Legislature(2001 - 2002)

04/17/2001 01:46 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 17, 2001                                                                                           
                         1:46 P.M.                                                                                              
                                                                                                                                
TAPE HFC 01 - 83, Side A                                                                                                        
TAPE HFC 01 - 83, Side B                                                                                                        
TAPE HFC 01 - 84, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:46 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Gary Stevens; Representative  Norman Rokeberg;                                                                   
Lori  Backes,  Staff,  Representative   Jim  Whitaker;  Karen                                                                   
Perdue,  Commissioner,   Department  of  Health   and  Social                                                                   
Services;  Diane Barrans,  Executive Director,  Postsecondary                                                                   
Education Commission, Department  of Education; Janet Clarke,                                                                   
Director, Division of Administrative  Services, Department of                                                                   
Health   and    Social   Services;   Janet    Seitz,   Staff,                                                                   
Representative  Norman  Rokeberg;   Kevin  Brooks,  Director,                                                                   
Division of  Administrative Services, Department  of Fish and                                                                   
Game;  Randal  Burns,  CEO,  Alaska   Psychiatric  Institute,                                                                   
Anchorage; Margo Waring, Alaska  Mental Health Board, Juneau;                                                                   
Caren Robinson, Chair, Alaska  Mental Health Trust Authority,                                                                   
Juneau;  Wendy Redman,  Vice President,  Statewide  Programs,                                                                   
University  of  Alaska; Steve  Blanche,  Executive  Director,                                                                   
Alaska Mental Health Trust Land Office, Anchorage.                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jeff Jesse,  Executive Director, Alaska Mental  Health Trust,                                                                   
Anchorage                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 76     An Act authorizing the commissioner of health and                                                                     
          social  services  to  provide  for the  design  and                                                                   
          construction  of psychiatric  treatment  facilities                                                                   
          to   replace   the   facilities   of   the   Alaska                                                                   
          Psychiatric Institute.                                                                                                
                                                                                                                                
          HB 76 was HEARD and HELD in Committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 187    An  Act relating to  the destruction,  desecration,                                                                   
          and vandalism of cemeteries and graves.                                                                               
                                                                                                                                
          CS HB 187 (JUD) was reported out of Committee with                                                                    
          a "do  pass" recommendation and with  a zero fiscal                                                                   
          note  by the  Department of  Law dated 4/10/01  and                                                                   
          the  Alaska  Court  System  dated  4/10/01  and  an                                                                   
          indeterminate    note   by   the    Department   of                                                                   
          Administration dated 4/10/01.                                                                                         
                                                                                                                                
HB 194    An  Act relating  to  fees for  commercial  fishing                                                                   
          licenses   and  permits;   and  providing   for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CS HB 194 (FIN) was reported out of Committee with                                                                    
          a  "do pass"  recommendation  and  with new  fiscal                                                                   
          notes by the Commercial  Fisheries Entry Commission                                                                   
          and the Department of Fish and Game.                                                                                  
                                                                                                                                
HB 204    An  Act  relating  to   the  Alaska  Commission  on                                                                   
          Postsecondary  Education  and  the  Alaska  Student                                                                   
          Loan  Corporation;  relating to  student  financial                                                                   
          aid programs  and the financing of  those programs;                                                                   
          establishing the Alaska  Advantage Loan Program and                                                                   
          the  Alaska  Supplemental Education  Loan  Program;                                                                   
          increasing the bonding  authorization of the Alaska                                                                   
          Student  Loan  Corporation;   providing  for  liens                                                                   
          resulting  from  a default  under  AS  14.43 or  AS                                                                   
          14.44;  relating  to  the duties  of  the  recorder                                                                   
          regarding  those liens; relating to  defaults under                                                                   
          the  Western  Regional  Higher  Education  Compact;                                                                   
          relating  to  the  prohibition   on  discrimination                                                                   
          regarding  programs  under  AS 14.43;  relating  to                                                                   
          fees  for  the  review   of  certain  postsecondary                                                                   
          institutions;  making  conforming  amendments;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          HB 204 was reported out of Committee with a "do                                                                       
          pass" recommendation  and with a fiscal note by the                                                                   
          Alaska Commission on  Postsecondary Education dated                                                                   
          4/04/01.                                                                                                              
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 194                                                                                                            
                                                                                                                                
     An Act relating to fees for commercial fishing licenses                                                                    
     and permits; and providing for an effective date.                                                                          
                                                                                                                                
REPRESENTATIVE GARY STEVENS commented  that a good compromise                                                                   
had  been  reached  which  was   included  in  the  committee                                                                   
substitute,  work   draft  version  22-LS0441\B,   Utermohle,                                                                   
4/17/01.                                                                                                                        
                                                                                                                                
Representative   Hudson  MOVED   that  committee   substitute                                                                   
version  be the  version of  the bill  before the  Committee.                                                                   
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Representative  Harris  MOVED  to  ADOPT  Amendment  #1,  22-                                                                   
LS0441\O.2, Utermohle,  4/09/01.   [Copy on File].   Co-Chair                                                                   
Mulder  OBJECTED  for  the  purpose  of  discussing  concerns                                                                   
previously voiced by the Committee.                                                                                             
                                                                                                                                
Representative Stevens noted that  the changed language would                                                                   
insert the words:                                                                                                               
                                                                                                                                
