Legislature(2001 - 2002)

04/19/2001 01:48 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 19, 2001                                                                                           
                         1:48 P.M.                                                                                              
                                                                                                                                
TAPE HFC 01 - 87, Side A                                                                                                        
TAPE HFC 01 - 87, Side B                                                                                                        
TAPE HFC 01 - 88, Side A                                                                                                        
TAPE HFC 01 - 88, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:48 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  Gretchen  Guess;  Senator  Lyda  Green;  Hans                                                                   
Neidig, Staff,  Senator Lyda  Green; Heather Nobrega,  Staff,                                                                   
Representative   Norman   Rokeberg;   Dean   Guaneli,   Chief                                                                   
Assistant  Attorney   General,  Department  of   Law;  Darwin                                                                   
Peterson, Staff, Senator John  Torgerson; Rita Davis, Special                                                                   
Education, NEA-Alaska, Palmer;  Karla Griswold, Teacher, NEA-                                                                   
Alaska,  Anchorage; Dean  Guaneli,  Chief Assistant  Attorney                                                                   
General,  Criminal   Division,  Department  of   Law;  Angela                                                                   
Salerno, Division of Public Assistance,  Department of Health                                                                   
and  Social Services;  Lucy  Hope, NEA-Alaska,  Wasilla;  Dr.                                                                   
Bruce Johnson,  Deputy Commissioner, Department  of Education                                                                   
and  Early Development;  Rod McCoy,  NEA-Alaska, Old  Harbor,                                                                   
Anchorage.                                                                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Linda Kesterson, Department of  Law, Anchorage; Doug Griffin,                                                                   
Director,  Alcohol Beverage Control  Board, Anchorage;  Karen                                                                   
Dempster,  Superintendent of Yukon  Koyukuk School  District;                                                                   
Louise Parrish,  Valdez; Dr. Ed McLean, Kenai;  Jim Nordlund,                                                                   
Director,  Division  of  Public   Assistance,  Department  of                                                                   
Health & Social  Services, Anchorage; Jim  Stouffer, Division                                                                   
of Oil and  Gas, Department of Natural  Resources, Anchorage;                                                                   
Barbara  Lefler,  PERC,  Anchorage;  Millie  Ryan,  Executive                                                                   
Director,   Governor's  Council   Disabilities  and   Special                                                                   
Education,  Anchorage;  Jennifer  Jones,  Governor's  Council                                                                   
Disabilities  and Special  Education,  Anchorage; Jean  Bugg,                                                                   
Anchorage; Tim Weiss, Parent Incorporated, Anchorage.                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 132    An Act  relating to the possession  or distribution                                                                   
          of  alcohol  in  a  local  option  area;  requiring                                                                   
          liquor  license applicants  to submit  fingerprints                                                                   
          for  the purpose of  conducting a criminal  history                                                                   
          background  check,  and  relating  to  the  use  of                                                                   
          criminal  justice  information   by  the  Alcoholic                                                                   
          Beverage Control  Board; providing for  a review of                                                                   
          alcohol server  education courses by  the Alcoholic                                                                   
          Beverage   Control  Board  every  two   years;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          CS HB 132 (FIN) was reported out of Committee with                                                                    
          a "do  pass" recommendation  and with  fiscal notes                                                                   
          by Department of Revenue  dated 3/26/01, Department                                                                   
          of  Law dated  3/26/01,  Department of  Corrections                                                                   
          dated 3/26/01,  Department of Administration  dated                                                                   
          3/26/01 and the Alaska  Court System dated 4/03/01.                                                                   
                                                                                                                                
HB 142    An Act relating to the  Alaska temporary assistance                                                                   
          program; and providing for an effective date.                                                                         
                                                                                                                                
          CS HB 142 (HES) was  reported out of Committee with                                                                   
          a "do  pass" recommendation and with  a fiscal note                                                                   
          by  Department of  Health &  Social Services  dated                                                                   
          2/23/01.                                                                                                              
                                                                                                                                
SB 77     An Act repealing the exception that applies to                                                                        
          collection and payment  of interest of $150 or less                                                                   
          on  royalty or net  profit share underpayments  and                                                                   
          overpayments; and providing  for an effective date.                                                                   
                                                                                                                                
          SB  77 was  reported out  of Committee  with a  "do                                                                   
          pass"  recommendation and with  a zero  fiscal note                                                                   
          by Department of Natural Resources dated 2/22/01.                                                                     
                                                                                                                                
SB 133    An  Act  relating  to  a  two-year  transition  for                                                                   
          implementation   of    the   public   high   school                                                                   
          competency  examination   and  to  establishing  an                                                                   
          essential  skills  examination  as  a  high  school                                                                   
          graduation   requirement;  and  providing   for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          SB 133 was HELD in Committee for further                                                                              
          consideration.                                                                                                        
                                                                                                                                
HCR 14    Suspending  Rules  24(c),  35,  41(b),  and  42(e),                                                                   
          Uniform Rules of the Alaska State Legislature,                                                                        
          concerning Senate Bill No. 133, relating to high                                                                      
          school competency testing.                                                                                            
                                                                                                                                
          HCR   was    HELD   in   Committee    for   further                                                                   
          consideration.                                                                                                        
                                                                                                                                
                                                                                                                                
#HCR#14                                                                                                                       
HOUSE CONCURRENT RESOLUTION NO. 14                                                                                            
                                                                                                                                
     Suspending  Rules 24(c), 35,  41(b), and 42(e),  Uniform                                                                   
     Rules  of  the  Alaska  State   Legislature,  concerning                                                                   
     Senate Bill No. 133, relating  to high school competency                                                                   
     testing.                                                                                                                   
                                                                                                                                
SENATE BILL NO. 133                                                                                                           
                                                                                                                                
     An   Act  relating   to   a  two-year   transition   for                                                                   
     implementation  of  the public  high  school  competency                                                                   
     examination  and  to establishing  an  essential  skills                                                                   
     examination  as a  high school  graduation  requirement;                                                                   
     and providing for an effective date.                                                                                       
                                                                                                                                
SENATOR  LYDA GREEN  testified that  HCS for  CSSB 133  (HES)                                                                   
Version "T" is a combination of  the Senate-passed version of                                                                   
SB  133  and the  Education  Committee's  HB  94.   The  bill                                                                   
maintains   accountability   for    the   State   Performance                                                                   
Standards.   It also  addresses the  public's concerns  about                                                                   
opportunity  to   learn,  children  with   disabilities,  and                                                                   
students  who  transfer  into  an Alaskan  high  school  from                                                                   
another state.   She noted the work, which had  gone into the                                                                   
effort, was intended to make the  High School Competency Test                                                                   
fair to all students and make it legally defensible.                                                                            
                                                                                                                                
