Legislature(2009 - 2010)HOUSE FINANCE 519

03/27/2009 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 09:00 am 03/28/09 --
+ HB 127 ALASKA RAILROAD BUDGET TELECONFERENCED
Heard & Held - Assigned to Subcommittee
+= HB 35 NOTICE & CONSENT FOR MINOR'S ABORTION TELECONFERENCED
Moved CSHB 35(FIN) Out of Committee
Committee Discussion/Amendments
+ HB 161 CERTIFICATES OF PARTICIPATION FOR SUBPORT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 199 APPROPS: NON-TRANSPORTATION STIMULUS TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 27, 2009                                                                                           
                         1:40 p.m.                                                                                              
                                                                                                                                
1:40:35 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  called the House Finance  Committee meeting                                                                   
to order at 1:40 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Patrick   Gamble,   President    &   CEO,   Alaska   Railroad                                                                   
Corporation;  Bill O'Leary, Chief  Financial Officer,  Alaska                                                                   
Railroad Corporation;  Representative John  Coghill, Sponsor;                                                                   
William Hogan, Commissioner, Department  of Health and Social                                                                   
Services;  Mike   Lesmann,  Community  Relations   Manager  &                                                                   
Legislative   Contact,   Office   of   Children's   Services,                                                                   
Department  of  Health and  Social  Services;  Representative                                                                   
Cathy Munoz, Sponsor; Vern Jones,  Chief Procurement Officer,                                                                   
Department of Administration;  Larry Persily, Staff, Co-Chair                                                                   
Mike   Hawker;    Dan   Spencer,   Director,    Division   of                                                                   
Administrative  Services,  Department  of Public  Safety;  Jo                                                                   
Ellen Hanrahan,  Senior Policy Analyst, Office  of Management                                                                   
and Budget, Office  of the Governor; Alison  Elgee, Assistant                                                                   
Commissioner, Finance and Management  Services, Department of                                                                   
Health   and    Social   Services;   Guy    Bell,   Assistant                                                                   
Commissioner, Department of Labor  and Workforce Development;                                                                   
Tom   Nelson,   Director,   Employment   Security   Division,                                                                   
Department of Labor and Workforce Development.                                                                                  
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Craig Tillery,  Deputy Attorney  General, Department  of Law;                                                                   
Jeff Jessee,  Chief Executive  Officer, Alaska Mental  Health                                                                   
Trust  Authority;  Harry  Noah,  Executive  Director,  Alaska                                                                   
Mental Health  Trust Land  Office; Dan Fauske,  CEO/Executive                                                                   
Director, Alaska  Housing Finance Corporation,  Department of                                                                   
Revenue; Robert  M. Pickett, Chairman, Regulatory  Commission                                                                   
of Alaska;  Bob Stoller,  Attorney, Regulatory Commission  of                                                                   
Alaska,  Anchorage;   Bryan  Butcher,  Director,   Government                                                                   
Affairs  and   Public  Relations,   Alaska  Housing   Finance                                                                   
Corporation, Department Of Revenue.                                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 127    ALASKA RAILROAD BUDGET                                                                                                
                                                                                                                                
          HB  127  was HEARD  and  placed in  a  subcommittee                                                                   
          consisting of Representative  Stoltze as chair, and                                                                   
          Representative  Fairclough,  Representative  Joule,                                                                   
          Representative  Gara,  Representative  Foster,  and                                                                   
          Representative Kelly.                                                                                                 
                                                                                                                                
HB 35     NOTICE & CONSENT FOR MINOR'S ABORTION                                                                                 
                                                                                                                                
          CSHB (FIN) 35 was REPORTED out of Committee with                                                                      
     no recommendations and two previously published                                                                            
     fiscal notes: FN1 (LAW), FN2 (HSS).                                                                                        
                                                                                                                                
HB 161    JUNEAU SUBPORT BLDG/AHFC BLDG                                                                                         
                                                                                                                                
          HB 161 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 199    APPROPS: NON-TRANSPORTATION STIMULUS                                                                                  
                                                                                                                                
          HB 199 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HOUSE BILL NO. 127                                                                                                            
                                                                                                                                
     "An Act  providing that the Alaska  Railroad Corporation                                                                   
     is  subject to the  Executive Budget  Act and  providing                                                                   
     that  expenditures of  the  Alaska Railroad  Corporation                                                                   
     are  subject  to  appropriation; and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
1:41:14 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze presented an overview of the day's bills.                                                                      
                                                                                                                                
PATRICK   GAMBLE,   PRESIDENT    &   CEO,   ALASKA   RAILROAD                                                                   
CORPORATION,  stressed  the  significance  of  the  bill  and                                                                   
provided history  leading up to the state  assuming operation                                                                   
of the railroad. The Alaska Railroad  Corporation Act of 1985                                                                   
provided  guidance for  the innovative  relationship  between                                                                   
the state and the railroad, including a management board.                                                                       
                                                                                                                                
1:45:52 PM                                                                                                                    
                                                                                                                                
Mr.  Gamble  detailed  the goal  of  making  the  corporation                                                                   
financially sustainable.  The corporation  had to be  able to                                                                   
make  enough money  to turn  revenues  into capital  projects                                                                   
that  would  benefit  the state,  especially  connecting  the                                                                   
Railbelt. The corporation was  formed in 1985 and reviewed by                                                                   
the legislature  in 1997. He saw  the purpose of  the current                                                                   
meeting as a review of conditions  to determine the viability                                                                   
of the original model.                                                                                                          
                                                                                                                                
1:48:59 PM                                                                                                                    
                                                                                                                                
Mr.   Gamble  presented   the  committee   with  a   document                                                                   
summarizing  the railroad's  performance (copy  on file).  He                                                                   
suggested  that  consultants  and  lawyers  could  study  and                                                                   
rewrite the 1985  act if the legislature believes  the budget                                                                   
act   requires  a   deeper  review.   He   referred  to   the                                                                   
corporation's  14 percent  combined annual  growth rate  over                                                                   
the 24-year period.                                                                                                             
                                                                                                                                
1:51:52 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  agreed that the policy issue  was important                                                                   
and  referred  to  active  debates   and  criticisms  of  the                                                                   
corporation.  He thought there  was foundational  support for                                                                   
state government  having oversight of and  responsibility for                                                                   
the railroad. He referred to earlier concerns.                                                                                  
                                                                                                                                
1:54:49 PM                                                                                                                    
                                                                                                                                
Representative Gara  questioned the ramifications  of putting                                                                   
the railroad under the executive budget act.                                                                                    
                                                                                                                                
Co-Chair  Stoltze  thought  there  would  be  differences  of                                                                   
opinion.  His intent  was  to have  little  or no  day-to-day                                                                   
oversight of  operations. He referred  to initial  fears that                                                                   
have not  been realized and did  not think the  changes would                                                                   
be significant.                                                                                                                 
                                                                                                                                
1:57:39 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked if the railroad  corporation would                                                                   
submit  a budget  like  other agencies  and  queried how  the                                                                   
budget process  works currently. Mr. Gamble replied  that the                                                                   
budget goes through the board of directors.                                                                                     
                                                                                                                                
Representative Gara questioned  language on page 2 related to                                                                   
the concurrence of the governor.                                                                                                
                                                                                                                                
BILL  O'LEARY,  CHIEF  FINANCIAL   OFFICER,  ALASKA  RAILROAD                                                                   
CORPORATION, clarified that current  language states that the                                                                   
corporation   may   request   an   appropriation   from   the                                                                   
legislature;   the  change  would   require  it   to  request                                                                   
appropriations.                                                                                                                 
                                                                                                                                
Representative Gara  asked if the corporation  receives state                                                                   
money outside  of the capital  budget. Mr. O'Leary  responded                                                                   
that  the  corporation  has not  received  state  funds.  Mr.                                                                   
Gamble  added  that  the  corporate   act  provided  for  the                                                                   
corporation going to the legislature  for funding if it could                                                                   
not pay its own way.                                                                                                            
                                                                                                                                
2:00:56 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  queried  the  corporation's  plans                                                                   
regarding  the  legislation.  Co-Chair  Stoltze  stated  that                                                                   
subcommittee hearings  would be needed and did  not think the                                                                   
legislation  would   move  through  quickly.  He   hoped  for                                                                   
meaningful input from the corporation  regarding the changes.                                                                   
                                                                                                                                
2:03:36 PM                                                                                                                    
                                                                                                                                
Representative  Gara referred  to  concerns he  had with  the                                                                   
railroad corporation  and reviewed  past legal cases  against                                                                   
the railroad.  He questioned high  management salaries  and a                                                                   
sense  of an  insider  club, and  stated  concerns about  the                                                                   
corporation's status  as a "quasi  state agency."  He thought                                                                   
the corporation acted  either as a state agency  or a private                                                                   
company  depending on  its  own interests.  He  asked if  the                                                                   
state currently reviewed management salaries.                                                                                   
                                                                                                                                
2:06:58 PM                                                                                                                    
                                                                                                                                
Mr. Gamble  replied that his salary  is the only one  that is                                                                   
public  information, so  he  could provide  only  statistical                                                                   
information  and  not  information   about  the  salaries  of                                                                   
individuals.  He   would  be  able  to   compare  corporation                                                                   
salaries with those in the Lower 48.                                                                                            
                                                                                                                                
Representative Gara  reiterated historic concerns  related to                                                                   
management salaries.  Mr. Gamble  thought that the  issue had                                                                   
changed  since the railroad  had downsized  in recent  years.                                                                   
Individual actions  must go through  him. He speculated  that                                                                   
illegal actions may have taken  place at one time. He now has                                                                   
three  lawyers   and  a  human  resource   person  overseeing                                                                   
personnel actions.                                                                                                              
                                                                                                                                
Mr. Gamble  commented on remarks  that the corporation  acted                                                                   
sometimes as a  state agency and sometimes as  a private one,                                                                   
opining that the flexibility to  do so was part of the genius                                                                   
of  the Alaska  Railroad  Corporation  Act,  and has  brought                                                                   
millions of federal dollars into  the state.  He believed the                                                                   
ability to operate  both ways was an advantage.  He commented                                                                   
that the tax code is unique in the U.S.                                                                                         
                                                                                                                                
2:11:09 PM                                                                                                                    
                                                                                                                                
Representative Gara  wanted assurance that  railroad property                                                                   
would be public  property. Mr. Gamble acknowledged  the right                                                                   
to protest  on railroad property  as long as  individuals are                                                                   
not standing in the right-of-way.                                                                                               
                                                                                                                                
Representative  Crawford  questioned  how  workers  would  be                                                                   
treated  if  the  railroad came  under  the  federal  system,                                                                   
especially related to retirement contributions.                                                                                 
                                                                                                                                
Co-Chair Stoltze stated that the  intent was to have employee                                                                   
status remain the same.                                                                                                         
                                                                                                                                
2:13:25 PM                                                                                                                    
                                                                                                                                
Mr.  Gamble agreed  and  recommended  the issue  be  examined                                                                   
closely,  as it is  complex. In  general, anything  involving                                                                   
hiring,  wages,  or benefits  could  be affected  by  outside                                                                   
control  and  employees  will  be  concerned.  He  wanted  to                                                                   
protect benefits.  He referred to  a letter in  the committee                                                                   
packet  from a long-time  labor representative  on the  board                                                                   
(copy  on  file). He  wanted  human  resources issues  to  be                                                                   
carefully  vetted.  He referred  to  a  two-year gap  in  the                                                                   
corporation's  formation  process  during which  some  rights                                                                   
were lost and  emphasized his desire to make  sure that would                                                                   
not happen again.                                                                                                               
                                                                                                                                
2:16:18 PM                                                                                                                    
                                                                                                                                
Representative  Gara stated  an affinity  for railroad  rank-                                                                   
and-file  workers, and  discussed salary  requests that  were                                                                   
denied  because the  corporation  claimed  to be  financially                                                                   
stressed.  He  wanted  the  committee  to  review  management                                                                   
salaries and bonuses  over the past three years  and asked if                                                                   
the figures  could be  seen if the  names of the  individuals                                                                   
were deleted.  Mr. Gamble replied  that he needed to  ask his                                                                   
lawyers;  he did  not have  a  problem with  the request.  He                                                                   
thought   statistical   information   compared   with   other                                                                   
statistical information might be possible.                                                                                      
                                                                                                                                
Representative Gara  wanted the information by  position. Mr.                                                                   
Gamble pointed  out that  management salaries were  currently                                                                   
frozen. To  address revenue loss,  there was a  hiring freeze                                                                   
in 2007,  positions were  reduced in  2008, and a  management                                                                   
salary freeze was implemented in 2009.                                                                                          
                                                                                                                                
2:20:19 PM                                                                                                                    
                                                                                                                                
Representative  Foster liked way  the railroad was  being run                                                                   
and questioned the time being spent on the legislation.                                                                         
                                                                                                                                
2:23:15 PM                                                                                                                    
                                                                                                                                
Representative Kelly  asked if there were a  list of problems                                                                   
with the railroad.                                                                                                              
                                                                                                                                
Co-Chair  Stoltze  did not  want  a  list of  grievances.  He                                                                   
believed the  legislation dealt with long-term  institutional                                                                   
questions and policy issues.                                                                                                    
                                                                                                                                
Representative Kelly  queried the number of  unresolved labor                                                                   
grievances.  Mr. Gamble  offered to get  the information.  He                                                                   
thought the number was a high average.                                                                                          
                                                                                                                                
Representative  Kelly  asked   about  dividends.  Mr.  Gamble                                                                   
replied that the issue has come up, although not recently.                                                                      
                                                                                                                                
Representative Kelly  asked about the quality  of the current                                                                   
board. Mr. Gamble spoke positively of the board.                                                                                
                                                                                                                                
Representative  Kelly  asked if  the  corporation's  unfunded                                                                   
liability  was included  in the  state's unfunded  liability.                                                                   
Mr.  Gamble responded  that the  corporation's  entitlements,                                                                   
such as retirement  and post-retirement medical  are paid for                                                                   
out  of  earnings   and  not  out  of  the   Public  Employee                                                                   
Retirement  System (PERS).  The entitlements  went down  with                                                                   
the economic downturn; there is  currently 80 percent funding                                                                   
for retirement.                                                                                                                 
                                                                                                                                
2:28:43 PM                                                                                                                    
                                                                                                                                
Representative Kelly queried the sunset date.                                                                                   
                                                                                                                                
Representative  Fairclough  volunteered  to  be on  the  sub-                                                                   
committee.  She  relayed  that   her  constituents  have  had                                                                   
problems with  the railroad. She mentioned conflict  with the                                                                   
port in Anchorage.  Constituents have also  expressed concern                                                                   
regarding rail straightening.                                                                                                   
                                                                                                                                
Co-Chair Stoltze emphasized that  the broader policy issue is                                                                   
related to budget concerns. He  acknowledged the existence of                                                                   
many complaints  related to the  railroad, but did  not think                                                                   
it would  be productive  to bring  them before committee.  He                                                                   
appointed the  subcommittee with himself,  Represented Joule,                                                                   
Representative      Fairclough,     Representative      Gara,                                                                   
Representative Foster,  and Representative Kelly.  He invited                                                                   
the public to call his office with comment.                                                                                     
                                                                                                                                
2:31:57 PM                                                                                                                    
                                                                                                                                
HB 127 was HEARD  and placed in a subcommittee  consisting of                                                                   
Representative  Stoltze  as chair,  and  with  Representative                                                                   
Fairclough,   Representative   Joule,  Representative   Gara,                                                                   
Representative Foster, and Representative Kelly.                                                                                
                                                                                                                                
HOUSE BILL NO. 35                                                                                                             
                                                                                                                                
     "An Act  relating to  notice and  consent for  a minor's                                                                   
     abortion;  relating  to   penalties  for  performing  an                                                                   
     abortion;  relating to a  judicial bypass procedure  for                                                                   
     an abortion; relating to  coercion of a minor to have an                                                                   
     abortion; relating  to reporting of  abortions performed                                                                   
     on minors; amending Rule  220, Alaska Rules of Appellate                                                                   
     Procedure, and  Rule 20, Alaska Probate  Rules, relating                                                                   
     to judicial  bypass for an  abortion; and  providing for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
2:33:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHN COGHILL,  SPONSOR,  provided history  of                                                                   
the legislation and spoke to anticipated amendments.                                                                            
                                                                                                                                
Representative   Gara  referred   to  a   request  from   the                                                                   
Department  of Health  and Social  Services (DHSS)  regarding                                                                   
the issue of consent from foster parents and guardians.                                                                         
                                                                                                                                
Co-Chair  Stoltze asked  whether  Commissioner William  Hogan                                                                   
had   designated    someone    to   answer   the    question.                                                                   
Representative  Coghill  did  not  know the  answer.  He  had                                                                   
questions regarding  how many  young teens under  foster care                                                                   
have sought abortions.                                                                                                          
                                                                                                                                
2:36:17 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  queried the  version  of the  bill                                                                   
before the committee. Representative  Coghill replied that he                                                                   
had  introduced  version  A  as the  version  that  had  been                                                                   
significantly  amended  in  committees  during  the  previous                                                                   
legislature. He stated that the  version was a compromise for                                                                   
him.                                                                                                                            
                                                                                                                                
Co-Chair Stoltze clarified that  a previous committee had not                                                                   
amended the bill.                                                                                                               
                                                                                                                                
Representative  Foster reported that  his rural district  was                                                                   
83  percent  Native  and  that they  valued  human  life.  He                                                                   
referred  to  historic  high fatality  rates  and  how  those                                                                   
affected  child rearing  in  the present.  He  did not  think                                                                   
there was an issue  with abortion in the past  and noted that                                                                   
getting an  abortion in the  present requires  traveling long                                                                   
distances  at high  expense. He  thought  the bill  pertained                                                                   
more to people in urban areas.                                                                                                  
                                                                                                                                
2:39:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze brought up the issue of amendments.                                                                            
                                                                                                                                
