Legislature(2001 - 2002)

02/20/2002 09:09 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                           JOINT MEETING                                                                                      
                     SENATE FINANCE COMMITTEE                                                                                 
                      HOUSE FINANCE COMMITTEE                                                                                 
                         February 20, 2002                                                                                    
                              9:09 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 12, Side A                                                                                                             
SFC 02 # 12, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Dave Donley convened the meeting at approximately 9:09 AM.                                                             
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative John Harris                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative John Davies                                                                                                      
Representative Eric Croft                                                                                                       
Representative Bill Hudson                                                                                                      
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
                                                                                                                                
Also Attending:  REPRESENTATIVE HUGH FATE; PRESIDENT  MARK HAMILTON,                                                          
President  University of  Alaska; WENDY REDMAN,  Vice President  for                                                            
University Relations, University  of Alaska; ELSA FROEHLICH DEMEKSA,                                                            
University of  Alaska Board of Regents; MARLENE JOHNSON,  University                                                            
of Alaska Board  of Regents, JOE THOMAS, University  of Alaska Board                                                          
of Regents                                                                                                                    
                                                                                                                                
Attending via Teleconference:                                                                                                 
There were no teleconference participants.                                                                                      
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 289-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
SB 245-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
SB 298-TOBACCO TAXATION; LICENSING                                                                                              
SB 246-APPROP: MENTAL HEALTH BUDGET                                                                                             
HB 335-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
HB 336-APPROP: MENTAL HEALTH BUDGET                                                                                             
HB 337-REAPPROPRIATIONS & CAPITAL APPROPRIATIONS                                                                                
HB 403-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
HB 404-APPROP: MENTAL HEALTH BUDGET                                                                                             
HB 414-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK                                                                                  
HB 415-SUPPLEMENTAL APPROPRIATIONS                                                                                              
                                                                                                                                
This was  a joint meeting  of the Senate  Finance Committee  and the                                                            
House  Finance Committee.  The  Committees  heard testimony  on  the                                                            
State  of  the  University  of  Alaska.   The  bills  were  held  in                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 289                                                                                                        
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 245                                                                                                        
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 298                                                                                                        
     "An Act  relating to certain  licenses for the sale  of tobacco                                                            
     products;  relating to  tobacco taxes  and sales and  cigarette                                                            
     tax stamps;  relating to provisions  making certain  cigarettes                                                            
     contraband  and subject to seizure and forfeiture;  relating to                                                            
     certain  crimes,  penalties,  and interest  concerning  tobacco                                                            
     taxes   and  sales;  relating   to  notification  regarding   a                                                            
     cigarette   manufacturer's  noncompliance   with  the   tobacco                                                            
     product  Master  Settlement   Agreement  or  related  statutory                                                            
     provisions and to  confiscation of the affected cigarettes; and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 246                                                                                                        
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 335                                                                                                         
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 336                                                                                                         
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 337                                                                                                         
     "An  Act making capital  appropriations  and reappropriations,                                                             
     and capitalizing  funds; making  appropriations under  art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 403                                                                                                         
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 404                                                                                                         
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 414                                                                                                         
     "An Act making supplemental  and other appropriations; amending                                                            
     appropriations; and providing for an effective date."                                                                      
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 415                                                                                                         
     "An Act making supplemental  and other appropriations; amending                                                            
     appropriations; making  appropriations to capitalize funds; and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was the first  hearing for these bills in the  Senate and House                                                            
Finance Committees.                                                                                                             
                                                                                                                                
MARK  HAMILTON,  President,  University   of  Alaska,  reminded  the                                                            
Committee  that during his  first presentation  to the Committee  in                                                            
1999,  he  expressed  "how  the  level   funding  of  the  90's  had                                                            
essentially  broken the machine,"  and "enrollment  and morale  were                                                            
down."   He  expressed   now,  however,   with   support  from   the                                                            
legislature,  the University is turning  into a "success  story." He                                                            
stated  that  in FY  00,  when the  University  received  its  first                                                            
general fund  increase in many years,  the University began  to make                                                            
plans and the "tide was  turned." He noted the University's reliance                                                            
on general funds for a  large portion of its overall budget has been                                                            
decreasing as referenced  in the University of Alaska handout titled                                                            
"Actual General  Fund Compared to Total Funds FY 86-FY  01" [copy on                                                          
file]. He summarized that  the general fund percent of total funding                                                            
has declined  from a high of 47 percent  to the current 38  percent,                                                            
and the percentage  is projected to drop to 35 percent  of the total                                                            
funding under the proposed FY 03 budget.                                                                                        
                                                                                                                                