     "not to exceed a maximum of $50 for each license holder                                                                    
     for each year;".                                                                                                           
                                                                                                                                
Representative  Stevens stated  that the  increase would  add                                                                   
more  money into  the  fund than  necessary,  which had  been                                                                   
addressed through the amendment.                                                                                                
                                                                                                                                
Co-Chair Mulder  questioned where the excess  money would go.                                                                   
Representative   Stevens  replied   that   the  money   would                                                                   
eventually  end up in  commercial fisheries.   He added  that                                                                   
the fishermen were "happy" with the proposed change.                                                                            
                                                                                                                                
KEVIN BROOKS, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT OF FISH AND GAME, explained  that the revenue from                                                                   
the sale  of the licenses  was addressed  in the  language in                                                                   
the front  of the bill, placing  a deposit into the  Fish and                                                                   
Game Fund.  There is a component  in that Fund which has been                                                                   
separated  out  for  the  commercial   fisheries  and  it  is                                                                   
available for appropriation for  commercial fishing projects.                                                                   
                                                                                                                                
Representative Davies asked what  the fiscal impact would be.                                                                   
Mr. Brooks  replied that without  the amendment,  there would                                                                   
be a  potential increase of  $116 thousand dollars,  and that                                                                   
by FY03; it would amount to $300 thousand dollars.                                                                              
                                                                                                                                
Co-Chair  Mulder  WITHDREW  his  OBJECTION.    Representative                                                                   
Croft  pointed out  that the  drafters should  note that  the                                                                   
page  numbers  shifted  with  the  adoption  of  the  current                                                                   
version.  There being NO FURTHER  OBJECTION, Amendment #1 was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative  Davies MOVED  a  change to  Page  4, Line  9,                                                                   
deleting  "does not  exceed" and  inserting  language "is  as                                                                   
close as  is practical to".   Co-Chair Williams  OBJECTED for                                                                   
purposed of discussion.                                                                                                         
                                                                                                                                
Representative  Davies  explained   the  bill  would  provide                                                                   
direction.   He stated  that it  should not  be equal  to the                                                                   
maximum as the amounts vary from  year to year.  The proposed                                                                   
language  would give  the necessary  instruction to  maximize                                                                   
the concern.                                                                                                                    
                                                                                                                                
Representative  Hudson  suggested   a  "friendly"  amendment,                                                                   
deleting the  language proposed  by Representative  J. Davies                                                                   
and  instead adding  "is".   Representative Davies  explained                                                                   
that the  other language  had  been chosen  as a result  from                                                                   
previous discussion requiring  them to enter a maximum amount                                                                   
every year.   Representative  Hudson  WITHDREW his MOTION  to                                                                   
amend.                                                                                                                          
                                                                                                                                
Mr.  Brooks commented  that the  fee  had been  based on  the                                                                   
prior year's expenditures.   Much of the language  is to deal                                                                   
with the  logistics of  that.   At the  heart of the  license                                                                   
issue,   originally  there   was   a  $500   dollar   spread.                                                                   
Historically,  the charge  was between  $30 and $90  dollars.                                                                   
Now it is between $60 and $125  dollars.  He pointed out that                                                                   
the gap  is $100 dollars  or less.   If the Courts  came back                                                                   
with a  differential, there could  be a crewmember  charge of                                                                   
$60  dollars for  a  resident  and $160  dollars  for a  non-                                                                   
resident.  He discussed the magnitude  of the differential on                                                                   
the low end rather than focusing on the high end.                                                                               
                                                                                                                                
Representative Stevens  referenced Page 2, Line  13, advising                                                                   
that   the  wording   would   need   to  be   changed   there                                                                   
additionally.                                                                                                                   
                                                                                                                                
Representative   Davies  MOVED   the  amendment  to   include                                                                   
language on both Page 2 and Page 4.                                                                                             
                                                                                                                                
Co-Chair  Williams WITHDREW  his OBJECTION.   There  being NO                                                                   
further OBJECTION, the amendment was adopted.                                                                                   
                                                                                                                                
Co-Chair Mulder  pointed out  that there  was no fiscal  note                                                                   
from the Department of Fish and  Game.   Mr. Brooks indicated                                                                   
that it would be forth coming.                                                                                                  
                                                                                                                                
Co-Chair  Mulder MOVED  to  report  CS HB  194  (FIN) out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
CS HB  194 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass"  recommendation   and  with   a  fiscal  note   by  the                                                                   
Commercial Fisheries  Entry Commission and the  Department of                                                                   
Fish and Game.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 187                                                                                                            
                                                                                                                                
     An Act relating to the destruction, desecration, and                                                                       
     vandalism of cemeteries and graves.                                                                                        
                                                                                                                                
REPRESENTATIVE JIM  WHITTAKER introduced his Chief  of Staff,                                                                   
Lori  Backes.    He  noted  that  under  the  current  Alaska                                                                   
Statutes, there  are no provisions relating to  the vandalism                                                                   
or desecration of modern cemeteries and memorials.                                                                              
                                                                                                                                
