result in up to 7 weeks less of
instruction for students. He felt that shortening the
school year would not be beneficial to students. He felt
that very few school districts would switch to an
alternative schedule and those would likely be small
districts that had unique situations.
9:36:47 AM
KATHY LEA, DEPUTY DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION, testified that
teacher's working for a school district that had received
approval from the Department of Education and Early
Development to be on an alternate school term would receive
a year's worth of service toward retirement.
Co-Chair Stoltze asked about the contract negotiations. He
understood the responsibility to fund, but wondered what
would happen if the change was unsuccessful and had to be
reversed mid-year.
9:38:06 AM
Representative Wilson replied that contracts would need to
be renegotiated. She believed that some schools would
embrace the idea and that others would not take advantage
of the opportunity.
Co-Chair Stoltze reiterated that it would be difficult to
reverse from a four day week back to a five day week.
9:41:03 AM
Representative Munoz asked how many hours students were
required to be in school during the 180 days.
Commissioner Hanley replied that the school day was 6.5
hours long; typically 1020 hours in the 180 day school
year.
Representative Munoz understood that the proposal in the
bill would lower the hours by 120.
Commissioner Hanley replied yes, that it would allow the
minimum number of hours. He clarified that the district
currently had a 180 day school year with 10 of those days
being in-service days.
9:42:47 AM
Representative Gara understood that the bill would result
in some districts offering less school hours.
Commissioner Hanley replied that the minimal hours
recognized a minimum school day set at 4 hours for younger
students, and 5 hours for older. He said that that was in
statute to recognize days with parent conferences or early
release. He said that there were no school districts that
operated daily for 4 or 5 hours, but for longer periods of
time. He stressed that even though the minimum was there,
when the 180 or 170 student days was in place, over 1000
hours was typical.
Representative Gara asked if student would be attending
school for the same number of hours or less under the
legislation.
Commissioner Hanley replied that it would be up to the
districts. The bill would allow them to come forward with
fewer days and fewer hours.
Representative Gara expressed concern that student would be
attending school for fewer hours than they were currently.
Commissioner Hanley replied that currently all school
districts exceeded the minimum number of hours. He said
that shifting to 4 days a week, while keeping the school
day the same number of hours, would reduce the student's
time in school by 20 percent.
9:46:32 AM
Representative Edgmon asked why the schedule approval would
be left up to the board and not the department.
Representative Wilson replied the decision would be a local
one. She said that once the plan was determined by the
school board it would advance to the department and the
department would ensure that the plan met all of the
necessary requirements.
Representative Edgmon asked why the board of education
needed to be involved when the decision could be handled
solely be the department.
9:48:06 AM
Commissioner Hanley replied that currently local school
boards set the yearly calendars, which the bill maintained.
The only change would be approval from the commissioner of
the department when dropping below a certain number of
days.
9:50:11 AM
Representative Munoz asked whether the commissioner already
had the ability to approve the alternative schedule.
Commissioner Hanley replied yes.
Representative Munoz wondered whether the bill was
necessary given the authority already offered to the
commissioner.
Commissioner Hanley replied that the bill changed the time
a teacher needed to work to achieve the full year of
retirement credit.
Representative Wilson thought that the commissioner's
authority was based on a 4 day school week.
Commissioner Hanley replied that the authority offered him
the ability to approve an alternate calendar that fell
below the currently required days. He noted that there were
a significant number of alternative calendars that were
already being used.
Representative Wilson believed that if that was the case
then the main issue would be to ensure that teachers
received the full year's retirement credit for working the
alternate calendar years. She stressed that the intent of
the bill was not about teachers working less, but addressed
that a school with a 172 day calendar did not mean that
students were in the school for all of the 172 days. She
said that the alternate schedule was to improve attendance.
9:54:10 AM
Representative Thompson wondered whether shortening the
school week would result in a better product.
Representative Wilson appreciated the concern. She believed
that allowing flexibility to districts would improve
attendance levels. She believed that the community lead
decision making process was a safeguard.
9:57:36 AM
Representative Edgmon understood that the bill would put in
place a pilot program that would enable school districts to
better utilize custom calendar models. He expressed concern
that only a small number of school districts statewide
would be able to participate in the program. He relayed
that in bush Alaska the schools were the pulse of the
community during the school year. He expressed disbelief
that any of the smaller schools would elect to shift to a 4
day week. He thought that the bill was idealistic and not
realistic.
9:59:52 AM
Representative Costello asked if the conscience decision
had been made by the sponsor to not involve a policy call
in changing what was currently required in statute for the
minimum hours for schools.
Representative Wilson responded that the 4 day school week
was already statute and could be implemented by the school
board without community involvement. She said that the
issue that the bill addressed was the retirement portion.
She felt that further discussions needed to be had with the
commissioner concerning the parameters of the alternate
schedule possibilities. She felt that any changes should be
directed by a community decision. She thought that
community involvement in dramatic changes would be
imperative in order for the change to be successful.
Co-Chair Stoltze clarified that the latest version of the
bill did not categorize the program as a pilot program.
10:02:35 AM
Representative Costello asked if the legislature should
increase the minimum hours of a school day in state
statute.
Commissioner Hanley replied that a separate conversation
was necessary to address the issue.
Representative Costello agreed. She stressed that the bill
was not an effort to reduce the number of hours for
schools, but was an effort to give schools more flexibility
in their calendar.
ANDY MILLS, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF ADMINISTRATION, pointed out to the committee
that Page 2, line 19. He spoke to AS 14.25.22, which spoke
to a calendar for pension service credit for teacher that
was 133 days or more.
Co-Chair Stoltze agreed that changes should be made with
caution.