Representative Gara  told the committee  that he was  open to                                                                   
feedback  and that  he  did not  plan  to introduce  all  the                                                                   
amendments. He did not believe  a fiscal note from DHSS would                                                                   
change  the  mind  of  committee.  He  referenced  statements                                                                   
during  the previous  legislature  regarding accurate  fiscal                                                                   
notes,  and  requested  one  from   DHSS  before  introducing                                                                   
amendments to the bill.                                                                                                         
                                                                                                                                
Co-Chair Stoltze  replied that  DHSS had  been asked  for the                                                                   
fiscal note and could not explain why it was not there.                                                                         
                                                                                                                                
Representative  Coghill  added  that information  was  needed                                                                   
regarding  how many  female  foster care  teens  would be  in                                                                   
state  custody and  how  many  have chosen  to  elect for  an                                                                   
abortion.    He  pointed  out  that there  are  no  rules  or                                                                   
restrictions  at present  related  to foster  care teens  who                                                                   
seek an abortion, so the state cannot know the numbers.                                                                         
                                                                                                                                
Co-Chair  Stoltze  felt  that the  question  was  legitimate.                                                                   
Representative   Coghill  stated   that  he   was  open   for                                                                   
discussion but that time is running out.                                                                                        
                                                                                                                                
2:43:43 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough requested  additional  information                                                                   
regarding previous testimony by  Dr. Whitefield, specifically                                                                   
the  48-hour notice  for  parents and  medical  complications                                                                   
that might require a faster abortion.                                                                                           
                                                                                                                                
Representative  Coghill  replied  that  the  48-hour  waiting                                                                   
period would  be a  legal question.  He noted the  concurrent                                                                   
nature of the  waiting period.  He disagreed  with the charge                                                                   
that the waiting period was restrictive  and believed that it                                                                   
allowed  for planning  and communication.  He  referred to  a                                                                   
U.S.  Supreme Court  case regarding  the  issue, and  quoted:                                                                   
"The 48-hour  delay provides the  parents the  opportunity to                                                                   
consult with his  or her spouse, family physician  to inquire                                                                   
into the  competency of  the abortion  doctor and to  discuss                                                                   
the decision on religious moral  implications with the minor,                                                                   
and provide needed  guidance and counsel on  how the decision                                                                   
will affect  their future. The  delay imposes only  a minimal                                                                   
burden on the minor's rights."                                                                                                  
                                                                                                                                
Representative  Coghill added  that another  issue was  where                                                                   
the pregnant  teen lived.  Whether she lived  in an  urban or                                                                   
rural area,  the teen would  not be able  to get  a pregnancy                                                                   
test one day  and abortion the next. The process  takes three                                                                   
days; notification follows a similar timeline.                                                                                  
                                                                                                                                
2:47:00 PM                                                                                                                    
                                                                                                                                
Representative Coghill  continued that the  emergency medical                                                                   
issue was  a separate  legal question. He  had asked  Dr. Jay                                                                   
Butler,  Alaska's Chief  Medical Officer,  who believed  that                                                                   
the medical instability mentioned  on page 2, line 29 is open                                                                   
to  interpretation by  medical  doctors. He  was  open to  an                                                                   
amendment to clarify  the language; however,  Dr. Butler also                                                                   
said  that  the  remaining  language   regarding  a  doctor's                                                                   
judgment about what constitutes  a medical emergency was very                                                                   
clear.                                                                                                                          
                                                                                                                                
Representative  Fairclough felt  that  the medical  emergency                                                                   
language in the  bill needed to be revisited  to clarify what                                                                   
a doctor needed  to do. She asked about the  judicial bypass.                                                                   
She mentioned public testimonies  given regarding pregnancies                                                                   
caused by  incest and  questioned the  necessity of  a second                                                                   
signature for the judicial bypass.                                                                                              
                                                                                                                                
2:49:59 PM                                                                                                                    
                                                                                                                                
Representative  Coghill directed attention  to page  3, which                                                                   
discusses the  issue of  minors being a  victim of  abuse. He                                                                   
clarified that it was not judicial  bypass, but bypass of the                                                                   
judicial  system. A  court hearing  is not  required, only  a                                                                   
signed statement  and a witness that is knowledgeable  of the                                                                   
abuse. He stressed  that he did not want to  create loopholes                                                                   
for  perpetrators.  He felt  that  having  a witness  to  the                                                                   
signature was wise.                                                                                                             
                                                                                                                                
2:51:39 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  shared from  personal  experience                                                                   
the  difficulty  in  identifying  sexual  abuse  of  a  minor                                                                   
because  of delays  in  reporting and  the  lack of  physical                                                                   
evidence.                                                                                                                       
                                                                                                                                
Representative  Gara  felt  that everyone  on  the  committee                                                                   
would  agree  about  the  importance   families  having  open                                                                   
dialogue about  the issues.  He had  questions about  the 48-                                                                   
hour  waiting   period,  and  the  court  process   with  the                                                                   
affidavit.  Regarding the  48-hour waiting  period, the  bill                                                                   
requires a pregnant minor and  her parent to first talk about                                                                   
the pregnancy and come to a decision.  Then the bill requires                                                                   
the family  to wait another day.  A family from a  rural area                                                                   
would have  to stay in a hotel  the two days. He  agreed that                                                                   
the family should talk; he questioned  the law requiring them                                                                   
to wait two days after talking.                                                                                                 
                                                                                                                                
2:54:33 PM                                                                                                                    
                                                                                                                                
Representative  Coghill reiterated  the concurrent  nature of                                                                   
the  waiting  period.  He  thought   the  question  was  more                                                                   
appropriate  for families  from  urban areas.  He quoted  the                                                                   
U.S.  Supreme  Court  ruling: "The  states'  48-hour  waiting                                                                   
period  is necessary to  enable notified  parents to  consult                                                                   
with their daughters  or their physicians so if  they so wish                                                                   
results  in   a  little  or   no  delay,  and   therefore  is                                                                   
constitutional." He thought the  notification was appropriate                                                                   
to allow for family deliberation.                                                                                               
                                                                                                                                
Representative  Gara believed the  bill worked if  the family                                                                   
is  perfect, but  all families  are  not prefect.  He gave  a                                                                   
hypothetical  example illustrating the  problem with  the 48-                                                                   
hour waiting period. He questioned  the family having to wait                                                                   
after making a decision.                                                                                                        
                                                                                                                                
2:56:49 PM                                                                                                                    
                                                                                                                                
Representative  Coghill believed  that  48 hours  is a  small                                                                   
period  of time  given the  circumstance.  He considered  the                                                                   
wait an opportunity for deliberation.  He outlined a possible                                                                   
series of  events. He  did not think  the waiting  period was                                                                   
unreasonable. He thought it was a notification issue.                                                                           
                                                                                                                                
Co-Chair  Stoltze   asked  that   the  discussion   focus  on                                                                   
amendments.                                                                                                                     
                                                                                                                                
Representative Gara informed the  committee that he would not                                                                   
offer  an  amendment  on  the   48-hour  waiting  period.  He                                                                   
reiterated his desire for a response from DHSS.                                                                                 
                                                                                                                                
Co-Chair Stoltze agreed that the question was pertinent.                                                                        
                                                                                                                                
Representative Joule spoke to  the importance of fiscal notes                                                                   
for  the Finance  Committee.  He thought  the  administration                                                                   
should provide the information to the committee.                                                                                
                                                                                                                                
Representative  Coghill repeated  his  commitment to  finding                                                                   
the requested information. He  admitted he had not written to                                                                   
any department head for the fiscal note.                                                                                        
                                                                                                                                
3:02:27 PM          AT EASE                                                                                                   
3:23:03 PM          RECONVENED                                                                                                
                                                                                                                                
WILLIAM HOGAN, COMMISSIONER, DEPARTMENT  OF HEALTH AND SOCIAL                                                                   
SERVICES, apologized  to the  committee regarding  the fiscal                                                                   
note.                                                                                                                           
                                                                                                                                
Representative  Gara asked  for clarification  about how  the                                                                   
legislation  would  apply  to   foster  children,  especially                                                                   
regarding who would give consent.                                                                                               
                                                                                                                                
Commissioner  Hogan  explained  that  the  state  takes  over                                                                   
guardianship and makes decisions  either directly or with the                                                                   
courts in foster  care situations where parental  rights have                                                                   
been   terminated.  If   parental   rights   have  not   been                                                                   
terminated, DHSS would continue  to work with the guardian or                                                                   
natural  parents  to make  the  best decision  regarding  the                                                                   
child.                                                                                                                          
                                                                                                                                
3:25:35 PM                                                                                                                    
                                                                                                                                
Representative Coghill added that  the minor is free to go to                                                                   
court  without the  custodian's  knowledge  and have  someone                                                                   
assigned  to them  at no  charge, regardless  of whether  the                                                                   
parents or  the state is the  custodian. He thought  the real                                                                   
question is  what would  happen if the  minor seeks  to avoid                                                                   
consent from the state.                                                                                                         
                                                                                                                                
Representative Gara  reiterated that the bill  works for good                                                                   
families where the minor has support.  He was concerned about                                                                   
the others  the bill will affect:  the 2,000 children  in the                                                                   
state who are in the foster care  system, plus many others in                                                                   
bad circumstances in their families.                                                                                            
                                                                                                                                
Representative  Gara asked  whether  a minor  in foster  care                                                                   
would have to  get parental consent if the  guardian is still                                                                   
the parent  who is  not living  with her. Commissioner  Hogan                                                                   
thought  the  practice  would  be  to  talk  to  the  natural                                                                   
parents.                                                                                                                        
                                                                                                                                
3:28:00 PM                                                                                                                    
                                                                                                                                
Representative  Coghill explained that  the minor  could seek                                                                   
emancipation if a  minor in state custody was  in a situation                                                                   
with parents who did not care.                                                                                                  
                                                                                                                                
Representative Gara asked how  emancipation would occur for a                                                                   
pregnant minor who has deadlines.  Representative Coghill did                                                                   
not  know  the  details.  He  did  know  that  a  minor  must                                                                   
demonstrate  the ability  to be self-sufficient  in  order to                                                                   
gain  emancipation;  such a  person  could seek  an  abortion                                                                   
without consent.                                                                                                                
                                                                                                                                
Representative   Gara   asked  for   further   clarification.                                                                   
Commissioner  Hogan  explained   that  the  child  protective                                                                   
services  system  first  tries  to reunite  kids  with  their                                                                   
families.  When that  is not possible,  the  next step  is to                                                                   
seek placement outside  the home. He added that  much depends                                                                   
on the  minor's history  with the family  and noted  that all                                                                   
decisions  about  the child's  status  are made  through  the                                                                   
court.                                                                                                                          
                                                                                                                                
Co-Chair  Stoltze asked  if Representative  Gara's  questions                                                                   
would  lead  to an  amendment  to  provide  a focus  for  the                                                                   
discussion.                                                                                                                     
                                                                                                                                
3:32:43 PM                                                                                                                    
                                                                                                                                
Representative Gara  stated that his focus was  that the bill                                                                   
has been around  for six years and no one has  considered how                                                                   
it  would work  in a  foster care  situation.  He wanted  the                                                                   
information before  he put together an amendment.  He did not                                                                   
want one law for minors with parents  that required minors in                                                                   
foster care to go to court.                                                                                                     
                                                                                                                                
Representative Gara  asked what would happen for  a minor who                                                                   
is  in  foster care  but  the  natural  parent is  still  the                                                                   
guardian. Commissioner  Hogan pointed out that  the described                                                                   
situation applies  to the typical child who  first enters the                                                                   
foster care  system. The  state must  determine over  time if                                                                   
the family can be reunited. The  intent is to keep the family                                                                   
together if possible.                                                                                                           
                                                                                                                                
Representative Gara  thought it might be unhealthy  to make a                                                                   
child obtain consent from a parent  who does not take care of                                                                   
her anymore. Commissioner Hogan agreed.                                                                                         
                                                                                                                                
Representative Gara  asked if those children  would then have                                                                   
to go  to court and  wondered if that  would be healthy  in a                                                                   
torn family. Commissioner thought  the child would have to go                                                                   
to court. He acknowledged the  difficulty of the decision. He                                                                   
thought  the state  would go  to court  but try  to make  the                                                                   
process as easy as possible.                                                                                                    
                                                                                                                                
3:36:18 PM                                                                                                                    
                                                                                                                                
Representative Gara asked whether  social work staff would be                                                                   
involved  in the  process. Commissioner  Hogan answered  that                                                                   
social work staff would be involved.                                                                                            
                                                                                                                                
Representative Coghill  added that current law  provides only                                                                   
minimal protection.  A child abused while in  the foster care                                                                   
system  could  be  coerced  by  the  perpetrator  to  get  an                                                                   
abortion without  anyone's consent, even  if the minor  is in                                                                   
state custody. House  Bill 35 would provide  recourse for the                                                                   
minor; she  can appeal without  costs to herself. She  can go                                                                   
directly to a doctor  or some other adult and  make an appeal                                                                   
for an abortion.                                                                                                                
                                                                                                                                
3:38:01 PM                                                                                                                    
                                                                                                                                
Representative  Gara  referred  to  statistics  showing  that                                                                   
approximately  50 percent  of  youth in  foster  care end  up                                                                   
pregnant  before  age  18.  Commissioner  Hogan  thought  the                                                                   
number seemed high and offered to get figures.                                                                                  
                                                                                                                                
Representative  Gara speculated  that additional staff  would                                                                   
be needed  if the  statistics were  high. Commissioner  Hogan                                                                   
thought  that all  child  protective service  workers  should                                                                   
have the  skills needed  and did  not believe the  department                                                                   
would need  additional  staff. He noted  that the  department                                                                   
has increased staff training.                                                                                                   
                                                                                                                                
3:39:26 PM                                                                                                                    
                                                                                                                                
Representative  Gara  requested clarification  regarding  the                                                                   
training.  Commissioner Hogan  reported  that the  department                                                                   
had implemented new training in January 2009.                                                                                   
                                                                                                                                
Representative  Gara  asked  who  would be  the  guardian  if                                                                   
parental rights  had been  terminated but  the minor  has not                                                                   
been      assigned     a      foster     care      placement.                                                                   
Commissioner  Hogan  replied  that  the state  would  be  the                                                                   
guardian;  regulations would  be needed  specifying who  that                                                                   
would be. He thought the courts should also be involved.                                                                        
                                                                                                                                
Representative  Gara  expressed  alarm  at a  federal  review                                                                   
reporting  that social  workers do  not see  youth more  than                                                                   
once every eight months in 30  percent of cases. Commissioner                                                                   
Hogan did not  recognize the exact statistic  but agreed that                                                                   
the state needs to see youth in foster care more often.                                                                         
                                                                                                                                
Representative Gara  wondered if social workers  did not know                                                                   
foster  children  well in  many  circumstances.  Commissioner                                                                   
Hogan  hoped   that  the  social   worker  would   develop  a                                                                   
relationship with the child.                                                                                                    
                                                                                                                                
3:42:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara  asked if  there  were  cases where  the                                                                   
social worker did not spend the  necessary time. Commissioner                                                                   
agreed that that does happen on occasion.                                                                                       
                                                                                                                                
Representative Crawford described  experience with the foster                                                                   
care system. In  the four years he had a foster  child during                                                                   
an  adoption process,  the  social  worker visited  once  per                                                                   
year. When  they called  with questions,  they sometimes  did                                                                   
not get an answer  for a month. The state had  explained that                                                                   
there  is less  contact with  a stable  family; others  might                                                                   
have had  real problems. He felt  the foster care  system was                                                                   
understaffed and overworked in Alaska.                                                                                          
                                                                                                                                
Commissioner  Hogan  hoped  that  the  system  would  respond                                                                   
better to  foster parents  and that  calls would be  returned                                                                   
promptly.  He emphasized  the importance  of foster  families                                                                   
and apologized.                                                                                                                 
                                                                                                                                
3:45:55 PM                                                                                                                    
                                                                                                                                
Representative Crawford emphasized  that he was not trying to                                                                   
fault social workers, but when  the timing was as critical as                                                                   
it would be for  a pregnant teen, the system  had to respond.                                                                   
Commissioner Hogan agreed.                                                                                                      
                                                                                                                                
Representative  Gara  pointed  out  that  in  his  experience                                                                   
foster  youth feel  like different  rules apply  to them.  He                                                                   
asked  if there  could be  psychological damage  if a  foster                                                                   
child  was told  they must  go to  court. Commissioner  Hogan                                                                   
responded  that the  state tries  to be sensitive  to what  a                                                                   
foster child needs and works hard  to not make the child feel                                                                   
different.                                                                                                                      
                                                                                                                                
3:48:59 PM                                                                                                                    
                                                                                                                                
Representative Gara wanted a pregnant  minor without a stable                                                                   
family  to consult  with  an adult  in  making decisions.  He                                                                   
wondered  if the  emphasis  in the  legislation  could be  on                                                                   
giving  notice rather  than requiring  consent.  Commissioner                                                                   
Hogan  pointed  out  that  the bill  is  about  consent,  not                                                                   
notification.   He  stated  that   the  department   supports                                                                   
Representative Coghill's  bill, although it would  be willing                                                                   
to work on language.                                                                                                            
                                                                                                                                
3:52:29 PM                                                                                                                    
                                                                                                                                
MIKE  LESMANN,  COMMUNITY  RELATIONS  MANAGER  &  LEGISLATIVE                                                                   
CONTACT, OFFICE OF CHILDREN'S  SERVICES, DEPARTMENT OF HEALTH                                                                   
AND SOCIAL SERVICES,  detailed the Alaska statute  related to                                                                   
a  parent's  residual rights  (AS47.10.084).  Under  residual                                                                   
rights,  birth parents  have the  right to  consent to  major                                                                   
medical procedures.  If the child is in state  custody, state                                                                   
staff  is absolutely  not  authorized to  consent  to a  non-                                                                   
emergency  major  medical  procedure;  parents  approval  are                                                                   
required unless  the parent's rights have been  terminated by                                                                   
the court.  If the parent is  not willing to give  consent, a                                                                   
court order  is required in order  for the procedure  to take                                                                   
place.                                                                                                                          
                                                                                                                                