President Hamilton  stated the decrease  in general fund  percentage                                                            
of total funds is indicative  that "more students mean more tuition;                                                            
more corporate  donations; more federal  funds; more foundation  and                                                            
grant funding."                                                                                                                 
                                                                                                                                
President  Hamilton stressed  that what  is harder  to see from  the                                                            
handout   information   is  the   "enormous  increase   in   spirit,                                                            
enthusiasm,  and hope"  that has resulted  from  the support  of the                                                            
Governor  and the Legislature."  He continued,  "our faculty,  staff                                                            
and students have been energized."                                                                                              
                                                                                                                                
President  Hamilton stated  that Alaska "lost"  30,000 of its  young                                                            
people between  1990 and 2000, and this loss undermined  the balance                                                            
of ideas, energy,  and life experiences  "between the youth  and the                                                            
more  experienced."  He  exampled   the  determination  of  a  young                                                            
University  of  Alaska student,  Jim  Border,  who in  1930  thought                                                            
Alaska  could be  connected to  the "Lower  48"  by road.  President                                                            
Hamilton stated  it took more than a decade but the  road was built.                                                            
                                                                                                                                
President   Hamilton  reported   that  the   University  has   "made                                                            
significant  progress in  keeping our  young people  in Alaska."  He                                                            
highlighted  several programs that  have attracted students  such as                                                            
the Young  Scholars  program,  which has  resulted in  a 50  percent                                                            
increase in  Alaska high school graduates  attending the  University                                                            
of Alaska. He added that  the number of Alaskan high school students                                                            
who graduated  in the  top ten percent  of their  class and  who are                                                            
attending  the University  of Alaska was  increased 400 percent.  He                                                            
credited Legislative support  for the turnaround in keeping Alaska's                                                            
youth  in  the state.  He  expressed  this  "has  sent a  clear  and                                                            
resounding  message. The students  heard it,  the faculty heard  it,                                                            
the parents'  of students  heard it, and  Alaska's businesses  heard                                                            
it."                                                                                                                            
                                                                                                                                
President Hamilton  opined, "the turnaround  is a direct  reflection                                                            
of your insistence  that we support the only instrument  of economic                                                            
development diversification  this state or any state has, and that's                                                            
its education  system." He  stated that the  University, along  with                                                            
the Legislature,  is addressing "the call" from the  citizens of the                                                            
state for  a long-range fiscal  plan. He stressed  the need  for the                                                            
state  to "support  a vibrant  education  system…pre-school  through                                                            
post-secondary."                                                                                                                
                                                                                                                                
President Hamilton  stated the University should serve  the needs of                                                            
the State  and toward that  endeavor, the  University has asked  for                                                            
support  and direction from  the Legislature,  industries and  state                                                            
agencies.  He  continued   that  the  business  response   has  been                                                            
"staggering."  He stated  businesses  requested  "courses,  degrees,                                                            
training, basic  and applied research,  community outreach…in  other                                                            
words,  the  services  of  a  state  higher  education  system."  He                                                            
contended, "an aging workforce,  the high costs, and bad results, of                                                            
bringing workers from out  of state, the needs for constant training                                                            
and  re-training…these   are  real  problems  that  are   inhibiting                                                            
Alaska's  ability   to  achieve  and  maintain  a  solid   financial                                                            
footing."                                                                                                                       
                                                                                                                                
President  Hamilton explained  that  for the past  three years,  the                                                            
University  has "asked for  much less than  the state demanded  from                                                            
us" as he declared  the University is "not willing  to ask for money                                                            
we can't responsibly spend."                                                                                                    
                                                                                                                                
