Legislature(1997 - 1998)

04/15/1997 01:48 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         April 15, 1997                                        
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 97-97, Side 1, #000 - end.                                          
  TAPE HFC 97-97, Side 2, #000 - end.                                          
  TAPE HFC 97-98, Side 1, #000 - end.                                          
  TAPE HFC 97-98, Side 2, #000 - end.                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Therriault  called  the  House  Finance  Committee                 
  meeting to order at 1:45 p.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Kelly                           
  Co-Chair Therriault           Representative Kohring                         
  Representative Davies         Representative Martin                          
  Representative Davis          Representative Moses                           
  Representative Foster         Representative Mulder                          
  Representative Grussendorf                                                   
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Senator  Lyda  Green;  Lynne  Smith,  Staff,  Representative                 
  Bunde;  Nancy Buell,  Director,  Division  of  Teaching  and                 
  Learning Support, Department of Education; James Popham, IOX                 
  Assessment  Associates;  Tuckerman  Babcock, Staff,  Senator                 
  Green; Marty Rutherford, Deputy Commissioner, Department  of                 
  Natural Resources;  John Baker, Assistant  Attorney General,                 
  Department of Law.                                                           
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 146    "An   Act   relating    to   competency    testing                 
            requirements for secondary students; and providing                 
            for an effective date."                                            
                                                                               
            HB  136  was   HELD  in   Committee  for   further                 
            consideration.                                                     
                                                                               
  HB 244    "An Act relating  to cost-of-living adjustments to                 
            state employee compensation; and  providing for an                 
            effective date."                                                   
                                                                               
            HB 244 was  reported out of  Committee with a  "do                 
            pass" recommendation  and with  three zero  fiscal                 
            notes   by  the  Office   of  the   Governor,  the                 
            Legislative Affairs Agency,  and the Alaska  Court                 
                                                                               
                                1                                              
                                                                               
                                                                               
            System.                                                            
                                                                               
  SB 109    "An  Act relating  to land  used for  agricultural                 
            purposes  and   to  state   land  classified   for                 
            agricultural   purposes   or   subject    to   the                 
            restriction of use for agricultural purposes only;                 
            and annulling certain  program regulations of  the                 
            Department   of   Natural   Resources   that   are                 
            inconsistent  with  the  amendments made  by  this                 
            Act."                                                              
                                                                               
            HCS CSSB 109  (FIN) was reported out  of Committee                 
            with  a  "do pass"  recommendation  and with  five                 
            fiscal impact notes,  three by  the Department  of                 
            Natural Resources, one by  the Department of  Law,                 
            and one by the Alaska Court System.                                
  HOUSE BILL NO. 146                                                           
                                                                               
       "An Act relating to competency testing requirements for                 
       secondary  students;  and  providing for  an  effective                 
       date."                                                                  
                                                                               
  LYNNE  SMITH,  STAFF,  REPRESENTATIVE  BUNDE,  testified  in                 
  support  of  HB 146.   She  asserted  that many  high school                 
  graduates  are finishing  school and  receiving high  school                 
  diplomas  without  the skills  necessary  to survive  in the                 
  world.                                                                       
                                                                               
  Ms. Smith noted that over twenty states  now conduct student                 
  competency tests for  a standard high  school diploma.   The                 
  students in these  states must  pass a test  with a  minimum                 
  score before  they are  allowed to  graduate.   Three states                 
  also have an exit  exam for an "Endorsed Diploma."   To earn                 
  this, the students not only have to pass the  test, but must                 
  score  at  a  designated  level,  higher  than  the  minimum                 
  required  for  a  regular diploma.    "Honors  Diplomas" are                 
  awarded in three states for higher testing levels.                           
                                                                               
  Ms. Smith observed  that under the  provisions of CS HB  146                 
  (HES),  a  student   is  required   to  pass  a   competency                 
  examination in the  areas of reading, English,  mathematics,                 
  science, Alaska and United States history before receiving a                 
  high school  diploma.   The test  would be  selected by  the                 
  Department  of  Education.     A   pupil  who  failed   this                 
  examination  and was  no longer  in attendance  would  get a                 
  certificate of attendance.  It  would indicate the number of                 
  years of attendance, but would also  show that the pupil has                 
  neither  passed  a  competency  examination nor  received  a                 
  diploma.  The  pupil would  have the opportunity  to be  re-                 
  examined,  within  three  years after  the  pupil  left high                 
  school.                                                                      
                                                                               
                                2                                              
                                                                               
                                                                               
  Representative Martin  provided  members  with  Amendment  1                 
  (copy on file).   He  noted that the  amendment would  begin                 
  testing earlier.                                                             
                                                                               
  NANCY BUELL,  DIRECTOR, DIVISION  OF  TEACHING AND  LEARNING                 
  SUPPORT explained that it is important  for students to have                 
  multiple opportunities to take the test and be remediated.                   
                                                                               
  Co-Chair  Therriault  summarized  that  the  test  would  be                 
  administered  to earlier  grades so  that there  would be  a                 
  number of years for students to be brought up to speed.                      
                                                                               
  Ms.  Buell  noted   that  the  Department  could   not  only                 
  administer  the  test   in  the  senior  years.     Co-Chair                 
  Therriault observed that  the test would be  administered in                 
  grades 9 through 12.                                                         
                                                                               
  Representative Mulder  noted that  the committee  substitute                 
  would test United States and Alaska history.                                 
                                                                               
  Ms. Buell noted that social science tests are developmental.                 
  She stressed  that social  science is  a broad  field.   She                 
  stated  that social  science tests  are more  complex.   She                 
  emphasized that it would  be difficult to estimate  the cost                 
  of these tests.                                                              
                                                                               