The bill includes the following provisions:                                                                                     
                                                                                                                                
       · Delays the effective date of the High School                                                                           
          Competency Test until February 1, 2004;                                                                               
       · Legislature's commitment to improving education                                                                        
          through the State Performance Standards and intent                                                                    
          that the High School Competency Test would be part                                                                    
          of an evolving process;                                                                                               
       · Students must demonstrate mastery of the State                                                                         
          Performance Standards in reading, English and math                                                                    
          in  order to receive  a diploma,  or have  passed a                                                                   
          competency test in another state;                                                                                     
       ·  A waiver could be granted  to students who transfer                                                                   
          to  an  Alaskan high  school  or  who has  rare  or                                                                   
          unusual  circumstances  and who  has satisfied  the                                                                   
          state performance  standards to the  maximum extent                                                                   
          possible;                                                                                                             
       ·  If  a student  cannot  demonstrate  mastery of  the                                                                   
          standards,  he/she would  receive a Certificate  of                                                                   
          Achievement,  which  would note  which portions  of                                                                   
          the   test   the  student   had   passed,   his/her                                                                   
          attendance  record,  and any  other  qualifications                                                                   
          the district felt were appropriate;                                                                                   
       ·  Special education students  may demonstrate mastery                                                                   
          by  a  combination  of  passing  the  test  without                                                                   
          accommodations,  with accommodations, or  through a                                                                   
          portfolio;                                                                                                            
       ·  A  requirement  that  the Department  of  Education                                                                   
          would  provide  the   Legislature  with  an  annual                                                                   
          report  showing  indicators  of the  progress  that                                                                   
          schools    are   making    toward   high    student                                                                   
          achievement;                                                                                                          
       ·  Rewards  students,   between  2002  and  2004,  for                                                                   
          passing the High School Competency Test;                                                                              
       ·  Asks the Department  to make recommendations to the                                                                   
          Legislature   regarding  an  appeals   process  and                                                                   
          portfolios; and                                                                                                       
       ·  Asks  the Department to  report to the  Legislature                                                                   
          on  the   proposed  criteria  and   procedures  for                                                                   
          waivers.                                                                                                              
                                                                                                                                
Representative  Harris asked  about the  changes made  to the                                                                   
House HESS  version of  the bill.   Senator Lyda  stated that                                                                   
she preferred  the "simplicity" of  the Senate version.   She                                                                   
stressed  that it  is  important that  the  high standard  be                                                                   
maintained.                                                                                                                     
                                                                                                                                
Representative   Croft    asked   the   difference    between                                                                   
accommodation,  modification   and  waiver.    Senator  Green                                                                   
recalled that the waiver language  would refer to someone who                                                                   
is not currently included.  Under  federal law, a student can                                                                   
qualify through various  ways in order to be  classified as a                                                                   
student   with  special   needs  to   make  their   education                                                                   
comparable  to the  other  students.   She  explained how  an                                                                   
accommodation  or  modification  could  be made  for  certain                                                                   
circumstances.   She commented  that the intelligence  or the                                                                   
manner in  how the student reaches  the result should  not be                                                                   
the focus.   Senator Green deferred to Dr.  Bruce Johnson for                                                                   
a more thorough definition of the terms.                                                                                        
                                                                                                                                
Representative Hudson  voiced appreciation for  the hard work                                                                   
that  had been  undertaken for  the betterment  of the  young                                                                   
people in  Alaska.  He  questioned if  there was one  area in                                                                   
the House committee substitute,  which needed to be modified.                                                                   
                                                                                                                                
Senator Green voiced her concern  with the minimum competency                                                                   
record and  the portfolio referenced  on Page 3,  Line 19-20.                                                                   
Vice-Chair Bunde  interjected that  language referred  to the                                                                   
State  Board  of Education  and  the  option of  providing  a                                                                   
report  back.     Senator  Green  added  that   the  language                                                                   
addressing the  State performance  standards was  of concern.                                                                   
The  performance  standards for  math  are  not in  the  best                                                                   
interest of the student.                                                                                                        
                                                                                                                                
Representative Hudson  pointed out the difference  on Page 3,                                                                   
Line  30, and  the certificate  of achievement.   The  Senate                                                                   
version  contains   no  certificate   of  achievement   area.                                                                   
Representative Hudson asked why it had not been included.                                                                       
                                                                                                                                
Senator  Green  explained  that  the current  exam  is  being                                                                   
rewritten.   Using the  essential skills  subset as  the goal                                                                   
versus the larger rack of information  to test over, the test                                                                   
is being brought  to a standard that most students  should do                                                                   
well on.   She believed that  all of the individual  needs of                                                                   
students  were being  addressed.   If the State  has a  small                                                                   
number of  students who do not  pass the test, she  would not                                                                   
be concerned,  as that child could  repeat the year  in order                                                                   
to pass the test.  She stressed  that it is the goal that the                                                                   
student meets the established standard.                                                                                         
                                                                                                                                
Representative Hudson reiterated  that he was looking for the                                                                   
area of disagreement.   He noted the inclusion  of diploma or                                                                   
certificate of  achievement, suggesting  that a policy  issue                                                                   
is  the  "difference".    Senator  Green  was  not  sure  how                                                                   
essential the certificate of achievement would be.                                                                              
                                                                                                                                
Representative  Davies asked if  there were issues  regarding                                                                   
the  standards   of  treating   special  education   students                                                                   
differently,  by allowing  them  the same  opportunities  and                                                                   
success.  Senator Green explained  that each student deserves                                                                   
a diploma.  Those that are severely  developmentally disabled                                                                   
would take  a different  test.  Some  students will  need the                                                                   
accommodations.  In the Senate  version, those students would                                                                   
be able to do  that.  In the discussion regarding  the waiver                                                                   
language, it  is the  role of the  Department of  Education &                                                                   
Early Development  and the State School Board  to develop the                                                                   
language.                                                                                                                       
                                                                                                                                