Representative  Coghill added  that the  parental rights  law                                                                   
did not  apply to abortion, which  was one of the  reasons he                                                                   
thought HB 35  was necessary. The courts have  been trying to                                                                   
figure out for years how to balance the rights.                                                                                 
                                                                                                                                
3:54:45 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze observed that  the bill had not been amended                                                                   
to date and thought it would be amended on the House floor.                                                                     
                                                                                                                                
Representative  Gara  repeated  concerns  about  expecting  a                                                                   
child  to obtain  consent  from  a parent  who  has not  been                                                                   
involved. He did  not want a social worker or  judge who does                                                                   
not  know  the child  to  be  able to  override  the  child's                                                                   
decision.  He wanted  a child  to have  someone rational  and                                                                   
caring to talk to.                                                                                                              
                                                                                                                                
Representative  Coghill  responded that  when  someone is  in                                                                   
state  custody,  there is  a  legal conundrum  regarding  who                                                                   
should  give  consent. However,  a  minor  has the  right  to                                                                   
bypass  the  legal  guardian.  A  judge  would  consider  the                                                                   
maturity of the minor and the  level of stress created by the                                                                   
circumstances. The judge could  be a rational decision maker.                                                                   
There could be  other rational persons, including  the social                                                                   
worker.                                                                                                                         
                                                                                                                                
3:58:19 PM                                                                                                                    
                                                                                                                                
Representative  Gara  wanted  to  know  for  the  record  the                                                                   
average  tenure   of  a  social  worker  at   the  Office  of                                                                   
Children's  Services.  Commissioner  Hogan thought  a  social                                                                   
worker tended  to stay  two to  two and  a half years;  after                                                                   
that length  of time,  they tended to  stay longer.  He added                                                                   
that the vacancy rate was down.                                                                                                 
                                                                                                                                
3:59:38 PM                                                                                                                    
                                                                                                                                
Representative  Gara  wanted   language  in  the  legislation                                                                   
stipulating that it applied to  good families. Representative                                                                   
Coghill responded  that four  out of five  parts of  the bill                                                                   
are targeted for people in less than good circumstances.                                                                        
                                                                                                                                
Representative Gara  did not like one of the ways  to get out                                                                   
of parental consent, which is  to go to a judge that does not                                                                   
know the  child. He  also did  not like  a second way,  which                                                                   
says a child's affidavit is not  good enough, that there must                                                                   
be another witness to the abuse who signs an affidavit.                                                                         
                                                                                                                                
Co-Chair Stoltze  asked for amendments.  As there  were none,                                                                   
he turned to the fiscal notes.                                                                                                  
                                                                                                                                
Commissioner  Hogan spoke to  fiscal note  number 2  by DHSS,                                                                   
explaining that  it was indeterminate because  the department                                                                   
did not  know which minors  enrolled in Medicaid  had consent                                                                   
from a  parent or guardian;  the department does  not require                                                                   
consent.  He   indicated  the   explanation  for   costs  for                                                                   
abortions   and  qualifications   connected  with   the  Hyde                                                                   
amendment.   He stressed the  difficulty in finding  a dollar                                                                   
amount.                                                                                                                         
                                                                                                                                
CRAIG  TILLERY, DEPUTY  ATTORNEY GENERAL,  DEPARTMENT OF  LAW                                                                   
(via  teleconference),   commented  regarding   indeterminate                                                                   
fiscal  note number  1 by  the  Department of  Law (LAW).  He                                                                   
explained that LAW does not put  anticipated litigation costs                                                                   
into  fiscal  notes;  the department  tried  to  provide  the                                                                   
committee  with  information  that  would  give  an  idea  of                                                                   
potential  costs involved  with  litigation.  He opined  that                                                                   
litigation  is  likely;  the  last time  a  similar  law  was                                                                   
litigated, LAW  ended up  spending approximately  $500,000 on                                                                   
the case. Both in-house and outside  counsel were used in the                                                                   
case. In  addition, there  was a court  award of  $940,000 to                                                                   
the prevailing  party against the state. He  anticipated that                                                                   
in future the  state would make every effort  to litigate in-                                                                   
house.  He thought  that costs  would be in  the $300,000  to                                                                   
$400,000  range.  In addition,  there  would  be court  award                                                                   
costs depending on who won the case.                                                                                            
                                                                                                                                
4:04:23 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked if Mr.  Tillery had read  the bill                                                                   
and  the  court  opinion  declaring   the  last  similar  law                                                                   
unconstitutional. Mr. Tillery responded in the affirmative.                                                                     
                                                                                                                                
Representative  Gara pointed out  that the last  decision had                                                                   
determined  that the  parental consent  part of  the law  was                                                                   
unconstitutional. He asked if  the court might make a similar                                                                   
determination  again  about  parental  consent.  Mr.  Tillery                                                                   
responded that it was not a foregone  conclusion that the law                                                                   
would  be  declared unconstitutional,   although he  was  not                                                                   
predicting  that response again  from the  court as  the vote                                                                   
was close the last time. House  Bill 35 modifies the previous                                                                   
law  in a  way that  brings the  law closer  to the  majority                                                                   
opinion that  struck it  down. In particular,  HB 35  adds an                                                                   
exception,  a victim  of documented  abuse,  with respect  to                                                                   
judicial bypass.  In terms  of time  and ability to  navigate                                                                   
the system,  HB 35 reduces the  time from five  business days                                                                   
to  three business  days; it  also reduces  appeal time  from                                                                   
nine days to  eight days. The new proposed  law also provides                                                                   
a  confidential form  for  school excuse  for  a hearing.  He                                                                   
added that  at least two of  the justices will  have changed,                                                                   
which could affect a new decision.                                                                                              
                                                                                                                                
Representative Gara  requested an explanation of  the concept                                                                   
"stare decisis."  Mr. Tillery explained that  "stare decisis"                                                                   
indicates that when  faced with a similar situation  that has                                                                   
been previously ruled on by a  court, the court will continue                                                                   
with the  ruling in  order to provide  some certainty  to the                                                                   
way  people order  their affairs,  unless  the situation  has                                                                   
dramatically  changed. Changes  could  be those  in the  bill                                                                   
itself, or changes in social mores.  He did not believe stare                                                                   
decisis would  play a  large role because  the court,  by the                                                                   
very nature  of its  analysis, would  be determining  whether                                                                   
there have been sufficient changes  in the law to allow it to                                                                   
be declared unconstitutional.                                                                                                   
                                                                                                                                
4:08:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  MOVED to  REPORT HB  35 from Committee  with                                                                   
individual recommendations and attached fiscal notes.                                                                           
                                                                                                                                
Representative Gara OBJECTED.                                                                                                   
                                                                                                                                
Co-Chair Hawker WITHDREW the MOTION.                                                                                            
                                                                                                                                
Representative Gara MOVED Amendment 1:                                                                                          
                                                                                                                                
     1.   Page 2, lines 3-4:                                                                                                    
          Following "notice":                                                                                                   
          Delete "and consent"                                                                                                  
                                                                                                                                
     2.   Page 3, lines 7-8:                                                                                                    
          Following "performed":                                                                                                
          Delete "and the parent, legal guardian, or                                                                            
          custodian has consented in writing to the                                                                             
          performance or inducement of the abortion"                                                                            
                                                                                                                                
     3.   Page 3, lines 10-11:                                                                                                  
          Following "notice":                                                                                                   
          Delete "and consent"                                                                                                  
                                                                                                                                
     4.   Page 3, lines 13-14:                                                                                                  
          Following "notice":                                                                                                   
          Delete "and consent"                                                                                                  
                                                                                                                                
     5.   Page 5, line 5:                                                                                                       
          Following "to":                                                                                                       
          Delete "and the consent of"                                                                                           
                                                                                                                                
     6.   Page 5, line 8:                                                                                                       
          Following "to":                                                                                                       
          Delete "or the consent of"                                                                                            
                                                                                                                                
     7.   Page 5, line 17:                                                                                                      
          Following "to":                                                                                                       
          Delete "or the consent of"                                                                                            
                                                                                                                                
     8.   Page 5, lines 20-21:                                                                                                  
          Following "notice to":                                                                                                
          Delete "or the consent of"                                                                                            
                                                                                                                                
     9.   Page 5, line 24:                                                                                                      
          Following "the":                                                                                                      
          Delete "consent of"                                                                                                   
          Insert "notice to"                                                                                                    
                                                                                                                                
     10.  Page 6, line 7:                                                                                                       
          Following "to":                                                                                                       
          Delete "or the consent of"                                                                                            
                                                                                                                                
     11. Page 6, line 11:                                                                                                       
          Following "such":                                                                                                     
          Delete "consent"                                                                                                      
          Insert "notice"                                                                                                       
                                                                                                                                
     12. Page 6, line 27:                                                                                                       
          Following "to":                                                                                                       
          Delete "or the consent of"                                                                                            
                                                                                                                                
     13. Page 6, line 30-31:                                                                                                    
          Following "to"                                                                                                        
          Delete "or the consent of"                                                                                            
                                                                                                                                
     14. Page 8, lines 15-16:                                                                                                   
          Following "to":                                                                                                       
          Delete "and the consent of"                                                                                           
                                                                                                                                
     15. Page 8, line 25:                                                                                                       
          Following "to":                                                                                                       
          Delete "and the consent of"                                                                                           
                                                                                                                                
     16. Page 9, line 18:                                                                                                       
          Following "to":                                                                                                       
          Delete "and the consent of"                                                                                           
                                                                                                                                
     17. Page 9, lines 30-31:                                                                                                   
          Following "to":                                                                                                       
          Delete "or the consent of"                                                                                            
                                                                                                                                
Representative Fairclough OBJECTED.                                                                                             
                                                                                                                                
Representative Gara  explained that the amendment  says it is                                                                   
fine to  give a non-abusive family  notice that the  minor is                                                                   
pregnant  and seeking  an  abortion so  that  the family  can                                                                   
discuss  the matter,  but  that consent  is  not required  in                                                                   
cases where consent  seems impossible, such as  from a foster                                                                   
parent who  has not seen  the child for  two years.  Since he                                                                   
did not know  how to word the amendment,  Representative Gara                                                                   
WITHDREW Amendment 1.                                                                                                           
                                                                                                                                
Representative Gara MOVED Amendment 2:                                                                                          
                                                                                                                                
     Page 3, lines 20-28:                                                                                                       
          Delete all text.                                                                                                      
                                                                                                                                
Co-Chair Hawker OBJECTED.                                                                                                       
                                                                                                                                
Representative  Gara detailed that  Amendment 2 addresses  an                                                                   
exception on  page 3 that  the child does  not have to  go to                                                                   
court if the child is the victim  of physical or sexual abuse                                                                   
but needs  a second witness  to the abuse.  In a  small town,                                                                   
the abusive parent who the child  is trying not to tell might                                                                   
find out.  The amendment says  that the second  witness might                                                                   
be the abuser  or the abuser's  spouse; the minor may  not be                                                                   
able  to secure  the second  witness  statement. Amendment  2                                                                   
says the minor's affidavit is enough.                                                                                           
                                                                                                                                
Representative   Coghill  objected   to  the  amendment.   He                                                                   
asserted  that the  purpose of  the  list is  to protect  the                                                                   
minor in  cases of abuse, and  that abusers could  pressure a                                                                   
minor to go to a doctor for an abortion.                                                                                        
                                                                                                                                
4:13:33 PM                                                                                                                    
                                                                                                                                
Representative  Gara clarified that  the amendment has  to do                                                                   
with  page 3,  line 20.  He thought  all could  agree that  a                                                                   
parent  who physically  abuses  a child  loses  the right  to                                                                   
consent.  However, in  order  for the  minor  to comply,  the                                                                   
minor must fill out the affidavit  and then find someone with                                                                   
personal knowledge  of the abuse.  He pointed out  that there                                                                   
may not  be another  person with  personal knowledge  to fill                                                                   
out the  second affidavit.  He thought  requiring the  second                                                                   
witness would make the provision unusable.                                                                                      
                                                                                                                                
4:15:02 PM                                                                                                                    
                                                                                                                                
Representative  Coghill disagreed.  He referred to  testimony                                                                   
by  people  who  had  reached  out to  minors  and  found  it                                                                   
improbable  that  no one  would  know  about the  abuse.  His                                                                   
primary concern was for the minor.                                                                                              
                                                                                                                                
Representative Kelly stated that  in a chaotic situation, the                                                                   
default position is  that someone dies; he would  opt for the                                                                   
keeping someone  alive. He  supported the legislation,  while                                                                   
acknowledging that it is not perfect.  He believed DHSS would                                                                   
help.  He placed  equal value  on  the unborn  child and  the                                                                   
minor.                                                                                                                          
                                                                                                                                
4:20:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara WITHDREW  Amendment  2.  He thought  the                                                                   
problem  with the amendment  reflected  the problem with  the                                                                   
bill.  He thought  government was  bad on  how people  should                                                                   
communicate within  their home. He  stressed that he  did not                                                                   
believe that the victim of any  abuse should have the duty to                                                                   
go to the abuser to get consent for an abortion.                                                                                
                                                                                                                                
4:21:38 PM          AT EASE                                                                                                   
4:26:29 PM          RECONVENED                                                                                                
                                                                                                                                
Representative Gara  indicated that he would  not be offering                                                                   
Amendment 3.                                                                                                                    
                                                                                                                                
Representative Gara MOVED Amendment 4:                                                                                          
                                                                                                                                
     Page 7, line 25:                                                                                                           
          Following "have":                                                                                                     
          Insert "or refrain from having"                                                                                       
                                                                                                                                
Co-Chair Hawker OBJECTED.                                                                                                       
                                                                                                                                
Representative Gara  took issue with  Section 9 of HB  35. He                                                                   
believed it  should be a crime  to coerce someone to  have an                                                                   
abortion. Coerced  is defined as  to "restrain or  dominate a                                                                   
minor  by  force,  threat  of  force,  deprivation  of  food,                                                                   
support, or shelter."  He did not think the  committee should                                                                   
take  sides  in  the  pro-life  or  pro-choice  debate;  both                                                                   
forcing someone to  have an abortion and forcing  someone not                                                                   
to have an abortion should be  a crime. He intended Amendment                                                                   
4 to balance the bill.                                                                                                          
                                                                                                                                
Representative Coghill  asserted that the bill's  purpose was                                                                   
regulating abortions, not regulating  the decision whether to                                                                   
have one. He agreed  that coercion is bad in  many cases, but                                                                   
did not think the issue was coercion.                                                                                           
                                                                                                                                
Co-Chair Hawker MAINTAINED his OBJECTION.                                                                                       
                                                                                                                                
Representative   Gara   argued   that   the   amendment   was                                                                   
appropriate  to  the  bill,  and  that  the  bill  was  about                                                                   
abortion. He  turned to page  7, line  25, which says  that a                                                                   
person may  not coerce  a minor  who is  pregnant to  have or                                                                   
refrain from having  an abortion. He agreed with  the part of                                                                   
the bill  that wanted families  to talk about the  issue, but                                                                   
the amendment  did not relate  to that  part of the  bill. He                                                                   
did not want to  create a crime that makes those  on the pro-                                                                   
life side of the issue happy but  discriminates against those                                                                   
on  the pro-choice  side of  the issue.  He did  not want  to                                                                   
protect minors  who decide  not to have  an abortion  and not                                                                   
protect minors  who do decide  to have one when  the decision                                                                   
is legal.                                                                                                                       
                                                                                                                                
4:30:31 PM                                                                                                                    
                                                                                                                                
Representative  Kelly expressed  reluctance to force  lawyers                                                                   
on everyone who is counseling the minor against abortion.                                                                       
                                                                                                                                
Representative  Coghill  repeated that  the  bill intends  to                                                                   
protect the  minor if  she chooses to  have the baby.  Should                                                                   
she  choose  not  to  have  the   baby,  she  would  have  to                                                                   
demonstrate  maturity.  He  thought   part  of  the  question                                                                   
related to an  immature person choosing to have  an abortion.                                                                   
The amendment would strike at  the parental consent part. The                                                                   
legal  question would  be that  a parent  disagreeing with  a                                                                   
minor  about  having  an  abortion   could  be  portrayed  as                                                                   
coercion.  He  maintained  that  the  measure  is  about  the                                                                   
regulation of abortion.                                                                                                         
                                                                                                                                
Representative Coghill argued  the legitimacy of the question                                                                   
of maturity; many other statues  address the issue. He read a                                                                   
statement  by  the Alaska  Association  of School  Boards  on                                                                   
maturity:  "Students who  have  not yet  graduated from  high                                                                   
school are  too young to  make the life-changing  decision to                                                                   
forego  basic education."  He maintained  that accepting  the                                                                   
amendment would result in a legal challenge to coercion.                                                                        
                                                                                                                                
4:34:12 PM                                                                                                                    
                                                                                                                                
Representative Crawford thought  it would be wrong to force a                                                                   
child to have an  abortion when she did not want  one, but it                                                                   
would  also be  wrong to  coerce the  minor to  do what  they                                                                   
wanted by  withholding food or  shelter. He acknowledged  the                                                                   
difficulty of the issue.                                                                                                        
                                                                                                                                
Representative  Austerman  pointed out  that  the whole  bill                                                                   
would be  legally challenged, not  just the part of  the bill                                                                   
that would be affected by the amendment.                                                                                        
                                                                                                                                
Representative Coghill reported  that he had been told by the                                                                   
American Civil Liberties Union  (ACLU) and Planned Parenthood                                                                   
that they  definitely intended  to challenge the  measure. He                                                                   
stressed that he  did not like coercion, but  maintained that                                                                   
the section  of the bill  addressed by the amendment  relates                                                                   
to coercion and opens the door to legal challenge.                                                                              
                                                                                                                                
