Legislature(1997 - 1998)

03/02/1998 02:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE FINANCE COMMITTEE                                           
                   March 2, 1998                                               
                     2:00 P.M.                                                 
TAPE HFC 98 - 47, Side 1.                                                      
TAPE HFC 98 - 47, Side 2.                                                      
TAPE HFC 98 - 48, Side 1.                                                      
TAPE HFC 98 - 48, Side 2.                                                      
CALL TO ORDER                                                                  
Co-Chair Hanley called the House Finance Committee meeting                     
to order at 2:00 P.M.                                                          
Co-Chair Hanley   Representative Kelly                                         
Co-Chair Therriault   Representative Grussendorf                               
Representative Martin  Representative G. Davis                                 
Representative Foster  Representative Mulder                                   
Representatives Kohring, J. Davies and Moses were not                          
present for the meeting.                                                       
ALSO PRESENT                                                                   
Representative Ivan Ivan, (Testified via Teleconference),                      
Akink; Representative Joe Ryan; Representative Jerry                           
Sanders; Annalee McConnell, Director, Office of Management                     
and Budget, Office of the Governor; Dan Spencer, Chief                         
Budget Analyst, Office of Management and Budget, Office of                     
the Governor; Mike Irwin, Commissioner, Department of                          
Community and Regional Affairs; John Bitney, Alaska Housing                    
Finance Corporation, Anchorage; Dwayne Peeples, Director,                      
Division of Administrative Services, Department of                             
Corrections; Janet Clarke, Director, Division of                               
Administrative Services, Department of Health and Social                       
Services; Karen Pearson, Health Program Manager, Division                      
of Public Health, Department of Health and Social Services;                    
Nico Bus, Budget Coordinator, Department of Military and                       
Veterans Affairs; Nancy Slagle, Director, Division of                          
Administrative Services, Department of Transportation and                      
Public Services; Tom Brigham, Director, Division of                            
Statewide Planning, Department of Transportation and Public                    
Facilities; Kevin Brooks, Director, Division of                                
Administrative Services, Department of Fish and Game;                          
Rebecca Gamez, Director, Division of Employment Services,                      
Department of Labor; Sharon Barton, Director, Division of                      
Administrative Services, Department of Administration;                         
Keith Gerken, Architect-Facilities, Division of General                        
Services, Department of Administration; Dean Guaneli, Chief                    
Assistant Attorney General, Criminal Division, Department                      
of Law; Mary Lou Burton, (Testified via Teleconference),                       
University of Alaska, Fairbanks.                                               
HB 370 An Act making an appropriation for relief of the                        
1997 fishery disaster in Bristol Bay and on the                                
Kuskokwim River; and providing for an effective                                
 HB 370 was HELD in Committee for further                                      
HB 461 An Act making supplemental and special                                  
appropriations; and providing for an effective                                 
 HB 461 was HELD in Committee for further                                      
HOUSE BILL NO. 370                                                             
"An Act making an appropriation for relief of the 1997                         
fishery disaster in Bristol Bay and on the Kuskokwim                           
River; and providing for an effective date."                                   
AKINK, explained that HB 370 requests $2.3 million dollars                     
in general funds as a match for the $7 million federal                         
dollars granted through the Magnuson-Stevens fund.  The                        
funds would provide for programs designed to assist                            
communities and fishermen in the Kuskokwin and Bristol Bay                     
regions which the Administration has been declared an                          
economic disaster.  The proclamation was issued in response                    
to the poor fishing returns occurring in those areas.                          
The State share would be $2.3 million dollars.  He                             
continued, with in-kind contributions provided by the                          
communities and the Department of Community and Regional                       
Affairs (DCRA), the actual amount requested from the                           
Legislature would be $1.875 million dollars.                                   