LORI BACKES,  STAFF, REPRESENTATIVE  JIM WHITAKER,  commented                                                                   
that  acts  of  vandalism  are   currently  punishable  under                                                                   
statutes  that  relate  to criminal  mischief,  however,  the                                                                   
degree of crime  centers around monetary value  of the damage                                                                   
and  does not  recognize the  personal  insult and  emotional                                                                   
injury  to a  family, community  or tribe  that has  suffered                                                                   
when these areas are vandalized.                                                                                                
                                                                                                                                
Ms. Backes  noted that  HB 187  clearly states  that it  is a                                                                   
crime of criminal  mischief in the second degree  if a person                                                                   
intentionally  abuses these  sites.   The  bill would  insert                                                                   
language  into  statutute  making  it  a  crime  of  criminal                                                                   
mischief in  the second degree.   Recognizing that  there may                                                                   
be circumstances  where memorials,  tombs or gravesites  must                                                                   
be altered, moved  or removed, HB 187 places  into statute an                                                                   
affirmative defense  if the defendant  is an employee  of the                                                                   
cemetery acting  on behalf of  the cemetery or  is "otherwise                                                                   
authorized by law to engage in the conduct.                                                                                     
                                                                                                                                
Vice-Chair  Bunde  asked  how the  legislation  would  impact                                                                   
archeological    digs.      Ms.    Backes   explained    that                                                                   
Representative  Whitaker's office  had been  in contact  with                                                                   
the University  of Alaska's Anthropology Department  and they                                                                   
have no  problem with the wording  of the legislation.   They                                                                   
are already  protected under laws  that allow them  to obtain                                                                   
State  permits and/or  federal permits  if the  sites are  on                                                                   
federal land.                                                                                                                   
                                                                                                                                
Vice-Chair Bunde  asked if the  legislation would  give false                                                                   
hope to certain  Native groups that think  that archeological                                                                   
digs would stop with passage of  the legislation.  Ms. Backes                                                                   
replied that the legislation would  not give them false hope.                                                                   
Burial  sites are  already protected  under the  Preservation                                                                   
Act.  The  hope that the bill  is attempting to give  is that                                                                   
there will  be some type  of penalty  that a person  could be                                                                   
charged with  if a person were  to damage a  modern cemetery.                                                                   
The bill's verbiage does not address the historic sites.                                                                        
                                                                                                                                
Representative  Whitaker  added that  the  bill  was not  all                                                                   
encompassing and that it should not be misconstrued to be.                                                                      
                                                                                                                                
Representative  Croft asked  the appeal  portion found  in AS                                                                   
41.25.200©.  Ms. Backes replied  that statute was the portion                                                                   
of statute  intended to protect  gravesites, however,  it had                                                                   
been placed under the Alaska Historic  Preservation Act.  The                                                                   
concern with that is that it would  mainly protect historical                                                                   
burial  sites,  not modern  cemeteries.   The  proposed  bill                                                                   
would move the protection to another statute.                                                                                   
                                                                                                                                
Representative Croft referenced  Page 2, Line 18, noting that                                                                   
the  exception when  on a  State permit.   He  asked when  on                                                                   
federal  land, would the  archeological  digs have to  obtain                                                                   
both a State  and federal permit.  Ms. Backes  explained that                                                                   
on  federal land,  they  would  not need  to  obtain a  State                                                                   
permit.  She  stated that the bill drafter  suggests that the                                                                   
language "authorized by law" would cover that concern.                                                                          
                                                                                                                                
Representative  Davies asked  what the  penalty for  crime of                                                                   
criminal mischief  in the second  degree would  be classified                                                                   
as.   Ms.  Backes advised  that penalty  would be  a Class  C                                                                   
felony and  would result  up to  five years  in prison  and a                                                                   
$50,000 dollar fine.                                                                                                            
                                                                                                                                
Representative Whitaker  interjected that it  was intentional                                                                   
to raise  it to  that level.   He noted  that there  had been                                                                   
extensive   hearings  in   the   House  Judiciary   Committee                                                                   
regarding those  concerns.  He  added that there would  be no                                                                   
fiscal impact.                                                                                                                  
                                                                                                                                
Representative Hudson MOVED to  report CS HB 187 (JUD) out of                                                                   
Committee  with  individual recommendations  and  the  fiscal                                                                   
notes.                                                                                                                          
                                                                                                                                
Representative Harris asked the  reason for the indeterminate                                                                   
fiscal note by the Department  of Administration.  Ms. Backes                                                                   
explained that  it was  indeterminate because the  Department                                                                   
is  not certain  how often  there would  be prosecuted  cases                                                                   
coming forward and what those costs would be.                                                                                   
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CS HB  187 (JUD)  was reported  out of  Committee with  a "do                                                                   
pass"  recommendation  and  with  zero fiscal  notes  by  the                                                                   
Department  of Law  dated 4/10/01,  the  Alaska Court  System                                                                   
dated  4/10/01,   and  Department  of  Administration   dated                                                                   
4/10/01.                                                                                                                        
                                                                                                                                