Representative Croft  referenced Page 3, indicating  that the                                                                   
student either pass  the test or has a portfolio  of work for                                                                   
a certificate of  achievement.  He recommended  having a test                                                                   
or having an alternative way that  the student can achieve an                                                                   
appropriate  level.   He stated that  would provide  everyone                                                                   
the opportunity to  "get there".  Once that  is accomplished,                                                                   
they  would receive  their diploma.   As  the bill  currently                                                                   
stands,  there would  be only  one  standard, the  test.   He                                                                   
emphasized that  something else was needed because  there are                                                                   
going to  be a lot  of special need  kids that will  not meet                                                                   
the standard  of that test.    Representative  Croft stressed                                                                   
the need for an alternative route for those kids.                                                                               
                                                                                                                                
Vice-Chair  Bunde pointed  out  that 40%-50%  of the  current                                                                   
Individual  Education  Program  (IEP)  students  do  not  get                                                                   
diplomas  at this  time.   Under the  current standard,  that                                                                   
number is lax for  graduation and that about 10%  of all high                                                                   
school seniors do not get diplomas  under the current system.                                                                   
He recommended that defining a diploma should be discussed.                                                                     
                                                                                                                                
Senator Green  advised that referencing the  portfolio refers                                                                   
to  a child  with a  disability.   She pointed  out that  the                                                                   
Senate version  contains present  statute language on  how to                                                                   
implement that test.                                                                                                            
                                                                                                                                
LUCY HOPE, SPECIAL EDUCATION,  NATIONAL EDUCATION ASSOCIATION                                                                   
(NEA)-ALASKA,  WASILLA,  voiced  support  for  SB 133.    She                                                                   
pointed out  concerns indicated on  Page 3 and  the portfolio                                                                   
language addressing special needs  children.  She stated that                                                                   
the proposed language would not  be the best way to determine                                                                   
special  needs  student proficiency.    She  asked who  would                                                                   
score the portfolios.   Ms. Hope commented that  the language                                                                   
of the Senate version more clearly  acknowledges the concerns                                                                   
of the special need students and  that language is already in                                                                   
place and defined.   She urged substituting  the language for                                                                   
the  IEP  accommodations  and  modifications  and  using  the                                                                   
Senate version of the bill.                                                                                                     
                                                                                                                                
Representative Croft asked good  examples of modification and                                                                   
accommodations.    Ms.  Hope noted  that  an  "accommodation"                                                                   
would allow  the student  to take  the same  test.   Ms. Hope                                                                   
explained that  an accommodation is something  that would not                                                                   
give the  student an unfair  advantage versus  a modification                                                                   
that would  give the  student  an advantage  such as using  a                                                                   
calculator.     The  accommodations  and   modifications  are                                                                   
determined by  the IEP of the  student.  Braille for  a blind                                                                   
student would  be an  accommodation, but  reading to  a blind                                                                   
person  would be a  modification because  someone else  could                                                                   
benefit  from having  it  read.   She  noted  that reading  a                                                                   
reading  test  would  be totally  disallowed;  the  seriously                                                                   
dyslexic  student  would  be   disallowed  from  getting  the                                                                   
diploma in that case.                                                                                                           
                                                                                                                                
Representative  Whitaker clarified  that the  IEP team  would                                                                   
determine the criteria for a special  needs student earning a                                                                   
diploma.  Ms. Hope acknowledged that was correct.                                                                               
                                                                                                                                
Vice-Chair Bunde clarified that  the IEP team consists of the                                                                   
parents,  teacher  and  a  representative   from  the  school                                                                   
district.  Vice-Chair  Bunde referred to the  Senate version,                                                                   
which  would provide  for  as many  competency  tests as  IEP                                                                   
teams.    He   believed  that  different  teams   would  have                                                                   
different standards.   Ms. Hope replied that  it would depend                                                                   
on the student's proficiency.                                                                                                   
                                                                                                                                
Representative   Davies   asked   how  many   students   have                                                                   
difficulties  in passing the  tests.   Ms. Hope replied  that                                                                   
there  are  many   reasons  that  a  modification   could  be                                                                   
recommended.   She  did not  know the  percentage, but  noted                                                                   
that it would usually be for students  with specific learning                                                                   
disabilities.                                                                                                                   
                                                                                                                                
Representative Davies  questioned the drawback  to having all                                                                   
students using a calculator.   Ms. Hope replied that it would                                                                   
depend  on what  was  being tested.    The  ability to  think                                                                   
through  a process  is  being tested,  not  the knowledge  of                                                                   
those facts being reviewed.                                                                                                     
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 87, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
RITA DAVIS,  SPECIAL EDUCATION  TEACHER, NEA-ALASKA,  PALMER,                                                                   
noted that she  had worked with teens providing  IEP goals to                                                                   
set the standard  and developing class schedules  to meet the                                                                   
graduation  requirements  with the  alternate  of a  diploma.                                                                   
She reviewed  a situation with  a special needs  student, who                                                                   
had been  one of her students  and had disabilities  and then                                                                   
how the accommodations and modifications  helped that student                                                                   
complete her  high school graduation.   She urged  passage of                                                                   
SB 133.                                                                                                                         
                                                                                                                                
Representative Davies agreed with  the comment that the State                                                                   
does  not  have  to  "water  down  the  standards"  being  an                                                                   
important  portion  of the  bill.    He understood  that  the                                                                   
students would  be "moving" toward the same  standards, using                                                                   
different  routes.  Ms.  Davis explained  that the  goals are                                                                   
matched  according to  the student's  disability.  Every  IEP                                                                   
looks different.                                                                                                                
                                                                                                                                
Vice-Chair Bunde  pointed out  that the University  of Alaska                                                                   
system does  not require  a high school  diploma.   Ms. Davis                                                                   
replied  that  when  students  are labeled  with  a  learning                                                                   
disability,  it  is  difficult  to predict  what  makes  that                                                                   
student "vulnerable".   She spoke to the effort  each student                                                                   
must make in order to succeed.                                                                                                  
                                                                                                                                
Representative  Croft  commented that  there  is an  unspoken                                                                   
worry that IEP's don't expect  enough of the students or that                                                                   
IEP's  are sometimes  used for  students that  do not  really                                                                   
have   a  disability   but   instead   want   some  type   of                                                                   
modification.  He  inquired if IEP's were being  abused.  Ms.                                                                   
Davis replied  that there are stringent  guidelines regarding                                                                   
disabilities   established   by   the   federal   and   State                                                                   
government.  The assessment evaluation  is a well-established                                                                   
system.  The IEP  is a part of that standard and  it is a way                                                                   
to give information  to identify the student's  ability.  She                                                                   
emphasized  that programs  are  designed  to meet  graduation                                                                   
standards.                                                                                                                      
                                                                                                                                