The following programs would be funded from the                                
? Community grant program for projects that are of                             
direct and/or indirect benefit to the fisheries                                
that sustain the economic viability of                                         
communities and would help to diversify the                                    
economy or assess the economic and social effects                              
of the commercial fisheries failure.                                           
? Loan programs to the Bristol Bay, Chignik and                                
Kuskokwin permit holders who are in financial                                  
crisis.  The Division of Investments at DCRA                                   
would administer the program.                                                  
? Economic planning in the Kuskokwin region.  The                              
funds would be used to enhance economic planning                               
capability and/or continue economic planning                                   
process and procedures.                                                        
? Fisheries education, training and research such                              
as smelt outmigration, salmon escarpment counts                                
and selected resource management issues.                                       
Representative Ivan summarized that a portion of the                           
funding would be used by DCRA to cover administrative costs                    
associated with the program.                                                   
REPRESENTATIVE JOE RYAN testified in support of the                            
purposed legislation.  He spoke about the intense poverty                      
in village areas as a result of poor economic fishing                          
conditions last summer.  In those areas, some of the                           
utility cooperatives have threatened to close, as the                          
villagers have not been able to afford to pay their bills.                     
Representative Ryan explained that DCRA initially requested                    
federal funding, although, the Federal Emergency Management                    
Agency (FEMA) stipulated that this type of economic                            
disaster request would not fall under their privy.                             
Following that meeting, the U.S. Department of Commerce                        
stepped in; FEMA did not want to establish a precedent of                      
granting money for this type of need because of the                            
resulting repercussions which could occur in other states.                     
Representative Ryan noted, following much discussion, the                      
federal government agreed to help provide funding to create                    
work projects in the villages so that they would be able to                    
get "back on their feet".  Unfortunately, that program will                    
not come into effect until August 1998, after the next                         
fishing season. A timing which would not address the                           
current crisis.                                                                
Representative Ryan reiterated that the people in this area                    
are desperate and need Legislative help.  He urged the                         
Committee's support of the measure.                                            
Representative Martin questioned why the legislation had                       
been limited to two regions while the entire area had                          
experienced hardship.  Co-Chair Hanley pointed out that                        
there is criteria established by the federal government,                       
which determines the disaster category.  He clarified that                     
this is a federal program in which the State would be                          
requested to match.                                                            
REPRESENTATIVE JERRY SANDERS commented that the majority of                    
people affected by the fish shortage live in this area and                     
have a very low yearly income.  They often make less than                      
$7 thousand dollars a year.  He stressed that this funding                     
would not help the "high-liners".  The loans will be small                     
and will need to be repaid.                                                    
Co-Chair Hanley asked for further information regarding the                    
Magnuson-Stevens federal act.                                                  
REGIONAL AFFAIRS (DCRA), explained that last year was the                      
first time funding had been available from the Magnuson-                       
Stevens Act, which was established to address economic                         
disasters.  Section "312" of that act was crafted in 1995                      
following a crash in the Georgia fisheries.  That request                      
was denied.  At that time, there had been enough impetus                       
created and people affected, that the federal government                       
agreed that there should be a program to help with those                       
types of economic disasters.                                                   
Alaska is the first State to have a secretarial declaration                    
under the Magnuson-Stevens provision.  On July 18, 1997,                       
Governor Knowles claimed an economic disaster in the                           
Bristol Bay and Kuskokwin areas.  Bristol Bay and Kuskokwim                    
seemed to fit the type of situation most appropriate by                        
Section 312 standards of the Magnuson-Stevens Act.  The                        
federal government uses certain criteria to determine if                       
there has been an economic disaster.  The criteria address                     
income and the amount of dependence that the area has on                       
that source of income.                                                         
DCRA was able to create a package that was acceptable to                       
the federal government yet met the communities needs. HB
370 is comprised of 70% community block grants for                             
fisheries, economic concerns and development enhancement.                      
The remaining 30% would consist of a no-interest loan                          
program for individuals who live in those communities.                         
Representative Martin voiced concern in how broad the                          
funding language of the legislation was.  He noted that he                     
would support helping individual's hardships, but                              
questioned the community block grant aspects of the                            
legislation.  Commissioner Irwin explained that the                            
committee substitute contains the amount that was included                     
in the Governor's supplemental request for this funding.                       
He explained that the way the federal government program                       
works is that a certain amount of in-kind be required                          
against the State's match.  He agreed that the people of                       
the area who are economically suffering, their needs should                    
be addressed first.  He guaranteed Committee members that                      
the loan program would be the first aspect implemented.                        