HOUSE BILL NO. 204                                                                                                            
                                                                                                                                
     An   Act   relating   to  the   Alaska   Commission   on                                                                   
     Postsecondary  Education  and  the Alaska  Student  Loan                                                                   
     Corporation; relating to  student financial aid programs                                                                   
     and the  financing of  those programs; establishing  the                                                                   
     Alaska   Advantage   Loan   Program   and   the   Alaska                                                                   
     Supplemental  Education  Loan  Program;  increasing  the                                                                   
     bonding  authorization   of  the  Alaska   Student  Loan                                                                   
     Corporation;  providing   for  liens  resulting  from  a                                                                   
     default  under AS  14.43 or  AS 14.44;  relating to  the                                                                   
     duties of  the recorder regarding those  liens; relating                                                                   
     to defaults under the Western  Regional Higher Education                                                                   
     Compact; relating  to the prohibition  on discrimination                                                                   
     regarding programs under  AS 14.43; relating to fees for                                                                   
     the  review   of  certain  postsecondary   institutions;                                                                   
     making  conforming  amendments;  and  providing  for  an                                                                   
     effective date.                                                                                                            
                                                                                                                                
DIANE  BARRANS, EXECUTIVE  DIRECTOR, POSTSECONDARY  EDUCATION                                                                   
COMMISSION,  DEPARTMENT  OF  EDUCATION,  explained  that  the                                                                   
Alaska  Student Loan Program  has achieved  great success  in                                                                   
the  past  few  years.    The   Commission  on  Postsecondary                                                                   
Education  and  the  Alaska  Student  Loan  Corporation  have                                                                   
turned the  program around, running  it in the black  for the                                                                   
first  time in  history and  paying  a dividend  back to  the                                                                   
State.   The bill  would establish  the AlaskaAdvantage  Loan                                                                   
Program.  Under the legislation,  Alaska would participate in                                                                   
the  federal guaranteed  student loan  program, which  brings                                                                   
benefits  including  low  interest rates  for  borrowers  and                                                                   
reduces risk to the State through federal loan guarantees.                                                                      
                                                                                                                                
Ms.  Barrens   testified  that   the  bill  would   create  a                                                                   
supplemental loan program to provide  financial assistance in                                                                   
the  event   that  the   AlaskaAdvantage  Loan  program   was                                                                   
insufficient  to cover  education costs  if the student  does                                                                   
not  qualify  for assistance  under  the  federal  guaranteed                                                                   
student  loan program.    The bill  would  create a  one-stop                                                                   
financial aid  information center and financial  opportunity,                                                                   
guarantee  the lowest  possible  borrowing rates,  streamline                                                                   
aid delivery and  reduce financial risk to the  State through                                                                   
the  federal  guarantee.    The   program  would  also  offer                                                                   
expanded  options for  borrowers with  special needs  in loan                                                                   
repayment.                                                                                                                      
                                                                                                                                
Co-Chair Mulder pointed out the  renaming of the student loan                                                                   
program.   Ms. Barrens  replied that  because there  would be                                                                   
loans offered  to none resident  students, the choice  was to                                                                   
go with a "generic" name.                                                                                                       
                                                                                                                                
Co-Chair  Mulder  referenced   Page  11,  the  increase  bond                                                                   
issuance by  $75 million dollars.   Ms. Barrens  replied that                                                                   
at this point, it is not anticipated  that the annual bonding                                                                   
will need  to be increased, however,  in the future  if there                                                                   
is a substantial jump, the Division  would like to be able to                                                                   
make that effort.                                                                                                               
                                                                                                                                
Co-Chair  Mulder  clarified  that  only  bonds  necessary  to                                                                   
substantiate the  application would  be issued.   Ms. Barrans                                                                   
replied that was correct.                                                                                                       
                                                                                                                                
Vice-Chair  Bunde asked  about  the students  that remain  in                                                                   
Alaska following graduation.   Ms. Barrens explained that the                                                                   
State believes that there could  be efficiencies created with                                                                   
the  automation  and  connection  with  the  institutions  in                                                                   
Alaska  that could  result in  lower servicing  costs of  the                                                                   
loans.   The  bill  proposes to  offer  a preferred  interest                                                                   
reduction  for  individuals  that  remain  in  Alaska.  There                                                                   
currently is  not a program of  that kind in existence.   The                                                                   
financial  model  that underlies  the  program  has some  new                                                                   
revenues  coming into  the  corporation.   In  the past,  the                                                                   
Division  lost money and  those programs  were not  feasible.                                                                   
As the Commission has moved from  the "red" into the "black",                                                                   
they have been reluctant to be  overly aggressive of reducing                                                                   
costs  at  the   low  market  without  some   revenue  stream                                                                   
associated  with that.    The benefits  of  the program  will                                                                   
allow the Commission to afford new programs.                                                                                    
                                                                                                                                
Vice-Chair  Bunde asked the  current "dead  beat" rate.   Ms.                                                                   
Barren  replied that  there are  not good  statistics on  the                                                                   
average debt of the person graduating  from the program.  The                                                                   
average debt  of a borrower is  around $15,000 dollars.   She                                                                   
added that this year, the default rate fell below 10%.                                                                          
                                                                                                                                
Representative  Davies   inquired  the  incentives   for  the                                                                   
students that stay  within the State and at  what point would                                                                   
they become eligible.  He pointed  out that if the incentives                                                                   
were not provided to the students,  the dividend to the State                                                                   
would become larger.                                                                                                            
                                                                                                                                