Vice-Chair Bunde  pointed out that  a parent must  "sign off"                                                                   
on the IEP.   Ms. Davis responded that it is  a team decision                                                                   
and at  the high school level,  the students are  involved in                                                                   
the decision.   She commented that the standard  would not be                                                                   
lowered if the parent thinks it is too tough.                                                                                   
                                                                                                                                
ROD MCCOY, SPECIAL EDUCATION TEACHER,  NEA-ALASKA, ANCHORAGE,                                                                   
addressed his  experience as a  teacher of special  education                                                                   
students in Anchorage.   He emphasized that  he supported the                                                                   
Senate version of the legislation.   He addressed how painful                                                                   
it is to  expect more than the student's  individual ability.                                                                   
Mr. McCoy  pointed out  that it is  important to  respect the                                                                   
individual differences between students.                                                                                        
                                                                                                                                
Vice-Chair Bunde interjected that  it is "criminal" to damn a                                                                   
child to  low expectations.   Mr.  McCoy agreed.   Vice-Chair                                                                   
Bunde  voiced  his concern  that  the standard  continues  to                                                                   
decline.    He  pointed  out   that  currently,  high  school                                                                   
students are functioning  at a junior high level.   Mr. McCoy                                                                   
                                                   th                                                                           
interjected that the national level is that of a 5 grader.                                                                      
                                                                                                                                
KARLA  GRISWOLD,   TEACHER,  NEA-ALASKA,  ANCHORAGE,   voiced                                                                   
support of the Senate version  of the bill.  She commented on                                                                   
the exceptional standards that  currently exist in the State.                                                                   
Ms. Griswold voiced concerns regarding  the portfolio.  There                                                                   
are  some things  that  are not  essential  skills which  are                                                                   
being  required of  the students.   She  suggested that  some                                                                   
students do need "extra tools".   The State should stick with                                                                   
the standards  and have  high expectations  of the  students.                                                                   
She added that  on the whole, the special  education students                                                                   
are hard workers.                                                                                                               
                                                                                                                                
TIM   WEISS,    (TESTIFIED   VIA   TELECONFERENCE),    PARENT                                                                   
INCORPORATED,  ANCHORAGE, commented  that Parent  Inc.,  is a                                                                   
group  of  parents  of  children  needing  special  education                                                                   
services.   These parents want  to insure that no  matter how                                                                   
severe their  child's disability is,  they are able to  get a                                                                   
diploma.                                                                                                                        
                                                                                                                                
Mr. Weiss noted  that the bill provides for  several concerns                                                                   
which are necessary for students with disabilities:                                                                             
                                                                                                                                
       · Recognizing that after taking the test, the IEP                                                                        
          team    may    determine   that    re-testing    is                                                                   
          inappropriate; and                                                                                                    
       · Explicitly outlining the methods by which students                                                                     
          with disabilities can receive a diploma.                                                                              
                                                                                                                                
Mr. Weiss worried  about the fact that an EIP  team could not                                                                   
request a  waiver in unusual  circumstances.   The Department                                                                   
of Education  &  Early Development  has currently  determined                                                                   
that  their "alternate  examination"  through portfolio  work                                                                   
can only  be for the lowest  functioning 2% of  students with                                                                   
disabilities.                                                                                                                   
                                                                                                                                
LOUISE  PARRISH,  (TESTIFIED   VIA  TELECONFERENCE),  VALDEZ,                                                                   
voiced  support   for  the   legislation  and  concern   that                                                                   
legislators have  not had experience with  disabled children.                                                                   
The majority of those kids in  Alaska fall under the category                                                                   
of  specific learning  disability.   She  addressed  concerns                                                                   
with dyslexia and specific learning  disabilities (SLD).  Ms.                                                                   
Parrish  commented that  all  struggling  kids could  benefit                                                                   
from a  system of K-2  screening, diversion and  intervention                                                                   
using proven  methods of reading  instruction.   She stressed                                                                   
that all children can learn if  schools decide to make reform                                                                   
a priority.                                                                                                                     
                                                                                                                                
DR. ED MCLEAN, (TESTIFIED VIA  TELECONFERENCE), KENAI, stated                                                                   
schools  are expected  to teach  a  full array  of skills  to                                                                   
children and to  decide what is essential.  Out  of that full                                                                   
set, the schools are attempting  to identify which skills and                                                                   
concepts are essential.   All students cannot  be required to                                                                   
cover the entire  broad range.  The question  revolves around                                                                   
what level is enough.                                                                                                           
                                                                                                                                
Dr. McLean discussed essential  skills.  He suggested that if                                                                   
the use  of a modification is  allowed, it should  be allowed                                                                   
during  the assessment.    Dr. McLean  referenced  Page 5  of                                                                   
reports,  which  would  be  provided.     He  stated  if  the                                                                   
districts  were required to  report the  number of  kids with                                                                   
waivers  and the  number  that graduate  with  the exam,  the                                                                   
district  could  add  an  additional  report  indicating  the                                                                   
number   of  students   that   graduate  with   the  use   of                                                                   
modifications.    He  pointed out  that  federal  save-guards                                                                   
already are in place and would not need to be modified.                                                                         
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 88, Side A                                                                                                      
                                                                                                                              
                                                                                                                                
Dr. McLean voiced  his appreciation of all the  work that had                                                                   
been done through the legislation.                                                                                              
                                                                                                                                
Vice-Chair Bunde  inquired if the current test  standards met                                                                   
the definition  of "essential  skills".   Dr. McLean  replied                                                                   
that his  district did  define the essential  skills.   It is                                                                   
being  developed  and the  district  is determining  how  the                                                                   
passing  skills are  measured  in determining  foundation  or                                                                   
essential skills.   Dr. McLean  explained that  the important                                                                   
piece is not only the level but also the focus of the test.                                                                     
                                                                                                                                
Vice-Chair Bunde thought that  the modifications could change                                                                   
the  test and  raise a  red flag.   Dr.  McLean replied  that                                                                   
there   are   federal   regulations,   which   outlines   the                                                                   
requirements that  IEP must follow  in terms of  eligibility.                                                                   
He stated if there  was a district with a high  number of IEP                                                                   
students,  that   the  district  office  would   initiate  an                                                                   
inquiry.                                                                                                                        
                                                                                                                                