Commissioner Irwin commented that the people living in the                     
villages have advocated for these projects.  The programs                      
match with language in the Magnuson-Stevens Act.  This was                     
a way in which the community as a whole could develop some                     
infrastructure and enhancement for future wages.  There is                     
$1.86 million dollars set aside for the loan program,                          
providing an economic benefit in the amount of $1 thousand                     
dollars per person.  The community works project would not                     
be able to begin until the end of the winter.  Co-Chair                        
Hanley asked if there are restrictions within federal law                      
which prohibited DCRA from loaning more than $1 thousand                       
dollars per person.  Commissioner Irwin replied that there                     
was not a limit established; these would be "no-interest"                      
loans and the Permanent Fund Dividend (PFD) could be used                      
as collateral.                                                                 
Representative Kelly believed that it would be more                            
advantageous to take the entire amount provided by the                         
federal government and make larger loans available to those                    
living in the village area.  He suggested that the public                      
works project probably would not work in an area where the                     
resident's fish as fishing is what they do and generally                       
they are not interested in other job markets.                                  
Commissioner Irwin understood Representative Kelly's                           
concern.  He emphasized that the people living in these                        
regions initially did not want the loan program. U.S.                          
Congress stressed the need to implement the program.  He                       
stated that the proposed projects would enhance the                            
community while also meeting the objectives of the                             
Magnuson-Stevens Act.                                                          
Representative Kelly reiterated that if it was the intent                      
to help people during this economic need, that should be                       
addressed during the loan process.  He stated that the                         
public works projects should be addressed in a competitive                     
process in the Capital Budget.                                                 
Co-Chair Therriault asked what an "in-kind" contribution                       
from DCRA would consist of.  Commissioner Irwin replied                        
that the Department has accumulated a lot of staff time and                    
travel dollars.  In response to the fisheries disaster,                        
which began last July, DCRA has spent close to $200                            
thousand dollars.  Those expenses will not be prorated,                        
although, the Department's expectation is that in moving                       
forward, there will be in-kind contributions to help defray                    
the costs.                                                                     
Co-Chair Therriault asked DCRA's program support and                           
general fund dollars attached with it.  Commissioner Irwin                     
replied that 2% of the overall program cost would be                           
allocated to the Department for in-kind support expenses.                      
Co-Chair Therriault inquired the length of the loans.                          
Commissioner Irwin replied initially it had been four years                    
but now it might have been changed to two years.  He                           
reiterated that borrowers have the option of using their                       
PFD's as collateral.                                                           
(Tape Change HFC 98- 47, Side 2).                                              
In response to Representative Therriault's query,                              
Commissioner Irwin touched on community project                                
possibilities to be undertaken to improve that quality of                      
life in those areas.                                                           
Representative G. Davis pointed out that the economic                          
disaster was affecting more than just the fishermen,                           
although, the loan was not being offered to any others.                        
Commissioner Irwin stated that there was not enough money                      
to go around.  He added that there is a program through the                    
Small Business Association (SBA) for getting small                             
businesses 4% loans available primarily for people involved                    
in the fisheries communities.                                                  
Co-Chair Hanley asked what would count as a match toward                       
federal funds.  Commissioner Irwin stated that the                             
Department of Commerce had accepted DCRA's formula for                         
community and local in-kind matching determined by a                           
federal percentage.  Co-Chair Hanley asked if the $3                           
million dollars for FEMA would be considered a match.                          
Commissioner Irwin advised that it would not.  Every state                     
dollar spent has to be matched by three federal dollars.                       
Federal money will be available the week of March 7th.                         
The economic disaster determination was made by the                            
congressional delegation.  He commented that a formula had                     
not been used to make that determination.                                      
Co-Chair Hanley asked if some of the money could be used                       
too pay the utility providers.  Commissioner Irwin replied                     
that the funding could not be used to subsidize fuel sales.                    
The local utilities would need to rely upon people                             
receiving loan money to pay back their utility bills.                          