President  Hamilton communicated  to  the Committee  the details  of                                                            
programs the  University has created  as a response to the  needs of                                                            
the state  such as: the  two-year nursing  program in Fairbanks  and                                                            
Kodiak; the radiology,  dental assistance and other  health programs                                                            
offered  at most  campuses;  Information  Technology  programs;  and                                                            
Early  Childhood   and  teacher  education   programs  as   well  as                                                            
certificate and associate level industry and trade programs.                                                                    
                                                                                                                                
President Hamilton  stressed, in addition  to course offerings,  new                                                            
instructional  programs  providing  counseling, job  placement,  and                                                            
academic advising  have "generated  significant improvements  in the                                                            
day-to-day lives of our students."                                                                                              
                                                                                                                                
He stressed  to the  Committee  "accountability is  foremost to  the                                                            
University,"  and  affirmed  the  University's   commitment  to  the                                                            
initiative   process.  He   stated  the   University  holds   itself                                                            
accountable  to the  agencies and  corporations that  invest in  the                                                            
University, and  that the University conducts a quarterly  review on                                                            
each  initiative.   He  gave   as  an  example   a  $400,000   state                                                            
appropriation  that  would  be  returned,  as  the  program  it  was                                                            
intended for was unsuccessful.                                                                                                  
                                                                                                                                
President Hamilton affirmed  the University's commitment to quality,                                                            
and  informed  the  Committee  that  the  University   had  recently                                                            
completed  national "institutional  and program  accreditation."  He                                                            
continued that the Nursing  review "was so good they will require no                                                            
more review for  six years - an accomplishment granted  to less than                                                            
20 percent of all nursing programs in the country."                                                                             
                                                                                                                                
President  Hamilton  shared  the  academic  accomplishments  of  the                                                            
University in  debate and finance competitions, and  highlighted the                                                            
hosting  of such  conferences as  the Breadloaf  Writers  Conference                                                            
held each  summer at  the Juneau  campus. He  noted that  University                                                            
"engineering students routinely  score at twice the national average                                                            
on standardized  licensure exams" and "nursing students  are usually                                                            
in the top two to three  percentile nationally in first time passing                                                            
for their licensure exams."                                                                                                     
                                                                                                                                
President  Hamilton stated  the FY 03 operating  budget request  has                                                            
been described  as a $21.6  million increase;  however, this  figure                                                            
includes funding  for the Alaska Science  and Technology  Foundation                                                            
(ASTF)  and  postsecondary  funding  which  were  committed  to  the                                                            
University  as general  funds. He  commented he  did not agree  that                                                            
their inclusion in the  overall increase of funds "was fair," and he                                                            
considers the  increase of funding to be $16.9 million  in new money                                                            
with $3.8 million allotted  to cover fixed costs in excess of normal                                                            
inflation,  and $5.7  million to  cover negotiated  labor  contracts                                                            
which were already approved by the Legislature.                                                                                 
                                                                                                                                
President Hamilton  stressed that the University is  generating more                                                            
funds, and stated the balance  of the new money is going to meet the                                                            
expanding program activities  to meet the needs of Alaska's business                                                            
and industry.                                                                                                                   
                                                                                                                                
President  Hamilton detailed  some of the items  in the request:  in                                                            
technology   "the  need  is  to  assure   access  to  networks   for                                                            
classrooms,  labs and  offices  on the  main campuses;"  in  student                                                            
services  the request would  support a variety  of programs  such as                                                            
peer  counseling,  marketing  and  advising;  expanded  programs  in                                                            
finance  and general business;  and to  address health, information                                                             
technology,   education,   trades   and  technology;   and   project                                                            
management  courses   in  the  engineering  field  under   Workforce                                                            
Development.                                                                                                                    
                                                                                                                                
President  Hamilton stressed  the success of  a "model program"  for                                                            
recruiting  and retaining Alaska Native  students in engineering  at                                                            
the  University  of  Alaska  Anchorage.  He stated  the  program  is                                                            
primarily supported through corporate donations.                                                                                
                                                                                                                                
President  Hamilton  furthered  that an  increase in  funding  would                                                            
allow for  statewide delivery  of additional  nursing programs,  and                                                            
that  the biomedical  health  research  request for  $420,000  would                                                            
enable the University to receive grant money of $4.6 million.                                                                   
                                                                                                                                