Representative  Hudson   asked  about  the   Kenai  certified                                                                   
diploma.  He inquired how the  State could guarantee that the                                                                   
money being spent  for education was producing  students that                                                                   
can  meet  the  necessary  minimum  standards.    Dr.  McLean                                                                   
replied that setting  the standards, the Borough  begins with                                                                   
a  yearlong process  of monthly  meetings  held to  establish                                                                   
indicators  of a  successful policy.   Then  those ideas  are                                                                   
accessed and the criteria reference is considered.                                                                              
                                                                                                                                
Representative   Lancaster  asked   which   version  of   the                                                                   
legislation  was preferred.    Dr. McLean  responded that  he                                                                   
preferred   the   Senate   version   as   it   provides   for                                                                   
accountability  and that a  variety of  the details  would be                                                                   
addressed  through the  public  process.   He commented  that                                                                   
cost is critical for modifications.                                                                                             
                                                                                                                                
KAREN    DEMPSTER,     (TESTIFIED    VIA     TELECONFERENCE),                                                                   
SUPERINTENDENT  OF YUKON KOYUKUK  SCHOOL DISTRICT,  commented                                                                   
that she had  been a special needs student,  who continued on                                                                   
to  law school.   She  noted that  she could  not finish  the                                                                   
general  education diploma  (GED) exit  exam.  She  commented                                                                   
that the debate  now revolves around two  situations, special                                                                   
need students  and those students  that only have  a specific                                                                   
limitation.   Ms. Dempster  spoke to  the objective  criteria                                                                   
currently being  used.  After  the student meets  the testing                                                                   
qualifications, then they must meet the standards.                                                                              
                                                                                                                                
Ms.  Dempster added  that it  is  important to  look at  what                                                                   
criteria are  being used  to determine  whether a student  is                                                                   
handicapped  or  not.    She   addressed  concerns  with  the                                                                   
portfolio work and  testing for the IEP student.   Currently,                                                                   
there  is  a  standard  in place  that  allows  seeing  which                                                                   
student  has a handicap.   That  standard is  rigorous.   Ms.                                                                   
Dempster recommended going with  the version of the bill that                                                                   
allows for  the identification  of the  handicap and  for the                                                                   
modification  to  accomplish the  testing.    She urged  that                                                                   
consideration  be made on  how to handle  this concern.   She                                                                   
noted that  employers often  do look  at the other  criteria.                                                                   
She  applauded Vice-Chair  Bunde  with the  inclusion of  the                                                                   
high school education  standards to help raise  the awareness                                                                   
of why education is important.   The accommodation should not                                                                   
be a lessening of the standard.                                                                                                 
                                                                                                                                
Vice-Chair  Bunde  noted  that  both  versions  of  the  bill                                                                   
provide  for accommodations  and that  the divergence  begins                                                                   
with the modifications.                                                                                                         
                                                                                                                                
BARBARA LEFLER,  (TESTIFIED VIA TELECONFERENCE),  PARENTS FOR                                                                   
EFFECTIVE READING CURRICULUM (PERC),  ANCHORAGE, testified to                                                                   
experiences  with her  child who has  a learning  disability.                                                                   
She commented  that a  curriculum was  formed to address  his                                                                   
needs.      She  stressed   that   children   with   learning                                                                   
disabilities can  succeed if there is a curriculum  for their                                                                   
conditions.   Ms. Lefler stressed  that parents  are becoming                                                                   
worn down  in fighting for their  child.  She urged  that the                                                                   
IEP diploma language be removed.                                                                                                
                                                                                                                                
Representative Hudson asked about  the "weight" referenced on                                                                   
Page 3  with regard to the  certificate of achievement.   Ms.                                                                   
Lefler  responded  that a  certificate  of achievement  is  a                                                                   
"back door" to  allow the IEP team to let them  off the hook.                                                                   
She  stressed  that a  certificate  of achievement  does  not                                                                   
carry as much weight as a diploma.                                                                                              
                                                                                                                                
Vice-Chair   Bunde   commented   that  the   certificate   of                                                                   
achievement applied to all students not just the IEP.                                                                           
                                                                                                                                
MILLIE  RYAN,   (TESTIFIED  VIA  TELECONFERENCE),   EXECUTIVE                                                                   
DIRECTOR,  GOVERNOR'S  COUNCIL  ON DISABILITIES  AND  SPECIAL                                                                   
EDUCATION, ANCHORAGE,  stated that  the Council does  support                                                                   
high standards  for all students  and that expectations  need                                                                   
to  be   higher.     The  performance   standards  offer   an                                                                   
opportunity for  schools to accommodate for the  students and                                                                   
their learning  style.  Ms. Ryan  added that it  is important                                                                   
to  provide a  variety of  ways  to provide  for students  to                                                                   
demonstrate what  they have learned.  The  Council recommends                                                                   
adding  language that  allows  for the  participation in  the                                                                   
alternative learning  assessment outlined  in their  IEP that                                                                   
results in a diploma if they do  not pass the exit exam three                                                                   
times.   She recommended that  the alternative  assessment be                                                                   
in line with the performance standard.                                                                                          
                                                                                                                                
Vice-Chair  Bunde  stated  that  an  assessment  would  be  a                                                                   
modification of the test.                                                                                                       
                                                                                                                                
JENNIFER  JONES, (TESTIFIED  VIA TELECONFERENCE),  GOVERNOR'S                                                                   
COUNCIL  ON  DISABIITIES AND  SPECIAL  EDUCATION,  ANCHORAGE,                                                                   
addressed her own  physical disability.  The  ability to pass                                                                   
the test with modifications currently  exists.  A certificate                                                                   
of achievement  does not carry  the same weight as  a diploma                                                                   
and limits  the student's ability  to succeed in  the future.                                                                   
Students  fear that they  are not  going to  be able  to move                                                                   
forward.   Ms.  Jones  recommended  adding language  for  the                                                                   
alternative  assessment to  be in line  with the  performance                                                                   
standard.                                                                                                                       
                                                                                                                                
JEAN   BUGG,  (TESTIFIED   VIA   TELECONFERENCE),   EDUCATOR,                                                                   
ANCHORAGE,  commented  on  the   certificate  of  achievement                                                                   
amounting  to a diploma  with a  "disclaimer".  She  stressed                                                                   
that  document would  not qualify  the student  for a  "real"                                                                   
job.  Ms. Bugg stated that the  Alaska education system needs                                                                   
better teaching  skills to assure  the best methods  to reach                                                                   
disabled students.                                                                                                              
                                                                                                                                
