Legislature(2003 - 2004)

02/24/2003 02:22 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 24, 2003                                                                                          
                          2:22 PM                                                                                               
TAPE HFC 03 - 24, Side A                                                                                                        
TAPE HFC 03 - 24, Side B                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Harris  called the  House Finance Committee  meeting                                                                   
to order at 2:22 PM.                                                                                                            
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Dan Spencer,  Director, Division of Administrative  Services,                                                                   
Department   of  Administration;   Dave  Stewart,   Personnel                                                                   
Manager,    Division    of     Personnel,    Department    of                                                                   
Administration;   Tom   Lawson,    Director,   Administrative                                                                   
Services, Department  of Community and Economic  Development;                                                                   
Jerry Burnett, Director, Administrative  Services, Department                                                                   
of Corrections                                                                                                                  
PRESENT VIA TELECONFERENCE                                                                                                    
Brant  McGee, Public  Advocate,  Office  of Public  Advocacy;                                                                   
Barbara  Brink,  Director,  Public   Defender  Agency;  Steve                                                                   
Ashman, Director, Division of  Senior Services, Department of                                                                   
Administration;  Daniel   T.  Seamount,  Jr.,   Commissioner,                                                                   
Alaska  Oil and  Gas Conservation  Commission, Department  of                                                                   
Administration;  Jeff Jahnke,  State Forester, Department  of                                                                   
Natural Resources;  Sharon Young, State Recorder,  Department                                                                   
of  Natural  Resources;  Peter   Panarese,  Acting  Director,                                                                   
Division of Parks, Department of Natural Resources                                                                              
Co-Chair Harris convened the meeting at 2:21 pm.                                                                                
HB 100    "An    Act    making   supplemental    and    other                                                                   
          appropriations;   amending    appropriations;   and                                                                   
          providing for an effective date."                                                                                     
          HB 100 was heard and HELD in Committee for further                                                                    
HB 101    "An Act making a special  appropriation for a grant                                                                   
          to  Arctic  Power to  promote  the  opening of  the                                                                   
          Arctic  National Wildlife  Refuge for  oil and  gas                                                                   
          exploration  and development; and providing  for an                                                                   
          effective date."                                                                                                      
          CSHB 101  (FIN) was REPORTED out of  Committee with                                                                   
          a "do pass" recommendation.                                                                                           
HB 110    "An    Act    making   supplemental    and    other                                                                   
          appropriations;  amending   appropriations;  making                                                                   
          appropriations  to capitalize funds;  and providing                                                                   
          for an effective date."                                                                                               
          HB 110 was heard and  HELD in Committee for further                                                                   
HOUSE BILL NO. 101                                                                                                            
     "An Act  making a special  appropriation for a  grant to                                                                   
     Arctic  Power  to  promote  the opening  of  the  Arctic                                                                   
     National  Wildlife Refuge  for oil  and gas  exploration                                                                   
     and development; and providing for an effective date."                                                                     
Vice-Chair  Meyer MOVED  to  ADOPT Committee  Substitute  for                                                                   
House Bill 101, Work Draft 23-LS0555/I.                                                                                         
Representative  Croft  OBJECTED  and questioned  for  further                                                                   
clarification  regarding   changes  made  in   the  Committee                                                                   
Co-Chair Harris observed that  the Committee Substitute would                                                                   
appropriate  $2.7 million  to Artic Power,  $100 thousand  to                                                                   
Kaktovik,  and $300 thousand  to the  Office of the  Governor                                                                   
for the  specific purpose of  working with the  congressional                                                                   
In response to  a question by Representative  Joule, Co-Chair                                                                   
Harris  clarified that  the  total appropriation  for  Arctic                                                                   
Power would be  $2.8 million, of this $100  thousand would be                                                                   
appropriated to Katovik. The $300  thousand for the Office of                                                                   
the Governor would be a separate appropriation.                                                                                 
Representative  Croft  observed that  Arctic  Power has  been                                                                   
used as  the funding  source of all  the state's  efforts and                                                                   
would  funnel funds  to Katovik.  He noted  that there  was a                                                                   
separate  appropriation to  the  Office of  the Governor  and                                                                   
questioned  why  Arctic Power  was  not  used to  fund  these                                                                   
Co-Chair Harris acknowledged that  Arctic Power could be used                                                                   
to fund  the Office  of the Governor  and indicated  that the                                                                   
issue could be discussed after  the adoption of the committee                                                                   
Representative Croft WITHDREW his OBJECTION.                                                                                    
There  being NO  OBJECTION,  the Committee  Substitute,  Work                                                                   
Draft 23-LS0555/I, was adopted.                                                                                                 
Representative Croft  reiterated his concerns  and questioned                                                                   
why it was felt necessary to break  up the appropriation. Co-                                                                   
Chair  Harris  responded  that  the Office  of  the  Governor                                                                   
requested funding  for personnel  located in Washington  D.C.                                                                   
who  are  coordinating  efforts.   He  maintained  that  this                                                                   
coordination was  especially important during  the transition                                                                   
between administrations.                                                                                                        
Representative  Whitaker  expressed his  belief  that it  was                                                                   
appropriate  to support the  Governor's longstanding  efforts                                                                   