Co-Chair Hanley inquired if there were non-residents                           
eligible for the loans.  Commissioner Irwin advised that                       
they could possibly qualify.  It would be based upon permit                    
holding in one of the selected areas.  There will be                           
limitations in calculating the percent of the annual                           
household income from the fishery.  In order to qualify for                    
the loan program, a person must make 51% or more of their                      
income in that fishery.                                                        
Representative Martin commented that it appeared most of                       
the funds would be distributed to the Administration rather                    
than going to those in need.  Commissioner Irwin responded                     
that administrative costs would amount to 2% of the total                      
Representative Foster asked if assistance would be limited                     
to the list of villages named in the bill.  Commissioner                       
Irwin replied that they would be available to the permit                       
holders in the Bristol Bay and Kuskokwin River region.  Co-                    
Chair Hanley pointed out that permit holders could get the                     
loans no matter where they live if they meet the criteria.                     
Community grants would be limited to communities listed in                     
the bill.                                                                      
Co-Chair Hanley agreed that the loans were essential,                          
whereas, he felt that the economic development concerns                        
require further discussion in order to be placed on the                        
fast track time-sensitive supplemental.  He did not think                      
that diversification of the economy would help the                             
Commissioner Irwin pointed out that initially, the U.S.                        
Department of Commerce specified that there would be no                        
direct grants administered.  DCRA struggled to convince the                    
feds that the proposed legislation would be a way to get                       
funds into the pockets of the villagers.  The proposed                         
community works program would provide the best long term                       
help for the villages.  Because the federal government is                      
paying for the bulk of the program, DCRA is forced to opt                      
for these expenditures.  To not include these programs                         
which comprise 70% of the proposal, DCRA would have to                         
renegotiate with Congress.  He warned such action could                        
slow up the process or even make it "dead in the water".                       
Co-Chair Hanley voiced his frustration with the program and                    
how well it will ultimately affect the people in those                         
Representative Ivan advised that the response team had                         
created the best program possible so to receive the direct                     
grant for the individuals living in the village areas.  He                     
urged the Committee's support for the legislation.                             
HB 370 was HELD in Committee for further consideration.                        
(Tape Change HFC 98- 48, Side 1).                                              
HOUSE BILL NO. 461                                                             
"An Act making supplemental and special                                        
appropriations; and providing for an effective date."                          
BUDGET, OFFICE OF THE GOVERNOR, provided an overview of the                    
proposed time-sensitive appropriations from the Governor's                     
FY98 Supplemental Bill (HB397, SB292).  She assured                            
Committee members that the Administration had placed strict                    
limits on what would be considered time-sensitive.                             
DEPARTMENT OF REVENUE  -  1 (a)                                                
BUDGET (OMB), OFFICE OF THE GOVERNOR, stated that 1(a)                         
would address the immediate funding for monies needed to                       
prevent cash-flow problems for the Bank of America                             
building.  Department of Administration (DOA) has been                         
paying maintenance costs out of their budget as a stopgap                      
measure, however, that budget is experiencing it's own cash                    
flow problems. Private tenants are currently paying AHFC,                      
and OMB would prefer to give AHFC the authority to contract                    
with DOA.  The request would address the fiscal note                           
situation resulting from last session.                                         
ANCHORAGE, advised that AHFC at this time has no authority                     
to use the receipts from the building to pay for operation                     
and maintenance costs.  AHFC has been collecting the                           
receipts in a separate holding account.  With this                             
authority, AHFC would RSA reimbursement to DOA for their                       
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS - 1(b)                            
Co-Chair Hanley advised that Section 1(b) had been                             
addressed in HB 370.                                                           
DEPARTMENT OF CORRECTIONS - 1(c)                                               
Mr. Spencer explained that the requested appropriation                         
would be used to cover costs associated with Community                         
Residential Center (CRC) beds.  Some CRC contracts will                        
expire March 31, 1998.  The Department cannot implement                        
contracts to continue these beds if this requested funding                     
is not made available.                                                         
Representative Mulder commented that the Department is                         
looking into existing funding that could be applied.                           
SERVICES, DEPARTMENT OF CORRECTIONS (DOC), noted that since                    
the supplemental request was submitted, the Department has                     
done a reassessment of the CRC funding BRU's.  There is $18                    
thousand dollars available in a new CRC BRU, which could be                    
available because of start up delays of new beds.                              