Co-Chair  Williams  stated  that  SB  133 would  be  HELD  in                                                                   
Committee for further consideration.                                                                                            
                                                                                                                                
HOUSE BILL NO. 132                                                                                                            
                                                                                                                                
     An  Act relating  to the possession  or distribution  of                                                                   
     alcohol  in  a  local  option   area;  requiring  liquor                                                                   
     license  applicants  to   submit  fingerprints  for  the                                                                   
     purpose  of  conducting a  criminal  history  background                                                                   
     check,  and  relating to  the  use of  criminal  justice                                                                   
     information  by the  Alcoholic  Beverage Control  Board;                                                                   
     providing  for  a  review of  alcohol  server  education                                                                   
     courses  by the Alcoholic  Beverage Control  Board every                                                                   
     two years; and providing for an effective date.                                                                            
                                                                                                                                
HEATHER  NOBREGA,  STAFF,  REPRESENTATIVE   NORMAN  ROKEBERG,                                                                   
noted that the  House Judiciary Committee has  been requested                                                                   
to introduce HB  132 to address some problems in  the area of                                                                   
bootlegging alcohol,  and the issuance of liquor  licenses to                                                                   
persons with  criminal records  outside the State  of Alaska.                                                                   
Bootlegging is a  prevalent problem in "dry" areas,  and is a                                                                   
large  contributor to  crime in  those areas.   By  requiring                                                                   
applicants for  liquor licenses  to give their  fingerprints,                                                                   
the   State  could   thoroughly   investigate  the   criminal                                                                   
backgrounds  so  that  only  responsible   individuals  might                                                                   
obtain a liquor  license.  She urged the  Committee's support                                                                   
of the legislation.                                                                                                             
                                                                                                                                
Vice-Chair Bunde asked  if the sponsor had a  position on the                                                                   
proposed amendment.   Ms.  Nobrega noted that  Representative                                                                   
Rokeberg  supported the  amendment,  however, voiced  concern                                                                   
with the  potential fiscal impact.   He recommended  that the                                                                   
House Finance Committee work out the funding concerns.                                                                          
                                                                                                                                
Representative Croft  asked where in the bill  "six" would be                                                                   
replaced with  "12".  Ms.  Nobrego replied that  change would                                                                   
be made in Section 2 and 6.                                                                                                     
                                                                                                                                
Vice-Chair  Bunde questioned  if the  legislation would  make                                                                   
bootlegging  more lucrative.   Ms. Nobrega  replied  that was                                                                   
not the intent of the legislation.   The intent is to make it                                                                   
more difficult to get the alcohol.                                                                                              
                                                                                                                                
DEAN  GUANELI,  CHIEF ASSISTANT  ATTORNEY  GENERAL,  CRIMINAL                                                                   
DIVISION,  DEPARTMENT  OF  LAW,   spoke  in  support  of  the                                                                   
legislation.   He emphasized the problem that  alcohol causes                                                                   
in  Alaska.    There  are  provisions  in  current  law  that                                                                   
establishes  presumptions  on the  amounts  of  alcohol.   He                                                                   
added  that the  Criminal Justice  Assessment Commission  has                                                                   
worked to  look at  a variety of  aspects regarding  crime in                                                                   
Alaska  and that  alcohol  is one  of  the primary  concerns.                                                                   
There is  a problem  with current  law as  it applies  to the                                                                   
attempt to  send liquor into dry  areas.  The  problem arises                                                                   
when people  attempt to mail or  ship alcohol.  When  they do                                                                   
that and  are successful and over  a certain amount,  it then                                                                   
becomes a  Class C  felony.  If  they do  not succeed,  it is                                                                   
treated as an attempt,  which in Alaskan law is  handled as a                                                                   
lesser crime.  The level of culpability is the same.                                                                            
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 88, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
Mr.  Guaneli  added that  multiple  shipments  from  multiple                                                                   
stores  have been  used  to circumvent  the  law.   The  only                                                                   
effective way  to deal  with that, is  to create  a "delivery                                                                   
site", an area  that all alcohol shipped into a  dry area has                                                                   
to be delivered to a central location.   Barrow bans the sale                                                                   
of alcohol  but allows  its importation  and operates  one of                                                                   
the delivery sites.  Mr. Guaneli  acknowledged that the price                                                                   
is driven  up by that practice,  and emphasized that  less is                                                                   
getting into  the community.   The amendment would  allow the                                                                   
State to step-in and assume that function.                                                                                      
                                                                                                                                
Representative  Croft inquired  the  fiscal impact  resulting                                                                   
from the amendment.                                                                                                             
                                                                                                                                
Mr. Guaneli  responded that the  Department of  Public Safety                                                                   
received  a   substantial  appropriation  from   the  federal                                                                   
government  to combat bootlegging  alcohol.   As a  result of                                                                   
that appropriation,  the  Administration discussed  effective                                                                   
ways to  deal with  the concern.   There is sufficient  money                                                                   
within  that  appropriation  so  that the  program  could  be                                                                   
operated  at least  for  the first  fiscal  year without  any                                                                   
money coming from the general fund.                                                                                             
                                                                                                                                
Vice-Chair  Bunde  asked  the  administrative  costs  to  the                                                                   
program in Barrow.   Mr. Guaneli replied that  the program is                                                                   
operated under a  contract and did not know  the exact dollar                                                                   
amount.  The administrative fees cover the costs.                                                                               
                                                                                                                                
Representative   Hudson  questioned   if   the  concern   was                                                                   
principally a rural  issue.  Mr. Guaneli affirmed  it was and                                                                   
noted that  it actually applies  only to the areas  that have                                                                   
banned sales  but still allow  importation, a  couple primary                                                                   
places,  Bethel and  Kotzebue.   They  are the  hubs for  the                                                                   
smaller villages.                                                                                                               
                                                                                                                                
Representative  Hudson questioned  the intent.   Mr.  Guaneli                                                                   
noted  that the  aim  is  not to  reduce  the social  use  of                                                                   
alcohol.   The intent  is to  address those  people that  are                                                                   
selling  alcohol  for  a  profit   through  multiple  package                                                                   
stores.    Profits  are enormous  and  seriously  drive  that                                                                   
industry.                                                                                                                       
                                                                                                                                