  Representative  Mulder  spoke  in  support   of  testing  in                 
  mathematics, English and  reading.  He  failed to see how  a                 
  diploma  could be  denied to a  child that  did not  have an                 
  understanding of Alaska  history.   Ms. Buell observed  that                 
  the  Department  cautioned  against  the  inclusion  of this                 
  subject area.                                                                
                                                                               
  Representative  Martin maintained  that  the development  of                 
  humanity and  civilization are  basic subjects.   He  stated                 
  that the Department  of Education should be able to evaluate                 
  the students.  He noted that Amendment 1 would test children                 
  in grades  4, 8 and 11,  and make sure remedial  courses are                 
  available.                                                                   
                                                                               
  Ms. Buell clarified that the Department of Education doesn't                 
  have  the  expertise to  develop  tests that  will withstand                 
  legal scrutiny,  from the state  level, to  deny a  diploma.                 
  She  observed that  teachers  throughout  the districts  are                 
  adequately testing  competency.  She  emphasized that  there                 
  are no mandated curriculums or standards in the State.                       
                                                                               
  Representative Kelly questioned  why there  is a three  year                 
  limit on the test.  Ms. Smith observed that the Sponsor felt                 
  that it  would be a good idea to  enable the student to have                 
  another chance.  She observed that Representative Bunde felt                 
                                                                               
                                3                                              
                                                                               
                                                                               
  that three years was  a reasonable amount of time  to retake                 
  the test.                                                                    
                                                                               
  Representative Kelly spoke in support  of extending the time                 
  that a student could take the test.                                          
                                                                               
  Representative Grussendorf noted that good  students may not                 
  be able  to pass the  test.  He  asked what would  happen to                 
  children that cannot pass  the test.  Ms. Buell  stated that                 
  the Department is  concerned about students that do not pass                 
  the test.   She  observed that  studies in  Texas show  that                 
  adequate students have  dropped out of school  after failing                 
  the  test,  due  to test  anxiety  or  other  reasons.   She                 
  stressed  that  students  that  could succeed  in  secondary                 
  education will fail the test due to other factors.                           
                                                                               
  Representative Grussendorf stated that the system  sometimes                 
  fails in the delivery of the initial skills, such as reading                 
  and writing.                                                                 
                                                                               
  Co-Chair  Hanley  clarified that  the legislation  would not                 
  affect GED's.  Ms. Buell noted that GED's cannot be given to                 
  anyone who  is currently in  school.  Co-Chair  Hanley noted                 
  that  the student  has  three years  after  they leave  high                 
  school to pass  the test.   He felt that  three years was  a                 
  reasonable extension.                                                        
                                                                               
  Ms. Buell noted that other states  have begun testing in the                 
  8th or 9th grades.  She stated that it takes 3 to 4 years to                 
  get everyone through the test.  She added that there will be                 
  a substantial dropout rate following  the institution of the                 
  test.                                                                        
                                                                               
  Co-Chair Hanley stated that  it is clear that  testing needs                 
  to start earlier.   He maintained that if able  students are                 
  failing the test  then the test is flawed.   He stated that,                 
  ideally, it would  be up to each individual school district,                 
  starting in  the first  grade, to  make sure  their students                 
  were trained.   He observed  that the question  is "at  what                 
  place do we as a State mandate, so that the school districts                 
  that aren't doing their jobs are forced to do have a test."                  
                                                                               
  Representative Davis expressed concern  that the test  would                 
  compete with the  GED program.  He asked how  the content of                 
  the test would relate to the GED test.                                       
                                                                               
  Co-Chair Therriault noted  that pupils have to  meet all the                 
  requirements of  high school and pass the test to get a high                 
  school diploma.                                                              
                                                                               
  JAMES  POPHAM, IOX ASSESSMENT  ASSOCIATES testified  via the                 
  teleconference network.   He  stated that  he has  developed                 
                                                                               
                                4                                              
                                                                               
                                                                               
  assessment  tests  and  has  testified regarding  assessment                 
  tests.  He  explained that the motivation  behind assessment                 
  tests is to increase  the caliber of the education  that the                 
  State's children are receiving.  He observed that Alaska  is                 
  in  a  position  to profit  from  the  experiences  of other                 
  states.   He emphasized that the  nature of the test  is the                 
  most  important  issue.   He maintain  that  if the  test is                 
  inappropriate or  cheaply purchased that education in Alaska                 
  will not benefit.                                                            
                                                                               
  Mr. Popham explained  that the  tests measure the  important                 
  knowledge and skills  that legislators  think a high  school                 
  student  ought  to possess  before  receiving a  high school                 
  diploma.   He stated that  if the test  conceptualizes those                 
  skills  in  a manner  that  the  teachers of  the  state can                 
  address  then  the  test  becomes  a  powerful  catalyst  to                 
  improving the quality  of the instruction.   If the test  is                 
  not well designed  it can be  an impediment to high  quality                 
  instruction.   The test  functions as  a curriculum  magnet.                 
  Whatever is assessed becomes a target of instruction for the                 
  state's teachers.  He cautioned  against an "off the  shelf"                 
  test,  such as  a standardized achievement  test.   He noted                 
  that these tests are not  designed as instructional targets.                 
  He observed  that these tests  cannot be defended  in court.                 
  He  stated  that it  costs  between $150  and  $250 thousand                 
  dollars to develop a  test per subject matter.   He stressed                 
  that this level  of funding  has to be  available to  assure                 
  that the test will withstand litigation.                                     
                                                                               
  Co-Chair  Hanley  observed  that HB  146  provides  that the                 
  Department of  Education develop  and  score the  test.   He                 
  asked what areas are the most commonly tested.                               
                                                                               