Ms. Barrens  explained that as  the Commission  moves forward                                                                   
for the  next six  to nine months,  they will be  undertaking                                                                   
financial modeling.   At this  time, the  plan is to  make it                                                                   
available to anyone  who borrows to attend an  institution in                                                                   
Alaska  or for  those attending  outside  Alaska, they  would                                                                   
need to return to Alaska upon  graduation.  Administratively,                                                                   
that  would be  a  much  simpler benefit  to  pay  out.   The                                                                   
rational is  that if you live  in Alaska or attend  school in                                                                   
Alaska,  the costs  to the  program are  lower and  therefore                                                                   
that piece of interest paid for servicing should be lower.                                                                      
                                                                                                                                
Ms.  Barrans  added  that  because  the  dividend  amount  is                                                                   
formulated  and is a  certain percentage  of the net  income,                                                                   
anything that  would reduce the  net income would  affect the                                                                   
dividend to the State.  She explained  that one of the things                                                                   
that  the  bill   does  is  clarifies  the   mission  of  the                                                                   
Corporation  which, must  be focused  on the students  served                                                                   
and  the  borrowing  customers.   The  decisions  that  would                                                                   
reduce net income would be a direct  benefit to borrowers and                                                                   
would  occur through  the  bill.   She  stressed  that it  is                                                                   
important to the  corporation to have that  language included                                                                   
in the bill.                                                                                                                    
                                                                                                                              
                                                                                                                              
                                                                                                                              
TAPE HFC 01 - 83, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
Representative  Hudson inquired  if there  was anything  that                                                                   
would modify  the cost of the  loan.  Ms. Barrens  noted that                                                                   
there is  not currently a cap  on the interest that  could be                                                                   
charged on  a loan; rather  it is tied  to the interest  that                                                                   
could be charged  on a loan.  It is tied to  the financing of                                                                   
the program.   The bill would  establish a cap.   Ms. Barrans                                                                   
added that the  residency definition was not  changed, but it                                                                   
does  allow the  loans  to be  made to  people  that come  to                                                                   
Alaska to go to  an Alaskan institutions.  That  is a change.                                                                   
She added that  change is one that the  Commissioner believes                                                                   
is necessary.                                                                                                                   
                                                                                                                                
Vice-Chair  Bunde MOVED  to report  HB 204  out of  Committee                                                                   
with  individual recommendations  and  with the  accompanying                                                                   
fiscal notes.  Representative Davies OBJECTED.                                                                                  
                                                                                                                                
Representative  J. Davies pointed  out that  there was  not a                                                                   
fiscal  note  included  that  indicates  the  effect  on  the                                                                   
general  fund.   Ms.  Barrans replied  that  the fiscal  note                                                                   
included   with  the   bill  is  a   positive  fiscal   note.                                                                   
Implementing the program would  be creating a positive effect                                                                   
on the net income  of the Corporation.  What  is not included                                                                   
are  the various  pieces.    The  Corporation will  have  the                                                                   
flexibility  within  its  own statute  to  authorize  benefit                                                                   
programs  to the  borrowers.   There is  nothing that  states                                                                   
there should  be a  net zero value  and the Commission  could                                                                   
offer  below  market  rate  interest.   That  rate  would  be                                                                   
variable and  the rate  is not known  and cannot  be factored                                                                   
into the fiscal note.                                                                                                           
                                                                                                                                
Representative   Davies   stated   that   he   had   a   bill                                                                   
substantially   similar  to   a  portion   of  the   proposed                                                                   
legislation.   He  advised  that bill  currently  was in  the                                                                   
House Finance Committee.                                                                                                        
                                                                                                                                
Representative  Whitaker  understood   that  the  Corporation                                                                   
anticipates an  increased number of  loans.  He asked  how it                                                                   
could  be predicted  that the  dividend would  decrease.   He                                                                   
acknowledged  that  it  would  be difficult  to  predict  the                                                                   
fiscal impact.   Ms.  Barrans agreed that  this is  a dilemma                                                                   
and at this point the deferred  terms need to be established.                                                                   
Until the  volume is  assessed, it is  nebulous.   The reason                                                                   
that the cost  can be estimated, the interest  rate should be                                                                   
15-100 basis points  below the rate charged  other borrowers.                                                                   
That  is  how  the  fiscal  impact  was  calculated  for  the                                                                   
program.                                                                                                                        
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Bunde, Foster, Harris, Hudson, Lancaster,                                                                        
               Whitaker, Williams, Moses                                                                                        
OPPOSED:       Croft, Davies                                                                                                    
                                                                                                                                
Co-Chair Mulder was not present for the vote.                                                                                   
                                                                                                                                
The MOTION PASSED (8-2).                                                                                                        
                                                                                                                                
HB  204  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  with  new  fiscal notes  by  the  Alaska                                                                   
Commission on Post Secondary Education  and the Department of                                                                   
Fish and Game.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 76                                                                                                             
                                                                                                                                
     An  Act  authorizing  the  commissioner  of  health  and                                                                   
     social   services  to   provide  for   the  design   and                                                                   
     construction  of  psychiatric  treatment  facilities  to                                                                   
     replace  the   facilities  of  the   Alaska  Psychiatric                                                                   
     Institute.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  NORMAN  ROKEBERG   noted  that  HB  76  would                                                                   
provide the  replacement of the Alaska  Psychiatric Institute                                                                   
(API)   go  forward   with  a   mixture   of  funds   already                                                                   
appropriated ($22,200,000) and  proceeds from certificates of                                                                   
participation to be issued by  the State Bond Committee.  The                                                                   
legislation provides that the  Commissioner of the Department                                                                   
of Health  & Social Services  would work with  the Department                                                                   
of   Corrections,   the   University   of   Alaska-Anchorage,                                                                   
Providence  Hospital in Anchorage,  Alaska Regional  Hospital                                                                   
in Anchorage and the Municipality  of Anchorage in the design                                                                   
and construction of the replacement for API.                                                                                    
                                                                                                                                