Additionally, $64 thousand more dollars has been identified                    
in an existing CRC BRU, money which could also be made                         
available.  He noted that to date, the $236 thousand dollar                    
initial request could be reduced by $82 thousand dollars.                      
Mr. Peeples addressed the program receipts.  He stated that                    
$50 thousand dollars would come from the Drinking While                        
Intoxicated (DWI) Program.  The Department was authorized                      
to receive funds which were above the remaining account                        
balance in that program.  Co-Chair Hanley commented that                       
the in-mates occupying the beds would pay for a large                          
DEPARTMENT OF HEALTH AND SOCIAL SERVICES - 1(d)                                
that the $100 thousand dollar appropriation request would                      
be used to fund the Maternal Child Care Clinics scheduled                      
to begin in late March.  These clinics may be cancelled if                     
a supplemental appropriation allowing use of program                           
receipts from clinic fees is not approved.                                     
the work performed by the specialty clinics.  With a                           
professional team traveling out to rural communities allows                    
those families not to have to travel to Anchorage or the                       
lower 48 in order to access medical services.                                  
Co-Chair Hanley pointed out that not all people pay for                        
services received at these clinics.  He asked if the                           
people, who do pay, cover costs of the clinics.  Ms. Clarke                    
understood that the clinics were subsidized through other                      
funding mechanisms.  Last year, the Department received                        
funding through Alaska Mental Health Trust Authority as                        
well as federal block grants.  She agreed that program                         
receipt revenue does not cover the full cost of the                            
Co-Chair Hanley questioned why a supplemental request                          
exists when the Department had these clinics included in                       
last year's budget proposal.  Ms. Pearson explained that                       
the program staff was not aware during last year's budget                      
that the Division would no longer be able to go to the                         
Legislative Budget and Audit Committee (LBA) for additional                    
program receipts.                                                              
Representative Foster echoed concern.  Ms. Clarke noted                        
that the Department does have some remaining funds                             
resulting from an increase received from the FY99 Mental                       
Health Trust Authority which could continue some clinics.                      
DEPARTMENT OF MILITARY & VETERAN'S AFFAIRS - 1(e)                              
VETERAN'S AFFAIRS (DMVA), stated that the requested funding                    
would coordinate federal receipts for Poker Flats Research                     
Range.  The Department will transfer funding to the                            
University of Alaska so that construction can begin this                       
The specific work to be done would happen over a two year                      
time frame, costing about $20 million federal dollars.                         
Those funds would be used for refurbishment of a road and                      
the technology support.  He noted that because of existing                     
agreements, it would be easiest for those funds to be                          
distributed through DMVA.  The Department would act as                         
funding conduit.  Mr. Bus noted that there would be no                         
money for the Department.                                                      
Representative Martin pointed out that Section 1(e) and                        
1(i) represented the same money.  He asked if the funds                        
would conflict with the Kodiak Space Center.  Co-Chair                         
Therriault explained that Poker Flats rockets were                             
atmospheric sounding rockets and which could not achieve                       
orbit; the Kodiak facility rockets will orbit.                                 
Representative Martin asked how much money had been spent                      
over the past five years for upgrading.                                        
OF ALASKA, FAIRBANKS, believed that approximately $10                          
million dollars has been spent since 1990.  The project has                    
been 100% federally refunded.                                                  
Co-Chair Hanley questioned why this item had been included                     
in the fast track supplemental.                                                
FACILITIES (DOTPF), stated that this stretch of the road is                    
in great need of repair.  It had been included in the State                    
Transportation Improvement Program (STIP) to fix sections                      
of the road during a five years period beginning in 2000.                      
Because of the damages, which occurred this summer, the                        
Department realized they needed to speed up the work.  The                     
road has deteriorated.  The Federal Highway department has                     
granted approval for this project.                                             
The Department is rapidly working to get the proposal                          
completed in order to go to bid by April so that the                           
repairs could be done by August.  She pointed out that many                    
states are currently using federal highway money to                            
maintain roads, although it requires each state to provide                     
a plan.                                                                        
Ms. Slagle pointed out that a specific section of road has                     
been identified for repair.  The State would not be allowed                    
to undertake general overall maintenance when attempting to                    
meet Federal Highway approval, yet, specific work will be                      
Co-Chair Hanley asked if the State had overappropriated                        
it's original match or if the Department had held off on                       
already approved federal projects.                                             
that neither point had occurred.  The Department has                           
increased the size of the FY98 program to general                              
expectation.  The Tok project fits into bigger project                         
funding appropriated by the federal government, which would                    
not displace other projects.                                                   
Co-Chair Hanley inquired the total highway match for this                      
year.  Mr. Brigham replied it would be in the amount of                        
$24.5 million dollars.  Because of new federal                                 
authorization, there could be additional federal funds                         
available.  The average match rate is 10%.                                     