to develop ANWR resources.                                                                                                      
Vice-Chair Meyer  noted a conflict  of interest and  MOVED to                                                                   
be excused from voting. Co-Chair Harris OBJECTED.                                                                               
Representative Hawker  also noted a conflict  of interest and                                                                   
MOVED  to  be excused  from  deliberations.  Co-Chair  Harris                                                                   
Co-Chair  Harris  pointed  out  a difference  in  the  intent                                                                   
language  in Section  1 of  the CS.   He  explained that  the                                                                   
intent language  directs Artic  Power to coordinate  with the                                                                   
delegation in Washington D.C.                                                                                                   
Co-Chair  Williams MOVED  to  report CSHB  101  (FIN) out  of                                                                   
Committee. There being NO OBJECTION, it was so ordered.                                                                         
CSHB  101 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation.                                                                                                           
HOUSE BILL NO. 100                                                                                                            
     "An Act making supplemental and other appropriations;                                                                      
     amending appropriations; and providing for an effective                                                                    
HOUSE BILL NO. 110                                                                                                            
     "An Act  making supplemental  and other  appropriations;                                                                   
     amending   appropriations;   making  appropriations   to                                                                   
     capitalize funds; and providing  for an effective date."                                                                   
Co-Chair  Harris  discussed  the  Regular  and  "Fast  track"                                                                   
Supplemental Budget  requests.  He expressed  an intention to                                                                   
move the  bills out  of Committee by  early next  week, after                                                                   
amendments had been heard.                                                                                                      
DEPARTMENT OF ADMINISTRATION                                                                                                  
Section 1 (fast track)                                                                                                        
     Program  shortfunding was  estimated to  be $2,200.0  in                                                                   
     May.  Caseload growth has  added an additional $1,100.0.                                                                   
     An  additional  $2,473.5  is requested  in  the  regular                                                                   
     supplemental bill to meet the total need of $3,300.0.                                                                      
Section 1(a) (4) (regular supplemental)                                                                                       
     1(a)(4) Program shortfunding was estimated to be                                                                           
     $2,200.0  in   May.    Caseload  growth   has  added  an                                                                   
     additional $1,100.0.  An  additional $826.5 is requested                                                                   
     in the  fast track supplemental  bill to meet  the total                                                                   
     need of $3,300.0.                                                                                                          
DAN SPENCER,  DIRECTOR, DIVISION OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT OF  ADMINISTRATION explained that the  requests of                                                                   
$826,500  (Fast  track)  and $2,473,500  for  the  Office  of                                                                   
Public  Advocacy (OPA)  were based  on  current caseload,  as                                                                   
well as  projections for  the remainder  of the fiscal  year.                                                                   
He  maintained  that  OPA  had a  history  of  being  "short-                                                                   
funded".   A supplemental has been  needed in all but  one of                                                                   
the last 19 years.  The FY 03  budget was less than the FY 02                                                                   
budget.     The  Office   of  Public   Advocacy  received   a                                                                   
supplemental appropriation  of over  $2 million for  the past                                                                   
year [FY02].                                                                                                                    
Mr.  Spencer  anticipated  that  OPA  would  require  a  $2.2                                                                   
million supplemental for FY 03,  and observed that the amount                                                                   
could continue to grow with the  caseload.  He explained that                                                                   
the  office   deals  with  guardian   ad  lidum   and  public                                                                   
guardianship  cases, as  well  as some  criminal  cases.   He                                                                   
clarified  that most  of  the budgetary  funds  were paid  to                                                                   
private attorneys, working under  contract with OPA to defend                                                                   
clients at a highly reduced rate.                                                                                               
Mr. Spencer explained  that OPA utilized the  previous year's                                                                   
funding to  pay current bills in  a timely fashion.   He went                                                                   
on  to  note that,  after  the  end  of a  fiscal  year,  OPA                                                                   
continued to pay  bills in the 13  and 14   accounting month.                                                                   
He stated that  they have paid over $700 thousand  to private                                                                   
attorneys during  those periods.   He explained that,  at the                                                                   
end of the fiscal  year, OPA projected payments  for June and                                                                   
the holdover accounting months,  and requested this amount in                                                                   
the  regular  supplemental.    He  noted  that  the  balance,                                                                   
$826,500, represented  projected payments  into the  month of                                                                   
May.  He pointed out that, if  the budget was passed prior to                                                                   
that time, the figures could be combined into one request.                                                                      
Co-Chair Harris asked why, for  the sixth consecutive year, a                                                                   
significant  amount was  requested in  the supplemental.   He                                                                   
asked whether  the department  had been  under-funded,  or if                                                                   
caseload growth affected the amount of the request.                                                                             
Mr. Spencer  explained that caseload  was one of a  number of                                                                   
factors contributing  to the  request.   He observed  that in                                                                   
the  year,  which  had  not  required   a  supplemental,  the                                                                   
Ombudsman completed  a report  stating that OPA  was delaying                                                                   
payments to vendors due to legislative short-funding.                                                                           
Mr.  Spencer discussed  historical trends  in caseload  size.                                                                   
Caseload   has  been   affected   by  population   size   and                                                                   
legislative  changes. Changes  in legislation that  shortened                                                                   
the turnaround  time  in Child  in Need of  Aid cases  caused                                                                   
more aggressive  litigation.   More intensive litigation  has                                                                   
been  required   in  various   criminal  cases,   which  were                                                                   
classified as  felonies rather than misdemeanors.   He stated                                                                   
that OPA  could not decline  to accept court-assigned  cases,                                                                   
and did not have the capability  to predict amounts needed to                                                                   
support caseloads.  He pointed  out that, over the past seven                                                                   
years,  the amounts requested  in the  supplemental had  been                                                                   
adjusted  during the  course of  the  legislative session  as                                                                   
more information became available.                                                                                              
Co-Chair  Harris  observed  that   the  two  budget  requests                                                                   
totaled over  $3 million. He asked  if, since OPA  cases were                                                                   
court  mandated, this  prevented  any control  over  caseload                                                                   
growth.  Mr. Spencer confirmed that this was true.                                                                              
BRANT  MCGEE, PUBLIC  ADVOCATE,  OFFICE  OF PUBLIC  ADVOCACY,                                                                   
testified via teleconference.  He explained that the greatest                                                                   
increase in caseload was in Child  in Need of Aid cases, when                                                                   
the State  takes custody  of a  child due  to accusations  of                                                                   
abuse or  neglect.   He explained  that the State  represents                                                                   
the child  in these cases,  which have become  more intensive                                                                   
in recent  years, due  to time  crunches in  the system.   He                                                                   
acknowledged  that, while  these  time efficiencies  help  to                                                                   
resolve cases  more quickly and  are in the best  interest of                                                                   
the  children  involved,  this  also made  the  process  more                                                                   
expensive for the State.  He also  noted that often the State                                                                   
is called  on to also represent  one of the  parents involved                                                                   
in these cases, causing an increase in costs as well.                                                                           
Representative  Joule  asked  whether  the  increase  in  the                                                                   
amount   of  children's   cases  was   a  result  of   recent                                                                   
Mr.  McGee  confirmed  that  HB  375,  passed  in  1998,  had                                                                   
increased both the  number and the intensity  of these cases.                                                                   
He also  noted the intent  of the previous Administration  to                                                                   
increase the percentage of investigations  by the Division of                                                                   
Family  and  Youth  Services  into  reports  of  harm,  which                                                                   
increases  the  number  of petitions  filed,  triggering  the                                                                   
appointment of attorneys.  He  concluded that, although these                                                                   
changes  were  positive  for  the  children,  they  had  also                                                                   
increased costs.                                                                                                                
PUBLIC DEFENDER'S OFFICE                                                                                                      
Section 1 (a) (5) and (6)                                                                                                     
     Program  shortfunding was  estimated to  be $1,000.0  in                                                                   
     May.  Caseload has added  an additional $157.0.  Funding                                                                   
     is  also included  to continue the  mental health  court                                                                   
Mr. Spencer  then discussed the  two requests for  the Public                                                                   
Defender's Office:  one for $1.157  million from General Fund                                                                   
for  operating  costs, and  one  for  $73 thousand  from  the                                                                   
Mental  Health Trust  Authority  for a  court  attorney.   He                                                                   
noted that they  would have requested the $73  thousand as an                                                                   
RPL, but explained that the program  was already underway and                                                                   
that  an RPL  was not  required  if the  funds were  approved                                                                   
before the end of the fiscal year.                                                                                              
Mr.  Spencer  went   on  to  explain  that   the  agency  had                                                                   
anticipated  the need  for a $1.2  million supplemental,  and                                                                   
cited the  number and  intensity of  court assigned  cases as                                                                   
necessitating the request.                                                                                                      
Co-Chair   Harris   asked  whether   in-depth   investigation                                                                   
occurred into  the financial  situations of those  requesting                                                                   
public defense.                                                                                                                 
BARBARA BRINK, DIRECTOR, PUBLIC  DEFENDER AGENCY, noted that,                                                                   
due to  legislative concerns  regarding appointment  of cases                                                                   
to the agency,  the court system completed an  in-depth study                                                                   
two  years ago,  resulting  in a  change  in statute  (Alaska                                                                   
Criminal Rule 39.1).  She noted  that, due to this Commission                                                                   
study,  procedures  had  improved:    the  process  had  been                                                                   
tightened,  specific  assets  were  listed  to  account  for,                                                                   
estimates  for certain  types of cases  were determined,  and                                                                   
the rigor  with which indigence  was reviewed  had increased.                                                                   
She  also  noted that  if  any  concerns over  a  defendant's                                                                   
ability to hire  an attorney were raised, these  were brought                                                                   
to the attention of their judicial district.                                                                                    
Responding  to  a  comment  by  Co-chair  Harris,  Ms.  Brink                                                                   
clarified  that the standard  applied was  whether or  not an                                                                   
individual,  based on  their  assets and  debts,  as well  as                                                                   
their  location,  could  afford   to  retain  counsel.    She                                                                   
affirmed her confidence that any mistakes were corrected.                                                                       
Representative Stoltze  asked whether an  indigent individual                                                                   
could request that  outside counsel be hired  by other family                                                                   
Mr.  Brink indicated  that  if  the individual  could  obtain                                                                   
outside  counsel that  they  would not  be  eligible for  the                                                                   
Division's services.                                                                                                            
LABOR RELATIONS                                                                                                               
Section 1 (a) (7)                                                                                                             
     Arbitration settlement with ASEA union on Fair Labor                                                                       
     Standards Act (FLSA) residual claims including interest                                                                    
     of $9,238.36                                                                                                               
Mr. Spencer then  discussed the request for  Labor Relations,                                                                   
explaining that a  settlement had been reached  last May from                                                                   
Fair Labor Standards  Act claims dating back to FY  1993.  He                                                                   
stated  that  the  settlement   stipulated  that  the  agency                                                                   
request  funding for  this fiscal  year.  The  amount of  the                                                                   
settlement  was  $200  thousand,  in  addition  to  statutory                                                                   
interest  from May  until  the  time of  the  passage of  the                                                                   
supplemental,  estimated at $209,800,  assuming the  bill was                                                                   
signed in June.                                                                                                                 
Mr.  Spencer  also  explained  that  the  outstanding  claims                                                                   
represented  a  liability to  the  State  of $700,000  to  $1                                                                   
million,  if all  cases  were lost,  in  addition to  hearing                                                                   
officer  or  other costs  incurred.    He asserted  that  the                                                                   
mediated  settlement mitigated  financial  risk that  already                                                                   
Representative Croft referred  to the February 18 spreadsheet                                                                   
produced by  the Office  of Management  and Budget  (OMB) and                                                                   
asked whether  in the Fast track Supplemental,  under General                                                                   
Relief, there  was indeed a savings  of $300 thousand  in the                                                                   
Department  of Administration  (Item 1(b), Senior  Services).                                                                   
He  noted  that  in  the  Department  of  Health  and  Social                                                                   
Services'   budget   (Section   3(1)  of   the   Fast   track                                                                   
Supplemental), there was a cost  of $271 thousand for General                                                                   
Relief Assistance.                                                                                                              
Mr.  Spencer   noted  that  the  HESS  budget   was  entirely                                                                   
different  than that  of Administration.  He  noted that  the                                                                   
Department  of  Administration's   Senior  Services  program,                                                                   
AS47.24  addressed   "vulnerable  adults",   mandating  state                                                                   
assistance  when  an  adult  was reported  as  in  danger  or                                                                   
incapable of caring for himself or herself.                                                                                     
SENIOR SERVICES                                                                                                               
Section 1 (b) (regular supplemental)                                                                                          
     Caseload for general relief program is lower than                                                                          
Mr.  Spencer clarified  that  the Vulnerable  Adults  Program                                                                   
there  had been  considerable  caseload growth  in the  past,                                                                   
necessitating supplemental  requests, but that  no growth had                                                                   
occurred  this year.    He maintained  his  opinion that  the                                                                   
program was currently over funded.                                                                                              
DIVISION OF FINANCE                                                                                                           
Section 1 (a) (1) (regular supplemental)                                                                                      
     The Division of Finance is  incurring substantially more                                                                   
     costs  for   accounting  and  payroll   data  processing                                                                   
     charges,   due  to   both  increased   usage  and   rate                                                                   
     increases,  and  unanticipated  increased costs  due  to                                                                   
     conversion  from ADABAS  to  DB2.   (Savings in  general                                                                   
     relief program offsets $300.0.)                                                                                            
Mr.  Spencer stated  that this  was  an unusual  supplemental                                                                   
request.  He explained that the  Division of Finance pays for                                                                   
all costs related  to the accounting and payroll  system.  He                                                                   
discussed the  history of changes  in payroll  processing. He                                                                   
noted that  the supplemental is  based on a rate  change from                                                                   
Information  Technology Group  (ITG),  another Department  of                                                                   
Administration  program; the  charge back  to ITG causes  the                                                                   
need for  the supplemental  request.   He explained  that the                                                                   
reasons for this have to do with  cost accounting principals.                                                                   
He noted that rates were adjusted  in the previous year, late                                                                   
in the  budget development process,  before an  accurate cost                                                                   
projection  could  be made.    He pointed  out  that, if  the                                                                   
supplemental was  not requested, it would have  to be charged                                                                   
in some way.                                                                                                                    
In response  to a  question by  Co-Chair Harris, Mr.  Spencer                                                                   
stated that they anticipated that  rates would be down in the                                                                   
following year and another supplemental  request would not be                                                                   
Representative  Hawker referred  to the contractual  services                                                                   
line as being the  item for which funding was  requested.  He                                                                   
asked   whether  the   conversion   process   did  not   meet                                                                   
Mr. Spencer  conceded that the  Department had  not initially                                                                   
been  aware of  the  costs of  the  conversion  process.   He                                                                   
confirmed that the  process was more lengthy  and costly than                                                                   
anticipated.   Responding  to a follow  up by  Representative                                                                   
Hawker,  he stated  that  the  majority of  the  cost was  in                                                                   
processing time.  He also confirmed  that the process was the                                                                   
State's  own   internal  process,   which  was  cost   center                                                                   
oriented.  He summarized that  charges were made to the State                                                                   
by the State.                                                                                                                   
Representative  Hawker asked about  the income available  for                                                                   
this request.                                                                                                                   
Mr. Spencer  explained that  it was a  statutory fund  in the                                                                   
Department  of   Revenue,  called  Internal  Services.     He                                                                   
clarified  that the  Department of  Administration is  paying                                                                   
the costs on behalf of other agencies.                                                                                          
Representative   Joule   asked  why   a   request  for   cost                                                                   
equalization was not present in either supplemental.                                                                            
Mr. Spencer  was not able to  answer that question,  as it is                                                                   
not a Department of Administration program.                                                                                     
PIONEER'S HOME                                                                                                                
Section 1(a)(2)                                                                                                               
     Cost  of the certified  nurse aide  and assisted  living                                                                   
     aide reclassifications  which was effective  December 1,                                                                   
     2002.     The  classification   study  found   that  the                                                                   
     positions were underpaid  by one range compared to other                                                                   
     similar   positions.      Affects   323   positions   at                                                                   
     approximately  $175 per  month per  position.   Total of                                                                   
     $390.7 thousand in General Fund.                                                                                           
Mr. Spencer then  discussed the Pioneer's Home  and explained                                                                   
that the  request  was a result  of a  study, which  compared                                                                   
compensation levels  to other staff in the State  system.  He                                                                   
noted that,  as a result, the  nursing aids were  upgraded by                                                                   
one range,  and the  Pioneer Home aids  were upgraded  by two                                                                   
ranges,  which  resulted  in   a  net  cost  increase  of  an                                                                   
estimated  $700 thousand  per year.   The  request of  $390.7                                                                   
thousand is based  on an evaluation of actual  cost increases                                                                   
during  the month of  December, after  the salary  adjustment                                                                   
became effective.   He recalled  a historical situation  of a                                                                   
raise in pay for nurses in the  Pioneer Home, which was based                                                                   
on  a   different  study.   Responding   to  a  question   by                                                                   
Representative  Stoltze,  he   noted  that  the  Division  of                                                                   
Personnel completed the study.                                                                                                  
Representative  Stoltze  cautioned against  a  classification                                                                   
study, in which an agency was  tasked with evaluating itself.                                                                   
Mr.  Spencer  maintained  that  most  classification  studies                                                                   
conducted  by  the  Division   of  Personnel  have  generated                                                                   
internal  controversy,  since not  all positions  receive  an                                                                   
upgrade as  a result of  the studies.   He affirmed  that the                                                                   
study  in  question   was  extensive,  covering   nearly  340                                                                   
positions,  dealing  with  a  variety  of  issues,  including                                                                   
establishing clear standards of comparison.                                                                                     
Representative Stoltze reiterated  his question as to whether                                                                   
any agency would ever conduct its own classification study.                                                                     
Mr. Spencer  asserted that  this would not  be the  case, and                                                                   
pointed  to  a similar  case  regarding  employee  bargaining                                                                   
units, which the Division of Personnel contracted out.                                                                          
Responding  to a  question by  Co-chair  Harris, Mr.  Spencer                                                                   
noted that the  Pioneer Home study was completed  in the fall                                                                   
of 2002.                                                                                                                        
Co-Chair Harris observed that  the budget of last year stated                                                                   
that it  would not  pay for reclassifications,  and  asked if                                                                   
this request conflicted with that intent language.                                                                              
TAPE HFC 03 - 24, Side B                                                                                                      
Mr.  Spencer cited  the  action  of former  attorney  general                                                                   
Bothello    determining   that    this   language    was   an                                                                   
administrative  action  and  did   not  intend  to  create  a                                                                   
condition.   He maintained that  the State had  an obligation                                                                   
to implement  the results  of the study.   He also  expressed                                                                   
his  understanding that  the former  Administration spoke  to                                                                   
Senator Donley and Representative  Mulder about the language,                                                                   
but  stated  that   he  himself  was  not  present   for  the                                                                   
Responding  to a  question by  Co-Chair  Harris, Mr.  Spencer                                                                   
confirmed  that, if  the request  were not  funded, the  cost                                                                   
would  come directly  out of  the  Pioneer Home  Budget.   He                                                                   
expanded that this would mean  more vacant beds, although not                                                                   
necessarily a  reduction in staff.   He also noted that  as a                                                                   
part of fiscal  monitoring, the department had,  in the past,                                                                   
brought receipt changes to the  attention of the legislature,                                                                   
but that at this time such changes were not clear.                                                                              
Representative  Hawker asked whether  this was a  contractual                                                                   
obligation or a voluntary classification study.                                                                                 
Mr.  Spencer confirmed  that  the study  was  voluntary.   He                                                                   
explained  that a classification  study  was ordered  when it                                                                   
became apparent that  a group of employees, in  this case 340                                                                   
employees, might be misclassified.                                                                                              
Representative  Hawker   asked  whether  the   obligation  to                                                                   
implement the study  results, as referred to  by Mr. Spencer,                                                                   
was a legal obligation.                                                                                                         
Mr. Spencer  clarified that the  obligation to  implement the                                                                   
results of the classification  study was statutory.  He noted                                                                   
that,   although   the   division    daily   faced   position                                                                   
reclassifications,    the    scope   of    this    particular                                                                   
reclassification was unusual.                                                                                                   
DAVE  STEWART,  PERSONNEL  MANAGER,  DIVISION  OF  PERSONNEL,                                                                   
DEPARTMENT  OF ADMINISTRATION,  pointed  out  that the  State                                                                   
Constitution requires  that state employment be  based on the                                                                   
merit principal.   He  referred to  the Personnel Act,  Title                                                                   
39,  which   defines  the  merit   system  as   containing  a                                                                   
requirement  to give like  pay for like  work.  He  continued                                                                   
that  statutory  changes  required effective  dates  for  job                                                                   
classification  changes  be  paid  on the  first  pay  period                                                                   
following  a study.   He  concluded that  the obligation  was                                                                   
therefore statutory.                                                                                                            
Representative  Croft asked  whether a  union or other  right                                                                   
existed to request a study be done.                                                                                             
Mr. Stewart  responded that union contracts  contain language                                                                   
strongly urging them to request studies each year.                                                                              
Representative  Croft  clarified   whether  a  limited  right                                                                   
existed  when  an employee  perceived  a  difference  between                                                                   
their work and their level of pay.                                                                                              
Mr. Stewart confirmed  that, through a grievance  process, an                                                                   
employee  could  order  a  study.     Responding  to  another                                                                   
question  by Representative  Croft, Mr.  Stewart also  stated                                                                   
that, if  the study indicated  a change in salary  level, the                                                                   
state was obligated to fund the new salary.                                                                                     
Representative Stoltze  suggested that such studies  might be                                                                   
examined as a means of containing governmental costs.                                                                           
OIL AND GAS CONSERVATION COMMISSION                                                                                           
Section 1(a)(3)                                                                                                               
     Increased federal grant for the Underground Injection                                                                      
     Control Program.                                                                                                           
     $14.3 thousand of Federal Funds                                                                                            
Mr. Spencer  then addressed  the request  for the Alaska  Oil                                                                   
and Gas  Conservation  Commission (AOGCC).   He mentioned  an                                                                   
existing federal grant for $105  thousand, dating to FY 2001.                                                                   
He also noted  that the request could have  been addressed in                                                                   
an RPL, but was included in the  supplemental since there was                                                                   
no urgency.                                                                                                                     
Section 16                                                                                                                    
     16(2) Miscellaneous Claims and Stale-dated Warrants                                                                        
     $3,385.35 General Fund                                                                                                     
     16(3) Miscellaneous Claims and Stale-dated Warrants                                                                        
     $5,107.28 General Fund                                                                                                     
    16(4) Miscellaneous Claims and Stale-dated Warrants                                                                         
     $568.03   General Fund                                                                                                     
Mr.  Spencer  referred back  to  Section  16 of  the  regular                                                                   
supplemental.   He  noted that  these miscellaneous  warrants                                                                   
were state  checks that had not  been cashed within  the two-                                                                   
year limit.  He also explained  that the miscellaneous claims                                                                   
referred  to  debts  owed  by  the  state,  where  bills  for                                                                   
services occurred  more than a  year after the  services were                                                                   
given, and the funding was no longer available.                                                                                 
COMMUNITY AND ECONOMIC DEVELOPMENT                                                                                            
TOM LAWSON, DIRECTOR, ADMINISTRATIVE  SERVICES, DEPARTMENT OF                                                                   
COMMUNITY  AND ECONOMIC  DEVELOPMENT,  referred  to the  five                                                                   
items in the regular supplemental  request, none of which are                                                                   
funded by general funds.                                                                                                        
Section 2(a)                                                                                                                  
     Retroactive section to ratify the transfer of $51,000                                                                      
     from  the disaster  relief fund  back to the  commercial                                                                   
     fishing   revolving    loan   fund   in    response   to                                                                   
     recommendation  20 in  the FY01  Statewide Single  Audit                                                                   
     prepared by Legislative Audit.                0.0                                                                          
Mr. Lawson pointed out that this  request was generated by an                                                                   
audit conducted  in FY  01, for a  program initiated  in 1997                                                                   
involving  federal  funds.    He noted  that  in  1998,  $375                                                                   
thousand federal  funds were appropriated by  the legislature                                                                   
into the  Fund.  He stated  that the purpose was  to mitigate                                                                   
the fishing industry  disaster.  He explained  that, once the                                                                   
loans from  the Fund were  closed out, $51 thousand  remained                                                                   
in the  Disaster Relief Fund,  which was then moved  into the                                                                   
Commercial Fishing Loan Fund.   He concluded that the auditor                                                                   
had  objected  to  this procedure,  and  recommended  that  a                                                                   
legislative appropriation be requested.                                                                                         
Section 2(b)                                                                                                                  
     Change RPL 08-3-0104 for Rural Internet Access from                                                                        
     operating to capital                          0.0                                                                          
Mr.  Lawson   referred  to  Section   2(b)  of   the  regular                                                                   
supplemental.   He  explained that  Regulatory Commission  of                                                                   
Alaska received  a federal grant  of $7.5 million,  which was                                                                   
included into  the operating budget.   He stated  that, since                                                                   
the program was  not now projected as operational  by the end                                                                   
of the operating budget fiscal  year, they sought to transfer                                                                   
the authorization from the operating to the capital budget.                                                                     
Section 2( c)                                                                                                                 
     Authority to  receive and expend fees paid  by licensees                                                                   
     for background  checks.  The Division of  Insurance will                                                                   
     then  enter into  a contract  (RSA)  with Department  of                                                                   
     Public  Safety  who  performs   the  background  checks.                                                                   
Mr.  Lawson   then  discussed  Section  2(c),   seeking  $200                                                                   
thousand in authorization for  the Division of Insurance.  He                                                                   
explained  that the  Department  of Public  safety  completes                                                                   
background  checks for licensing  in the  State.  He  further                                                                   
observed that, since the September  11 attacks, the number of                                                                   
checks had  overwhelmed the Division  of Insurance,  and that                                                                   
they had requested the process be changed.                                                                                      
Co-Chair  Harris  asked  whether  a  corresponding  decrement                                                                   
would be found  in the Department of Public  Safety's budget.                                                                   
Mr.  Lawson did  not  know the  answer,  but speculated  that                                                                   
issue had been addressed in past budgets.                                                                                       
Section 2(d)                                                                                                                  
     Authority to receive and expend registration receipts                                                                      
     from  the  Korea  USA economic  conference.    The  2002                                                                   
     conference   was  held  in   Korea;  2003  will   be  in                                                                   
     Anchorage.   Subsequent years' conferences  will be held                                                                   
    in other western states.                      115.0                                                                         
Mr. Lawson  referred to  Section 2(d)  regarding an  economic                                                                   
conference in  Anchorage. He  request seeks authorization  to                                                                   
receive and  spend $115 thousand.   He noted that due  to the                                                                   
funding  source  these  funds  could  only  be  used  on  the                                                                   
Representative Hawker noted that  the $35 thousand difference                                                                   
between the  receipts and expenses  for the conference  would                                                                   
come  from  the  International   Trade  Marketing's  existing                                                                   
Section 2(e) and (f)                                                                                                          
     Income  is insufficient  to  fund  appropriation due  to                                                                   
     stock market  declines.  Fund source switch  from income                                                                   
     to  endowment  and  a  reduction   of  $6,418.6  in  the                                                                   
     appropriation,    leaving   authorization    of   $4.1m.                                                                   
Mr. Lawson  referred to Section  2(e) and (f),  regarding the                                                                   
Alaska  Science  and  Technology Foundation  endowment.    He                                                                   
explained  that  the  market   value  of  the  endowment  had                                                                   
decreased  beneath the  original  principal  investment.   He                                                                   
noted that  the request  served as  a stopgap measure,  which                                                                   
changes  the   funding  source   and  reduces  the   spending                                                                   
authorization.   The  $4.1   million   will  cover   existing                                                                   
operations and obligations.                                                                                                     
Co-Chair  Harris questioned  if it  is legal  for the  Alaska                                                                   
Science  and Technology  Foundation  to  use their  endowment                                                                   
funds without  legislative approval. Mr. Lawson  replied that                                                                   
the  questioned has  not  yet been  answered.  He noted  that                                                                   
efforts were  being made to alter  statute. He added  that no                                                                   
one envisioned  that the principle  of the fund would  be $10                                                                   
million  less than  the original  investment.   He  concluded                                                                   
that this request representative an interim measure.                                                                            
Section 17                                                                                                                    
     17(a)(1)(A) AR 56381-02 (Delta Junction Economic                                                                           
     17(a)(1)(B) AR 56385-02 (Rural Utility Mgt.)                                                                               
Mr. Lawson  reviewed ratifications  dating  back to  the DCRA                                                                   
(Department of Community and Regional  Affairs). He explained                                                                   
that a  federal grant was  closed out before  $562.85 dollars                                                                   
were received. The second ratification is for .83 cents.                                                                        
Representative  Stoltze  questioned  if  there is  a  minimum                                                                   
standard  to  warrant  legislative  review.  Co-Chair  Harris                                                                   
responded  that   accounting  practices  necessitated   exact                                                                   
Representative   Joule   reiterated  his   earlier   question                                                                   
regarding the Power Cost Equalization  (PCE) program funding.                                                                   
Mr.  Lawson  stated that  the  program  was funded  at  $15.7                                                                   
million for  FY 03.  He  further speculated that  there would                                                                   
not  be a  request for  additional  funding. He  acknowledged                                                                   
that PCE  would not  be fully  funded, and  pointed out  that                                                                   
past  governors   have  requested  full  funding   through  a                                                                   
supplemental.  Mr. Lawson  did not know  the required  amount                                                                   
for full funding,  but observed that the amount  would be for                                                                   
April  through   June.  Responding   to  a  follow   up  from                                                                   
Representative  Joule, Mr. Lawson  noted that the  amount had                                                                   
been pro-rated.    He committed to providing  a more specific                                                                   
dollar amount for the Committee.                                                                                                
Co-Chair Harris summarized that  the projected annual cost of                                                                   
providing  power is  higher  than the  actual  appropriation,                                                                   
therefore  the  payments  have  been  pro-rated.  Mr.  Lawson                                                                   
observed  that the  department  anticipated  that the  amount                                                                   
would not  be sufficient and  began prorating from  the first                                                                   
DEPARTMENT OF CORRECTIONS                                                                                                     
JERRY BURNETT, DIRECTOR, ADMINISTRATIVE  SERVICES, DEPARTMENT                                                                   
OF   CORRECTIONS    provided   information    regarding   the                                                                   
department's supplemental requests.                                                                                             
Section 2(a)                                                                                                                  
     Costs  incurred due  to the November  19, 2002  accident                                                                   
     involving a  prisoner transport van at mile  19.5 of the                                                                   
     Seward Highway.                                                                                                            
Section 2(b)                                                                                                                  
     Due  to   increased  negotiated  contract   amount  with                                                                   
     Municipality of  Anchorage, the department  will realize                                                                   
     increased  manday billings  and needs receipt  authority                                                                   
     to utilize those receipts.                                                                                                 
Mr. Burnett  explained that the  requests related to  an auto                                                                   
accident occurring  in November of  2002.  He  explained that                                                                   
the amount  needed to cover the  cost of health care  for the                                                                   
three injured inmates  was estimated at $1 million.  He noted                                                                   
that the bill requested $500 thousand  from program receipts,                                                                   
which  would then  replace the  $500  thousand, requested  in                                                                   
general funds.                                                                                                                  
Co-Chair  Harris  observed  that   fault  had  not  yet  been                                                                   
determined. Mr.  Burnett speculated that, upon  completion of                                                                   
the police  report, insurance  payments  would be pursued  by                                                                   
the State to return to the General Fund.                                                                                        
Section (3) of the Regular Supplemental                                                                                       
     Prior year  bill for dialysis services for  an inmate in                                                                   
     FY2002.   The vendor inadvertently billed  a wrong party                                                                   
     and recently discovered the  error.  An appropriation is                                                                   
     needed in  order for the  department to pay the  bill of                                                                   
Mr. Burnett  explained  that the department  received  a bill                                                                   
for a patient  for dialysis treatment in FY02.  He noted that                                                                   
the bill  was received  in June  20002 and  was submitted  to                                                                   
Medicare.  Medicare  remanded  the  charge to  the  state  of                                                                   
Alaska. He pointed  out that, since the fiscal  year had been                                                                   
closed out, the  department could not pay the  bill without a                                                                   
supplemental request.                                                                                                           
Responding  to  a question  from  Representative  Meyer,  Mr.                                                                   
Burnett noted that  the patient was no longer  in the Alaskan                                                                   
correction system,  but was  released on June  18, 2002.   He                                                                   
went on  to explain that a  final bill for services  had been                                                                   
billed  in June  of  FY 02,  and  that Medicare  had  refused                                                                   
Responding to  a question  from Representative Chenault,  Mr.                                                                   
Burnett clarified  that the bill  is from a private  provider                                                                   
in Anchorage.                                                                                                                   
In response  to a  question by  Representative Whitaker,  Mr.                                                                   
Burnett explained that Medicare  would not pay for a prisoner                                                                   
in state custody.                                                                                                               
Mr. Burnett  noted that,  in a case  like this that  required                                                                   
extensive  medical treatment,  a  policy  existed that  would                                                                   
normally  transfer an  inmate  to an  out  of state  provider                                                                   
where care was more cost effective.                                                                                             
Representative Whitaker  asked whether the amount  was beyond                                                                   
what was customary.                                                                                                             
Mr. Burnett stated that these were customary.                                                                                   
Representative   Stoltze  asked   whether   refusal  of   the                                                                   
legislature to  pay the amount  would aid in  negotiating the                                                                   
bill.   Mr. Burnett stated that  the Agency was  obligated to                                                                   
pay the stated amount.                                                                                                          
17(a)(2)(A) AR 50981-01 (Noncust Fingerprints)     $219.77GF                                                                    
17(a)(2)(B) AR 50982-01 (ADAM Pgm/Univ AK Anc)     $66.65 GF                                                                    
Mr. Burnett  noted other  miscellaneous requests,  which were                                                                   
to   complete  bookkeeping,   including   some  stale   dated                                                                   
Representative  Croft  stated  his  understanding  the  stale                                                                   
dated warrants were funneled through Administration.                                                                            
HB  100 and  HB 110  were  heard and  HELD  in Committee  for                                                                   
further consideration.                                                                                                          
The meeting was adjourned at 3:48 PM                                                                                            

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