Representative  Rokeberg   discussed  that  the   bill  would                                                                   
require  that,  as  a  part of  any  replacement  of  API,  a                                                                   
forensic psychiatric  unit be included.  Currently,  there is                                                                   
a 10-bed forensic psychiatric  unit and the legislation would                                                                   
require  that  such a  unit  be  a part  of  the  replacement                                                                   
facility.  The  unit would be a facility for  the assessment,                                                                   
treatment,  custody  and  confinement  of  mentally  abnormal                                                                   
criminal offenders as is the current facility.                                                                                  
                                                                                                                                
The legislation  encourages various State and  local agencies                                                                   
to cooperate in the development  of the replacement facility.                                                                   
Representative  Rokeberg  urged  Committee's support  of  the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Representative  Rokeberg stressed  the need  to bring  better                                                                   
treatment facilities for patients.   He noted that a forensic                                                                   
unit  would help  provide local  support.   Issues are  being                                                                   
resolved.  The facility  is needed  and  the Legislature  has                                                                   
already provided substantial funds.                                                                                             
                                                                                                                                
Representative Hudson  noted that the total  funding would be                                                                   
$58 million dollars and that $19  million dollars was already                                                                   
available. Representative Rokeberg  understood that there was                                                                   
$22 million dollars currently available.                                                                                        
                                                                                                                                
KAREN PERDUE,  COMMISSIONER, DEPARTMENT OF HEALTH  AND SOCIAL                                                                   
SERVICES,  provided  information regarding  the  legislation.                                                                   
[Copy on File].  She observed  that the issue has been before                                                                   
the State for many years.                                                                                                       
                                                                                                                                
RANDAL BURNS,  CEO, ALASKA PSYCHIATRIC INSTITUTE,  ANCHORAGE,                                                                   
provided  information regarding  the legislation.   [Copy  on                                                                   
File].   He spoke  in support  of the  replacement and  noted                                                                   
that the building  does not meet standards.  There are urgent                                                                   
problems making its replacement necessary.                                                                                      
                                                                                                                                
     ·    API is permeated with  hazardous material asbestos;                                                                   
     ·    Its  fire,  life  safety   and  mechanical  support                                                                   
          systems are worn out;                                                                                                 
     ·    The roof needs replacement; and                                                                                       
     ·    The  structure does  not meet  the current  seismic                                                                   
          code.                                                                                                                 
                                                                                                                                
Mr. Burns commented that API must be replaced:                                                                                  
                                                                                                                                
     ·    It was  not designed as a psychiatric  hospital and                                                                   
          its  physical layout is  not conductive  to patient                                                                   
          care and treatment;                                                                                                   
     ·    API has had 39 years of hard use; and                                                                                 
     ·    The  need to  replace  the old  API was  recognized                                                                   
          long ago and replacement  efforts have been ongoing                                                                   
          for 13 years.                                                                                                         
                                                                                                                                
Mr. Burns continued  that a March 2001 report  just issued by                                                                   
Koonce Pfeffer  Bettis, Inc. of Anchorage estimates  the cost                                                                   
of  renovation  to  range between  $74.5  million  and  $81.1                                                                   
million  dollars.   It would be  cheaper to  construct  a new                                                                   
facility than to abate the asbestos  and make the renovations                                                                   
needed to make API a modern, efficient  psychiatric hospital.                                                                   
                                                                                                                                
Mr. Burns commented on solutions  that have been attempted in                                                                   
the past.                                                                                                                       
                                                                                                                                
     ·    Constructing  a replacement facility,  however, the                                                                   
          implementation  was halted  when construction  bids                                                                   
          substantially  exceeded both engineering  estimates                                                                   
          and  appropriated  funding  and  only the  lack  of                                                                   
          sufficient capital prevented success.                                                                                 
     ·    Strategic     partnerships     with     neighboring                                                                   
          institutions  proved  unsuccessful  when  essential                                                                   
          land   swaps   among    partners   could   not   be                                                                   
          accomplished  and  the  partners withdrew  and  the                                                                   
          partners withdrew.                                                                                                    
     ·    Purchase  a replacement  was  considered.   Charter                                                                   
          North   Hospital  was   the   only  real   purchase                                                                   
          alternative.   After two  year, local  planning and                                                                   
          zoning    decisions    and   strong    neighborhood                                                                   
          opposition  made  it  impossible  to  complete  the                                                                   
          purchase and use the facility.                                                                                        
                                                                                                                                
Mr.  Burns  commented  on  what  should  be  done  now.    He                                                                   
recommended that the only realistic  option for replacing API                                                                   
would be the  construction of a replacement  hospital on land                                                                   
very near  the existing  facility.   He mentioned that  there                                                                   
has  been  an   agreement  made  regarding   the  complicated                                                                   
situations.  The University of  Alaska Medical landowners and                                                                   
the  institutions have  agreed to  a parcel  from the  Alaska                                                                   
Mental Health  Trust Authority (AMHTA) for the  new facility.                                                                   
AMHTA,   Providence   Hospital,   the  University   and   the                                                                   
Department  of  Health and  Social  Services  have signed  an                                                                   
agreement.                                                                                                                      
                                                                                                                                