4:38:50 PM                                                                                                                    
                                                                                                                                
Representative   Gara  asserted  that   the  bill   would  be                                                                   
challenged.                                                                                                                     
                                                                                                                                
Representative Coghill did not  think the issue was so clear.                                                                   
He read  part of the Supreme  Court decision saying  that the                                                                   
relocation  of fundamental  right from  minors to parents  is                                                                   
"constitutionally  suspect." He  thought the  court was  very                                                                   
definite that  the parents  had the  right and definite  that                                                                   
the minors are  immature in their choices. The  Supreme Court                                                                   
was  looking for  less restrictive  means;  he believed  less                                                                   
restrictive means were crafted into HB 35.                                                                                      
                                                                                                                                
Representative Gara understood  the philosophical points, but                                                                   
pointed  out that  the  amendment was  narrower.  He did  not                                                                   
believe it was right to have a  law that made it a crime if a                                                                   
person was  coerced into  having an  abortion, but  would not                                                                   
stand behind  a person  who is  coerced to  not have  a legal                                                                   
abortion.  He asserted  that the amendment  says that  either                                                                   
kind of coercion should be illegal.                                                                                             
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Crawford, Gara, Joule, Salmon, Austerman                                                                              
OPPOSED: Fairclough, Foster, Kelly, Thomas, Stoltze, Hawker                                                                     
                                                                                                                                
The MOTION FAILED (5-6).                                                                                                        
                                                                                                                                
4:43:03 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED Amendment 5:                                                                                          
                                                                                                                                
     Page 2, line 27:                                                                                                           
                                                                                                                                
          Following "death":                                                                                                    
          Insert "or a substantial risk to the minor's                                                                          
          health"                                                                                                               
                                                                                                                                
     Page 2, line 28-30:                                                                                                        
          Delete all text.                                                                                                      
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Representative Gara  explained that the bill  has a provision                                                                   
that  says that  in  the case  of  a medical  emergency,  the                                                                   
doctor  can  perform  an  abortion to  save  the  minor  from                                                                   
physical  harm   or  death.  He   thought  the   wording  was                                                                   
difficult. On line  29, the bill says that  the physical harm                                                                   
that would be  avoided must be proved to be  irreversible. He                                                                   
asserted that  a doctor cannot  always know if the  injury is                                                                   
irreversible;   a  doctor  could   be  subject  to   criminal                                                                   
prosecution. The  amendment would  clarify that in  a medical                                                                   
emergency,  an  abortion can  be  performed if  necessary  to                                                                   
prevent  death, or  to prevent  serious risk  to the  minor's                                                                   
health.                                                                                                                         
                                                                                                                                
Representative  Coghill responded that  he would  object less                                                                   
to the amendment  if it said to "physical health"  so that it                                                                   
would not be open to a subjective interpretation.                                                                               
                                                                                                                                
Representative  Gara  agreed  and  offered  an  amendment  to                                                                   
Amendment 5, to insert the word "physical" before "health."                                                                     
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked if there  was continued  objection to                                                                   
Amendment 5 as amended.                                                                                                         
                                                                                                                                
Representative Kelly OBJECTED.                                                                                                  
                                                                                                                                
Representative  Coghill  stated   that  he  would  not  speak                                                                   
against the amendment.                                                                                                          
                                                                                                                                
Representative Kelly WITHDREW his OBJECTION.                                                                                    
                                                                                                                                
There  being  NO  further  OBJECTION,   it  was  so  ordered.                                                                   
Amendment 5 as amended was PASSED.                                                                                              
                                                                                                                                
Co-Chair  Hawker  MOVED CSHB  (FIN)  35 from  Committee  with                                                                   
individual recommendations and attached fiscal notes.                                                                           
                                                                                                                                
4:49:51 PM                                                                                                                    
                                                                                                                                
Representative Gara  OBJECTED for discussion. He  thought the                                                                   
main  part of  the bill  presents  legitimate discussion.  He                                                                   
wanted minors to discuss matters  such as abortion with their                                                                   
parents. However, he did not know  how a law could be written                                                                   
to require families  to talk to one another,  especially when                                                                   
the family is  dysfunctional or when the minor  does not have                                                                   
a  family.   He  had  concerns   about  foster   children  in                                                                   
particular. He took  issue with a provision in  the bill that                                                                   
states that  there has to  be a 48-hour  wait after  a parent                                                                   
consents  to   a  minor's  abortion.  He  pointed   out  that                                                                   
legislative  researchers reported  that there  is no  48-hour                                                                   
waiting period for any other procedure  in Alaska. He thought                                                                   
the provision  was disrespectful  to the parent's  choice. He                                                                   
reiterated concerns about the  second person required to sign                                                                   
an affidavit.                                                                                                                   
                                                                                                                                
4:52:44 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  agreed   that  the  bill  was  a  very                                                                   
difficult one. He opined that  the default position should be                                                                   
choosing  life  and not  death  in  a confusing  and  chaotic                                                                   
situation. He thought the sponsor had found a balance.                                                                          
                                                                                                                                
Representative  Joule thought  the issue  was highly  charged                                                                   
and he appreciated the respectful tone of the debate.                                                                           
                                                                                                                                
4:55:13 PM                                                                                                                    
                                                                                                                                
Representative  Crawford concurred that  the issue  is tough.                                                                   
He discussed  his  views of abortion  and the  topic of  when                                                                   
life begins. He pointed out that  there were abortions before                                                                   
it was made legal, and conjectured  that there would still be                                                                   
abortions  if  they  were  made  illegal.  He  believed  that                                                                   
Planned Parenthood  had reported  that there  were 18  in the                                                                   
past year that HB 35 would have  covered; 14 of the girls had                                                                   
involved parents  and 4 did not.  He feared that HB  35 would                                                                   
force the four  to have underground abortions  and questioned                                                                   
whether the bill  would fix the problem it  was purporting to                                                                   
fix. He emphasized his desire  to pass legislation that would                                                                   
not have unintended negative consequences.                                                                                      
                                                                                                                                
4:59:40 PM                                                                                                                    
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSHB  (FIN)  35 was  REPORTED  out  of  Committee with  a  no                                                                   
recommendations  and two previously  published fiscal  notes:                                                                   
FN1 (LAW), FN2 (HSS).                                                                                                           
                                                                                                                                
Representative Foster noted that  in the Bush, hospitals fall                                                                   
under   federal  guidelines   and  are   exempt  from   state                                                                   
regulations. The doctors and nurses  answer to other laws. He                                                                   
wondered if Bush hospitals still operate this way.                                                                              
                                                                                                                                
Co-Chair  Hawker noted  that Commissioner  Hogan would  get a                                                                   
formal response to the question.                                                                                                
                                                                                                                                
5:02:08 PM          AT EASE                                                                                                   
5:12:00 PM     RECONVENED                                                                                                     
                                                                                                                                
HOUSE BILL NO. 161                                                                                                            
                                                                                                                                
     "An  Act  relating to  the  Alaska Mental  Health  Trust                                                                   
     Authority  Subport  Office   Building;  authorizing  the                                                                   
     issuance   of   certificates    of   participation   for                                                                   
     construction of the building  and authorizing the use of                                                                   
     up to $25,000,000 from the  mental health trust fund for                                                                   
     construction  of the building;  approving leases  of all                                                                   
     or   part  of  the   building  by   the  Department   of                                                                   
     Administration; and providing for an effective date."                                                                      
                                                                                                                                
REPRESENTATIVE CATHY  MUNOZ, SPONSOR, spoke in  support of HB                                                                   
161 and introduced several people  who could answer questions                                                                   
regarding the legislation.                                                                                                      
                                                                                                                                
5:14:18 PM                                                                                                                    
                                                                                                                                
Representative Munoz  informed the committee that  HB 161 was                                                                   
introduced  on  behalf  of the  Alaska  Mental  Health  Trust                                                                   
Authority (AMHTA) so that the  trust could develop a piece of                                                                   
property  in  the  subport  area   in  downtown  Juneau.  She                                                                   
explained  that the  plan calls  for the  construction of  an                                                                   
office  building  that  will house  approximately  500  state                                                                   
employees.                                                                                                                      
                                                                                                                                
Representative  Munoz added that  a primary mission  of AMHTA                                                                   
is to  develop land that it  holds throughout the  state. For                                                                   
many years,  the trust has viewed  the subport property  as a                                                                   
top development priority.  She pointed to a  critical need in                                                                   
Juneau  for office  space; two  of the  state facilities  are                                                                   
aging and  face immediate  renovation costs of  approximately                                                                   
$8.5 million.  In addition, both  facilities will need  to be                                                                   
replaced  in the  future.  The Department  of  Fish and  Game                                                                   
(DFG) building  in Douglas  is nearly 50  years old,  and the                                                                   
Department of Public Safety (DPS)  building downtown is about                                                                   
40 years old.  The DPS building was constructed  in 1970; the                                                                   
intent was  to use  it for ten  years. A  lease on  the third                                                                   
facility, the Department  of Labor (DOL) building,  is due to                                                                   
expire soon.  The state will  need to find replacement  space                                                                   
for approximately 300 DOL employees.                                                                                            
                                                                                                                                
5:16:10 PM                                                                                                                    
                                                                                                                                
Representative  Munoz listed  four key  points regarding  the                                                                   
legislation:                                                                                                                    
                                                                                                                                
   · Over the life of the lease, the state will save                                                                            
     approximately $13 million.                                                                                                 
   · The trust is allowed to develop a key land holding,                                                                        
     which  will  provide  a stable  and  dependable  revenue                                                                   
     stream for beneficiaries of the trust.                                                                                     
   · As land owner, the trust provides the land and half the                                                                    
    construction costs, or approximately $22.7 million.                                                                         
   · The state, in partnership with the trust, is able to                                                                       
     meet  a  critical  space   need  for  around  525  state                                                                   
     employees,  and  agrees  to  bond  an  equal  amount  of                                                                   
     approximately $22.7 million,  with the lease payments as                                                                   
     security on the bonds.                                                                                                     
                                                                                                                                
Representative  Munoz emphasized that  timing is  crucial. In                                                                   
order  for the  project to  work,  enabling legislation  must                                                                   
happen in  the current session,  as the DOL lease  expires in                                                                   
1012.                                                                                                                           
                                                                                                                                
5:17:47 PM                                                                                                                    
                                                                                                                                
Representative Foster opined that  the bill was the best he'd                                                                   
ever heard.                                                                                                                     
                                                                                                                                
Representative Crawford  agreed and asked if  the legislation                                                                   
would   be   under   the   state's   prevailing   wage   law.                                                                   
Representative  Munoz did not  know but  offered to  find the                                                                   
answer.                                                                                                                         
                                                                                                                                
Vice-Chair Thomas asked who owns  the building being vacated.                                                                   
Representative Munoz  answered that the state  of Alaska owns                                                                   
the DPS  facility on Willoughby  Avenue and the  DFG building                                                                   
in Douglas. The  DOL facility is owned privately  by a family                                                                   
who lives outside of Alaska.                                                                                                    
                                                                                                                                
Vice-Chair   Thomas   wondered   what   the   Department   of                                                                   
Administration  planned for the  two state-owned  facilities.                                                                   
Representative  Munoz   replied  that  the   buildings  would                                                                   
probably  be  torn  down  and the  property  sold  for  mixed                                                                   
development such as housing.                                                                                                    
                                                                                                                                
Vice-Chair Thomas  queried if the proposal included  funds to                                                                   
tear the buildings down. Representative  Munoz responded that                                                                   
the legislation does not provide for demolition costs.                                                                          
                                                                                                                                
Vice-Chair Thomas hoped there  was a plan. He had seen school                                                                   
districts  burdened with  old  buildings  after erecting  new                                                                   
ones. Representative  Munoz explained that the  state planned                                                                   
to take the  DPS facility down and put in  additional parking                                                                   
for  the area.  There  was also  discussion  about using  the                                                                   
facilities for things such as record storage.                                                                                   
                                                                                                                                
5:21:36 PM                                                                                                                    
                                                                                                                                
Representative Austerman  wondered if parking  space would be                                                                   
lost  in  the  downtown  area   with  the  new  construction.                                                                   
Representative Munoz replied that  the facility would require                                                                   
on-site parking to meet the planning  and zoning needs of the                                                                   
space. She assured  him that the needs could  be met on-site.                                                                   
In addition,  the city  is constructing  a parking  garage at                                                                   
Main Street  and Egan  Drive; this  garage is not  associated                                                                   
with the proposed project.                                                                                                      
                                                                                                                                
Co-Chair   Stoltze   queried  possible   parking   variances.                                                                   
Representative  Munoz replied that  the project has  not gone                                                                   
through  a permitting  process yet, but  she understood  that                                                                   
there would be enough on-site parking.                                                                                          
                                                                                                                                
5:24:04 PM                                                                                                                    
                                                                                                                                
JEFF JESSEE,  CHIEF EXECUTIVE  OFFICER, ALASKA MENTAL  HEALTH                                                                   
TRUST  AUTHORITY (via  teleconference),  testified that  when                                                                   
the Department  of Administration approached the  trust about                                                                   
the  possibility of  constructing  the office  building,  the                                                                   
trust saw a unique opportunity  to develop its resources. The                                                                   
land  office has  relied on  more tradition  methods of  land                                                                   
management such as leases and  sales of property. The project                                                                   
would offer  the trust the option  of being a  developer. The                                                                   
trustees considered and decided  the project was an excellent                                                                   
investment for the trust. The  $22.7 million that AMHTA would                                                                   
invest  in the  building  would  return around  7.5  percent,                                                                   
which is  comparable to the  return on the trust's  permanent                                                                   
fund over  time. In the  current economic environment,  being                                                                   
able  to guarantee  the return  over a  30-year period  would                                                                   
help secure the endowment of the  trust. During the 30 years,                                                                   
the  payout would  be  offset  and after  the  30 years,  the                                                                   
entire lease  would go to the  trust, making it  an excellent                                                                   
investment. The state  has the advantage of  seeing its lease                                                                   
payments  ultimately return  to  the non-profits  that  serve                                                                   
trust beneficiaries in furtherance  of the mental health plan                                                                   
of  the  state.  The mental  health  needs  are  expected  to                                                                   
increase, so the additional revenue will be good.                                                                               
                                                                                                                                
5:28:59 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked   for  further  information                                                                   
regarding  the  benefit  to  the state  of  using  the  $22.7                                                                   
million  general fund.  Mr. Jesse understood  that the  $22.7                                                                   
million  will come  from certificates  of participation;  the                                                                   
state will not  be fronting general funds.  Private investors                                                                   
will  put up  the capital.  Through the  lease payments,  the                                                                   
certificates  of participation  will be paid  off over  a 20-                                                                   
year period of time.                                                                                                            
                                                                                                                                
5:30:12 PM                                                                                                                    
                                                                                                                                
Representative  Crawford   suggested  that  the   design  not                                                                   
include a flat roof, which does not make sense in Juneau.                                                                       
                                                                                                                                
Vice-Chair  Thomas queried the  acreage of  the land  and who                                                                   
owns it.  Representative  Munoz replied  that the trust  owns                                                                   
the land.                                                                                                                       
                                                                                                                                
HARRY NOAH,  EXECUTIVE DIRECTOR,  ALASKA MENTAL HEALTH  TRUST                                                                   
LAND  OFFICE (via  teleconference), recollected  the size  as                                                                   
approximately four acres.                                                                                                       
                                                                                                                                
Vice-Chair Thomas  asked the property value of  the land. Mr.                                                                   
Noah replied that comparable appraisals  in the area had been                                                                   
made, but  he did not  have the data.  He offered to  get the                                                                   
numbers.                                                                                                                        
                                                                                                                                
Vice-Chair  Thomas asked why  the parking  area had  the best                                                                   
view. Mr.  Noah answered that  the subport area  is extremely                                                                   
valuable  land. Initially,  the intent  was to take  (through                                                                   
the trust  land replacement program)  the land where  the DPS                                                                   
building stands  and build the  parking garage.  However, the                                                                   
cost  of the  parking  garage was  $20  million. The  project                                                                   
could not  offset the  high number  with lease payments.  The                                                                   
trust has reluctantly  decided to use the area  where the old                                                                   
subport building  was as surface parking until  there is some                                                                   
economic reason to  change. Then the parking  garage would be                                                                   
constructed and the  area where the old subport  building was                                                                   
would be  developed. He  called the  measure an interim  one.                                                                   
The trust has no specific use  currently for the land. When a                                                                   
good one  comes along, the trust  intends to build  a parking                                                                   
garage and  further develop  the area that  will be  used for                                                                   
surface parking.                                                                                                                
                                                                                                                                
5:34:37 PM                                                                                                                    
                                                                                                                                
Representative  Gara   voiced  concern  about   taking  $22.7                                                                   
million from  assets that generate  income for the  trust. He                                                                   
wanted to make sure there would  be enough. Mr. Jesse replied                                                                   
that  there  will  be  no  interruption   of  cash  flow.  He                                                                   
explained that at the end of the  fiscal year, the trust pays                                                                   
out a  percentage of its assets  held by the  permanent fund.                                                                   
In  this  case,  the  $22.7 million  will  still  be  in  the                                                                   
permanent fund at  the end of FY10; payout  will be available                                                                   
in  FY11. For  2012, the  lease  payments will  begin at  the                                                                   
start  of the fiscal  year, and  the lease  payments will  be                                                                   
available subsequently.                                                                                                         
                                                                                                                                
Representative Gara  asked whether there  would be a  risk if                                                                   
tenancy did  not occur or  if construction were  delayed. Mr.                                                                   
Jesse responded that  no business deal is entirely  free from                                                                   
risk; however,  there are major  incentives to make  sure the                                                                   
building  is completed  on  time,  including  that the  state                                                                   
lease on  the current facility  expires at same time  the new                                                                   
building will be completed. He  added that even if there were                                                                   
some delay  in the  commencement of  the lease payments,  the                                                                   
amount of money  involved is $900,000 a year,  an amount that                                                                   
he  believed   trust  could  plan  for  and   absorb  without                                                                   
affecting its goals.                                                                                                            
                                                                                                                                