President  Hamilton  detailed  how  the  increase  would  positively                                                            
affect  the  liberal  arts  program,  teacher  education   programs,                                                            
natural resource management  programs, and service learning programs                                                            
that incorporate community service into the curriculum.                                                                         
                                                                                                                                
President Hamilton  noted the information on page  28 and page 29 of                                                            
the  University  of Alaska  Fiscal  Year  2003 Operating  &  Capital                                                            
Budget Requests  booklet [copy on file] denotes that  the University                                                            
is asking for  zero general fund money and permission  to receive $3                                                            
million in non-general  funds for the "EPSCoR (SYS) program" as well                                                            
as zero  general  funds and  $7 million  in industry  funds for  the                                                            
Center for Nanosensor Technology  to promote manufacturing expertise                                                            
in Alaska.                                                                                                                      
                                                                                                                                
President Hamilton  expressed that  "research is an industry  in the                                                            
state of Alaska"  and ranks number  three in payroll and  number six                                                            
in employment  in the state. He cited the number of  people employed                                                            
at the  University with  research grant funding,  and stressed  "how                                                            
important it is  to understand how much a University  looks and acts                                                            
and contributes  like a major business,"  and "that many  states are                                                            
pouring  money into their  state university  research components  in                                                            
order to built their state economy."                                                                                            
                                                                                                                                
President  Hamilton acknowledged  the support  that the Legislature                                                             
has  given  the  University;  however,  he  stressed  the  need  for                                                            
continuing  investment  in the  University  system in  spite of  the                                                            
fiscal "storm" that Alaska is facing.                                                                                           
                                                                                                                                
Senator Leman asked President  Hamilton to explain the ramifications                                                            
of and the benefits derived from research projects.                                                                             
                                                                                                                                
President  Hamilton  detailed   several  of  the research   projects                                                            
currently  underway at the  University such  as the microprocessing                                                             
project called  Nanotechnology.  He stated  it is hard to  determine                                                            
what all the  spin-offs of these projects  are; however,  they bring                                                            
new technologies  into the state in addition to research  monies. He                                                            
remarked that  the University is in  discussion with other  research                                                            
entities  such as the  wireless industry,  and stated  this is  "the                                                            
only  way we  will  ever  spin-off  and develop  and  diversify  the                                                            
economy of  Alaska." He stated that  four years ago there  were zero                                                            
technology  research projects  at the University  and now there  are                                                            
three, and that number will be growing.                                                                                         
                                                                                                                                
Senator Leman asked whom  the University has hired as Vice President                                                            
for Research.                                                                                                                   
                                                                                                                                
President  Hamilton announced  the University  had hired the  former                                                            
director  of Woods Hole,  a renowned  research entity,  for the  new                                                            
position of Vice President for Research.                                                                                        
                                                                                                                                
Senator  Hoffman asked  if rural  campuses are  attracting the  same                                                            
percentages of Alaska's  high school graduates as the main campuses.                                                            
                                                                                                                                
President Hamilton  stated, "the rural  campuses have significantly                                                             
increased their  student bodies and  their retention;" however,  the                                                            
rural  campuses   have  different  percentages  of  the   graduating                                                            
students than  the main campuses.  He stated the focus at  the rural                                                            
campuses should be on the  rate of retention, and that the expansion                                                            
of  course offerings  at  the  rural campuses  has  helped  increase                                                            
enrollment numbers.                                                                                                             
                                                                                                                                
President Hamilton  stressed how important  the issue of  continuing                                                            
education for  rural Alaskans is to  the University. He stated  that                                                            
in addition to  the Alaska Scholars program which  is awarded to the                                                            
top  ten  percent  graduates  in  every   Alaska  high  school,  the                                                            
University  has developed  a program  called  the Emerging  Scholars                                                            
Program, which  offers rural students at risk of failing  school, an                                                            
opportunity to continue  their education. He expressed that three of                                                            
the  eight  students  initially   in  this  program  would  earn  an                                                            
associates  degree in May 2002. He  stated it took them three  years                                                            
instead of  the typical two  years; however,  this "means they  have                                                            
completely  caught  up and  successfully  accomplished  the  college                                                            
curriculum," including the "catch-up" courses.                                                                                  
                                                                                                                                
President  Hamilton  informed   the Committee   the  University  has                                                            
approximately  "$8  million  in  federal  grants   specifically  and                                                            
directly  associated for the  recruitment and  the retention  of our                                                            
Native students."                                                                                                               
                                                                                                                                
Senator Hoffman commented  these "are not very high student numbers"                                                            
and  questioned  the program's  success  rate.  He asked  about  the                                                            
University's   commitment  to  developing   infrastructure   at  the                                                            
University's rural campuses.                                                                                                    
                                                                                                                                
President Hamilton  stated there has been "significant  improvement"                                                            
at  the  rural  campuses.    He  stated  that  when  he  joined  the                                                            
University,  the total capital  budget designated  for rural  Alaska                                                            
campuses was  $70,000; now it is "several  millions of dollars."  He                                                            
exampled that Bristol Bay  had been waiting for twelve years to have                                                            
a campus built, and it is finally being built now.                                                                              
                                                                                                                                
Senator  Hoffman  commented  that  the  University  could  not  take                                                            
"credit for the Bristol  Bay campus as it was on the list and it was                                                            
because of legislative action that made it a priority."                                                                         
                                                                                                                                
President Hamilton agreed  that the Legislature has the final say in                                                            
what projects  are selected, and noted  that the University's  Board                                                            
of Regents  exerted considerable effort  in support of that  campus.                                                            
                                                                                                                                
Representative  Davies  inquired  as to  the  University's  deferred                                                            
maintenance  status;  specifically  as to  what might  be  "critical                                                            
future needs."                                                                                                                  
                                                                                                                                
President  Hamilton referenced  the list  of Capital Appropriations                                                             
the University  has received since  FY 90, beginning on page  161 of                                                            
the  handbook. He  stated  this list  reflects, "what  happens  when                                                            
money  is  allocated  without  any  continuity   and  planning."  He                                                            
detailed  that several years  ago, the University  received  a large                                                            
amount of "desperately  needed" deferred maintenance money, but "had                                                            
absolutely  no staff left  to plan and supervise  these things."  He                                                            
stressed  that the  University  now has  "the necessary  staff."  He                                                            
contended that  "it takes a long time  to plan for any project"  and                                                            
he  relayed, for  instance,  that  when a  dorm is  remodeled,  many                                                            
faucets of  the job have to be planned  including housing  residents                                                            
in other facilities, and  "if you have money to fix three dorms, you                                                            
can  absolutely  guarantee  that  its going  to  be  three  separate                                                            
projects because you can't  just kick everybody out all at once." He                                                            
stated that  building and  remodeling projects  take some time,  are                                                            
accounted for,  and "are on the right track now as  there are people                                                            
in place to take care of the project."                                                                                          
                                                                                                                                
President   Hamilton  stressed  "it   is  clear  that  we   need  to                                                            
concentrate  on  science  and  lab facilities  as  "there  are  just                                                            
enormous  opportunities out  there to continue  to both provide  the                                                            
instruction and provide  the kinds of research that needs to be done                                                            
in the state of Alaska  by Alaskans." He spoke to the opportunity to                                                            
compete for some "enormous  pockets" of research money, and informed                                                            
the Committee  the first year he was  employed at the University  of                                                            
Alaska,  "the  University  was  bringing   in  $70,000  in  National                                                            
Institute of Health (NIH)  research grant funding out of a total NIH                                                            
budget  of $28.6  billion. He  commented  that even  without a  vice                                                            
president of  research position to  further that cause, "this  year,                                                            
we will  receive approximately  $7.5 million  dollars." He  stressed                                                            
that  research  monies  provide  the  University  with  a  "powerful                                                            
economic instrument,"  as well as being "very important  instruments                                                            
for the state's economy."                                                                                                       
                                                                                                                                
Representative  Croft inquired as to the status of  the University's                                                            
community colleges.                                                                                                             
                                                                                                                                
President  Hamilton responded  there was a  recent directive  by the                                                            
University's   Board  of   Regents  stating   their  commitment   to                                                            
revitalize  the  community  colleges. He  stated  this  effort is  a                                                            
result of the  people of Alaska's  needs. He informed the  Committee                                                            
"in 1950,  20 percent of  the jobs in America  required a four  year                                                            
degree. This is  the year 2002 and only 23 percent  of the jobs do."                                                            
He stated this is the result  of "the enormous increase in jobs that                                                            
require post-secondary  education or require refresher  courses." He                                                            
forecast that  by the end of this  decade "the University  of Alaska                                                            
will still be characterized  by having most of its students as part-                                                            
time" with  there being "an enormous  number of students  associated                                                            
with  what we would  refer  to as the  community  college roll."  He                                                            
continued "the  funds that were directed to work-force  development"                                                            
by the  Legislature for the  last several  years, "have gone  a long                                                            
way toward  revitalizing  our capability to  provide that  workforce                                                            
training and the former community college mission.                                                                              
                                                                                                                                
Representative  Hudson,   noting  that  approximately  half  of  the                                                            
requested FY  03 budget increase would  support salary maintenance,                                                             
inquired   if  the  University   typically   negotiates   three-year                                                            
contracts.                                                                                                                      
                                                                                                                                
President Hamilton responded yes.                                                                                               
                                                                                                                                
Representative  Hudson asked  if this  is the third  year of  such a                                                            
negotiation.                                                                                                                    
                                                                                                                                
President Hamilton  responded "basically,  yes," however,  a portion                                                            
of  it  supports  an increase   for non-union  or  "non-represented                                                             
staff."                                                                                                                         
                                                                                                                                
Representative  Hudson   asked  if  the  fixed  cost  increases  are                                                            
"absolute requirements."                                                                                                        
                                                                                                                                
President   Hamilton  stated   that  the   budget  includes   "those                                                            
extraordinary  pieces of inflation that are associated  with running                                                            
a University"  such as  the double digit  increases associated  with                                                            
library materials  and Information Technology expenses.  He reminded                                                            
the Committee  "three  quarters of  the normal  inflation costs  are                                                            
covered by money generated from University receipts."                                                                           
                                                                                                                                
Representative  Hudson asked what is included in the  administrative                                                            
support request.                                                                                                                
                                                                                                                                
President Hamilton  responded this request would provide  additional                                                            
administrators  in offices  throughout  the campuses.  He  explained                                                            
that as the University  has transitioned "from $350 million of total                                                            
expenditures to $620 million  this year," additional staff is needed                                                            
to "run the business  practices" and the overwhelming  amount of new                                                            
dollars and new  programs into the system that have  to be accounted                                                            
for."                                                                                                                           
                                                                                                                                
Representative  Harris noted the University has received  funding to                                                            
address the shortages of  teachers and nurses in the state and asked                                                            
how the funding has addressed these needs.                                                                                      
                                                                                                                                
President  Hamilton  replied this  is a  larger "problem"  than  the                                                            
University could solve.                                                                                                         
                                                                                                                                
                                                                                                                                
SFC 02 # 13, Side B 09:59 AM                                                                                                    
                                                                                                                                
                                                                                                                                
President Hamilton  stated that on  the national level, "42  percent                                                            
of individuals  who  graduate with  a teaching  degree never  teach"                                                            
and, "half  of those who  do quit within  three years." He  reported                                                            
that  to address  this  situation, the  University  "has  absolutely                                                            
changed the teacher  education program from the ground  up in direct                                                            
context  with the  principals and  superintendents  of the state  of                                                            
Alaska."  He  explained  that  in  the  traditional   program,  "the                                                            
individuals  did not go into the classroom  until the last  semester                                                            
of their senior  year. Now they go  in as first semester  freshman."                                                            
He contended that people  need to "see what it is we are training to                                                            
be, and understand that from the beginning."                                                                                    
                                                                                                                                
President Hamilton stated  the University has begun two-year nursing                                                            
programs in both Kodiak  and Fairbanks "with one beginning this year                                                            
in Juneau."  He continued that Licensed  Practitioner Nursing  (LPN)                                                            
programs  would begin  at three  different sites,  on a "rotational                                                             
basis." President  Hamilton disclosed that increases  in money would                                                            
not be the "complete solution"  for the Allied Health program as the                                                            
"needs are  so enormous that  at some stage  of the game, you  quite                                                            
literally  will  run out  of  facilities  in  which to  execute  the                                                            
program."                                                                                                                       
                                                                                                                                
President  Hamilton  speculated   that  the  nursing  and  education                                                            
workforces  would "continue  to be supplemented  through the  end of                                                            
this decade,  as the University  can not  possibly begin to  provide                                                            
all of it." He  stressed, however, that the University  would try to                                                            
"provide  all we can." He  summarized that  the demands continue  to                                                            
grow in  these fields and  the process needs  to be "staged"  and be                                                            
"built in increments as has been requested every year."                                                                         
                                                                                                                                
Senator  Olson inquired  as to what  has been  done to "address  the                                                            
nursing shortage occurring, especially in rural hospitals."                                                                     
                                                                                                                                
President  Hamilton  stated  the plans  are  listed in  the  handout                                                            
material.  He continued that  the University  has sought advice  and                                                            
has begun  partnerships  in rural  areas.  He noted  there are  much                                                            
higher demands for the  LPN programs in the rural areas, and stated,                                                            
"these courses  are administered  from Anchorage  but delivered  and                                                            
greatly  supported by distant  delivery."  He reiterated that  these                                                            
courses would  be on a rotational basis and, for example,  would "be                                                            
offered in  Bethel in even  years and offered  in Dillingham  in odd                                                            
years."                                                                                                                         
                                                                                                                                
Senator Olson asked the  history of the number of nursing graduates.                                                            
                                                                                                                                
President  Hamilton  responded  that the  numbers  reflect  "clearly                                                            
more"  students and  more programs;  however,  the University  would                                                            
research this information and provide it to the Committee.                                                                      
                                                                                                                                
Senator Wilken  asked the status on  enrollment numbers in  order to                                                            
get a "sense of success."                                                                                                       
                                                                                                                                
President Hamilton  stated that enrollment dropped  precipitously in                                                            
the 1990's as  the result of the flat funding and  loss of programs.                                                            
He continued that 2001  was the first time since the early 90's that                                                            
enrollment went  up, and it "jumped again" this year.  He stated the                                                            
University  "attracted a  very significant  increase" in first  time                                                            
college students…right  out of high school. He opined this "reflects                                                            
that the word is out that  the University is a great quality program                                                            
where  you have  good experience."  He  also stated  that  returning                                                            
students appreciate  that classes are small, that  students can talk                                                            
to their professors, and that the professor knows their name.                                                                   
                                                                                                                                
President Hamilton  stated "where we haven't seen  the increases has                                                            
been in  the other core  courses that are  more directly  associated                                                            
with the  old kind of community  college  mission such as  Associate                                                            
Degrees."   He  advised,  "this corner  needs  to be  turned" as  it                                                            
"represents the  greatest number of potential students"  for us." He                                                            
stated increasing  the students  in this category  "will be  a major                                                            
focus."                                                                                                                         
                                                                                                                                
President Hamilton  asserted that  retention is another key  element                                                            
to  the  success  of the  University  and  that  "our  retention  is                                                            
terrible."                                                                                                                      
                                                                                                                                
Co-Chair  Williams asked  President Hamilton  for suggestions  for a                                                            
long-term fiscal  plan that would enable the legislature  to be able                                                            
to fund the University's needs.                                                                                                 
                                                                                                                                
President  Hamilton  responded,  "I would  really encourage  you  to                                                            
invest," as  he does not "believe  there is any possibility  that we                                                            
can  save ourselves  into  prosperity."  He  said the  state  should                                                            
approach the  fiscal problem the same  way a typical citizen  would:                                                            
instead of buying  a new car, keep the one you have  in good repair;                                                            
instead of  buying a new home, paint  the one you have; and  when it                                                            
is time for the  child to go to college, take out  a loan and invest                                                            
in his  or her education.  He stated  "we as  individuals invest  in                                                            
education,"  and he "would recommend  the same course of  action" to                                                            
the legislature.                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Dave Donley adjourned the meeting at 10:06 AM                                                                          

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