     ·    The  agreement sets  forth the  framework for  land                                                                   
          conveyances,    potential   land   purchases    and                                                                   
          exchanges,  and  continued commitments  to  working                                                                   
          agreements.                                                                                                           
     ·    It sets  the parameters for the  future development                                                                   
          of  the  important University-Medical  District  in                                                                   
          Anchorage.                                                                                                            
                                                                                                                                
Mr. Burns  advised that the  parties believe building  on the                                                                   
U-Med parcel makes sense.                                                                                                       
                                                                                                                                
     ·    The API parcels are zoned for the use;                                                                                
     ·    API is  a well-established, accepted  and necessary                                                                   
          institution on its present site;                                                                                      
     ·    UAA  nursing students do  their psych  rotations at                                                                   
          API each semester;                                                                                                    
     ·    UAA social  work and psychology students  intern at                                                                   
          API each semester; and                                                                                                
     ·    WAMI  medical students  rely on  API as a  teaching                                                                   
          site.                                                                                                                 
                                                                                                                                
Mr.  Burns noted  that  building on  the  present site  makes                                                                   
sense because:                                                                                                                  
                                                                                                                                
     ·    API must be located  near an acute care hospital in                                                                   
          case a person needs  to be medically cleared before                                                                   
          admission  to API  and when  the API patient  needs                                                                   
          emergency medical care;                                                                                               
     ·    The   University   Community   Council   and   area                                                                   
          residents are supportive of API; and                                                                                  
     ·    The  Alaska Native Medical  Center has  stated that                                                                   
          it  has  no  plans  within  the next  10  years  to                                                                   
          provide inpatient psychiatric services and will                                                                       
          continue to rely on API.                                                                                              
                                                                                                                                
Mr. Burns commented that replacing  API would be the key to a                                                                   
broader effort of:                                                                                                              
                                                                                                                                
     ·    Developing  private treatment  alternatives to  API                                                                   
          hospitalization;                                                                                                      
     ·    Enhancing the quality of care at API; and                                                                             
     ·    Replacing the API building.                                                                                           
                                                                                                                                
Mr. Burns spoke to the intent  of development of delivery for                                                                   
community based services and the  single point of entry.   At                                                                   
that point, it  would be decided where each  patient would be                                                                   
sent.                                                                                                                           
                                                                                                                                
Mr. Burns acknowledged that there  have been questions of why                                                                   
API is needed.  He advised:                                                                                                     
                                                                                                                                
     ·    That service  is a core function of  government and                                                                   
          that API provides the services that private                                                                           
          providers cannot or will not do;                                                                                      
     ·    Patient  needs can exceed  local private  treatment                                                                   
          options;                                                                                                              
     ·    Inpatient  treatments is  nonexistent or  uncertain                                                                   
          in some communities; and                                                                                              
     ·    API Treats forensic  and NGRI patients and provides                                                                   
          competency evaluation services to the courts.                                                                         
                                                                                                                                
Mr. Burns commented on why the  State should build a hospital                                                                   
that can accommodate up to 72 beds.                                                                                             
                                                                                                                                
     ·    Successful  operations  of a  smaller facility  (54                                                                   
          beds) are contingent on a full array of private                                                                       
          community services;                                                                                                   
     ·    Community services are not all in place;                                                                              
     ·    Future  bed needs at  API are not predictable  with                                                                   
          absolute precision; and                                                                                               
     ·    Irresponsible  to  build  for  an  ideal  situation                                                                   
          without capacity to cope with emergencies or                                                                          
          population growth.                                                                                                    
                                                                                                                                
Mr.  Burns discussed  building  with a  flexible capacity  in                                                                   
mind.  As  the State's safety  net, API must have a  range of                                                                   
inpatient bed capacity.  He stressed  that the bottom line is                                                                   
that API cannot  close its doors.  API must  admit any person                                                                   
who is  involuntarily committed  or court-ordered to  API for                                                                   
evaluation and/or treatment.                                                                                                    
                                                                                                                                
Mr.  Burns emphasized  that  the  Legislature  could help  to                                                                   
solve these problems through passing HB 76.                                                                                     
                                                                                                                                
Representative  Hudson  asked  if the  increased  operational                                                                   
costs  had  been  computed.    Mr.  Burns  replied  that  the                                                                   
operating  costs  would  drop.    Currently,  a  very  "poor"                                                                   
heating system  exists, however,  staying at the  current bed                                                                   
size, there would not be a reduction in staff costs.                                                                            
                                                                                                                                
Representative  Hudson  inquired  if Alaskans  are  currently                                                                   
being sent  out-of-State.  Mr.  Burns replied that no  one is                                                                   
being sent out-of-State.                                                                                                        
                                                                                                                                
Commissioner Perdue commented  that it was the intent to have                                                                   
as small of a hospital as possible.   The community hospitals                                                                   
have  developed   the  first  level  of  response   on  these                                                                   
concerns,  which is  being encouraged  throughout the  entire                                                                   
State.  In Anchorage,  API is filling that function.   API is                                                                   
the last resort for many of the patients.                                                                                       
                                                                                                                                