5:38:12 PM                                                                                                                    
                                                                                                                                
Representative Gara  stated that he is fine with  the risk if                                                                   
the  trust is  fine with  it. Mr.  Jesse replied  that he  is                                                                   
definitely  fine with  the risk, particularly  because  at 20                                                                   
and 30  years out, the investment  becomes an  excellent deal                                                                   
for future trustees.                                                                                                            
                                                                                                                                
Co-Chair  Hawker  queried  how the  state  could  rationalize                                                                   
building on expensive Class A  real estate. Mr. Jesse replied                                                                   
that the  AMHTA intends  to provide  the state with  quality,                                                                   
energy  efficient,  aesthetically  appropriate  office  space                                                                   
without the health and safety  concerns caused by the state's                                                                   
current space.                                                                                                                  
                                                                                                                                
Representative  Munoz added  that rates  at other  comparable                                                                   
spaces, such as at the Goldbelt  and Sealaska buildings, were                                                                   
comparable. In addition, the renegotiated  DOL lease would be                                                                   
considerably more than what is currently being paid.                                                                            
                                                                                                                                
5:41:07 PM                                                                                                                    
                                                                                                                                
Representative   Foster   asked   what  the   Department   of                                                                   
Administration thought about the provision.                                                                                     
                                                                                                                                
VERN  JONES,   CHIEF  PROCUREMENT   OFFICER,  DEPARTMENT   OF                                                                   
ADMINISTRATION,  directed attention  to the  fiscal note  and                                                                   
analysis. He reported that DOA  thought the proposition was a                                                                   
good  deal. He  mentioned  the DOL  building  lease that  was                                                                   
expiring.   If  the  building   does   not  get  built,   the                                                                   
department's  other option is  to put out  an RFP  the coming                                                                   
summer.  The department's  analysis shows  that over  the 30-                                                                   
year  life of  the lease,  the  AMHTA option  would be  $13.5                                                                   
million less  expensive than  a lease  in the private  sector                                                                   
and maintaining the two older  buildings that require a great                                                                   
deal of deferred maintenance.  He pointed out that the fiscal                                                                   
note was  understated;  the cost showed  for maintaining  the                                                                   
old buildings  and continuing the  lease is probably  low. In                                                                   
addition, the  capital costs for the Douglas  Island building                                                                   
and the  DPS building only  have the known existing  deferred                                                                   
maintenance projects  listed. Over  the next 30  years, other                                                                   
work would need to be done.                                                                                                     
                                                                                                                                
Mr. Jones added that DOA analysis  calculates the square foot                                                                   
price at  about $353.  The department thinks  the price  is a                                                                   
bargain for the quality of space being contemplated.                                                                            
                                                                                                                                
5:44:24 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked  if  he  was  referring  to  cost  to                                                                   
construct or leasehold costs.  Mr. Jones responded the number                                                                   
represents a cost  per square foot under a  lease. He pointed                                                                   
out that  the number  is a  ceiling to  negotiate under,  not                                                                   
necessarily the price that will be paid for the building.                                                                       
                                                                                                                                
Co-Chair  Hawker  stated  his   inclination  to  support  the                                                                   
concept. He  referred to  arguments by  the current  owner of                                                                   
one of  the buildings  that they  could do  a better  job for                                                                   
less  money.  Mr.  Jones  replied   that  he  had  heard  the                                                                   
arguments; departmental analysis does not support them.                                                                         
                                                                                                                                
Co-Chair  Hawker  wanted to  see  a  direct response  to  the                                                                   
arguments with the financial analysis.                                                                                          
                                                                                                                                
Representative  Munoz requested  that the committee  consider                                                                   
what the  state has  invested in the  facility. Close  to $50                                                                   
million has  been invested in  the old building.  She thought                                                                   
it  was important  for the  state  to find  space that  would                                                                   
allow  the  department  to  function   better.  She  reported                                                                   
numerous, well-documented problems.  She believed there would                                                                   
be good benefit for all the parties involved.                                                                                   
                                                                                                                                
Co-Chair Hawker  asserted that the  state has to pay  for the                                                                   
property. He wanted questions answered.                                                                                         
                                                                                                                                
Co-Chair Stoltze wanted numbers from the administration.                                                                        
                                                                                                                                
5:48:45 PM                                                                                                                    
                                                                                                                                
Representative  Kelly was  not  convinced that  the deal  was                                                                   
great.  He questioned  putting  state  employees  in Class  A                                                                   
space. The trust could also construct  a building and rent it                                                                   
out to doctors and attorneys to make money.                                                                                     
                                                                                                                                
Representative  Munoz believed the  current cost for  the DOL                                                                   
building  was  $2.33  per  square  foot.  She  asked  if  the                                                                   
committee wanted an analysis of comparable space.                                                                               
                                                                                                                                
Representative  Kelly  wanted  a comparison  with  costs  for                                                                   
Class B  or C space, which  he thought was  more appropriate.                                                                   
He referred to criticisms he was hearing about the measure.                                                                     
                                                                                                                                
5:52:23 PM                                                                                                                    
                                                                                                                                
Representative  Foster  relayed  his experience  with  office                                                                   
space.  He  opined  that  space  with  good  parking  can  be                                                                   
important for employees.                                                                                                        
                                                                                                                                
Mr. Jones  reiterated  that the  $3.53 per  square foot  is a                                                                   
ceiling cost and  that the price is still not  negotiated. He                                                                   
pointed out that  the state is not a typical tenant;  it is a                                                                   
high quality but expensive tenant.  Technology needs are much                                                                   
higher  and more  expensive  to service  than  for a  typical                                                                   
private tenant.  There are higher natural  light requirements                                                                   
as well, which drive up the cost  of space. He suggested that                                                                   
it is  not fair to  compare to what  might be available  at a                                                                   
mall  or Class  C  space. The  department  projects that  the                                                                   
expectations for  price in  the RFP will  be in the  $3.80 to                                                                   
$4.00 per  square foot  range. The  department thinks  it has                                                                   
good backup to justify those expectations.                                                                                      
                                                                                                                                
5:56:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  talked about the information  needed by the                                                                   
committee.                                                                                                                      
                                                                                                                                
Vice-Chair Thomas  wondered if there were letters  of support                                                                   
from the  municipality. Representative  Munoz responded  that                                                                   
the  City and  Borough  of Juneau  had  unanimously passed  a                                                                   
resolution of support.                                                                                                          
                                                                                                                                
5:58:50 PMRECESSED until 9:00 AM March 28, 2009                                                                               
9:09:48 AM     RECONVENED                                                                                                     
                                                                                                                                
HOUSE BILL NO. 199                                                                                                              
                                                                                                                                
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair  Hawker referred  to previous  testimony related  to                                                                   
the legislation  and questions  raised for the  Department of                                                                   
Education and Early Development.                                                                                                
                                                                                                                                
9:11:51 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker listed items that  were added to the original                                                                   
list,  items  where  the  administration   is  going  to  add                                                                   
personnel   in  order   to  accept   American  Recovery   and                                                                   
Reinvestment Act  (ARRA) funds: Item 12,  Healthcare Services                                                                   
Administration; Item 19, Labor  Employment Training Services;                                                                   
Item 27,  Public Safety State  Troopers; Item 13,  Child Care                                                                   
Benefits Grants; Item 22, Workforce Development Training.                                                                       
                                                                                                                                
Co-Chair Hawker  noted that the entire committee  was present                                                                   
except for Representative Foster, who had a medical excuse.                                                                     
                                                                                                                                
9:14:08 AM                                                                                                                    
                                                                                                                                
LARRY PERSILY,  STAFF, CO-CHAIR  MIKE HAWKER, began  with two                                                                   
follow-up items  from the previous  day's meeting.  First, he                                                                   
indicated   a   packet  containing   the   information   that                                                                   
Representative  Austerman had asked  for from the  Department                                                                   
of   Education.  Second,   regarding   questions  about   the                                                                   
Department  of  Conservation  (DEC)  air  quality  grants  he                                                                   
explained  that in FY08,  DEC received  about $300,000  under                                                                   
the  program.  Rather  than  granting   the  money  out  (the                                                                   
department does  not have granting  authority) DEC  used RSAs                                                                   
(reimbursable  services  agreements) within  state  agencies.                                                                   
Some  went to  the Department  of  Transportation and  Public                                                                   
Facilities for  diesel equipment retrofits. Some  went to the                                                                   
Alaska  railroad   for  diesel  retrofits.  The   $2  million                                                                   
available for  grants would  need statutory authority.  State                                                                   
agencies, non-profit  organizations, local  governments, port                                                                   
authorities,    and    anyone    with    jurisdiction    over                                                                   
transportation  or energy  would  be eligible  for the  grant                                                                   
program.  He listed  examples of  things the  money could  be                                                                   
used for.                                                                                                                       
                                                                                                                                
Co-Chair  Hawker clarified  that the DEC  air quality  grants                                                                   
were contained in Item 34.                                                                                                      
                                                                                                                                
9:16:35 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough   had  a  question   about  carbon                                                                   
credits. Mr. Persily offered to get the information.                                                                            
                                                                                                                                
Representative  Kelly  asked  if the  legislature  could  put                                                                   
limits  on  the DEC  grants.  Mr.  Persily replied  that  the                                                                   
legislature  cannot appropriate  to specific recipients;  the                                                                   
grant  program would  go  through DEC.  Representative  Kelly                                                                   
asked if the  legislature can instruct DEC about  the grants,                                                                   
such as limiting  them to diesel retrofits.  Mr. Persily said                                                                   
he would get back to committee.                                                                                                 
                                                                                                                                
Co-Chair Hawker  thought the question of how  much constraint                                                                   
could  be   applied  through   intent  was  related   to  the                                                                   
Department  of  Education  and Early  Development  (DEED)  as                                                                   
well.                                                                                                                           
                                                                                                                                
Representative  Kelly asked  if similar  limits could  be put                                                                   
education, such  as accepting only  money that would  be used                                                                   
for deferred maintenance. Mr.  Persily did not believe so. He                                                                   
would get  the answer to the  how question of  much direction                                                                   
and instruction could be used.                                                                                                  
                                                                                                                                
9:20:12 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked whether  the money  could be                                                                   
held and dispersed [by the legislature]  to rural communities                                                                   
through an  RSA process to  limit how  it could be  used. Mr.                                                                   
Persily did not believe so.                                                                                                     
                                                                                                                                
Co-Chair Hawker explained that  the RSA is used between state                                                                   
agencies. The legislature  does not have the  ability to move                                                                   
money  to another  public entity's  budget,  only within  the                                                                   
state  budget.  The  legislature  has to  empower  an  agency                                                                   
through  a grant  process  to  pass the  money  to the  other                                                                   
agencies. There  was a discussion  about limiting the  use of                                                                   
the $2 million.                                                                                                                 
                                                                                                                                
9:22:37 AM                                                                                                                    
                                                                                                                                
Representative  Gara  thought  that  most  of  federal  money                                                                   
allows for a  menu of expenditures. He suggested  the easiest                                                                   
way to direct where the money  went would be to go through an                                                                   
agency. Otherwise there must be  a statutory grant program to                                                                   
specify how it is spent. Cooperation  with the administration                                                                   
would be required.                                                                                                              
                                                                                                                                
DEPARTMENT OF PUBLIC SAFETY                                                                                                   
                                                                                                                                
9:24:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked for  details regarding the  Department                                                                   
of Public  Safety (DPS) Item  27, the State  Trooper/Narcotic                                                                   
Task Force.                                                                                                                     
                                                                                                                                
DAN SPENCER,  DIRECTOR, DIVISION OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT OF PUBLIC SAFETY, gave  an overview of the justice                                                                   
assistance  grant program,  which is  a formula program.  The                                                                   
ARRA stimulus  funds operate similar  to the regular  federal                                                                   
justice  assistance   grants  program,  with   some  changes.                                                                   
Supplanting  rules   have  been  removed  and   some  of  the                                                                   
reporting  is different,  but the purpose  remains the  same,                                                                   
and  the grants  can be  used  for just  about anything  that                                                                   
improves crime fighting.                                                                                                        
                                                                                                                                
Mr. Spencer detailed that about  $9.6 million is allocated to                                                                   
Alaska;  about  $4  million  goes   directly  from  the  U.S.                                                                   
Department  of  Justice  to  municipal  governments.  Another                                                                   
$5,821,000 comes  to the state;  of that, $1,252,900  will be                                                                   
passed to  local governments.  The application for  the funds                                                                   
is due by  April 9, 2009. The  stimulus funds do not  have to                                                                   
be used for personnel, but DPS plans to ask for that.                                                                           
                                                                                                                                
Mr.  Spencer continued  that  the justice  assistance  grants                                                                   
program   requires  the   department   to   provide  to   the                                                                   
legislature  and to the  public a minimum  of 30  days notice                                                                   
before applying  for the  funds. Public review  has to  be in                                                                   
place before  the money is  spent. In  the past, DPS  has put                                                                   
together  the  grant  application,  sent  a  letter  to  each                                                                   
presiding body, and given online public notice.                                                                                 
                                                                                                                                
9:28:03 AM                                                                                                                    
                                                                                                                                
Mr. Spencer reported  that there would be a  written document                                                                   
with line item  detail for legislative review.  There will be                                                                   
an  option  of change  once  the  money  is approved  by  the                                                                   
Department  of Justice,  but the public  and the  legislature                                                                   
has to  be notified.  There will  be full  disclosure of  all                                                                   
proposals.                                                                                                                      
                                                                                                                                
9:30:15 AM                                                                                                                    
                                                                                                                                
Mr.  Spencer  responded  to earlier  remarks  about  how  the                                                                   
stimulus  funds would  require more  transparency than  other                                                                   
funds. He maintained that DPS is already fully accountable.                                                                     
                                                                                                                                
Mr. Spencer informed  the committee that the  overall plan is                                                                   
to  increase  investigative  capacity   with  six  positions,                                                                   
including   five  investigators   in  Anchorage,   Fairbanks,                                                                   
Soldotna, and  Palmer. There would also be  an administrative                                                                   
position,  probably based  in Fairbanks.  Once the  positions                                                                   
are filled, DPS intends to give  roughly $150,000 per year to                                                                   
the  Department  of  Law  (DOL) to  bring  on  an  additional                                                                   
prosecutor. In addition, the crime  lab would receive funding                                                                   
for  sexual  assault  exam  kits  and  other  equipment,  and                                                                   
funding would go to local government for investigations.                                                                        
                                                                                                                                
Mr.  Spencer  anticipated  that  the  plan  would  cost  $5.8                                                                   
million over  three years.  The question  will then  be where                                                                   
the  money  would come  from  to  continue the  programs.  He                                                                   
asserted  that   DPS  would  have  proposed   increasing  the                                                                   
investigative  program even  if  the federal  funds were  not                                                                   
available. He  pointed out that  Alaska has the  highest rate                                                                   
of sexual  assault in the  country; several of  the positions                                                                   
would focus  on that,  as well as  on internet and  financial                                                                   
crimes. He added that more details would be forthcoming.                                                                        
                                                                                                                                
9:33:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker noted  how the proposed  program would  grow                                                                   
government.                                                                                                                     
                                                                                                                                
Representative Fairclough  asked for expected costs  in three                                                                   
years and  queried the number  of new positions at  the state                                                                   
level.  Mr. Spencer  replied that  there would  be seven  new                                                                   
positions  for  $5 million  over  five years,  including  the                                                                   
attorney at DOL. The money would  cover the personnel and all                                                                   
the related  training,  equipment, travel,  and the  money to                                                                   
the crime lab.                                                                                                                  
                                                                                                                                
Representative  Fairclough thought  that was  a lot  of money                                                                   
for  seven  positions.  Mr. Spencer  answered  that  the  new                                                                   
trooper positions  in the first  year would cost close  to $1                                                                   
million; the second year would  be less because the vehicles,                                                                   
guns, and  so on would have  been purchased. He  stated there                                                                   
were no hidden costs related to the positions.                                                                                  
                                                                                                                                
Representative Fairclough clarified  that the amount included                                                                   
$1.3 million for  local government. Mr. Spencer  added that a                                                                   
number  of  municipal  governments   are  getting  nearly  $4                                                                   
million from the Department of Justice.                                                                                         
                                                                                                                                
Representative  Fairclough asked  if that  funding stream  to                                                                   
local governments  would continue.  Mr. Spencer replied  that                                                                   
that had  not been discussed;  he believed the  funding would                                                                   
continue  because  it would  increase  investigative  ability                                                                   
overall.                                                                                                                        
                                                                                                                                
9:36:39 AM                                                                                                                    
                                                                                                                                
Representative  Gara  questioned  whether  there  was  double                                                                   
funding, specifically for the  crime lab. Mr. Spencer assured                                                                   
him there was not.                                                                                                              
                                                                                                                                
Representative Gara acknowledged  shortfalls in investigation                                                                   
units. He questioned  the money going toward  internet crime,                                                                   
since  the federal  government  already  did  that work.  Mr.                                                                   
Spencer  replied  that  he would  get  more  information.  He                                                                   
believed the issue  would be addressed in the  forward of the                                                                   
grant application.                                                                                                              
                                                                                                                                
Representative  Gara asked  if there  would be seven  trooper                                                                   
positions over  the three years.  Mr. Spencer  clarified that                                                                   
there  would  be five  trooper  investigator  positions,  one                                                                   
administrative position, and funding  to DOL for a prosecutor                                                                   
position.                                                                                                                       
                                                                                                                                