Co-Chair Therriault asked if the proposed increment would                      
cause a shift to any other proposed project.  Mr. Brigham                      
stated that nothing would be displaced and no major design                     
would be needed.                                                               
DEPARTMENT OF FISH AND GAME - 1(g)                                             
SERVICES, DEPARTMENT OF FISH AND GAME, stated that the                         
requested allocation would be used for subsistence harvest                     
research projects.  He added, early approval of federal                        
receipts would allow timely completion of these projects.                      
There are five separate small projects included in the                         
request, all of which will need to be completed by                             
September 30, 1998.  He added that this would be a 100%                        
federal fund.                                                                  
Representative Foster argued the point that the Nome                           
subsistence position had been cut leaving sixteen positions                    
residing in Anchorage.  He indicated his resentment in                         
supporting sixteen subsistence positions in Anchorage when                     
the need is in Bush Alaska.  Mr. Brooks responded that the                     
economics of maintaining Bush Alaska offices and leases                        
became prohibitive.  Flying from village to village is                         
expensive.  The Anchorage office has always been the hub.                      
He summarized that the budget has been cut so small, it is                     
impossible for the Department to cover such a wide area.                       
DEPARTMENT OF LABOR - - 1(h)                                                   
DEPARTMENT OF LABOR (DOL), explained that the $3 million                       
dollar supplemental request would be used to establish the                     
Alaska Disaster Assistance Program (ADAP).  Early approval                     
will allow relief for those persons suffering from the loss                    
of their primary income due to the poor salmon-fishing                         
season in Bristol Bay.                                                         
Representative Martin asked how the program was different                      
from HB 370.  Ms. Gamez explained that this was not a loan                     
program; it was an entitlement program.  DOL anticipates                       
quick turnover costs.  Administrative costs will amount to                     
approximately 8.4%; $2.75 million dollars will be available                    
to 54 communities in the State.                                                
Co-Chair Hanley asked if the Department used guidelines                        
similar to those established by FEMA.  Ms. Gamez responded                     
that the determination would be based on a combination of                      
regulations and laws and would include some of those used                      
through FEMA.  The federal government turned that request                      
down. An amount had been determined by estimating the                          
maximum number of people that would be eligible under the                      
Disaster Unemployment Assistance program and then used the                     
average unemployment benefit rate received.                                    
Representative Martin asked why the program had been                           
limited to Bristol Bay.  Ms. Gamez replied that the                            
Division had "stuck" with the basic FEMA request made a                        
number of months ago and did not expand it.  Representative                    
Martin suggested adding language specifying all communities                    
that could qualify for the funding.                                            
(Tape Change HFC 98- 48, Side 2).                                              
Co-Chair Hanley noted that to undertake this request would                     
require additional legislation.  Normally there would be a                     
fiscal note attached with the bill.  Mr. Spencer questioned                    
where the fiscal note would show up; he recommended the use                    
of conditional language.  A fiscal note would provide                          
appropriation contingent upon the bill passing.                                