  Mr.  Popham cautioned against installing measures of content                 
  that  would  not be  considered  mainline for  United States                 
  citizens to possess, such as Alaska history.  He stated that                 
  it would be a violation of a child's constitutional right to                 
  be  refused  a diploma  for  not  passing a  test  on Alaska                 
  history.   He  observed that  most tests  focus on  reading,                 
  language arts and  mathematics.   Newer tests have  included                 
  science and social studies.   He noted that the  first tests                 
  were developed to  assess basic skills. He  noted that there                 
  are  four  major areas  reading/language  arts, mathematics,                 
  science, and social studies.                                                 
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Popham  noted   that  tests  have  been   installed  because                 
  legislators did not  believe that students were  receiving a                 
  proper  education.   Tests  have  been  used as  a  lever to                 
  increase quality.  He  cautioned that the installation of  a                 
  badly conceived test has negative impacts.                                   
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Martin noted that  legislators are expressing                 
  the frustration  of parents,  employers and  colleges.   Mr.                 
  Popham  agreed that citizens  have cried out  for the tests.                 
  He  noted  that  tests,  that  are built  properly,  benefit                 
  structural  planning decisions  and improve  the quality  of                 
  schooling.                                                                   
                                                                               
  Representative Mulder asked if the scope was limited to only                 
  reading, writing, and  mathematics, would  the State have  a                 
  more defensible test.   Mr.  Popham indicated that  limiting                 
  the subject matter would make it easier to build first rate,                 
  legally defensible  tests.   He  noted that  there has  been                 
  ample experience  and guidance in the area  of basic skills.                 
  He observed that the work of other states could be used.                     
                                                                               
  Mr.  Popham  noted  that  educators  and non-educators  must                 
  review each item  for bias.   Representatives of  individual                 
  minority groups must  review each item.  He  emphasized that                 
  it is too important not to do the job well.                                  
                                                                               
  Representative Mulder asked if the State would save money by                 
  limiting the scope.  Mr. Popham  agreed that the State would                 
  save money by  limiting the scope.   He emphasized that  any                 
  time an exotic  area, such as social  studies, is considered                 
  the cost is greater.  He  noted that social studies includes                 
  history, geography and government.   He recommended that the                 
  State start with what is well known.                                         
                                                                               
  Representative Martin maintained  that if a person  is going                 
  to be a  full citizen of  America they must  learn the  full                 
  political process.                                                           
                                                                               
  (Tape Change, HFC 97-97, Side 2)                                             
                                                                               
  Mr.  Popham  observed  that the  inclusion  alone  of social                 
  studies as  a test  area would  not be  contested in  court.                 
  However,  if  the  test  was  not properly  developed,  with                 
  involvement of  all concerned constituencies, it  could lead                 
  to   a  court  challenge.     He  stated   that  tests  cost                 
  approximately  $200 to  $250  thousand  dollars per  subject                 
  area.                                                                        
                                                                               
  Co-Chair Hanley stated that the intent is to test for skills                 
  versus understanding.  He observed that the ability  to read                 
  allows  learning  in a  lot  of  areas.   He  emphasized the                 
  benefit  of verbal and written  communication.  He asked how                 
  often tests should be issued.                                                
                                                                               
  Mr. Popham  recommended that  the  law not  include all  the                 
  details.  He stated that students should be given four years                 
  notice that they  are going  to master the  skills that  are                 
  going to be tested.  He observed that no state has been able                 
                                                                               
                                6                                              
                                                                               
                                                                               
  to  require  testing  with  less  than three  years  notice.                 
  Students should begin  testing in the ninth  or tenth grade.                 
  Multiple forms of the test are needed.                                       
                                                                               
  Co-Chair Therriault summarized that the  first test would be                 
  offered to ninth graders two years from now.  The test would                 
  be phased in over four years.                                                
                                                                               
  Mr.  Popham  stated  that  parents  and children  should  be                 
  notified in advance  of the  first test.   He observed  that                 
  some  lawsuits   have  claimed  that   students  have   been                 
  emotionally marked by doing bad on  the first test.  Parents                 
  should be given a sample test.                                               
                                                                               
  Representative Martin emphasized  that parents and educators                 
  need to be responsible.  Mr. Popham stated that teachers and                 
  administrators  do not  like  testing.   He agreed  that the                 
  focus  should be  on the  educational  delivery system.   He                 
  stressed that the notion is to have reform stimulated by the                 
  tests.                                                                       
                                                                               
  Representative Grussendorf observed  that many tests  depend                 
  on  memory.    He asked  if  a  true  skills  test could  be                 
  constructed.                                                                 
                                                                               
  Ms.  Buell stated that the Department  of Education does not                 
  have the expertise to  construct the test.  She  referred to                 
  the Alaska Student Content Standards.  She observed that the                 
  standards address learning in a more sophisticated way.  She                 
  stated that the CAT 5 could not be used as an exit exam.                     
                                                                               
  Representative Martin MOVED  to adopt  Amendment 1 (copy  on                 
  file).     He  observed  that  the   amendment  incorporates                 
  recommendations by Anchorage  educators.  Amendment  1 would                 
  assess students at grades 4, 8 and 11.   The amendment would                 
  also require intervention  plans to  be developed to  assist                 
  students whose  assessments  reveal they  have not  mastered                 
  skills required for the exit exam.                                           
                                                                               
  Co-Chair  Therriault  noted  that  there  will  be  multiple                 
  chances for students to be tested.   He observed that school                 
  districts can implement testing at earlier grades.  He asked                 
  if  the  fiscal  impact  of  remedial instruction  had  been                 
  considered.  Representative Martin responded that he did not                 
  know the impact of remedial instruction requirements.                        
                                                                               