Co-Chair  Mulder asked  if  it  were the  goal  to limit  the                                                                   
illegal  distribution,  and  how  would the  success  of  the                                                                   
program  be evaluated.   Mr. Guaneli  responded that  success                                                                   
would  not be  measured by  the  reduction in  alcohol.   The                                                                   
success would  be measured in  the reduction in the  need for                                                                   
social services and  a reduction in crime.   He affirmed that                                                                   
there is  not a baseline  for the reduction  of alcohol.   He                                                                   
added that the price of alcohol would be a measure.                                                                             
                                                                                                                                
Mr.  Guaneli emphasized  the  difficulty  creating a  perfect                                                                   
system.   The intent is to  limit persons to the  amount that                                                                   
they  can  statutorily receive  in  any  month.   There  will                                                                   
always be  situations in which  people try to  circumvent the                                                                   
law.                                                                                                                            
                                                                                                                                
Co-Chair Mulder  referenced the  amendment and asked  why the                                                                   
Committee should  consider adopting it as Bethel  already has                                                                   
it  in  place.   Mr.  Guaneli  advised  that  it  is  already                                                                   
allowed,  but   is  not  being  done  in   certain  locations                                                                   
throughout the  State.   Given the amount  of money  that the                                                                   
State spends  in that area, there  is a strong need  to limit                                                                   
the flow.  It will not hurt to  grant authority to the State.                                                                   
He reiterated  that this funding  was available  from another                                                                   
source this year.                                                                                                               
                                                                                                                                
Co-Chair Mulder asked  if it would be better to  put a sunset                                                                   
on the legislation.   Mr. Guaneli replied that  a study would                                                                   
be a legitimate expenditure.                                                                                                    
                                                                                                                                
Co-Chair Mulder commented that  measuring the success of such                                                                   
a  program  would be  nebulous.    He reiterated  applying  a                                                                   
sunset to justify that the program  has been successful.  Mr.                                                                   
Guaneli agreed that following  a period of time, if the State                                                                   
does not  show some success,  then perhaps the  effort should                                                                   
be abandoned.                                                                                                                   
                                                                                                                                
Representative  Harris commented that  there was  an election                                                                   
in Barrow that  turned down the funding for the  project.  He                                                                   
agreed that a sunset should be applied.                                                                                         
                                                                                                                                
Vice-Chair Bunde endorsed  the sunset.  He noted  that he was                                                                   
preparing  an  amendment to  the  amendment proposing  a  50%                                                                   
local match.  He hoped it would encourage a local buy-in.                                                                       
                                                                                                                                
DOUGLAS  GRIFFIN, (TESTIFIED  VIA TELECONFERENCE),  DIRECTOR,                                                                   
ALCOHOLIC  CONTROL   BOARD  (ABC),  ANCHORAGE,   stated  that                                                                   
language  is  needed by  the  Legislature  to provide  for  a                                                                   
statewide  check.  Mr.  Griffin identified  Section 3  of the                                                                   
bill, which speaks  to the criminal background  check.  There                                                                   
needs to  be specific information  that allows the  ABC Board                                                                   
to  access the  Federal Bureau  of  Investigation (FBI)  data                                                                   
bank  to   provide  a   nationwide  background  data   check.                                                                   
Currently, ABC  can only  access criminal convictions  within                                                                   
the State of Alaska.   He stressed that the  addition of that                                                                   
language would provide for a cost  savings to the State.  Mr.                                                                   
Griffin  pointed  out  that everything  is  run  through  the                                                                   
Department of Public Safety.   The State would benefit from a                                                                   
more complete background check.                                                                                                 
                                                                                                                                
Representative  Croft MOVED  to ADOPT  Amendment #1  with the                                                                   
conceptual addition  of a 3-year sunset and  a provision that                                                                   
if any general fund was required,  a 50% local match would be                                                                   
required.   [Copy on File].   Representative Harris  OBJECTED                                                                   
for the purpose of discussion.                                                                                                  
                                                                                                                                
Representative  Harris asked  if the  federal money  could be                                                                   
encumbered  during the  process.  Mr.  Guaneli believed  that                                                                   
the $1.4  million federal dollars  was available.   A portion                                                                   
of that  money has  been earmarked  for a  certain number  of                                                                   
troopers and  prosecutors.   He added  that there is  another                                                                   
source of federal money re-occurring  every year for drug and                                                                   
alcohol  concerns.  Mr.  Guaneli was  confident that  federal                                                                   
funding  would be  available  for at  least  the first  year.                                                                   
Until contracts  and regulations  are  available, it  will be                                                                   
difficult  to know what  the amount  is.   He added  that the                                                                   
fees need to be assessed.                                                                                                       
                                                                                                                                
Representative  Harris   asked  if  the   Administration  was                                                                   
confident that within the next  three years, no general funds                                                                   
would need to be  used to maintain the program.   Mr. Guaneli                                                                   
reiterated that he could not guarantee  that no federal funds                                                                   
would  be required  for  the entire  length  of the  program.                                                                   
Representative  Harris  asked if  the  sunset  should be  one                                                                   
year.   Mr. Guaneli replied that  a one-year sunset  would be                                                                   
too short,  as it will take  time to write the  contracts and                                                                   
regulations.  Three  years would be an appropriate  length of                                                                   
time.                                                                                                                           
                                                                                                                                
Representative Harris WITHDREW his OBJECTION.                                                                                   
                                                                                                                                
Co-Chair Williams  advised that the drafter  recommended that                                                                   
a Letter of Intent should accommodate the bill.                                                                                 
                                                                                                                                
Representative Hudson recommended  making a separate adoption                                                                   
of the Letter of Intent.                                                                                                        
                                                                                                                                
Representative  Croft redefined  Amendment #1,  adding  to it                                                                   
the three year sunset date.                                                                                                     
                                                                                                                                
There being NO OBJECTION, Amendment #1 was adopted.                                                                             
                                                                                                                                
Representative  Hudson MOVED  to ADOPT  the Letter of  Intent                                                                   
stating that:                                                                                                                   
                                                                                                                                
     "It is the intent of the Legislature that any general                                                                      
     fund money that goes into the operation of this program                                                                    
     must have a 50% local match".                                                                                              
                                                                                                                                
Co-Chair Williams OBJECTED for a question.                                                                                      
                                                                                                                                
Vice-Chair  Bunde  pointed  out   that  Michael  Ford,  Legal                                                                   
Drafter, had submitted the intent language.                                                                                     
                                                                                                                                
Co-Chair Williams WITHDREW his OBJECTIN.                                                                                        
                                                                                                                                