Appropriation could be made in the bill, but if the bill                       
did not pass, the appropriation would be no good.  Co-Chair                    
Hanley noted that there could be an appropriation bill                         
tagging along with the legislation.                                            
UNIVERSITY OF ALASKA - 1(i)                                                    
Co-Chair Hanley noted that Section 1(i) was tied with                          
Section 1(e).                                                                  
DEPARTMENT OF MILITARY & VETERAN'S AFFAIRS - 1(j)                              
Mr. Bus explained that the appropriation would fund the                        
Youth Corps ChalleNGe program.  He stated that early                           
approval was needed to begin the next scheduled class on                       
March 16, 1998.  He advised that $250 thousand dollars had                     
been allocated in the FY98 budget to support the program                       
with the understanding that the Department could come back                     
during the supplemental budget process.                                        
The Department did not know what the federal funding                           
commitment would be.  The initial allocation for Alaska was                    
about $2 million dollars.  DMVA continues to run the                           
program in anticipation of 80 graduates per class in each                      
of the two classes.  In order to get the program back up to                    
par; the Department is proposing supplemental funding                          
request in the amount of $608 thousand dollars to secure                       
the program through June, 1998.                                                
Co-Chair Hanley asked the total anticipated budget for the                     
year.  Mr. Bus replied that it would be $3.4 million                           
dollars, consisting of State and federal funding.  The                         
federal government has committed to $2.1 million dollars.                      
Co-Chair Hanley asked the amount of the request if there                       
were 60 graduates.  Mr. Bus explained that becomes                             
complicated as the federal guidelines require 75% federal                      
funds for 25% State funding match requirements.  Co-Chair                      
Hanley requested an impact statement indicating the cost                       
differential for 60 and/or 80 graduates.  He pointed out                       
that the percentage provided by the feds is declining.                         
Representative Foster pointed out that when the program                        
started it was a total federally funded program, however,                      
at this time, the projection is that federal funding will                      
pay 60% of costs and the State will provide 40% of the                         
associated costs.  Representative Foster pointed out that                      
the cost per graduated student is approximately $22                            
thousand dollars.  Mr. Bus advised that the program was                        
geared to the "at-risk" youth and that it is a cost                            
avoidance program.  The cost of sending a youth to a                           
correctional facility is approximately $66 thousand                            
dollars.  Mr. Bus emphasized that at-risk youth really                         
benefit from the program.                                                      
DEPARTMENT OF ADMINISTRATION - 1(k)                                            
Mr. Spencer noted that the Department of Administration                        
(DOA) was requesting funding for needed monthly lease                          
payments for the period from now through May, 1998.                            
SERVICES, DEPARTMENT OF ADMINISTRATION, advised that when                      
the FY98 budget had been passed, DOA projected that budget                     
would be short approximately $1.7 million dollars.  The net                    
effect of activity since that time has resulted in a total                     
request of $1.4 million dollars.                                               
HB 461 was HELD in Committee for further consideration.                        
Co-Chair Hanley asked for further clarification regarding a                    
potential supplemental request resulting from the decision                     
made by Judge Hunt to the Department of Corrections                            
regarding the overcrowding situation.                                          
DIVISION, DEPARTMENT OF LAW, provided Committee members a                      
history of the Cleary case which was filed in 1981 and                         
which challenged all aspects of the State's prison system.                     
There was a six-week trial of that case in 1984.  After the                    
trial, the Anchorage Superior Court determined that system                     
was in danger of becoming unconstitutionally overcrowded.                      
The Superior Court established population limits at all the                    
facilities.  Through negotiations, the Department was able                     
to get increases to those limits set.                                          
Mr. Guaneli stressed that those population limits have now                     
been seriously exceeded.  The Superior Court has held the                      
State in contempt for the last three years, accruing fines                     
at the rate of $100 thousand dollars a month.  He advised                      
that the Court has become frustrated with the Department's                     
inability to get the population under control.  The Court                      
has appointed a new Court Master to pressure the Department                    
to create a plan which will work.                                              
The most recent order by the Court, made in early February,                    
has required that by March 9th, the Department of                              
Corrections provide a plan that will reduce numbers in the                     
facilities by May 1st.  Mr. Guaneli warned that if the                         
Department is unable to do that, the Court has options                         
available.  Courts in other states have released prisoners,                    
some Courts have taken over running the prison systems, and                    
some have removed funds from the State Treasury to run the                     
Mr. Guaneli emphasized that this issue needs to be taken                       
seriously.  There are 500 hundred prisoners who need to be                     
addressed in order for the State to be down to an emergency                    
capacity.  Co-Chair Hanley advised that the State should                       
anticipate additional costs this fiscal year.                                  
The meeting adjourned at 4:25 P.M.                                             
H.F.C. 16 3/02/98                                                              

Document Name Date/Time Subjects