Representative  Gara pointed  to trooper  positions that  the                                                                   
state  has not  been able  to fill  and asked  why the  money                                                                   
should be used  for new ones. Mr. Spencer responded  that all                                                                   
the trooper  positions were filled  or would be  filled soon.                                                                   
He was hopeful that the department  would continue to be able                                                                   
to fill positions.                                                                                                              
                                                                                                                                
9:40:12 AM                                                                                                                    
                                                                                                                                
Representative   Gara  asked   whether  positions   had  been                                                                   
eliminated rather than filled.  Mr. Spencer answered that DPS                                                                   
started  with  around  50  vacant   positions.  The  previous                                                                   
summer, seven  trooper positions  were reclassified  to court                                                                   
services  officers;  previously  troopers  had  filled  those                                                                   
positions. The  reclassification freed up seven  troopers. He                                                                   
noted  that court  services officers  are  easy positions  to                                                                   
fill.                                                                                                                           
                                                                                                                                
Representative Gara  questioned whether the  department would                                                                   
have to come to  the legislature in three years  if the funds                                                                   
were approved.                                                                                                                  
                                                                                                                                
Representative  Austerman questioned why  the items  were not                                                                   
included on  the original  legislation. Mr. Spencer  believed                                                                   
that additional requirements such  as the need for the public                                                                   
process affected their inclusion in the original bill.                                                                          
                                                                                                                                
Co-Chair Hawker remembered that  the Office of Management and                                                                   
Budget   (OMB)  immediately   rejected   anything   involving                                                                   
additional personnel.                                                                                                           
                                                                                                                                
Representative Austerman asked for clarification.                                                                               
                                                                                                                                
9:44:58 AM                                                                                                                    
                                                                                                                                
JO  ELLEN   HANRAHAN,  SENIOR   POLICY  ANALYST,   OFFICE  OF                                                                   
MANAGEMENT  AND BUDGET,  OFFICE  OF THE  GOVERNOR,  explained                                                                   
that the  items were  not included on  the list because  they                                                                   
would increase operating costs;  requests with positions were                                                                   
immediately rejected.                                                                                                           
                                                                                                                                
Representative Austerman  asked if the governor's  office was                                                                   
moving forward  with the application without  public comment.                                                                   
Ms. Hanrahan responded  that all agencies were  instructed to                                                                   
continue  the  application  process  in  order  to  meet  all                                                                   
deadlines.                                                                                                                      
                                                                                                                                
9:46:56 AM                                                                                                                    
                                                                                                                                
Mr. Spencer added  that items could later be  modified if the                                                                   
legislature decided, for example, not to include positions.                                                                     
                                                                                                                                
Co-Chair Hawker noted an opinion issued by the governor.                                                                        
                                                                                                                                
Mr. Persily clarified that Item  27 was for $5.8 million that                                                                   
would go directly  to the state; a separate  allocation under                                                                   
the stimulus  bill of  $3.8 million would  go directly  to 19                                                                   
different cities and boroughs  around the state. For example,                                                                   
the Municipality of Anchorage  would get $2.7 million of that                                                                   
amount, Fairbanks North Slope  Borough, Unalaska, the City of                                                                   
Bethel,   Bristol  Bay   Borough,   and  so   on  would   get                                                                   
disbursements  separate of legislative  action. The  deadline                                                                   
for the  state's $5.8  million is April  9, 2009;  the cities                                                                   
and  boroughs have  until May  18,  2009. The  state and  the                                                                   
cities and boroughs  will have to go through  the same 30-day                                                                   
public revenue  of applications.  He added  that of  the $5.8                                                                   
million the state would get, $1.2  million has to go to local                                                                   
governments not covered  by the $3.8 million.  There are some                                                                   
restrictions:  the money can  be used  for new positions  and                                                                   
other things, but  the federal law stipulates  that the funds                                                                   
cannot   be  used   directly  or   indirectly  for   security                                                                   
enhancements, and the money may not be given to non-                                                                            
governmental  entities  that  are  not  engaged  in  criminal                                                                   
justice, public safety, or victim compensation.                                                                                 
                                                                                                                                
Mr. Spencer  clarified that  some of  the $1,282,000  that is                                                                   
passed  through  the  local  governments  can  go  to  larger                                                                   
municipalities,  although  the   intent  is  to  ensure  that                                                                   
smaller municipalities receive funds.                                                                                           
                                                                                                                                
9:50:03 AM                                                                                                                    
                                                                                                                                
Representative Salmon  asked whether money was  earmarked for                                                                   
Village   Public   Safety   Officers   (VPSO)   for   smaller                                                                   
communities. Mr.  Spencer replied  no for the  proposal under                                                                   
discussion.  He   explained  that  a   VPSO  is  not   a  law                                                                   
enforcement  position  in  the  normal  definition.  However,                                                                   
three other  competitive grant  programs that the  department                                                                   
intends  to apply for,  including: the  $1 billion  Community                                                                   
Oriented  Policing  Program  (COPS),  which  is  specifically                                                                   
oriented to  creating new police  officers; the  $225 million                                                                   
Edward  Byrne  Memorial (Byrne)  Competitive  Grant  program,                                                                   
which  could  apply;  and a  rural  law  enforcement  program                                                                   
[Assistance  to Rural  Law Enforcement  to  Combat Crime  and                                                                   
Drugs Program] aimed  at a variety of things.  The department                                                                   
has not  finalized plans, but  intends to apply for  at least                                                                   
another five positions  through the COPS program;  those come                                                                   
with  a "general  funds  kicker  right  up front."  The  COPS                                                                   
program  will  only  pay  for   the  entry-level  salary  and                                                                   
benefits, not for training, equipment,  merit increases, etc.                                                                   
The  condition of  applying  for the  positions  is that  the                                                                   
federal government will fund the  entry level salary for each                                                                   
of  three years;  after  that,  whatever entity  created  the                                                                   
positions  has  to agree  to  continue  the positions  for  a                                                                   
fourth  year.  The  department   will  apply  for  additional                                                                   
positions   through   the  Byrne   competitive   grant.   The                                                                   
department  plans   to  ask   for  three  trooper   positions                                                                   
dedicated  to   VPSOs  through  the  rural   law  enforcement                                                                   
program. He  stressed that the  applications were not  at the                                                                   
final  stages and  he  would come  back  when  there is  more                                                                   
information.                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  expressed  concerns  about  the  growth  of                                                                   
government caused  by obtaining one-time funds. He  saw it as                                                                   
a  way of  bypassing  the  legislature  and wondered  if  the                                                                   
legislature  should not pass  a law to  stop it.  Mr. Spencer                                                                   
did  not agree  that  the  department  was going  around  the                                                                   
legislature.  He  emphasized  that  even if  the  funding  is                                                                   
received, the legislature has  to give the authority to spend                                                                   
the  money  and   the  governor  has  to  sign   off  on  the                                                                   
expenditures.   He  called  law   enforcement  a   government                                                                   
program.                                                                                                                        
                                                                                                                                
9:54:13 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked if the government was  sanctioning the                                                                   
growth   of  government.   Mr.  Spencer   replied  that   the                                                                   
department had been told to work  on applications for what it                                                                   
deems appropriate purposes. Public  discussion will determine                                                                   
whether it  goes forward, but the  intent is to apply  by the                                                                   
deadline.                                                                                                                       
                                                                                                                                
Representative Kelly  thought that a state  employee position                                                                   
was  hard to  cut  once it  was created,  while  construction                                                                   
workers are  laid off when the  job ends. He  maintained that                                                                   
the record shows that state positions  will not be easily cut                                                                   
after three years.                                                                                                              
                                                                                                                                
Representative Joule referred  to the five positions that the                                                                   
department planned  to apply for  under the COPS  program. He                                                                   
asked  if any  of  the positions  were  related  to the  VPSO                                                                   
program.  Mr. Spencer  answered that the  positions were  not                                                                   
specifically dedicated to VSPO positions.                                                                                       
                                                                                                                                
Representative  Joule heard  the  answer as  no. Mr.  Spencer                                                                   
concurred.                                                                                                                      
                                                                                                                                
Representative  Joule asked if  the three positions  that the                                                                   
department  planned  to  apply  for [through  the  rural  law                                                                   
enforcement program] would translate  to more VPSO positions.                                                                   
Mr.  Spencer replied  that  VPSOs  are not  certified  police                                                                   
officers, which is the focus of the programs.                                                                                   
                                                                                                                                
Representative  Joule asked  if the VPSOs  are public  safety                                                                   
workers.  Mr.  Spencer  replied   that  they  were,  but  his                                                                   
understanding  was   that  the  programs  require   that  the                                                                   
positions  be law enforcement  positions.  He offered  to get                                                                   
more information.                                                                                                               
                                                                                                                                
9:57:34 AM                                                                                                                    
                                                                                                                                
Representative Gara referred to  the fact that the department                                                                   
had  filled  the  trooper  positions   for  which  there  had                                                                   
previously  been a shortage.  He was  supportive of  that. He                                                                   
stated that the highest crime,  lowest served areas are high-                                                                   
crime urban areas,  which have local police  forces; troopers                                                                   
will  not  solve  those  problems.   He  questioned  why  the                                                                   
positions would  not go  to rural areas  where they  are most                                                                   
needed. Mr.  Spencer denied saying  that the positions  would                                                                   
not go  to rural  areas. The  troopers are  still working  on                                                                   
their proposal;  he did  not know where  they planned  to put                                                                   
the  positions. The  five positions  covered in  Item 27  are                                                                   
investigator  positions. He understood  the issue  of getting                                                                   
positions to rural areas; some may go to Bethel.                                                                                
                                                                                                                                
10:00:10 AM                                                                                                                   
                                                                                                                                
Representative Austerman  asked who would oversee  the public                                                                   
scrutiny of programs outside the  legislative budget process,                                                                   
such  as the  COPS  grant. Mr.  Spencer  referred to  earlier                                                                   
testimony indicating  that the  Legislative Budget  and Audit                                                                   
Committee (BUD) [would perform  the function]. He pointed out                                                                   
that  the receipts  would be  federal, and  would be  tracked                                                                   
separately; since the funds were  not anticipated and did not                                                                   
have  expenditure authority,  he  expected to  go before  BUD                                                                   
during the interim.                                                                                                             
                                                                                                                                
Co-Chair   Hawker  asked  for   clarification.  Mr.   Spencer                                                                   
explained that  the department  had federal authority  in the                                                                   
budget.  Sometimes the  department gets  the money it  needs,                                                                   
but  sometimes it  gets less.  When there  is excess  federal                                                                   
receipt  authority,  or less  federal  money  coming in,  the                                                                   
department  can  use the  federal  receipt authority  to  use                                                                   
federal  money from  other sources.  He  emphasized that  the                                                                   
stimulus  money was  different. He  likened it  to a  capital                                                                   
appropriation,  in  that  they  have a  defined  purpose.  He                                                                   
assumed there would be a mechanism  for legislative review on                                                                   
the competitive grant proposals.                                                                                                
                                                                                                                                
Co-Chair  Hawker  cautioned against  assuming  anything.  Mr.                                                                   
Spencer acknowledged  that the  legislature could  change any                                                                   
assumption he had.                                                                                                              
                                                                                                                                
10:02:58 AM                                                                                                                   
                                                                                                                                
Ms. Hanrahan  agreed that normally,  an agency may  apply for                                                                   
competitive  grants  throughout the  year  if  it has  excess                                                                   
federal authority, and that the  stimulus money is different.                                                                   
She said that the  focus has been to identify  the funds that                                                                   
they know  are coming  to the  state and  have public  debate                                                                   
about  those  funds.  The  next   layer  is  the  competitive                                                                   
process.  However, there  is no assurance  about whether  the                                                                   
state would receive any of the  money through the competitive                                                                   
process. Some of  the grants have stipulations  which make it                                                                   
unlikely  that Alaska  would get  the  money. She  emphasized                                                                   
that until more information was  obtained, the administration                                                                   
was  focusing on  the direct  grants. She  believed the  only                                                                   
potential review for the direct grants is through BUD.                                                                          
                                                                                                                                
Co-Chair  Hawker added  that the mechanism  works because  in                                                                   
the  operating  budget  there  is  an  appropriation  of  all                                                                   
federal funds  that may be  received. The appropriation  goes                                                                   
through  a  review  by  the  Legislative   Budget  and  Audit                                                                   
Committee.  However,  he warned  that  the  BUD review  is  a                                                                   
"toothless tiger"  in that even  if the committee says  no to                                                                   
the  appropriation, the  administration may  still accept  it                                                                   
after a 45-day waiting period.                                                                                                  
                                                                                                                                
Mr. Spencer expanded by saying  that few governors have taken                                                                   
that prerogative. Co-Chair Hawker  emphasized that compliance                                                                   
with the committee is voluntary. Mr. Spencer agreed.                                                                            
                                                                                                                                
10:05:27 AM                                                                                                                   
                                                                                                                                
Representative Salmon asked what  a VPSO is considered if not                                                                   
law enforcement. He  wanted to know what it would  take for a                                                                   
VPSO  to  become  legitimate  law  enforcement.  Mr.  Spencer                                                                   
explained that VPSOs are public  safety officers. They have a                                                                   
wide variety  of duties;  they  do deal with  crimes in  some                                                                   
circumstances,  but they are not  a certified  police officer                                                                   
under Alaska  Police Standards  Council certification  rules.                                                                   
The primary purpose of a VSPO  is not to arrest, investigate,                                                                   
and  help to  prosecute. They  do have  probation and  parole                                                                   
responsibilities,   which  helped   in   improving  the   pay                                                                   
schedule. They also have public  safety roles such as working                                                                   
with villages  with code red  firefighting apparatus.  He did                                                                   
not  know what  it would  take to  get a  VPSO certified  and                                                                   
offered to get the information to the committee.                                                                                
                                                                                                                                
10:07:24 AM                                                                                                                   
                                                                                                                                
DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                                                                      
                                                                                                                                
Co-Chair explained  that the Department of Health  and Social                                                                   
Services  (DHSS) would  cover Items  12 and  13. He  detailed                                                                   
that Item  12 involves additional  personnel and Item  13 has                                                                   
significant dollar value.                                                                                                       
                                                                                                                                
ALISON ELGEE, ASSISTANT COMMISSIONER,  FINANCE AND MANAGEMENT                                                                   
SERVICES,   DEPARTMENT  OF   HEALTH   AND  SOCIAL   SERVICES,                                                                   
introduced  Item  12,  Health   Information  Technology.  The                                                                   
program  has  been  proposed through  ARRA  with  a  slightly                                                                   
longer  timeframe  than  most stimulus  programs.  The  money                                                                   
would be  made available soon,  but the program  dollars will                                                                   
be  available  through  FY15.  The  item  will  be  primarily                                                                   
capital dollars. As yet, there  is only very limited guidance                                                                   
from the federal government about  exactly how the money will                                                                   
be made available.  Nationally, there is $20  billion for the                                                                   
information technology.                                                                                                         
                                                                                                                                
Ms.  Elgee reported  that the  health information  technology                                                                   
program is  designed to move  the country into  an electronic                                                                   
health   records   environment.   The  benefits   have   been                                                                   
identified for  some time as  improving health  care quality,                                                                   
preventing  medical  errors,   reducing  health  care  costs,                                                                   
increasing     administrative    efficiencies,     decreasing                                                                   
paperwork, and expanding access to affordable care.                                                                             
                                                                                                                                
Ms. Elgee noted  the tremendous planning effort  that will be                                                                   
required to  establish health  information technology  in the                                                                   
state  of  Alaska.  The  department   will  create  a  health                                                                   
information  exchange  that will  allow  providers to  access                                                                   
health   records  from   other  providers   through  a   very                                                                   
controlled  environment  that   assures  the  protection  and                                                                   
privacy of the health records.                                                                                                  
                                                                                                                                
Ms.  Elgee  offered  that  DHSS  is  proposing  to  establish                                                                   
positions  to  begin  the  planning  effort.  The  department                                                                   
believes  that a  project coordinator,  data processors,  and                                                                   
additional support personnel will be needed.                                                                                    
                                                                                                                                
10:10:22 AM                                                                                                                   
                                                                                                                                
Co-Chair   Hawker  asked   for   more  background   regarding                                                                   
electronic  medical   records.  He  wondered  how   long  the                                                                   
practice had been around and if  it was voluntary. He did not                                                                   
regard electronic  data as secure.  Ms. Elgee  responded that                                                                   
planning  is needed  to protect  the records.  A very  secure                                                                   
environment is  essential. She explained that  the protection                                                                   
of  health records  runs throughout  the  business that  DHSS                                                                   
does.  She  emphasized  that   there  are  extensive  federal                                                                   
requirements  under  the  Health  Insurance  Portability  and                                                                   
Accountability Act  (HIPPA) that the department  will need to                                                                   
comply  with in  creating the  health information  technology                                                                   
environment.                                                                                                                    
                                                                                                                                
Ms. Elgee  pointed out  that the  potential for cost  savings                                                                   
are  tremendous.  For  example,  tests  are  ordered  for  an                                                                   
individual by a primary physician.  If the individual goes to                                                                   
a  different   doctor,  currently  most  of   the  tests  are                                                                   
duplicated.  In  a health  records  environment,  a  provider                                                                   
would be  able to access the  original tests and not  have to                                                                   
repeat them. The program will  help the safety of individuals                                                                   
because  the   records  will  contain  information   such  as                                                                   
allergies.                                                                                                                      
                                                                                                                                
Co-Chair  Hawker   asked  if  the  initiative   was  a  state                                                                   
initiative.  Ms.   Elgee  replied  that  it   was  a  federal                                                                   
initiative but that the state  has put a great deal of energy                                                                   
into planning  with providers what  it might look;  there has                                                                   
been no money to make it happen.                                                                                                
                                                                                                                                