Mr. Mills replied that it would be something to watch for.
He said that any changes to hours would be very much a part
of the contract negotiations.
Co-Chair Stoltze asserted that absolutely changes would be
addressed in the contract negotiation process.
Representative Gara expressed concern that districts would
reduce the number of student school hours.
10:09:19 AM
Representative Wilson believed that the issue was a
separate discussion. She said that the state currently did
not mandate more than 172 days. She asked whether the
success of a student was measured by the amount of hours
spent in the classroom or test scores. She assured the
committee that the bill would not change the amount of
hours currently required. The bill was meant to address the
issue of retirement. She contended that the district needed
support and flexibility rather than additional regulation.
10:13:24 AM
Representative Guttenberg asked whether there was an appeal
process in place for those who could be opposed to changes
in their districts.
Commissioner Hanley replied that items 1 through 3 on Page
2 listed the current requirements. He said that the current
statute indicated that the school board would adopt a
schedule that would be approved by the commissioner.
10:15:40 AM
Representative Costello discussed the two fiscal notes.
Both had zero fiscal impact.
Co-Chair Stoltze stated that a letter of intent should be
drafted to accompany the legislation that recognized
unstated but potential future costs.
Representative Wilson agreed to include a letter of intent.
Representative Costello MOVED to REPORT CSHB 21(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 21(FIN) was REPORTED out of committee with no
recommendation and with one new zero fiscal note from
Department of Education and Early Development and one new
zero fiscal note from Department of Administration.
10:18:54 AM
AT EASE
10:21:18 AM
RECONVENED
HOUSE BILL NO. 127
"An Act clarifying that the Alaska Bar Association is
an agency for purposes of investigations by the
ombudsman; relating to compensation of the ombudsman
and to employment of staff by the ombudsman under
personal service contracts; providing that certain
records of communications between the ombudsman and an
agency are not public records; relating to disclosure
by an agency to the ombudsman of communications
subject to attorney-client and attorney work-product
privileges; relating to informal and formal reports of
opinions and recommendations issued by the ombudsman;
relating to the privilege of the ombudsman not to
testify and creating a privilege under which the
ombudsman is not required to disclose certain
documents; relating to procedures for procurement by
the ombudsman; relating to the definition of 'agency'
for purposes of the Ombudsman Act and providing
jurisdiction of the ombudsman over persons providing
certain services to the state by contract; and
amending Rules 501 and 503, Alaska Rules of Evidence."
10:21:29 AM
BETH LEIBOWITZ, ASSISTANT OMBUDSMAN, OFFICE OF THE
OMBUDSMAN, offered a sponsor statement:
The Ombudsman Act (AS 24.55) has not changed much
since enactment in 1975, which speaks well for its
basic structure. The ombudsman requested and obtained
some modifications of the Ombudsman Act in 1990. It
has become apparent that the Ombudsman Act would
benefit from updates to address several issues that
have arisen since 1990.
The following is a brief sectional description of the
bill:
· Section 1 of CSHB 127(JUD) provides that the
ombudsman may receive a step increase in salary,
rather than remaining Step A of Range 26 for the
ombudsman's entire term or terms.
· Section 2 clarifies the ombudsman's authority to
hire additional staff using a personal services
contract pursuant to AS 24.55.060(f).
· Section 3 amends a section on the ombudsman's
investigatory authority to refer simply to
"agency" instead of "state agency." This brings
the section into conformance with the rest of the
Ombudsman Act (AS 24.55), which consistently
refers to the ombudsman's authority to
investigate an administrative "agency."
· Section 4 prevents a general waiver of attorney-
client privilege by an agency if it shares its
attorney's advice with the Officer Ombudsman in
order to explain the agency's actions.
· Section 5 improves the wording of the ombudsman's
existing privilege not to testify or produce
records regarding matters brought to the
ombudsman's attention in the course of her
duties.
· Section 6 modernizes the ombudsman's procurement
authority.
· Sections 7 and 8 state that sections 4 and 5 are
indirect court rule amendments because they
modify evidentiary rules, and that therefore
sections 4 and 5 only take effect if the
legislation is approved by a two-thirds majority
vote of each house, as required by Art. IV,
Section 15 of the Constitution of the State of
Alaska.
10:26:41 AM
LINDA LORD-JENKINS, STATE OMBUDSMAN, ANCHORAGE (via
teleconference), supported the comments provided by her
assistant.
Representative Guttenberg asked whether sections 4 and 5.
applied when the ombudsman was not an attorney.
Ms. Leibowitz clarified that the section did not speak to
attorney-client privilege. She said that the privilege was
typical of ombudsman statutes and was designed to keep the
ombudsman from being a witness in other forms of
litigation.
Representative Guttenberg understood that the courts could
not compel an ombudsman or their staff under Section 5.
Ms. Leibowitz replied that that was her understanding of
the section.
10:29:13 AM
Co-Chair Stoltze asked about jurisdiction and interface
between criminal activities of a statutorily empowered
agency.
Ms. Lord-Jenkins replied nothing had changed in the way the
office had historically handled those matters.
Co-Chair Stoltze CLOSED public testimony.
HB 127 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:32:07 AM
The meeting was adjourned at 10:32 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB127 Sponsor Statement March 26 2014.pdf |
HFIN 3/31/2014 8:30:00 AM |
HB 127 |
| HB127 Explanation of Changes March 26 2014.pdf |
HFIN 3/31/2014 8:30:00 AM |
HB 127 |
| HB 21 - CS(FIN) - Ver S - 3.30.14.pdf |
HFIN 3/31/2014 8:30:00 AM |
HB 21 |