Commissioner Perdue  stated that over the next  ten years, it                                                                   
is anticipated  that there  will be  other community  efforts                                                                   
that help people to do readmissions to API.                                                                                     
                                                                                                                                
Co-Chair  Williams noted  that it  was not  his intention  to                                                                   
move the bill from  committee at this time.  He  noted that a                                                                   
committee  substitute would  be  prepared and  at that  time,                                                                   
there would be public testimony taken.                                                                                          
                                                                                                                                
Vice-Chair  Bunde endorsed  keeping the  hospital at  a small                                                                   
size.                                                                                                                           
                                                                                                                                
In  response   to  Vice-Chair   Bunde,  Commissioner   Perdue                                                                   
acknowledged that  hospital care  is the most  expensive care                                                                   
and for  patients that do not  need that, it is  important to                                                                   
try to keep crisis from escalating.   She pointed out that in                                                                   
less  than  two  decades,  the  community  process  has  made                                                                   
tremendous progress in meeting  the needs of the mentally ill                                                                   
in the Alaskan communities.                                                                                                     
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 84, Side A                                                                                                      
                                                                                                                              
                                                                                                                                
Representative  Lancaster  asked if  the  land agreement  had                                                                   
been  resolved.   Commissioner  Perdue stated  that the  land                                                                   
agreement had been settled.                                                                                                     
                                                                                                                                
JEFF   JESSE,  (TESTIFIED   VIA  TELECONFERENCE),   EXECUTIVE                                                                   
DIRECTOR,  ALASKA MENTAL HEALTH  TRUST AUTHORITY,  ANCHORAGE,                                                                   
testified in support  of the proposed legislation  and moving                                                                   
forward with a committee substitute.   He noted that a shared                                                                   
vision  for   the  interest  exists,  however,   the  funding                                                                   
replacement is essential.                                                                                                       
                                                                                                                                
Representative Hudson  inquired the approximate  dollar value                                                                   
in  the land  transactions.    Mr.  Jesse deferred  to  Steve                                                                   
Blanche.                                                                                                                        
                                                                                                                                
STEVE  BLANCHE,  EXECUTIVE  DIRECTOR,  ALASKA  MENTAL  HEALTH                                                                   
TRUST  LAND OFFICE,  ANCHORAGE,  responded that  none of  the                                                                   
budget would go for the land.   The hospital would be clearly                                                                   
a beneficiary purpose under statute making it possible.                                                                         
                                                                                                                                
Representative  Davies  questioned   if  the  land  deal  was                                                                   
complete.  Mr.  Blanche replied that AMHTA believes  that the                                                                   
land  deal  has  been  substantially  completed.    It  would                                                                   
require  a  full   set  of  processes  required   by  statute                                                                   
regarding  the best interest  decisions, complete  appraisals                                                                   
for transactions with Providence  Hospital, public notice and                                                                   
Trust Authority consultation.   He noted that  AMTHA has been                                                                   
working on the concern for three years.                                                                                         
                                                                                                                                
CAREN ROBINSON, CHAIR, ALASKA  MENTAL HEALTH TRUST AUTHORITY,                                                                   
JUNEAU, added  that the  members of  the Trust Authority  are                                                                   
committed  to  everything  that   has  been  signed  off  and                                                                   
acknowledged  the rules  and regulations,  which  need to  be                                                                   
followed.                                                                                                                       
                                                                                                                                
MARGO  WARING, ALASKA  MENTAL  HEALTH BOARD,  JUNEAU,  stated                                                                   
that the Board had been working  on a replacement for the API                                                                   
facility  for over  twelve  years.   She  commented that  the                                                                   
Board recognizes  the need  for a new  building and  the need                                                                   
for a more therapeutic environment  for the Alaskan citizens.                                                                   
The Board has been the primary  force in recognizing that the                                                                   
future  of  the hospital  has  to  be  in an  environment  of                                                                   
community-based services.                                                                                                       
                                                                                                                                
Ms. Waring  added that  the Board looks  forward to  the time                                                                   
when there is a new hospital that  can serve the goal for the                                                                   
entire  State  that can  focus  on  a treatment  program  and                                                                   
treatment facility for psychiatric services.                                                                                    
                                                                                                                                
Ms. Waring voiced appreciation  for Representative Rokeberg's                                                                   
attention  to the  needs of  the State  efforts for  bringing                                                                   
forward an acute care facility.                                                                                                 
                                                                                                                                
WENDY REDMAN, VICE PRESIDENT,  STATEWIDE PROGRAMS, UNIVERSITY                                                                   
OF  ALASKA, FAIRBANKS,  noted  that the  University has  been                                                                   
involved with the community plan.   The Board of Regents have                                                                   
voiced their  support for  the plan.   She admitted  that the                                                                   
area that  will be  used will be  a little "land-locked"  and                                                                   
that there will  be many mutual programs and purposes.    The                                                                   
agreement  of shared  vision cannot  go  forward without  the                                                                   
construction funding.  She urged  the Committee's support for                                                                   
the legislation.                                                                                                                
                                                                                                                                
HB 76 was HELD in Committee for further consideration.                                                                          
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at  3:35 p.m.                                                                                         

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