Larry  Persily  added that  part  of the  electronic  medical                                                                   
records provisions  in the stimulus  bill is a  grant program                                                                   
that states  will administer  to health  care providers.  The                                                                   
funds  that will  be available  will be  administered by  the                                                                   
states and  will provide  as much as  $67,000 to  each health                                                                   
care provider spread over six  years. The amount would depend                                                                   
on costs; the maximum grant would  be $21,250 the first year,                                                                   
and  up  to  $8,500  each  year  for  the  next  five  years,                                                                   
depending  on  costs. Hospitals,  doctors,  clinics,  nurses,                                                                   
midwives,  and anyone  who qualifies  could  then obtain  the                                                                   
grant funds to help pay the cost  of converting to electronic                                                                   
medical records, which eventually  every health care provider                                                                   
will have  to do. He emphasized  that there will be  a lot of                                                                   
money  flowing to  health care  providers in  Alaska to  help                                                                   
with the conversion over several years.                                                                                         
                                                                                                                                
10:13:44 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker wanted  to know if the conversion  is already                                                                   
federally mandated.  Ms. Elgee understood that  the change is                                                                   
not currently federally mandated.  The program is intended as                                                                   
incentive  to  move states  in  the direction  of  electronic                                                                   
records.  She  could  not  predict   the  timing  of  federal                                                                   
mandating  but  noted a  federal  process in  place  planning                                                                   
around the effort.                                                                                                              
                                                                                                                                
Mr. Persily  believed that there  would be a  federal mandate                                                                   
at  some point,  which  was why  it  was a  key  part of  the                                                                   
stimulus bill.                                                                                                                  
                                                                                                                                
Co-Chair  Hawker thought  the item  would give  money to  the                                                                   
state  to  administer the  process,  but  asked if  it  would                                                                   
administer the grants to providers.  Ms. Elgee responded that                                                                   
the money  was to begin the  planning effort necessary  to be                                                                   
positioned  to   accept  the  remaining   health  information                                                                   
technology  funds,  which  will  include  provider  incentive                                                                   
payments.                                                                                                                       
                                                                                                                                
10:15:26 AM                                                                                                                   
                                                                                                                                
Representative  Joule  wondered  whether  major  health  care                                                                   
providers  were heading  towards  electronic health  records,                                                                   
either with  or without  the DHSS.  Ms. Elgee responded  that                                                                   
there  has  been  planning  underway.   She  referred  to  an                                                                   
organization created specifically  to look at the development                                                                   
of  an  electronic health  records  environment.  Dr.  Butler                                                                   
represents DHSS  on the board  of directors. She noted  a lot                                                                   
of provider interest.                                                                                                           
                                                                                                                                
Representative Joule  asked if the providers  interested were                                                                   
organizations  like   Providence,  Regional,   Memorial,  and                                                                   
others. Ms. Elgee answered in the affirmative.                                                                                  
                                                                                                                                
Representative Joule  wondered if there  would be a  need for                                                                   
additional capital  commitment from  the state. He  had heard                                                                   
of  a requirement  for a  match  of $1.3  million. Ms.  Elgee                                                                   
responded  that  the  department  has  received  very  little                                                                   
guidance for the program, so she  could not confirm or deny a                                                                   
future need for a state capital match.                                                                                          
                                                                                                                                
10:17:28 AM                                                                                                                   
                                                                                                                                
Mr. Persily introduced another  concern related to electronic                                                                   
medical records:  the issue of  privacy. He pointed  out that                                                                   
there are  already strict  privacy rules  related to  medical                                                                   
records, and  that the stimulus  bill includes pages  of even                                                                   
tighter  privacy restrictions.  For  example, ARRA  prohibits                                                                   
the  sale of  records and  use  of records  in marketing.  An                                                                   
audit trail  of people  having access  to the information  is                                                                   
required.  There   are  also   mandates  for  standards   for                                                                   
technology  systems to  restrict  the sensitive  information,                                                                   
use data encryption, to notify  people of breaches. There are                                                                   
monetary penalties for violation  of privacy and requirements                                                                   
for monitoring  the contracts  and compliance. He  emphasized                                                                   
that the issue of privacy was  taken seriously in the writing                                                                   
of the law.                                                                                                                     
                                                                                                                                
10:18:35 AM                                                                                                                   
                                                                                                                                
Representative  Gara  asked  why  the  state  needs  so  much                                                                   
database  infrastructure, since  it does  not itself  provide                                                                   
medical care or share medical  records with others. He wanted                                                                   
to  know what  the  state staff  would  be  doing. Ms.  Elgee                                                                   
explained that  the underlying  technology is called  a help-                                                                   
information  exchange,   a  means  by  which   providers  can                                                                   
exchange records  in a secure  environment. Once a  doctor at                                                                   
Providence indicates  a need obtain  records from  a provider                                                                   
in Kotzebue, they will query the  health information exchange                                                                   
for the records. The exchange  will then retrieve the records                                                                   
and pass  the information on.  Records can be  made available                                                                   
quickly and duplication of tests can be avoided.                                                                                
                                                                                                                                
Mr. Persily  added that  the exchange  ensures a secure  safe                                                                   
system,  rather   than  passing  records  on   through  email                                                                   
attachments.                                                                                                                    
                                                                                                                                
10:21:09 AM                                                                                                                   
                                                                                                                                
Representative Kelly pointed out  that the list the committee                                                                   
was looking  at consisted of  projects that the  governor did                                                                   
not  put in,  putting  the  departments  in the  position  of                                                                   
asking for something  that she did not request  funds for. He                                                                   
hoped that presenters would clarify  whether the governor had                                                                   
changed her mind regarding any of the items discussed.                                                                          
                                                                                                                                
Co-Chair Hawker  asked if  the department  would like  to get                                                                   
the funds. Ms.  Elgee acknowledged that the  department would                                                                   
like to receive  the funds and believed there  was tremendous                                                                   
benefit in  the program in  terms of controlling  health care                                                                   
costs.  She  observed that  SB  133  would address  the  same                                                                   
subject matter;  the department had  been advised to  work on                                                                   
the bill.                                                                                                                       
                                                                                                                                
Representative   Kelly  did  not   want  to  hear   what  the                                                                   
department wanted but whether  the administration had changed                                                                   
its position on  the items. He assumed that  the governor had                                                                   
not changed  her mind regarding  any of  the 39 items  on the                                                                   
spreadsheet.  Co-Chair Hawker  expressed  frustration with  a                                                                   
lack of communication with the governor.                                                                                        
                                                                                                                                
Ms.  Hanrahan felt  that the  governor was  clear that  while                                                                   
many of the items could benefit  the state, she wanted public                                                                   
discussion regarding the associated costs.                                                                                      
                                                                                                                                
10:27:03 AM                                                                                                                   
                                                                                                                                
Representative  Kelly   reiterated  a  desire   for  a  clear                                                                   
indication  that the  governor  had changed  her position  on                                                                   
individual items.                                                                                                               
                                                                                                                                
Co-Chair Hawker  queried what  authority Ms. Hanrahan  had in                                                                   
speaking  to the committee.  Ms. Hanrahan  believed that  the                                                                   
goal  was  giving  as  much  information  to  the  public  as                                                                   
possible so that the public could  decide whether they wanted                                                                   
the funds. Co-Chair Hawker asked  if she felt the departments                                                                   
had  been  giving   fair  and  complete   presentations.  Ms.                                                                   
Hanrahan affirmed  that departments have identified  the full                                                                   
spectrum of  the issues.  She felt that  there could  be more                                                                   
discussions on  costs or obstacles  that might  be associated                                                                   
with the items.                                                                                                                 
                                                                                                                                
10:29:25 AM                                                                                                                   
                                                                                                                                
Representative  Gara  concluded  that the  governor  has  not                                                                   
changed her  position of not wanting  the funds. He  asked if                                                                   
there had  been any  discussion with  the governor  regarding                                                                   
the  technology  energy  funds.  Ms.  Elgee  noted  that  the                                                                   
department  presented  information to  OMB  and supports  the                                                                   
request, but noted  they have gotten little  information from                                                                   
the federal government.                                                                                                         
                                                                                                                                
Representative  Gara asked if  there was an understanding  at                                                                   
OMB that the projects would be  presented to the legislature.                                                                   
Ms. Hanrahan  explained that OMB  was instructed  to identify                                                                   
the  benefits and  costs  of the  items.  She emphasized  how                                                                   
little  information   had  been   provided  by   the  federal                                                                   
government.                                                                                                                     
                                                                                                                                
10:33:49 AM                                                                                                                   
                                                                                                                                
Representative Gara  commented that he was  hearing different                                                                   
things from  the agencies and  from the governor  through the                                                                   
press.                                                                                                                          
                                                                                                                                
Representative  Kelly  cited   experience  dealing  with  the                                                                   
budgeting process. He found the  reports from the departments                                                                   
clear  and  reasonable.  He  only   wanted  to  know  if  the                                                                   
departments were  aware of a change in the  governor's stance                                                                   
regarding the  stimulus money. He  did not intend to  stir up                                                                   
controversy.                                                                                                                    
                                                                                                                                
10:37:15 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas  talked  about   experience  dealing  with                                                                   
health  records. He opined  that the  governor would  support                                                                   
the  department's  project, as  she  has approved  money  for                                                                   
electronic records  in the past.  He emphasized the  value of                                                                   
letting  the  public  hear  detailed   discussion  about  the                                                                   
various items.                                                                                                                  
                                                                                                                                
Representative  Crawford thought  the important question  was                                                                   
whether  such  things  as  electronic  health  care  records,                                                                   
troopers, or teachers  are needed. He thought  the items were                                                                   
needed  and that the  funds would  be requested  if even  the                                                                   
stimulus money  was not there.  He opined that  getting money                                                                   
from the federal  government for the next few  years would be                                                                   
a  good  thing  and that  the  legislature  needs  to  decide                                                                   
whether  to  make  a  commitment,   regardless  of  what  the                                                                   
governor does.  He felt the  question of whether  funds would                                                                   
be available in three years was a separate question.                                                                            
                                                                                                                                
10:42:17 AM                                                                                                                   
                                                                                                                                
Ms.  Elgee turned  to Item  13, Public  Assistance and  Child                                                                   
Care Benefits.  She explained that the  childcare development                                                                   
block  grant funding  being  proposed through  ARRA  includes                                                                   
$4,360,000 for  the state of  Alaska. She believed  the money                                                                   
would  be available  through 12/31/2010.  The  intent was  to                                                                   
improve  the   quality  of  childcare  services   and  expand                                                                   
programs.  The  money  cannot  be used  to  supplant  general                                                                   
funds;  existing  programs  must be  maintained.  Within  the                                                                   
allocation,  $333,660 is  specifically  targeted for  quality                                                                   
expansion  and  $193,232  for  activities  that  improve  the                                                                   
quality of infant and toddler care.                                                                                             
                                                                                                                                
Ms. Elgee continued  that the program is  partially addressed                                                                   
in the  governor's proposed FY10  budget. The  department put                                                                   
forward an increment  in the amount of $3 million  in general                                                                   
funds  to increase  the  reimbursement  level for  low-income                                                                   
families   that  qualify   for   childcare  assistance.   The                                                                   
department  is aware of  issues relative  to the  eligibility                                                                   
standards  being used and  are looking  at other barriers  to                                                                   
childcare  access. In  addition, DHSS  has been working  with                                                                   
the Department  of Education  and Early  Development  and the                                                                   
Best    Beginnings    organization   to    identify    needed                                                                   
improvements.  The  department  believes the  stimulus  money                                                                   
could be used  on a one-time basis and would  not necessarily                                                                   
commit   the  state   to  on-going   expense.  However,   the                                                                   
department would  probably come  back to the legislature  for                                                                   
continued funding to the degree  that the money increased the                                                                   
level of childcare assistance reimbursement.                                                                                    
                                                                                                                                
Co-Chair Hawker  clarified that currently nearly  $10 million                                                                   
of federal money goes to childcare  benefits. He asked if the                                                                   
money  could be  brought into  the  program and  free up  the                                                                   
federal money to  be used elsewhere. Ms. Elgee  did not think                                                                   
so but would  have to confirm. Co-Chair Hawker  verified that                                                                   
the department would look for  continued general funds if the                                                                   
stimulus money was accepted.                                                                                                    
                                                                                                                                
Representative  Gara  asked if  $3  million  of the  stimulus                                                                   
money could  be used for  the childcare expansion  considered                                                                   
by the governor. Ms. Elgee answered yes.                                                                                        
                                                                                                                                
10:46:58 AM                                                                                                                   
                                                                                                                                
Representative Fairclough clarified  that the funds would not                                                                   
supplant  a program  that the  legislature  has not  approved                                                                   
funding with general funds.                                                                                                     
                                                                                                                                
Representative Gara thought $3  million could be taken out of                                                                   
the operating  budget  and the stimulus  funds used  instead.                                                                   
Ms.  Elgee explained  that the  House version  of the  budget                                                                   
contains $1.5 million in general  funds for the purpose. When                                                                   
the Senate was  closing out its budget, the  federal economic                                                                   
stimulus  funds   were  better  understood;  they   chose  to                                                                   
eliminate  the general  funding  in deference  to the  policy                                                                   
debate regarding the stimulus funds.                                                                                            
                                                                                                                                
Co-Chair Hawker pointed  out that the gamble  is the governor                                                                   
rejecting  the  stimulus  funds   and  the  budget  going  to                                                                   
conference committee.                                                                                                           
                                                                                                                                
Representative  Gara still  thought that  some general  funds                                                                   
could  be freed  up  if the  legislature  could  do what  the                                                                   
governor and both  houses want to do with the  stimulus funds                                                                   
regarding  childcare. He  described  what could  be done  for                                                                   
foster care youth with $1.5 million.                                                                                            
                                                                                                                                
10:48:45 AM                                                                                                                   
                                                                                                                                
Representative Austerman verified  that $3 million in general                                                                   
funds  was  requested  for  the  same  program  in  the  FY10                                                                   
governor's budget.  He asked  for further clarification.  Ms.                                                                   
Elgee explained that the governor's  proposed FY10 budget had                                                                   
gone  through  exhaustive  review. The  stimulus  money  came                                                                   
after   the  committee   review  and   the  governor   wanted                                                                   
discussion to take place.                                                                                                       
                                                                                                                                
Co-Chair  Hawker asked  if  the administration  believed  the                                                                   
department's  presentation   had  adequately   described  the                                                                   
challenges of  the item. Ms.  Hanrahan replied yes,  costs as                                                                   
well as benefits had been described  in a transparent manner.                                                                   
                                                                                                                                
10:51:16 AM                                                                                                                   
                                                                                                                                
Representative Gara  asked if the governor had  proposed a $3                                                                   
million increment  in her operating  budget for some  of what                                                                   
is covered  in the $4 million  amount, after which  the House                                                                   
moved the amount to $1.5 million,  and finally the Senate was                                                                   
thinking about  how to  use stimulus  money for the  program.                                                                   
Ms.  Elgee  agreed with  his  analysis.  Representative  Gara                                                                   
thought that the  governor's rejection of the  stimulus money                                                                   
is rejection of federal money  to pay for something the state                                                                   
was going  to pay for. Ms.  Elgee stressed that  the governor                                                                   
had not  rejected the  money, but  has called for  additional                                                                   
conversation.                                                                                                                   
                                                                                                                                
Representative    Fairclough    requested   the    definition                                                                   
"supplanting."  Mr.  Persily  explained  that money  that  is                                                                   
already budgeted  cannot be supplanted. The  increment in the                                                                   
FY10 proposal  has  not been approved,  and  so is not  being                                                                   
supplanted. He  defined supplanting as replacing  dollars, as                                                                   
in   not  spending   a  dollar   that   had  been   budgeted,                                                                   
appropriated,  and planned  on  spending,  but replacing  the                                                                   
dollar with a federal dollar.                                                                                                   
                                                                                                                                
Representative Fairclough  pointed out that Alaska  is caught                                                                   
in  a  quandary  because  a  budget  had  been  submitted  in                                                                   
November before the federal stimulus  legislation came about.                                                                   
She  described  the  chain  of events.  She  thought  if  the                                                                   
federal  government reviewed  the  situation,  it would  look                                                                   
like supplanting.                                                                                                               
                                                                                                                                
Ms. Hanrahan agreed with Mr. Persily's  definition that funds                                                                   
not officially in the budget cannot be supplanted.                                                                              
                                                                                                                                
10:54:54 AM                                                                                                                   
                                                                                                                                
Representative Austerman did not  understand why the governor                                                                   
would  put  the  item  in the  budget  but  not  request  the                                                                   
stimulus  funds.  Ms.  Hanrahan  responded that  one  of  the                                                                   
concerns about  the stimulus  package is  that there  will be                                                                   
unprecedented  accountability   and  requirements  above  and                                                                   
beyond  some of the  state's formula  programs. She  believed                                                                   
the  governor   was  providing  a  chance  for   more  debate                                                                   
regarding any stimulus money that would come to the state.                                                                      
                                                                                                                                
10:56:57 AM         AT EASE                                                                                                   
11:06:05 AM         RECONVENED                                                                                                
                                                                                                                                
DEPARTMENT OF REVENUE                                                                                                         
                                                                                                                                
Co-Chair  Hawker  explained  that the  committee  would  next                                                                   
approach items 35,  36, and 37. He noted that  there had been                                                                   
a  lot of  confusion  about  the  three programs:  the  State                                                                   
Energy   Program,  the   Weatherization   Program,  and   the                                                                   
Efficiency and Conservation Block Grants.                                                                                       
                                                                                                                                
11:06:53 AM                                                                                                                   
                                                                                                                                
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  DEPARTMENT  OF  REVENUE  (via  teleconference),                                                                   
provided an  overview of the  three programs,  beginning with                                                                   
the $28.5 million listed for the  state energy program (SEP).                                                                   
The Alaska  Housing Finance  Corporation (AHFC) has  received                                                                   
federal funds for  many years, though not as  much as offered                                                                   
by   the  stimulus   funds.  The   corporation   has  had   a                                                                   
reimbursable  services   agreement  (RSA)  with   the  Alaska                                                                   
Industrial  Development  and  Export  Authority  (AIDEA)  for                                                                   
around ten  years. The corporation  shares the  federal money                                                                   
with  AIDEA; AHFC  deals on  the  demand side  of the  energy                                                                   
equation  and  AIDEA or  the  Alaska Energy  Authority  (AEA)                                                                   
deals with  the supply  side. The  item has raised  questions                                                                   
because the federal legislation  requires a state-wide energy                                                                   
code.                                                                                                                           
                                                                                                                                