Representative Hudson MOVED to  report CS HB 132 (FIN) out of                                                                   
Committee  with  individual recommendations,  the  Letter  of                                                                   
Intent and with  the accompanying fiscal notes.   There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
CS HB  132 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass" recommendation  and with fiscal notes  by Department of                                                                   
Revenue  dated  3/26/01,  Department of  Law  dated  3/26/01,                                                                   
Department  of  Corrections  dated   3/26/01,  Department  of                                                                   
Administration  dated  3/26/01 and  the  Alaska Court  System                                                                   
dated 4/03/01.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 142                                                                                                            
                                                                                                                                
     An Act relating to the Alaska temporary assistance                                                                         
     program; and providing for an effective date.                                                                              
                                                                                                                                
ANGELA SALERNO, DIVISION OF PUBLIC  ASSISTANCE, DEPARTMENT OF                                                                   
HEALTH AND SOCIAL  SERVICES, stated that Jim  Nordlund was on                                                                   
line and ready to testify.                                                                                                      
                                                                                                                                
JIM  NORDLUND,  (TESTIFIED  VIA   TELECONFERENCE),  DIRECTOR,                                                                   
DIVISION  OF  PUBLIC  ASSISTANCE, DEPARTMENT  OF  HEALTH  AND                                                                   
SOCIAL SERVICES,  ANCHORAGE, commented  that five  years ago,                                                                   
the Administration  worked with  the Legislature to  create a                                                                   
new  welfare  law for  Alaska.    The  Aid to  Families  with                                                                   
Dependent  Children  and  Job Opportunity  and  Basic  Skills                                                                   
programs  created  the Alaska  Temporary  Assistance  Program                                                                   
(ATAP).    He advised  that  changes  were needed  with  that                                                                   
program as it was initially established.                                                                                        
                                                                                                                                
Mr. Nordlund stated  that HB 142 would repeal  the percentage                                                                   
limit on the number of families  that may continue on receive                                                                   
assistance for more than 60 months  due to hardship.  Removal                                                                   
of  that limit  would  permit the  Department  of Health  and                                                                   
Social Services to base its hardship  exceptions on objective                                                                   
criteria  rather  than  on  a  fixed  percentage  of  overall                                                                   
caseload.   As families  are successful  in finding  work and                                                                   
the overall caseload decreases,  the number of hardship cases                                                                   
makes up a greater percentage of the total.                                                                                     
                                                                                                                                
Mr.  Nordlund  noted  that Alaska  established  an  extremely                                                                   
aggressive goal,  compared to other states,  capping hardship                                                                   
cases at  a specific percentage  of the total.   Other states                                                                   
either avoided time limits completely  or set a broader range                                                                   
of exemptions  to the  limits.  The  fixed percentage  in law                                                                   
artificially  bars needy families  with disabled  adults from                                                                   
receiving  essential cash  assistance  and  services for  the                                                                   
children.  The first families will begin to exceed the 60-                                                                      
month lifetime limit in July 2002.                                                                                              
                                                                                                                                
Mr. Nordlund added  that the bill would address  the seasonal                                                                   
provisions  for  a  two  parent   needy  family  by  removing                                                                   
outdated eligibility requirements  as cited in Superior Court                                                                   
ruling.   The  change  permits the  Department  to apply  the                                                                   
seasonal   reduction  provision   to  all  two-parent   needy                                                                   
families in  which both parents  are physically  and mentally                                                                   
able to work.                                                                                                                   
                                                                                                                                
The legislation  will require disabled parents  to have self-                                                                   
sufficiency plans.  The State  can better serve these parents                                                                   
by promoting their efforts toward self-sufficiency.                                                                             
                                                                                                                                
Representative Hudson MOVED to  report CS HB 142 (HES) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS HB  142 (HES)  was reported  out of  Committee with  a "do                                                                   
pass" recommendation and with  a fiscal note by Department of                                                                   
Health & Social Services dated 2/23/01.                                                                                         
                                                                                                                                
SENATE BILL NO. 77                                                                                                            
                                                                                                                                
     An  Act   repealing  the   exception  that   applies  to                                                                   
     collection and  payment of interest  of $150 or  less on                                                                   
     royalty   or   net  profit   share   underpayments   and                                                                   
     overpayments; and providing for an effective date.                                                                         
                                                                                                                                
DARWIN  PETERSON, STAFF,  SENATOR  JOHN  TORGERSON, noted  in                                                                   
1998, the Legislature enacted  AS 38.05.135(g), exempting the                                                                   
Department of Natural Resources  from calculating interest on                                                                   
small over  to underpayments of  royalty if the  interest was                                                                   
$150  or   less.     The  cost   of  calculating  the   small                                                                   
over/underpayments  was more  than the  interest received  or                                                                   
credit  applied.    Prior  to  1998,  Department  of  Natural                                                                   
Resources was  calculating the small processed  1,716 royalty                                                                   
filings where  interest amounts were between  a negative $150                                                                   
and   a   positive   $150.      The   net   amount   of   the                                                                   
under/overpayments was a positive $4,096.                                                                                       
                                                                                                                                
Mr.  Peterson   stated  that   the  effort  of   calculating,                                                                   
processing and  tracking interest for small  payments was not                                                                   
cost effective for the oil companies  or the State.  With the                                                                   
advent  of the  State's new  Oil and  Gas Royalty  Accounting                                                                   
System,  all interest  is  calculated electronically.    Most                                                                   
royalty  payers  are  using mainframe  computer  systems  and                                                                   
sending their  royalty reports  electronically.   The failure                                                                   
to repeal  AS 38.05.135(g) would  require the  Department and                                                                   
royalty  payers to reprogram  their computer  systems  to not                                                                   
compute payments of less than $150 dollars.                                                                                     
                                                                                                                                
Mr.  Peterson added  that  the repeal  of  the statute  would                                                                   
solve the  problem of the  administrative burden on  the part                                                                   
of the  royalty payers and the  State to manually  track very                                                                   
small amounts of interest.                                                                                                      
                                                                                                                                
Vice-Chair Bunde MOVED to report  SB 77 out of Committee with                                                                   
individual recommendations  and with the  accompanying fiscal                                                                   
note.  There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
SB  77  was  reported  out of  Committee  with  a  "do  pass"                                                                   
recommendation and  with a zero fiscal note  by Department of                                                                   
Natural Resources dated 2/22/01.                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:55 P.M.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects