Legislature(2003 - 2004)

05/01/2003 03:14 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 01, 2003                                                                                            
                          3:14 PM                                                                                               
                                                                                                                                
TAPE HFC 03 - 73, Side A                                                                                                        
TAPE HFC 03 - 73, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 3:14 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                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Norman Rokeberg;  Representative John Coghill;                                                                   
Ian Fisk, Staff,  Representative Ogg; George  McClune, United                                                                   
Fisherman of Alaska; Benjamin  Brown, Alaska State Chamber of                                                                   
Commerce;  Chip  Wagoner,  Alaska  Catholic  Conference;  Don                                                                   
Etheridge,   AFL-CIO;   Karen  Rugina,   Alaska   Hospitality                                                                   
Alliance; Eddy Jeans, Manager,  School Finance and Facilities                                                                   
Section,  Department  of  Education  and  Early  Development;                                                                   
Debby    Chalmers,   Alyeska    Central   School    Education                                                                   
Association;  Cecilia Miller,  ACSEA; John Paden,  Counselor,                                                                   
Alyeska   School;   Kevin   Sweeney,   Legislative   Liaison,                                                                   
Department of Education and Early Development.                                                                                  
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jay  Sutherland,  Anchorage;  John  Brown,  President,  Labor                                                                   
Council,   Fairbanks;  Jack  Lewis,   Sour  Mining   Company,                                                                   
Anchorage;  Ayiare Voorhees, student;  Nancy Rochar,  parent;                                                                   
Victoria  Martin,  parent, Anchorage;  Greg  Miller,  Charter                                                                   
Schools,  Anchorage; Kym  Wolcott,  Anchorage; Ryan  Wolcott,                                                                   
student, Anchorage; Victoria Martin,  parent, Anchorage; Sean                                                                   
Ruddell,  student,  Anchorage;  Dan  Gavora,  Executive  Vice                                                                   
President,  Utility  Services  of  Alaska;  Michael  Jeffrey,                                                                   
parent, Barrow;  Dan Easton,  Director, Division  of Facility                                                                   
Construction  and  Operation,   Department  of  Environmental                                                                   
Conservation;                                                                                                                   
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 119    "An  Act  permitting  grants to  certain  regulated                                                                   
          public  utilities  for  water  quality  enhancement                                                                   
          projects and water supply  and wastewater systems."                                                                   
                                                                                                                                
          HB 119 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 174    "An   Act  relating   to   the  state   centralized                                                                   
          correspondence   study  program,  to   funding  for                                                                   
          educational  programs that occur  primarily outside                                                                   
          school  facilities,  and to  the  duties of  school                                                                   
          boards  of borough  and city  school districts  and                                                                   
          regional   educational    attendance   areas;   and                                                                   
          providing for an effective date."                                                                                     
                                                                                                                                
          HB 174 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
HB 199    "An  Act  removing  the annual  adjustment  to  the                                                                   
          minimum  wage based on  the rate of  inflation; and                                                                   
          providing for an effective date."                                                                                     
                                                                                                                                
          HB 199 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
SB 139    "An  Act  repealing  the termination  date  of  the                                                                   
          Alaska salmon  price report program;  and providing                                                                   
          for an effective date."                                                                                               
                                                                                                                                
          SB  139 was REPORTED  out of  Committee with  a "do                                                                   
          pass"  recommendation  and  one new  fiscal  impact                                                                   
          note from the Department of Revenue.                                                                                  
SENATE BILL NO. 139                                                                                                           
                                                                                                                                
     "An Act repealing the termination date of the Alaska                                                                       
     salmon price report program; and providing for an                                                                          
     effective date."                                                                                                           
                                                                                                                                
IAN FISK, STAFF,  REPRSENTATIVE OGG, spoke in  support of the                                                                   
bill.   He explained that the  current bill would  repeal the                                                                   
sunset date  of a  Department of  Revenue program called  the                                                                   
Alaska Salmon Price Report (ASPR),  which is in AS 43.80.050.                                                                   
Processors  that  sell  over one  million  pounds  in  salmon                                                                   
products a  year are required  to report the  wholesale price                                                                   
received for  the product to  the Department of  Revenue. The                                                                   
Department  publishes the  data three  times a year:  January                                                                   
31, May  31, and September 30.  The ASPR details  monthly and                                                                   
annual  average wholesale  price  sorted  by salmon  species,                                                                   
product  form  and the  eight  regions  where the  salmon  is                                                                   
produced. The  report provides  data helpful to  negotiations                                                                   
between harvesters  and processors.   The ASPR  statute would                                                                   
sunset on July 1, 2003, without  the legislation. The sponsor                                                                   
believes  the ASPR  should  be a  permanent  function of  the                                                                   
Department of Revenue.                                                                                                          
                                                                                                                                
Co-Chair Harris  observed that  Representative Austerman  had                                                                   
previously introduced  the legislation.  Mr.  Fisk noted that                                                                   
the  bill was  successful  and received  broad  support.   In                                                                   
response to a question by Co-Chair  Harris, he confirmed that                                                                   
the  proposed  bill  merely  eliminated  the  sunset  of  the                                                                   
program.  He noted that the report  was used to help with the                                                                   
purchase program and had no opposition.                                                                                         
                                                                                                                                
Representative Whitaker referred  to the zero fiscal note and                                                                   
expressed support for the legislation.                                                                                          
                                                                                                                                
Representative  Croft  noted  that Chair  had  expressed  the                                                                   
desire to  know the real cost  of boards or commissions.   He                                                                   
observed  that  the program  cost  roughly $50  thousand  and                                                                   
suggested  that it should  be reflected  in the fiscal  note.                                                                   
Mr.  Fisk confirmed  that this  cost  estimate was  accurate.                                                                   
They  pointed out  that funding  would come  from the  salmon                                                                   
fund.                                                                                                                           
                                                                                                                                
Representative  Croft MOVED that  the fiscal note  be changed                                                                   
to reflect  the $50  thousand in  salmon treaty funds.  There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
Co-Chair Harris MOVED to report  SB 139 out of Committee with                                                                   
the accompanying revised fiscal note.                                                                                           
                                                                                                                                
Representative Stoltze  OBJECTED and stated that  he hoped to                                                                   
someday  pass a bill  to benefit  sports fishing  as well  as                                                                   
commercial fishing.   He WITHDREW his OBJECTION.  There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
SB  139  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  one  new  fiscal impact  note  from  the                                                                   
Department of Revenue.                                                                                                          
HOUSE BILL NO. 199                                                                                                            
                                                                                                                                
     "An Act removing the annual adjustment to the minimum                                                                      
     wage based on the rate of inflation; and providing for                                                                     
     an effective date."                                                                                                        
                                                                                                                                
REPRESENTATIVE    NORMAN    ROKEBERG,    SPONSOR,    provided                                                                   
information  regarding  the legislation.    He discussed  the                                                                   
history  and methodology  behind  the  bill,  which tied  the                                                                   
minimum wage  to the  consumer price  index (CPI) and/or  one                                                                   
dollar above federal  standard.  He suggested  that an annual                                                                   
increase  in the  minimum  wage  would have  an  inflationary                                                                   
impact  on  the State's  economy.    He speculated  that  the                                                                   
increases  affected potential  employers and would  increased                                                                   
unemployment.  He noted competing  theories regarding minimum                                                                   
wage legislation.  He noted that  one point of view indicated                                                                   
that legislative  action created  negative impacts,  but that                                                                   
the other side stated that increase  in income had a positive                                                                   
impact on  lower income workers.   He stated that  he adhered                                                                   
to the  belief that  the impact  of increases were  negative,                                                                   
and quoted research by the Ohio  University, analyzing law in                                                                   
Washington State.  Representative  Rokeberg stressed that the                                                                   
bill  would not  cut  the minimum  wage  and emphasized  that                                                                   
Alaska's $7.15 per  hour minimum wage was the  highest in the                                                                   
country.   He questioned whether  businesses could  afford an                                                                   
increase and suggested  that the largest provider  of jobs in                                                                   
this sector  was the  hospitality industry.   He stated  that                                                                   
the industry  had been hit  with a 27  percent increase.   He                                                                   
maintained  that this  sent the  message the  Alaska was  not                                                                   
"open for business".                                                                                                            
                                                                                                                                
BENJAMIN BROWN,  ALASKA STATE  CHAMBER OF COMMERCE  testified                                                                   
in  support  of  the  bill.     He  acknowledged  the  debate                                                                   
engendered by the legislation.   He suggested de-indexing the                                                                   
Alaska minimum  wage from the  national index.   He discussed                                                                   
economic theories,  such as the  "invisible hand"  theory. He                                                                   
maintained that the "invisible  hand" became visible when the                                                                   
minimum wage increase  was implemented with a tie  to the CPI                                                                   
index. He  explained that  employers were  forced to  pay the                                                                   
amount specified by  the state.  He stated that  the bill did                                                                   
not   reduce  minimum   wage,   but  created   a  system   of                                                                   
automatically deciding  the proper minimum wage,  rather than                                                                   
allowing future debate  based on the economy needs.   He also                                                                   
noted that some  believe that using the consumer  price index                                                                   
created an  artificial inflation  in the  economy.   He added                                                                   
that  there  was  a  suggestion   that  the  legislature  was                                                                   
aggregating an  earlier decision  by de-indexing  the minimum                                                                   
wage,  and suggested  that  there  was no  legal  implication                                                                   
against the State in this regard.                                                                                               
                                                                                                                                
CHIP  WAGONER,   ALASKA  CATHOLIC  CONFERENCE   testified  in                                                                   
opposition to the bill and expressed  the Church's support of                                                                   
the  minimum wage.  He  discussed the  concept  of a  "living                                                                   
wage" to  support individuals with  dignity.  He  pointed out                                                                   
that the current minimum wage  still placed individuals below                                                                   
the  poverty  level.   He  discussed  the two  public  policy                                                                   
issues when evaluating the minimum  wage. He first emphasized                                                                   
that the  legislature  should determine  a floor below  which                                                                   
the  legislature believed  was an  unjust wage.  Once a  just                                                                   
minimum wage is determined by  the legislature then it should                                                                   
remain  constant  with  the economy  in  terms  of  inflation                                                                   
because  below  that  minimum  wage it  becomes  unjust.  The                                                                   
second public issue is economics.  He suggested that the main                                                                   
arguments against  indexing dealt with the cost of  jobs.  He                                                                   
urged  the  Committee  to carefully  examine  the  source  of                                                                   
information  in this area.   He  noted that professionals  in                                                                   
this  area   could  create   information  to  support   their                                                                   
viewpoints.  He   suggested  that  the  Employment   Policies                                                                   
Institute was historically against  the minimum wage, and the                                                                   
Economic  Institute was  historically for  the minimum  wage.                                                                   
He discussed information  from the state of  Alaska. He noted                                                                   
that  according   to  Department   of  Labor  and   Workforce                                                                   
Development there  are only 14,000  people in  Alaska earning                                                                   
the  minimum  wage.  He argued  that  14,000  people  earning                                                                   
minimum  wage would not  create an  inflationary spiral  that                                                                   
would affect  the entire  state of  Alaska. Of these  14,000,                                                                   
about a  third were  in the  food service/drinking  industry.                                                                   
He  noted  that  these  industries  were  those  against  the                                                                   
minimum wage  increase.  He argued  that if there  were going                                                                   
to be  a loss  of jobs  that it would  have occurred  between                                                                   
December and January  [2003] when there was  a $1.5 overnight                                                                   
increase in  minimum wage. He  acknowledged that there  was a                                                                   
six  percent drop  in employment,  but pointed  out that  the                                                                   
drop  could  be  attributed  to   the  seasonal  drop,  which                                                                   
occurred at  the same time in  the previous year.   He stated                                                                   
that a  similar situation occurred  in Washington State.   He                                                                   
quoted the  state of Washington  concluded that:  "There does                                                                   
not  appear to  be  a direct  correlation  between the  index                                                                   
minimum   wage  and   the  number   of  jobs   in  the   food                                                                   
service/drinking  places industry." He  concluded that  a the                                                                   
raise  in minimum  wage was  only  one factor  among many  in                                                                   
terms of job loss and the numbers  don't prove that there has                                                                   
been  a  job   loss  in  the  food  service/drinking   places                                                                   
industry.                                                                                                                       
                                                                                                                                
DON  ETHERIDGE, AFL-CIO  testified  on behalf  of his  60,000                                                                   
members  in  opposition  to the  bill.    He noted  that  his                                                                   
organization  petitioned to  achieve an  increase in  minimum                                                                   
wage.   He pointed out that  the subsequent increase  finally                                                                   
raised  Alaska's  rank from  being  the  lowest on  the  west                                                                   
coast.   He suggested that the  first CPI increase  should be                                                                   
observed  before  repealing it.    He  noted that  the  first                                                                   
increase would be  a 14-cent increase that should  not impact                                                                   
businesses.                                                                                                                     
                                                                                                                                
KAREN  RUGINA,  ALASKA  HOSPITALITY   ALLIANCE  testified  in                                                                   
support  of the  bill.   She provided  information of  losses                                                                   
experienced  by restaurants  and hotels  due to increases  in                                                                   
wages, and explained that hotels  and restaurants operated on                                                                   
a  narrow  margin.   She  suggested  that  the  increase,  in                                                                   
combination  with an  increase in insurance  and decrease  in                                                                   
customers.  She suggested that  benefits were being cut.  She                                                                   
gave examples of  businesses that had decided not  to come to                                                                   
Alaska due  to the  increase in  minimum wage.   She  noted a                                                                   
natural  CPI  indexing  occurred  in  the  business  with  an                                                                   
increase in menu prices.  She  concluded that this added more                                                                   
uncertainty to an already uncertain climate.                                                                                    
                                                                                                                                
JAY SUTHERLAND,  ANCHORAGE, testified  via teleconference  in                                                                   
support  of the  bill.   He stated  that he  is a  restaurant                                                                   
operator and noted  that his business had been  forced to lay                                                                   
off employees and suggested that  there would be fewer future                                                                   
jobs  for youth.   He  noted that  the CPI  was suggested  in                                                                   
Washington  State,  and  referred   to  its  effects  on  the                                                                   
industry.   He maintained that  businesses invested  in other                                                                   
states to avoid this restriction.                                                                                               
                                                                                                                                
JOHN BROWN,  PRESIDENT, LABOR  COUNCIL, FAIRBANKS,  testified                                                                   
via teleconference in opposition  to the bill.  He noted that                                                                   
50  thousand   people  signed   a  petition  supporting   CPI                                                                   
indexing, and  maintained that legislators had  also voted to                                                                   
support it.   He suggested  that workers  needed a  fair wage                                                                   
and that  if wages  were not guaranteed  it would  negatively                                                                   
affect  the  economy.   He  maintained  that  all  businesses                                                                   
competed on an equal basis.                                                                                                     
                                                                                                                                
JACK  LEWIS, SOUR  MINING COMPANY,  ANCHORAGE, testified  via                                                                   
teleconference in support of the  bill.  He stressed that the                                                                   
last increase was sizable and  that, for the first time ever,                                                                   
he was not able  to pass along the increases  in menu prices.                                                                   
He referenced the liquor tax in  addition to the minimum wage                                                                   
increase.  He noted the need to  decrease benefit programs in                                                                   
order to  accommodate increases.   He stated that he  did not                                                                   
support an automatic  increase or the legislature  suggesting                                                                   
appropriate levels.   He expressed concern over  the increase                                                                   
since customers were already eating out less.                                                                                   
                                                                                                                                
Co-Chair Harris  requested that  the Department of  Labor and                                                                   
Workforce  Development should  produce  an additional  fiscal                                                                   
note.                                                                                                                           
                                                                                                                                
HB  199  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 174                                                                                                            
                                                                                                                                
     "An    Act   relating   to    the   state    centralized                                                                   
     correspondence    study   program,   to    funding   for                                                                   
     educational   programs  that  occur  primarily   outside                                                                   
     school facilities,  and to  the duties of  school boards                                                                   
     of  borough  and  city  school  districts  and  regional                                                                   
     educational  attendance  areas;  and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
EDDY JEANS,  MANAGER, SCHOOL FINANCE AND  FACILITIES SECTION,                                                                   
DEPARTMENT  OF  EDUCATION  AND   EARLY  DEVELOPMENT  provided                                                                   
information  about the  legislation.   He compared the  House                                                                   
State Affairs  Committee version  and the Governor's  Bill as                                                                   
introduced.    He  noted  that   the  Governor's  bill  would                                                                   
eliminate  the program  beginning  July 1,  2003 whereas  the                                                                   
House  State Affairs'  Committee  Substitute would  eliminate                                                                   
the  current summer  program  with a  one-year  delay in  the                                                                   
effective  date  eliminating   the  statewide  correspondence                                                                   
program.   Both bills  contain a  provision under  14.70.430,                                                                   
which  deals  with  state  funding  of  correspondence  study                                                                   
programs  in  the  foundation   program.  These  and  similar                                                                   
programs  are funded  at 80  percent.  Some charter  schools,                                                                   
which   are   home-based  programs,   have   challenged   the                                                                   
Department   because   they   do  not   see   themselves   as                                                                   
correspondence  programs.   The  Department  has   taken  the                                                                   
position  that,  for foundation  formula  purposes,  programs                                                                   
outside  of a  brick  and  mortar school  are  correspondence                                                                   
programs. The  legislation would  bring clarity by  expanding                                                                   
the definition to include home-based programs.                                                                                  
                                                                                                                                
Mr.  Jeans  discussed  two  central   issues:    first,  cost                                                                   
savings.  He noted the argument  that eliminating the program                                                                   
would not  save the  state of Alaska  money, but  rather cost                                                                   
money  as students  seek  accredited  programs  in brick  and                                                                   
mortar schools.   He suggested  that the Department  believes                                                                   
that many of  the students will find  correspondence services                                                                   
elsewhere in  the state. He added  that there is  a potential                                                                   
savings through  space lease reductions,  but noted  that the                                                                   
Department might have other uses  for the space. He discussed                                                                   
the second  issue: policy.   He gave  a brief history  of the                                                                   
Alyeska Central School (ACS or  Alyeska), which was initiated                                                                   
in 1939 and  has provided valuable services.   He pointed out                                                                   
that  at that  time there  were only  two options,  municipal                                                                   
school districts and state operated  schools.  He stated that                                                                   
in  1977, Regional  Education  Attendance  Areas (REAA)  were                                                                   
initiated,  so that  every area  of Alaska  was covered  by a                                                                   
school district. Each school district  has the responsibility                                                                   
of educating students within their  boundaries. Approximately                                                                   
seven years  ago, the State  began allowing students  to take                                                                   
advantage of correspondence  programs.  He referenced  SB 36,                                                                   
which supports  correspondence programs.  Today  there are 12                                                                   
[correspondence]  programs including  ACS. He suggested  that                                                                   
[ACS] students  would attend another  program.   He addressed                                                                   
statewide enrollments,  and observed that the  bill addressed                                                                   
open enrollments.  He noted that  Alyeska would allow certain                                                                   
exceptions to enrollment, such  as disability, but that these                                                                   
were case  by case.  He  suggested that they had  other rules                                                                   
for closing enrollment.                                                                                                         
                                                                                                                                
Mr.  Jeans  addressed  accreditation and  noted  that  Craig,                                                                   
Delta, Galena,  and Yukon schools  districts had  applied for                                                                   
accreditation  and  been awarded  conditional  accreditation.                                                                   
He   explained  that   conditional   accreditation   provides                                                                   
transferable credit for students.                                                                                               
                                                                                                                                
TAPE HFC 03 - 73, Side B                                                                                                      
                                                                                                                                
AYIARE  VOORHEES, STUDENT,  testified  via teleconference  in                                                                   
support of the amended bill.   She stated that, although they                                                                   
would  prefer   for  the  school  to  remain   mandated,  she                                                                   
appreciated the  response of the  State to requests  to allow                                                                   
the school to remain open for the year.                                                                                         
                                                                                                                                
NANCY ROCHAR,  PARENT,  testified in support  of the  Alyeska                                                                   
Central School.   She suggested  that it was the  only school                                                                   
that upheld the  no child left behind  regulations currently.                                                                   
She  pointed out  that  all teachers  were  certified in  the                                                                   
subjects that they  teach.  She maintained that  services are                                                                   
not duplicated,  and suggested that  it was the  only program                                                                   
with  direct  teacher  involvement.   She  acknowledged  that                                                                   
other programs,  which offer cash  inducements might  be more                                                                   
popular, but  maintained that  other programs were  deficient                                                                   
in  teacher  involvement.    She   suggested  that  this  cut                                                                   
produced  no  cost savings  to  the  state  of Alaska.    She                                                                   
pointed out that  not every student had Internet  access, and                                                                   
that Alyeska also utilized regular  mail correspondence.  She                                                                   
commended the success and quality of the program.                                                                               
                                                                                                                                
JANET  WALKER,   PARENT,  testified  via   teleconference  in                                                                   
support of  the Alyeska Central  School.  She noted  that her                                                                   
family lived in the wilderness  of Alaska. Therefore, Alyeska                                                                   
was essential since it offered  programs that were not on the                                                                   
Internet.   She  acknowledged  that  while there  were  other                                                                   
correspondence  schools, Alyeska  was the  only one  that was                                                                   
fully accredited  and provided  online adult education.   She                                                                   
suggested that  to close the school  would cost the  state of                                                                   
Alaska  up to  $300  thousand.   She  urged  members to  keep                                                                   
Alyeska open.                                                                                                                   
                                                                                                                                
GREG  MILLER,   CHARTER  SCHOOLS,  ANCHORAGE   testified  via                                                                   
teleconference.   He stated his experience as  an attorney in                                                                   
representing charter schools.   He addressed Section 5 to the                                                                   
Committee Substitute, which pertained  to AS 14.70.430, which                                                                   
set the  level of 80 percent  for charter schools.   He noted                                                                   
that  the change  expands  the definition  of  correspondence                                                                   
schools, and  suggested that it  raised a much  larger issue.                                                                   
He stated that it would in essence  treat any school not in a                                                                   
regular facility  as a correspondence  school.   He suggested                                                                   
that  this  was  not an  appropriate  definition  and  should                                                                   
rather relate to the mailing of  materials between the school                                                                   
and  students.   He  noted  three  potential impacts  of  the                                                                   
language  change:   first,  that  charter schools  that  were                                                                   
outside of  a "school facility"  as a correspondence  school;                                                                   
second, home  school study programs  would now  be considered                                                                   
correspondence   schools;  and   third,  alternative   school                                                                   
district programs  would now be affected.   He concluded that                                                                   
this sentence raised a larger issue.                                                                                            
                                                                                                                                
KYM  WOLCOTT, ANCHORAGE,  parent  of Alyeska  Central  School                                                                   
students testified  via teleconference in support  of Alyeska                                                                   
Central School.   She suggested  that ACS had no  parallel in                                                                   
service in  the state.   She discussed the services  provided                                                                   
by  ACS, and  questioned how  students may  be absorbed  into                                                                   
districts  that  are already  overcrowded  and  under-funded.                                                                   
She  challenged   the  Administration   to  support   quality                                                                   
education and not close ACS.                                                                                                    
                                                                                                                                
RYAN    WOLCOTT,    student,   Anchorage,    testified    via                                                                   
teleconference  in support  of the  Alyeska Central  Schools.                                                                   
He said  that the teachers at  Alyeska provided him  with the                                                                   
support  he needed  to achieve  an education.   He  suggested                                                                   
that there  was not  a cost  savings and  requested that  the                                                                   
members consider saving the school.                                                                                             
                                                                                                                                
VICTORIA    MARTIN,   PARENT,    ANCHORAGE   testified    via                                                                   
teleconference  in support  of  the Alyeska  Central  School.                                                                   
She pointed  out that  Alyeska was  currently accredited  and                                                                   
had been a part of the state since  1938.  She suggested that                                                                   
every child could be supported  by the Alyeska Central School                                                                   
and expressed  the negative impact  on her family  of closing                                                                   
the school.   She  noted that she  had testified  on numerous                                                                   
occasions.                                                                                                                      
                                                                                                                                
SEAN    RUDDELL,    STUDENT,    ANCHORAGE    testified    via                                                                   
teleconference  in opposition  to the bill.   He stated  that                                                                   
the amendment was not acceptable.                                                                                               
                                                                                                                                
DEBBY CHALMERS, ALYESKA CENTRAL  SCHOOL EDUCATION ASSOCIATION                                                                   
(ACSEA)  testified in  support of  the Committee  Substitute.                                                                   
The  teachers  and  parents  support  a  one-year  transition                                                                   
period.  She observed  that  the school  has  a very  complex                                                                   
program  and infrastructure,  which has  been developed  over                                                                   
many years.                                                                                                                     
                                                                                                                                
CECILIA MILLER,  ACSEA, testified  in support of  keeping the                                                                   
Alyeska Central  School open for  all the children  that need                                                                   
to be served.   She asked that  there be at least  a year for                                                                   
transition.  It  would benefit the State for the  best.  This                                                                   
will impact kids that are off to college.                                                                                       
                                                                                                                                
JOHN  PADEN,  COUNSELOR,  ALYESKA CENTRAL  SCHOOL,  spoke  in                                                                   
opposition to the  proposed legislation.  He  noted that when                                                                   
the bill  was first heard,  the idea  of saving of  money was                                                                   
the major  consideration.  He  observed that the  elimination                                                                   
of  the program  might  not reduce  the  lease  costs of  the                                                                   
Department.   He noted  that the two  main issues  were money                                                                   
and  duplication  of services.    Parents and  students  with                                                                   
Alyeska recognize  that it  is unique.   The real issue  is a                                                                   
policy  one.    He maintained  that  the  legislation  is  an                                                                   
affront to  those children and  families.  Extending  Alyeska                                                                   
                                                th                                                                              
would  be better  than  closing  it on  June  30.    Allowing                                                                   
Alyeska to continue would be the best solution.                                                                                 
                                                                                                                                
KEVIN SWEENEY,  LEGISLATIVE LIAISON, DEPARTMENT  OF EDUCATION                                                                   
AND  EARLY   DEVELOPMENT,  summed  up  the   Administration's                                                                   
arguments in support of the bill.   He realized that this was                                                                   
an emotional issue, but observed  that the educational system                                                                   
has changed since the implementation  of ACS. At its peak ACS                                                                   
served more  than 2,000 students.  It now educates  just over                                                                   
one-quarter  of  that  amount.  He  pointed  out  that  other                                                                   
districts  now offer the  same type  of service, which  could                                                                   
accommodate  the program.   There  are  currently over  8,000                                                                   
students  registered  in statewide  correspondence  programs.                                                                   
The State  has encouraged  these school  districts to  expand                                                                   
their correspondence program.                                                                                                   
                                                                                                                                
Mr. Sweeney  stated that  the intent is  to see the  programs                                                                   
continue to grow and attract students.   He observed that the                                                                   
primary  argument against  the  closure of  ACS  is that  the                                                                   
program  is  unique  and  is the  only  program  that  offers                                                                   
accreditation.    He  disagreed   with  those  arguments.  He                                                                   
stressed  that programs,  which  are run  outside of  Juneau,                                                                   
have shown  great promise.  These programs  have assured  the                                                                   
Department that they will adapt  to the needs of the students                                                                   
and they  want to attract  students. He asserted  that school                                                                   
districts  are  ready  to  provide  teacher  interaction  and                                                                   
"snail mail" service.                                                                                                           
                                                                                                                                
Mr. Sweeney pointed  out that the temporary  accreditation is                                                                   
not an issue  that is unique to correspondence  programs. All                                                                   
the   credits    that   students   earn    [under   temporary                                                                   
accreditation]  are  counted   as  accounted  credits.    The                                                                   
Governor's  approach  is  to avoid  duplication  and  support                                                                   
competition among school districts.                                                                                             
                                                                                                                                
Discussion on HB 174 was HELD until later in the meeting.                                                                       
HOUSE BILL NO. 119                                                                                                            
                                                                                                                                
     "An Act permitting grants to certain regulated public                                                                      
     utilities for water quality enhancement projects and                                                                       
     water supply and wastewater systems."                                                                                      
                                                                                                                                
REPRESENTATIVE JOHN COGHILL, SPONSOR  spoke in support of the                                                                   
legislation.  The  legislation  would  permit  grants  to  be                                                                   
offered to  utilities that serve  the pubic (municipally  and                                                                   
privately  owned).   The  intent  is to  encourage  municipal                                                                   
development.   Section 3 would  allow public water  and sewer                                                                   
utilities to be  eligible for projects that  are regulated by                                                                   
Regulatory   Commission  of  Alaska.   The  question   arises                                                                   
regarding whether those doing  contract work or own a utility                                                                   
would be able  to a make profit  from the grants.   He stated                                                                   
that  they  would not.    He  referenced  a letter  from  the                                                                   
Department  of  Community  and  Economic  Development,  dated                                                                   
April  8, 2002, in  member's packets.   Grants  would be  for                                                                   
project expansion  and would not  be put into the  asset base                                                                   
that  would be  later  sold.   The  purchase  price that  the                                                                   
utility  would be  able  to recover  would  be regulated.  He                                                                   
stressed  that the legislation  seeks  equity. The intent  is                                                                   
not   to  allow   public   money   to  bolster   up   private                                                                   
corporations,  but  to give  ratepayers  relief  and to  grow                                                                   
Alaska through an expansion of utilities.                                                                                       
                                                                                                                                
Representative Coghill observed  that the contributed capital                                                                   
for the  utilities would be  regulated.  Regulated  utilities                                                                   
would not  be permitted to  recover contributed  capital from                                                                   
its costumers.  It would account for the  contributed capital                                                                   
in a manner that is identified  and outlined in the rate base                                                                   
under  the  uniform  system of  accounts  in  the  Regulatory                                                                   
Commission  of Alaska.   The bill  contains many  safeguards.                                                                   
He  claimed  that  he was  comfortable  with  the  issue  and                                                                   
requested approval and passage of the legislation.                                                                              
                                                                                                                                
Co-Chair  Harris  asked  how many  private  water  and  sewer                                                                   
utilities  were  in  the state  of  Alaska.    Representative                                                                   
Coghill  stated  that there  were  four  sewer and  21  water                                                                   
related utilities.   He noted that in Fairbanks,  one company                                                                   
operates two different utilities.                                                                                               
                                                                                                                                
DAN  GAVORA, EXECUTIVE  VICE PRESIDENT,  UTILITY SERVICES  OF                                                                   
ALASKA testified  via teleconference in support  of the bill.                                                                   
He stated that as a result of  the privatization process that                                                                   
Fairbanks ratepayers  had lost  this eligibility.  The source                                                                   
of the funds that  pay for the grants are collected  from the                                                                   
taxes paid  by both  municipal and  private owned  utilities.                                                                   
He maintained  that to discriminate against  utilities, which                                                                   
shared equally  in the burden,  was unjust and that  the bill                                                                   
would put Fairbanks ratepayers  on an equal level with others                                                                   
in  the  state.    He  noted  that  there  were  45  thousand                                                                   
residents in the state that are  not given the same treatment                                                                   
as  the  remainder  of  the  state.    He  noted  that  under                                                                   
Regulatory  Commission  of Alaska  regulations  all  economic                                                                   
benefits  of the  grants  are passed  on  to the  ratepayers.                                                                   
Shareholders  receive no benefit.   He  stated that  the bill                                                                   
would  reduce  the  burden  to   ratepayers,  and  to  expand                                                                   
service.                                                                                                                        
                                                                                                                                
Representative   Stoltze   requested  that   the   Regulatory                                                                   
Commission of Alaska testify at a future meeting.                                                                               
                                                                                                                                
HB  119  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 174                                                                                                            
                                                                                                                                
     "An    Act   relating   to    the   state    centralized                                                                   
     correspondence    study   program,   to    funding   for                                                                   
     educational   programs  that  occur  primarily   outside                                                                   
     school facilities,  and to  the duties of  school boards                                                                   
     of  borough  and  city  school  districts  and  regional                                                                   
     educational  attendance  areas;  and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
MICHEAL JEFFREY, PARENT, BARROW,  testified in support of the                                                                   
Alyeska   Central  School.     He   commended  the   school's                                                                   
reputation and  accreditation.  He maintained  that temporary                                                                   
accreditation   did  not   reflect   well  with   prestigious                                                                   
colleges.    He  referred to  the  Committee  Substitute  and                                                                   
suggested  that  it  would provide  a  compromise  and  allow                                                                   
parents to  attempt to  keep the school  going in  some form.                                                                   
He suggested  that Alyeska's  certified teachers  presented a                                                                   
cost savings to the state of Alaska.   He urged the Committee                                                                   
to pass the Committee Substitute for HB 174.                                                                                    
                                                                                                                                
HB  174  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:48 PM                                                                                            
                                                                                                                                
                                                                                                                                

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