  Co-Chair Therriault  reiterated that  testing will  occur in                 
  grades 9 through  12.   Representative Martin stressed  that                 
  testing should begin in earlier grades.                                      
                                                                               
  Ms.  Buell  explained that  the  Department will  have bench                 
  marks available to  school districts, of what  students will                 
                                                                               
                                7                                              
                                                                               
                                                                               
  need to know  in each grade.   Co-Chair Therriault  observed                 
  that most states administer exit tests in high school.                       
                                                                               
  Co-Chair  Hanley   noted  that  under   the  amendment   the                 
  Department of Education would determine the examination, but                 
  the district would set their  own standards.  Representative                 
  Martin responded that  perhaps the  Department of  Education                 
  would be a better facilitator.                                               
                                                                               
  Co-Chair Therriault  pointed out  that individual  districts                 
  can do what they want to  prepare their students.  The State                 
  establishes the hurdle for graduation.                                       
                                                                               
  Representative Martin noted frustration by teachers.                         
                                                                               
  A roll call vote  was taken on the MOTION to adopt Amendment                 
  1.                                                                           
                                                                               
  IN FAVOR: Martin, Grussendorf, Foster, Kohring, Kelly                        
  OPPOSED:  Mulder, Davis, Hanley, Therriault                                  
                                                                               
  Representatives Moses and Davies were absent from the vote.                  
                                                                               
  The MOTION PASSED (5-4).                                                     
                                                                               
  Representative Mulder discussed Amendment  2 (copy on file).                 
  Amendment   2  would  delete  the  requirement  for  testing                 
  science,  and social science.   He stated that the amendment                 
  would  leave in  the  basic areas  of  reading, writing  and                 
  mathematics.  He  stressed that  the amendment would  reduce                 
  the fiscal note and future litigation costs.                                 
                                                                               
  Representative Kelly MOVED to rescind the Committee's action                 
  in adopting  Amendment 1.    Representative Kelly  expressed                 
  concern with the fiscal cost of  the amendment.  There being                 
  NO OBJECTION, it was so ordered.                                             
                                                                               
  Representative Martin spoke  in support of Amendment  1.  He                 
  maintained that the amendment will  be minor in relationship                 
  to the failure  of students  in earlier school  years.   Co-                 
  Chair Therriault  asserted that  establishment  of the  test                 
  will cause school districts to reevaluate their students.                    
                                                                               
  Representative  Davis emphasized  that  the legislation  has                 
  been drafted around other states'  experiences.  He stressed                 
  that  the   amendment  should  be   addressed  in   separate                 
  legislation.   He stated that  the legislation is  the first                 
  step.   Representative  Mulder agreed  that  HB 146  is  the                 
  starting point from which to expand.   He emphasized that if                 
  the legislation  is too broad and encompassing it will fail.                 
                                                                               
                                                                               
                                8                                              
                                                                               
                                                                               
  A roll call vote was taken on  the MOTION to adopt Amendment                 
  1.                                                                           
                                                                               
  IN FAVOR: Grussendorf, Kohring, Martin                                       
  OPPOSED:  Mulder,    Davis,     Foster,    Kelly,     Moses,                 
  Hanley,             Therriault                                               
                                                                               
  Representative Davies was absent from the vote.                              
                                                                               
  The MOTION FAILED (3-7).                                                     
                                                                               
  Representative Mulder  MOVED to  adopt Amendment  2.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Mulder asked if the Department of Education's                 
  fiscal note could  be revised  downward.   Ms. Buell  stated                 
  that the Department's  fiscal note was underestimated.   She                 
  stressed that the fiscal note is conservative.  She observed                 
  that the fiscal  note did  not anticipate implementation  of                 
  tests for two  years.  She  observed that funding should  be                 
  transferred from personal services to  the contractual line.                 
  She stressed the need for expertise.   She did not think the                 
  fiscal  impact  of the  first year  would  be changed.   She                 
  emphasized that  if the test  security is lost it  has to be                 
  redeveloped and reprinted.                                                   
                                                                               
  In  response to a question by Co-Chair Therriault, Ms. Buell                 
  stated   that   additional   clerical   support  should   be                 
  maintained.  She  noted that  Department of Education  staff                 
  has  to  oversee   security,  confidentially,  scoring,  and                 
  transmission of  data.  She estimated that  one higher level                 
  staff  person could  be eliminated.   She observed  that the                 
  Department of  Education currently  has one  person for  all                 
  assessment tests, with no clerical support.   She noted that                 
  this is  almost the only  general fund  position that  "does                 
  this kind  of thing".   Other positions  are supported  with                 
  federal funds.   She emphasized that  it is not possible  to                 
  redeploy staff from other tasks.                                             
                                                                               
  Co-Chair Hanley recounted that the cost to develop the  test                 
  is around $200 thousand dollars per  test.  He observed that                 
  reading and English  would be  one test.   He stressed  that                 
  only two tests would be developed.                                           
                                                                               
  Ms. Buell noted  that travel is necessary to  convene groups                 
  of people who will scrutinize the test.                                      
                                                                               
  Co-Chair Therriault noted that the educational specialist II                 
  position, at range 21A, costs $71,602 thousand dollars.   He                 
  suggested  that  this  amount   be  removed  from   personal                 
  services.   He stated  that he  would support  $400 thousand                 
  dollars in contractual.  Ms. Buell stated that this would be                 
                                                                               
                                9                                              
                                                                               
                                                                               
  the minimum amount needed.  She maintained that reading is a                 
  separate area from the rest of language arts.                                
                                                                               
  Representative Kohring  spoke against the  legislation.   He                 
  questioned  the cost  of the  legislation.  Ms.  Buell noted                 
  that Hawaii's assessment budget is $500 thousand dollars per                 
  year.  Hawaii's  student population is similar  to Alaska's.                 
  Representative  Kohring emphasized  the need  to  reduce the                 
  budget.                                                                      
                                                                               
  Ms. Buell stressed  that the Department of  Education cannot                 
  support the legislation if it is not adequately funded.                      
                                                                               
  In response to  comments by Representative Martin,  Co-Chair                 
  Therriault emphasized that  tests have  to be defensible  in                 
  court.                                                                       
                                                                               
  HB 146 was HELD in Committee for further consideration.                      
                                                                               
  (Tape Change, HFC 97-98, Side 1)                                             
  SENATE BILL NO. 109                                                          
                                                                               
       "An Act relating to land used for agricultural purposes                 
       and to state land classified for agricultural  purposes                 
       or subject to  the restriction of use  for agricultural                 
       purposes   only;   and   annulling    certain   program                 
       regulations of the Department of Natural Resources that                 
       are inconsistent with the amendments made by this Act."                 
                                                                               
  Co-Chair Therriault provided members with  a new work draft,                 
                                                                               
  SENATOR LYDA GREEN reviewed the work  draft.  She noted that                 
  page 6, lines 6 - 14 allow a perpetual  covenant.  Perpetual                 
  covenant is  extended to  cover homestead entry  properties.                 
  The right  to construct  housing in  a subdivided parcel  is                 
  granted upon a $4 thousand dollars fee, paid to the State.                   
                                                                               
  Senator Green  noted that  there is  a six  year statute  of                 
  limitation on actions brought against a parcel owner.                        
                                                                               
  Senator Green stated that the $4.0  thousand dollar fee, for                 
  the  right  to  construct  housing,  shall  be  adjusted  to                 
  correspond  with  the  change in  the  consumer  price index                 
  (CPI).                                                                       
                                                                               
  Senator Green observed that the construction of condominiums                 
  is  not  permitted.    Representative  Davis  questioned  if                 
  consideration was  given  to  the  language  "non-commercial                 
  entities."   Senator Green observed  that the owner  has the                 
  right  to   construct  needed   housing  for   farm  related                 
                                                                               
                               10                                              
                                                                               
                                                                               
  activities.                                                                  
                                                                               
  Co-Chair Hanley  noted  that the  fee  was reduced  from  $6                 
  thousand dollars to  $4 thousand dollars, adjusted  for CPI.                 
  Senator Green  clarified that Point McKenzie is set aside as                 
  different from the other agricultural areas.  She emphasized                 
  that some of the parcels are so remote  that the addition of                 
  a home does not increase the value.  The right  to construct                 
  housing on  Point  McKenzie parcels  on  future  subdivision                 
  would  be  based on  an  appraisal.   Future  Point McKenzie                 
  parcels owners would  not have the  choice of paying the  $4                 
  thousand dollars fee.                                                        
                                                                               
  Co-Chair  Hanley pointed  out that  he purchased a  condo at                 
  half of what  it sold for in  1981.  He maintained  that CPI                 
  does not always reflect market price.   Senator Green stated                 
  that the purchaser has the option to do an appraisal.                        
                                                                               
  Senator Green  referred to  an omission  in the work  draft.                 
  She stated  that the intention  is that anyone  currently on                 
  Point McKenzie land will fall under the same requirements as                 
  other  agricultural  land  holders.   Therefore,  they could                 
  choose  to  pay  the $4  thousand  dollars  fee  or have  an                 
  appraisal.  In the future, land conveyed by the  State to an                 
  individual will be subdivided by appraisal only.                             
                                                                               
  TUCKERMAN  BABCOCK,  STAFF,  SENATOR GREEN  discovered  that                 
  language governing appraisals  was inadvertently deleted  by                 
  the drafter.                                                                 
                                                                               
  In response to a question  by Representative Davis, Co-Chair                 
  Therriault explained that agricultural land holders  receive                 
  two rights to  the land.   The legislation  would add  other                 
  rights.  Land holders would pay  an incremental cost for the                 
  additional right.  Representative Davis asserted that the $4                 
  thousand dollar  fee does  not relate  to the  value of  the                 
  land.                                                                        
                                                                               
  Mr.  Babcock  explained   that  the  appraisal  is   on  the                 
  additional  value   on  the  right  to   construct  housing.                 
  Appraisal values are estimated  at between 0 to $8  thousand                 
  dollars.                                                                     
                                                                               
  Co-Chair Hanley expressed concern that the fee could rise to                 
  $10 thousand dollars with inflation, over-time.  He observed                 
  that an appraisal would protect the landowner.                               
                                                                               
  Representative  Davis  questioned  if  future  transfers  to                 
  children of the landowners would  be consistent with Article                 
  VIII,  Section 1  of  the Constitution.    He observed  that                 
  preferential  conveyance  is  not  in  the public  interest.                 
  Senator Green did not think there  would be a constitutional                 
                                                                               
                               11                                              
                                                                               
                                                                               
  problem.  She  stressed that  the intention is  to take  the                 
  State off the title of the land.                                             
                                                                               
  SB 109 was HELD in Committee for further consideration.                      
  HOUSE BILL NO. 244                                                           
                                                                               
       "An Act relating to cost-of-living adjustments to state                 
       employee compensation;  and providing for  an effective                 
       date."                                                                  
                                                                               
  Co-Chair Hanley stated  that the legislation makes  the non-                 
  union salary increases subject to  legislative approval.  He                 
  explained that language in the  operating budget denying the                 
  contracts did not deny increases for non-union members since                 
  they are set  in statutory schedule.   The legislation  will                 
  add  language  that  will make  non-union  salary  increases                 
  subject to funding from the Legislature.                                     
  Co-Chair  Hanley observed that there  is no fiscal impact to                 
  the  legislation.   Without the legislation  the departments                 
  would have to absorb the cost of the increase.                               
                                                                               
  Representative  Martin  MOVED  to  report   HB  244  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.                                                   
                                                                               
  Co-Chair  Hanley  reiterated  that there  is  no  savings or                 
  impact from the  legislation.   Without the legislation  the                 
  departments would have to absorb the cost of the increase.                   
                                                                               
  There being NO OBJECTION, HB 244 was moved from Committee.                   
                                                                               
  HB  244  was reported  out  of  Committee with  a  "do pass"                 
  recommendation  and  with  three zero  fiscal  notes  by the                 
  Office of the Governor, the  Legislative Affairs Agency, and                 
  the Alaska Court System.                                                     
  SENATE BILL NO. 109                                                          
                                                                               
       "An Act relating to land used for agricultural purposes                 
       and  to state land classified for agricultural purposes                 
       or subject to  the restriction of use  for agricultural                 
       purposes   only;   and   annulling    certain   program                 
       regulations of the Department of Natural Resources that                 
       are inconsistent with the amendments made by this Act."                 
                                                                               
  Co-Chair Therriault MOVED to  adopt work draft, #O-LS0690/L,                 
  Chenoweth,  4/15/97.  There  being NO  OBJECTION, it  was so                 
  ordered.                                                                     
                                                                               
  Senator Green  provided members  with Amendment  1 (copy  on                 
  file).  The amendment would add back the appraisal language.                 
                                                                               
                               12                                              
                                                                               
                                                                               
  Senator Green reviewed Amendment 1:                                          
                                                                               
  *    Page 8, line 6, after "parcel" delete  the remainder of                 
       the sentence and insert:                                                
                                                                               
            (1)    is  $4,000  for   the  parcel,  subject  to                 
            adjustment under (h) of this section; or                           
                                                                               
            (2)   shall be  determined by an  appraisal by  an                 
            appraiser under  contract to the landowner  in the                 
            parcel; the appraisal must:                                        
                                                                               
                 (A)  be based upon the value of the parcel at                 
            the time of  the original state conveyance  of the                 
            agricultural rights, subject  to adjustment  under                 
            (h) of this section; and                                           
                                                                               
                 (B)  include the value,  determined as of the                 
            date  of subdivision,  of the  right to  construct                 
            housing  by  the landowner  under  (d)(3) of  this                 
            section.                                                           
                                                                               
  *    Page 9, Line 29,    Delete "all                                         
                           Insert "the"                                        
                                                                               
  *    Page 9, Line 29     After "land" insert "estate"                        
                                                                               
  *    Page 11, Line 1     After  "Act"   insert:  for   those                 
                           landowners  who   purchase  parcels                 
                           conveyed  by  the  state after  the                 
                           effective date of this act."                        
                                                                               
  Co-Chair Hanley noted that the  appraisal must be based upon                 
  the value of  the parcel at the  time of the original  state                 
  conveyance of the agricultural rights, subject to adjustment                 
  under (h) of this section; and include the value, determined                 
  as of the  date of  subdivision, of the  right to  construct                 
  housing by the landowner under (d)(3) of this section.                       
                                                                               
  Mr. Babcock explained that there are two options.  The first                 
  option would be to pay the $4 thousand dollars.   The second                 
  option would  be to  have an  appraisal.   The appraiser  is                 
  instructed to base the value of  the parcel on the value  at                 
  the  time  of the  original  state conveyance,  adjusted for                 
  inflation.    The  value  of  the agricultural  rights  land                 
  adjusted for inflation is compared  to the incremental value                 
  for the right to  construct housing.  There is  no inflation                 
  adjustment for the right to construct housing.                               
                                                                               
  Co-Chair Hanley argued that  the value would still be  based                 
  on  the CPI.   He questioned  why it  would be  necessary to                 
  establish a  value and  then  adjust it  by the  CPI on  the                 
                                                                               
                               13                                              
                                                                               
                                                                               
  parcel.                                                                      
                                                                               
  Mr.  Babcock  observed  that the  drafter  thought  that the                 
  procedure was  the only vehicle for someone  to appraise the                 
  difference in the value of the land with agricultural rights                 
  only  and the  additional right  to construct  housing.   He                 
  stated that subsection (A) or (B) could be deleted.                          
                                                                               
  Co-Chair Hanley noted  that the appraisal would be  based on                 
  the value of the property adjusted for the CPI.  Mr. Babcock                 
  suggested that subsection (A) be deleted.                                    
                                                                               
  Senator  Green  noted  that  the  intent  was  to  base  the                 
  comparison on  what it would  have cost to  buy agricultural                 
  rights or patent land at the  time of purchase, adjusted for                 
  today's price.                                                               
                                                                               
  Representative Moses maintained  that there is no  reason to                 
  get  an   appraisal.     In  response   to  a  question   by                 
  Representative  Moses, Senator Green clarified that the land                 
  holder determines which method will be used.                                 
                                                                               
  Co-Chair Hanley  spoke in support  of allowing the  owner to                 
  have an appraisal.  He noted that if the CPI applied  to the                 
  dollar  amount  is over  the  market value  the  owner would                 
  benefit from an appraisal.                                                   
  Senator Green reiterated that the owner has the choice.  Mr.                 
  Babcock  noted  that the  Department  supports  allowing the                 
  owner discretion.                                                            
                                                                               
  Co-Chair Hanley MOVED to delete subsection (A).  The revised                 
  amendment would read:                                                        
                                                                               
  *    Page 8, line 6, after "parcel"  delete the remainder of                 
       the sentence and insert:                                                
                                                                               
            (1)    is  $4,000  for   the  parcel,  subject  to                 
            adjustment under (h) of this section; or                           
                                                                               
            (2)   shall  be determined by  an appraisal  by an                 
            appraiser under contract  to the landowner  in the                 
            parcel;  the  appraisal  must include  the  value,                 
            determined as of  the date of subdivision,  of the                 
            right to construct housing by the  landowner under                 
            (d)(3) of this section.                                            
                                                                               
  *    Page 9, Line 29,    Delete "all                                         
                           Insert "the"                                        
                                                                               
  *    Page 9, Line 29     After "land" insert "estate"                        
                                                                               
  *    Page 11, Line 1     After  "Act"   insert:  for   those                 
                                                                               
                               14                                              
                                                                               
                                                                               
                           landowners  who  purchase   parcels                 
                           conveyed  by  the  state after  the                 
                           effective date of this act."                        
                                                                               
  There being NO OBJECTION, the amendment was adopted.                         
                                                                               
  Co-Chair Therriault MOVED  to adopt Amendment 1  as amended.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Representative Kelly  MOVED to  adopt Amendment  2 (copy  on                 
  file).  Amendment  2 would delete "or  spousal equivalent of                 
  the person."  He maintained that it should not be the policy                 
  of the  State to encourage benefits without  the contract of                 
  marriage.                                                                    
                                                                               
  Senator Green did not object to the amendment.                               
                                                                               
  Representative Moses thought that the amendment would result                 
  in problems due  to common law.  Co-Chair Therriault pointed                 
  out common law marriages do not exist in Alaska.                             
                                                                               
  Representative Kohring added  his name to  Amendment 2 as  a                 
  sponsor.                                                                     
                                                                               
  There being NO OBJECTION, Amendment 2 was adopted.                           
                                                                               
  Representative  Martin referred  to the Department  of Law's                 
  fiscal  note.   He  noted that  the  Department of  Law will                 
  defend challenges to the land instead of the grantee.                        
                                                                               
  (Tape Change, HFC 97-98, Side 2)                                             
                                                                               
  JOHN BAKER,  ASSISTANT ATTORNEY  GENERAL, DEPARTMENT  OF LAW                 
  clarified  that currently  the State retains  the underlying                 
  fee interest.   Under  current law,  the State  can move  to                 
  foreclose  by  bringing  an administrative  hearing  against                 
  owners  that  abuse the  agricultural  covenant.   Under the                 
  legislation,  the  State  would  be  required  to  bring  an                 
  original   action  into   court   to  enforce   any  alleged                 
  violations.                                                                  
                                                                               
  Representative Martin noted that this change would result in                 
  additional cost to the state.                                                
                                                                               
  Senator Green stressed  that the Department of  Law's fiscal                 
  note was based on the anticipation that some people would be                 
  disgruntled by the  fact that  there was no  charge for  the                 
  right  to construct housing.   She concluded  that since the                 
  legislation now charges  for this right  there will be  less                 
  litigation.                                                                  
                                                                               
  MARTY RUTHERFORD, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL                 
                                                                               
                               15                                              
                                                                               
                                                                               
  RESOURCES added that  since the fiscal note was compiled the                 
  legislation has been amended to  allow neighbors or citizens                 
  to bring  civil action  if someone  abused the  agricultural                 
  covenant.  Soil  and Water Conservation Districts  have also                 
  been added as arbitrators to ensure that people are aware of                 
  the agricultural requirements.  She  maintained that much of                 
  the onerous for management  of the covenant has  been shared                 
  by people in the district.                                                   
                                                                               
  Representative Martin  asserted that  the person  who brings                 
  suit should be responsible for the cost.                                     
                                                                               
  Ms. Rutherford clarified that if the State pursues the civil                 
  action the cost  would be born by  the State.  If  a citizen                 
  pursues  a  civil action  they  would  bear the  cost.   She                 
  maintained that abuses occur because people are not aware of                 
  the limitations.  She stressed that there have not been many                 
  abuses under current law.  She  did not anticipate that many                 
  actions would be pursued.                                                    
                                                                               
  Mr.  Baker agreed that  the burden  of enforcement  would be                 
  spread by the private action.  He pointed out that the State                 
  would still have to monitor any actions that are filed.  The                 
  State  will  also  have  to  monitor  the  parcels  and  any                 
  subdivision or conveyance of the parcels for violations.  He                 
  noted that there  is only  one full-time assistant  attorney                 
  general  representing  the Division  of  Agriculture.   That                 
  position is funded  through the Agricultural Revolving  Loan                 
  and would not be available for this type of enforcement.  He                 
  emphasized that during 1988 -  1992 there were approximately                 
  70  - 80 litigations at any given time with two and one-half                 
  full time  attorneys working on the litigation.  He observed                 
  that  under  any  new legal  regime  there  is  a period  of                 
  adjustment where parties test the parameter of the law.                      
                                                                               
  Co-Chair Hanley observed  that the intent is to  give owners                 
  title with a restrictive  covenant.  The covenant has  to be                 
  followed.    Any  actions  restricted  by the  covenant  can                 
  continue until the owner is sued.  If the activity continues                 
  over a period of time the court can  rule that the covenants                 
  are  waived for  non-enforcement.   He pointed out  that the                 
  Department  of Natural  Resources anticipates  visiting each                 
  parcel once every  three years to  see if the covenants  are                 
  being followed.   He stressed  that most violations  will be                 
  unintentional.  He expressed concern  that the Department of                 
  Law's fiscal note  allocates a full-time attorney.  He noted                 
  that  there are 475  parcels.  He  did not think  that there                 
  would be  40 cases a year.  He suggested that the Department                 
  of  Law's fiscal note is too high.   He acknowledged that it                 
  is difficult to anticipate caseloads.                                        
                                                                               
  Mr. Baker reiterated that there were two and one-half, full-                 
                                                                               
                               16                                              
                                                                               
                                                                               
  time  attorneys  and one  full-time  paralegal working  on a                 
  total of  80 active litigation  cases at any  one time.   He                 
  noted that the  cases tend to  be fairly complicated with  a                 
  project life of 4  - 5 years.  He emphasized  that the cases                 
  entail  a lot of factual issues that  can be litigated.  The                 
  recurring  theme has  been the  failure to  comply with  the                 
  legal restrictions.  He noted that defenses have been raised                 
  on lender  liability.   The agricultural  land holders  have                 
  argued that the State's restrictions made repayment of their                 
  loans impossible, resulting in third party litigation.                       
                                                                               
  Ms.  Rutherford  pointed out  that  the current  attorney is                 
  funded through the  Agricultural Revolving  Loan Fund.   The                 
  funding for  this position will  be reduced to  $20 thousand                 
  dollars in  FY 98.  There  will be no  full-time attorney or                 
  any general funds for  the this position in the  Division of                 
  Agriculture in FY 98.                                                        
                                                                               
  Co-Chair Hanley did  not think the legislation  would result                 
  in the  level of  litigation that  occurred between  1988 to                 
  1992.   He questioned  how many current  cases are currently                 
  being litigated.   He  did  not think  that the  legislation                 
  would result in 35 cases.                                                    
                                                                               
  Representative Mulder referred to the Department of  Natural                 
  Resources, Division of Land's fiscal note.                                   
                                                                               
  JANE  ANGVIK,  DIRECTOR,  DIVISION  OF LAND,  DEPARTMENT  OF                 
  NATURAL RESOURCES discussed the Division's fiscal note.  She                 
  observed that the change in revenues  is the amount of money                 
  anticipated  to  come  into  the  Division  as  a  result of                 
  payments for the purchase of building rights.  The change in                 
  revenues  should be  reduced by  20 percent  to reflect  the                 
  reduction from $6  to $4  thousand dollars.   The change  in                 
  revenues are anticipated at $60 thousand dollars.                            
                                                                               
  Ms. Angvik  noted that the purpose of the bill is to address                 
  concerns by farmers that they cannot borrow money with their                 
  current conveyance  documents.  The  farmers have  requested                 
  title to the land with an agricultural restriction to  allow                 
  them  to  borrow on  the land.    The Department  of Natural                 
  Resources supports the concept of the  bill.  She noted that                 
  the  ability to  put a  house  on each  of  the three  newly                 
  subdivided  parcels  is  the principle  value  that  will be                 
  increased.   She observed  that Point McKenzie  can only  be                 
  subdivided by appraisal because it is closest to Anchorage.                  
                                                                               
  Ms. Angvik  discussed enforcement.   She  observed that  the                 
  State, a neighbor or the municipality  can sue a land holder                 
  for their  failure to live up to the agricultural covenants.                 
  In addition,  Soil  and Water  Conservation Districts  could                 
  sue.  She  observed that the  covenants are recorded at  the                 
                                                                               
                               17                                              
                                                                               
                                                                               
  time of sale.                                                                
                                                                               
  Ms. Angvik observed  that similar legislation was  vetoed by                 
  the  Governor in  the past legislative  session.   She noted                 
  that the previous bill did not  require the purchaser to pay                 
  for the additional rights.   The Governor was also concerned                 
  that state agricultural  rights would  not be protected  and                 
  the State could convene in the title to terminate the rights                 
  of individuals.  She  observed that the State has  not taken                 
  action against a farmer.  There  were also concerns that, in                 
  the previous  version, the remedy  for non-compliance  could                 
  only be enforced through a civil suit by the State.                          
                                                                               
  Ms. Angvik noted  that the  Department of Natural  Resources                 
  would prefer  a conservation easement  to keep the  State in                 
  the  line  of title.   The  Department of  Natural Resources                 
  supports the bill.                                                           
                                                                               
  Ms.  Angvik further  discussed the  Division's fiscal  note.                 
  She noted that  the process  of converting existing  patents                 
  would  remain the same.   The monitoring  and enforcement of                 
  covenants could  be reduced.  She indicated  that she needed                 
  to discuss this component  with the Department of Law.   She                 
  reiterated that the  change in revenues would  be reduced to                 
  reflect the reduction from $6 to $4 thousand dollars.                        
                                                                               
  Co-Chair Therriault pointed  out that fiscal notes  could be                 
  addressed in the Conference Committee.                                       
                                                                               
  In  response  to  a question  by  Representative  Davis, Ms.                 
  Angvik agreed that  if the covenants  are not enforced  they                 
  could be lost.  Mr. Baker observed that if covenants are not                 
  enforced there is  a risk that the court will  deem that the                 
  covenant has been  waived.  The  covenants must be  enforced                 
  uniformly to prevent an argument that they have been waived.                 
                                                                               
                                                                               
  Ms. Angvik noted that  page 8, line 24 indicates  that there                 
  is a six  year statute of limitation.  She  clarified that a                 
  conservation easement  would run with the  agricultural uses                 
  of the land.  Everything except  the homesite would have the                 
  conservation easement.                                                       
                                                                               
  Co-Chair Therriault  noted  that the  Department of  Natural                 
  Resources  would  adjust  their  fiscal  note based  on  the                 
  changes to  the bill.   He added that  all the  fiscal notes                 
  would be reviewed by the Conference Committee.                               
                                                                               
  Representative Mulder MOVED to report HCS CSSB 109 (FIN) out                 
  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.                                                   
                                                                               
                               18                                              
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 5:09 p.m.                                           
                                                                               
                                                                               
                               19                                              

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