Mr.  Fauske continued  that AHFC  also  receives money  every                                                                   
year from the  federal government for  weatherization, though                                                                   
not  as large  as the  stimulus  amount. For  many years  the                                                                   
money was  used for  people at 60  percent of median  income.                                                                   
Now, with the  approval of the revised  weatherization rebate                                                                   
program, there  is about $200 million in  weatherization; the                                                                   
stimulus money would go to that program.                                                                                        
                                                                                                                                
Mr.  Fauske explained  that the  $8.5 million  for the  block                                                                   
grants  are  funds for  energy  efficiency  and  conservation                                                                   
activities for  communities. Providers would compete  for the                                                                   
funds to provide the services required by the legislation.                                                                      
                                                                                                                                
Mr. Fauske stated that AHFC could  certainly put the money to                                                                   
use. Whether  the  money can be  accepted or  not because  of                                                                   
code requirements  is dependent on policies  being developed.                                                                   
He pointed out that most building  codes in most areas of the                                                                   
state equate to a four-star-plus  energy code. By statute the                                                                   
corporation  cannot  purchase   mortgages  unless  they  meet                                                                   
certain standards.                                                                                                              
                                                                                                                                
11:12:29 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker  asked if Item  37 (the block  grant program)                                                                   
was a  new program for the  corporation. Mr.  Fauske answered                                                                   
that it  was. Co-Chair  Hawker questioned whether  additional                                                                   
resources would  be needed from  the state to  administer the                                                                   
program.  Mr.  Fauske  replied  that  the  program  would  be                                                                   
project  based,  so  any additional  money  needed  would  be                                                                   
limited.  Once the  money  was gone,  the  position would  go                                                                   
away.                                                                                                                           
                                                                                                                                
11:13:30 AM                                                                                                                   
                                                                                                                                
Mr. Persily spoke to the question  of energy efficiency codes                                                                   
and utility rates. He stated that  there is no requirement to                                                                   
change state  utility regulation  or energy efficiency  codes                                                                   
for   the  weatherization   program  funds   or  the   energy                                                                   
efficiency  and conservation block  grants. The  requirements                                                                   
under  ARRA apply  only  to the  state  energy program  funds                                                                   
(Item 35, for $28.5 million).                                                                                                   
                                                                                                                                
Co-Chair Hawker  queried whether OMB or anyone  else believes                                                                   
otherwise.   He   emphasized   the  importance   of   correct                                                                   
information.                                                                                                                    
                                                                                                                                
Mr. Persily  clarified  the two requirements  under  ARRA for                                                                   
the $28.5  million for  the state  energy program.  Regarding                                                                   
the first requirement, he read from the act:                                                                                    
                                                                                                                                
     The   applicable   state   regulatory   authority   [the                                                                   
     Regulatory  Commission of Alaska  (RCA) in  Alaska] will                                                                   
     seek  to   implement  in  appropriate   proceedings  for                                                                   
     electric  and  gas  utilities   a  general  policy  that                                                                   
     ensures  that utility financial  incentives are  aligned                                                                   
     with   helping   their   customers   use   energy   more                                                                   
     efficiently, and  that provide timely cost  recovery and                                                                   
     a timely  earnings opportunity for utilities  associated                                                                   
     with   cost-effective   and    measureable,   verifiable                                                                   
     efficiency  savings in a  way that sustains  or enhances                                                                   
     utility customer incentives to use energy.                                                                                 
                                                                                                                                
Mr. Persily added  that the provision is also  referred to as                                                                   
"rate  decoupling."  He  assured  the  committee  that  other                                                                   
states have  already accomplished the requirement  by sending                                                                   
a   letter  the   U.S.   Department  of   Energy   certifying                                                                   
compliance, and that such assurance has been accepted.                                                                          
                                                                                                                                
Co-Chair Hawker  underlined the key point that  the prefacing                                                                   
condition  is  that  the  states   "seek"  to  implement  the                                                                   
provision;  there  is  no mandate  to  include  a  decoupling                                                                   
arrangement. Mr. Persily concurred.                                                                                             
                                                                                                                                
ROBERT (BOB)  M. PICKETT, CHAIRMAN, REGULATORY  COMMISSION OF                                                                   
ALASKA  (RCA) (via  teleconference), testified  that the  RCA                                                                   
commissioners  had taken the  matter up at  a March  11, 2009                                                                   
public meeting.  He stressed  that decoupling  is one  of the                                                                   
tools towards the end; it is not  mandated nor the only tool.                                                                   
He was authorized  by the commissioners to draft  a letter to                                                                   
Governor Palin. He read part of the letter:                                                                                     
                                                                                                                                
     The Regulatory Commission  of Alaska assures you that it                                                                   
     will seek  to implement  in appropriate proceedings  for                                                                   
     each  electric gas  and electric  utility in Alaska  for                                                                   
     which  the  RCA  has  rate-making  authority  a  general                                                                   
     policy  that ensures that  utility financial  incentives                                                                   
     are  aligned with  helping  their  customers use  energy                                                                   
     more efficiently and that  provides timely cost recovery                                                                   
     and   a  timely  earnings   opportunity  for   utilities                                                                   
     associated   with   cost-effective,    measurable,   and                                                                   
     verifiable efficiency savings  in a way that sustains or                                                                   
     enhances  utility customers'  incentives  to use  energy                                                                   
     more efficiently.                                                                                                          
                                                                                                                                
Mr. Pickett believed  that the letter provides  the necessary                                                                   
assurances to the governor.                                                                                                     
                                                                                                                                
11:17:27 AM                                                                                                                   
                                                                                                                                
BOB  STOLLER,  ATTORNEY,  REGULATORY   COMMISSION  OF  ALASKA                                                                   
ANCHORAGE  (via  teleconference),   testified  that  RCA  has                                                                   
regulations on the books that  date back to 1984. The precise                                                                   
citation setting  out the pricing  objectives or  the pricing                                                                   
of  electricity is  found in  Title  3 Alaska  Administrative                                                                   
Code  Chapter  48,  Section  510.  There  are  five  itemized                                                                   
objectives;  number  four  is  explicitly  conservation,  and                                                                   
number  five  is  explicitly  "optimal  use,  which  includes                                                                   
considerations of efficiency."                                                                                                  
                                                                                                                                
Mr. Stoller read from 3 AAC 48.520:                                                                                             
                                                                                                                                
     The fundamental  basis for  establishing rates  in order                                                                   
     to  meet pricing  objectives  is costs.  The  Commission                                                                   
     will,  in  its  discretion,   for  appropriate  reasons,                                                                   
     consider non-cost standards  in establishing electricity                                                                   
     rates.                                                                                                                     
                                                                                                                                
Mr. Stoller  added that RCA  applies similar policies  in its                                                                   
gas rate design and gas revenue requirement determinations.                                                                     
                                                                                                                                
11:18:36 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker  asked for  copies  of  the letter  and  the                                                                   
regulations cited.                                                                                                              
                                                                                                                                
Mr. Persily turned  to the second requirement  under ARRA for                                                                   
the $28.5 million  for the state energy program,  which deals                                                                   
with energy efficiency codes for  buildings. The act requires                                                                   
that within  eight years of the  date of enactment,  or until                                                                   
February 2017:                                                                                                                  
                                                                                                                                
     The state shall have achieved compliance on at least 90                                                                    
     percent of new and renovated residential and commercial                                                                    
     square footage.                                                                                                            
                                                                                                                                
Mr.  Persily   emphasized  that   there  were  two   separate                                                                   
standards  for  residential  and   commercial  buildings.  He                                                                   
referred to  a handout depicting  how many states are  at the                                                                   
required  level. The  law requires  that the  state meet  the                                                                   
most recent  or equivalent international  energy conservation                                                                   
code  for commercial  buildings;  for residential  buildings,                                                                   
the state must meet or exceed  the equivalent of the American                                                                   
Society  of  Heating,  Refrigerating,   and  Air-Conditioning                                                                   
Engineers (ASHRAE).                                                                                                             
                                                                                                                                
Mr. Persily  pointed out  that on the  map, the 26  states in                                                                   
green (for commercial  energy codes) either meet,  exceed, or                                                                   
are  just  one addition  away  from  the most  recent  ASHRAE                                                                   
codes; 22 states meet the residential energy codes.                                                                             
                                                                                                                                
Mr.  Persily  detailed  that  the  ASHRAE  codes  for  energy                                                                   
efficiency  deal with lighting  levels, insulation,  windows,                                                                   
and so  on; they are not  geared towards advanced  technology                                                                   
or  high performance  on  proven  technology.  The codes  are                                                                   
practical and doable; the intent is to be cost effective.                                                                       
                                                                                                                                
Co-Chair Hawker clarified that  the codes are strictly energy                                                                   
related  and   not  plumbing   or  structural.  Mr.   Persily                                                                   
explained that the  energy efficiency codes could  be part of                                                                   
a building  code. The  requirements deal  with 90 percent  of                                                                   
square  footage for  energy  efficiency  codes standards.  To                                                                   
receive the funds,  the state would have to  certify that the                                                                   
codes would be in place within eight years.                                                                                     
                                                                                                                                
Mr. Persily  reported that he  had asked the  U.S. Department                                                                   
of Energy  what would happen  after eight  years if a  new or                                                                   
renovated building  is found to  be at less than  90 percent;                                                                   
the response was that they did not know.                                                                                        
                                                                                                                                
11:22:36 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker asked  if AHFC had concerns  about the codes.                                                                   
Mr. Fauske  answered that the  corporation had  two concerns.                                                                   
First,  the   energy  code  is   for  both  residential   and                                                                   
commercial buildings, but AHFC  does not deal with commercial                                                                   
buildings  and  cannot  estimate  those  costs.  Second,  the                                                                   
corporation was concerned about the cost of enforcement.                                                                        
                                                                                                                                
Mr.  Persily   emphasized  that  the  commercial   compliance                                                                   
applied only to new and renovated  buildings; he thought most                                                                   
new buildings  would already  meet the  codes. He noted  that                                                                   
the state would have to accumulate the data.                                                                                    
                                                                                                                                
Mr. Persily disclosed  that his brother is  vice-president of                                                                   
ASHRAE. His brother had confirmed  that most new construction                                                                   
would meet the codes, which are  required in order to get new                                                                   
financing.  The   challenge  for  the  state   would  not  be                                                                   
enforcement  as much  as how  to  gather the  data needed  to                                                                   
certify that the standards were being met.                                                                                      
                                                                                                                                
Mr.  Persily  added  that voluntary  compliance  on  new  and                                                                   
renovated commercial structures  would help the state towards                                                                   
the  90  percent  goal  in  eight   years,  since  commercial                                                                   
buildings  are  larger,  and  since  the  square  footage  is                                                                   
cumulative  and made of  the combined  totals of  residential                                                                   
and commercial structures.                                                                                                      
                                                                                                                                
Representative  Austerman asked if  the code issues  affected                                                                   
the  energy efficiency  provision  in  Item  37. Mr.  Persily                                                                   
assured him that the codes apply only to Item 35.                                                                               
                                                                                                                                
Co-Chair Hawker  queried how to measure  voluntary compliance                                                                   
and how  voluntary compliance  would affect  the totals.  Mr.                                                                   
Persily did not know. He opined  that the state would have to                                                                   
figure out  whether reporting would  be voluntary and  how to                                                                   
accumulate the data.                                                                                                            
                                                                                                                                
Co-Chair Hawker questioned whether  the state was required to                                                                   
adopt  the codes or  if compliance  to the  standard was  the                                                                   
issue. Mr. Persily replied that  though the requirement is 90                                                                   
percent,  the law  says  that the  state  will implement  the                                                                   
energy  code   for  residential  and  the  energy   code  for                                                                   
commercial buildings.  At some point during  the eight years,                                                                   
the state  would have  to adopt the  energy codes  and gather                                                                   
the data.                                                                                                                       
                                                                                                                                
Mr. Fauske interjected  that currently the energy  rating for                                                                   
compliance  for  residential  buildings  costs  approximately                                                                   
$300.                                                                                                                           
                                                                                                                                
In a response  to a question by Co-Chair Hawker,  Mr. Persily                                                                   
reported  that his brother  has tested  federal buildings  in                                                                   
Alaska, which involves running  plastic tubing throughout the                                                                   
building, closing  the doors, blowing fans,  and seeing which                                                                   
way the air moves.                                                                                                              
                                                                                                                                
11:27:48 AM                                                                                                                   
                                                                                                                                
Vice-Chair Thomas asked if state  office buildings or schools                                                                   
would  fall under  the requirements.  He did  not think  some                                                                   
buildings had been built to be  energy efficient. Mr. Persily                                                                   
was  not  aware  of anything  in  the  law  exempting  public                                                                   
buildings from meeting the energy efficiency codes.                                                                             
                                                                                                                                
Mr. Fauske  pointed out that AHFC  represents about 20  to 25                                                                   
percent  of   residential  mortgages  in   Alaska.  Regarding                                                                   
compliance, he noted  that Fanny Mae, Freddie  Mac, and other                                                                   
mortgage companies  do not have to adhere to  Building Energy                                                                   
Efficiency  Standards (BEES) requirements,  although  they do                                                                   
adhere  to building  codes. He  had just  attended a  federal                                                                   
home loan  bank board  meeting (he is  a board member)  where                                                                   
the issue was discussed; they  concluded that a great deal of                                                                   
money was at stake.                                                                                                             
                                                                                                                                
11:30:12 AM                                                                                                                   
                                                                                                                                
Representative Gara wondered how  much money would be lost if                                                                   
the state  did not comply  with the energy efficiency  codes.                                                                   
If  the state  did  certify  compliance  with the  codes,  he                                                                   
wondered whether the $28 million  could be used for renewable                                                                   
energy  projects. Mr.  Persily thought  the state would  have                                                                   
wide latitude on how to use the money.                                                                                          
                                                                                                                                
BRYAN  BUTCHER,  DIRECTOR,  GOVERNMENT   AFFAIRS  AND  PUBLIC                                                                   
RELATIONS, ALASKA HOUSING FINANCE  CORPORATION, DEPARTMENT OF                                                                   
REVENUE  (via  teleconference),  replied that,  per  previous                                                                   
agreement with  AEA, the funds  would be split  50-50 between                                                                   
AHFC  and AEA.  He  listed estimated  amounts  of money  that                                                                   
could be used for the different programs:                                                                                       
                                                                                                                                
   · $2 million: weatherization and rebate support, software                                                                    
     enhancements, expanding an energy audit program to deal                                                                    
     with commercial, school, and state buildings                                                                               
   · $4 million: home-based renewable energy program, with                                                                      
     smart metering, net metering, ways of gathering                                                                            
     information                                                                                                                
   · $1.8 million: consumer education                                                                                           
   · $4.5   million:   weatherization    community   building                                                                   
     retrofit                                                                                                                   
   · $2 million: statewide energy efficiency standards for                                                                      
     public buildings, including developing the commercial                                                                      
     energy code                                                                                                                
                                                                                                                                
Representative Gara asked whether  the agreement to split the                                                                   
money  with AEA  could be  adjusted. Since  AHFC was  already                                                                   
getting weatherization and other  money, he did not think the                                                                   
50-50 split  would be good  policy. Mr. Butcher  replied that                                                                   
the  agreement could  be  adjusted. If  the  ARRA funds  were                                                                   
received, there  would be policy  meetings discussing  how to                                                                   
use  the   funds  in  the   time  allotted.  He   noted  that                                                                   
information was  still being gathered. Mr. Fauske  added that                                                                   
both agencies would want all the money.                                                                                         
                                                                                                                                
11:35:36 AM                                                                                                                   
                                                                                                                                
Representative  Gara emphasized his  desire to use  the funds                                                                   
to deal with  Alaska's energy crisis. Mr. Fauske  thought the                                                                   
legislature and the governor could set policy on the issue.                                                                     
                                                                                                                                
Mr.  Persily  stressed  that meeting  the  energy  efficiency                                                                   
standards  would   take  a  lot  of  work.   He  referred  to                                                                   
legislation  in  the  Senate  that  addressed  the  issue  by                                                                   
exempting structures  without running water or  utilities. He                                                                   
referred to communities moving  towards compliance but making                                                                   
the process  relevant and doable  for Alaska. He  opined that                                                                   
the policy  call was deciding  whether the funds  were wanted                                                                   
and  could  be  used  well,  and  then  adopting  an  interim                                                                   
project.                                                                                                                        
                                                                                                                                
Representative  Kelly  noted  that  the  private  sector  was                                                                   
moving  ahead  on   the  codes  and  asked   if  the  federal                                                                   
government would  be satisfied  with codes already  in place.                                                                   
Mr. Persily  did not  think so.  He believed the  legislature                                                                   
would have to  craft legislation that both complies  with the                                                                   
energy  efficiency standards  required under  ARRA and  works                                                                   
for Alaska.                                                                                                                     
                                                                                                                                
Co-Chair  Hawker  asked  if  local   government  could  enact                                                                   
standards  in  lieu of  the  state.  Mr. Persily  quoted  the                                                                   
legislation:  "…the state  or the applicable  units  of local                                                                   
government that  have authority to adopt building  codes will                                                                   
implement the following..."                                                                                                     
                                                                                                                                
11:39:52 AM                                                                                                                   
                                                                                                                                
Representative  Kelly   stated  for  the  record   that  just                                                                   
determining how  to deal with federal requirements  would not                                                                   
                                                            th                                                                  
satisfy citizens who  want more states rights as  per the 10                                                                    
amendment.  He asked  if there  was  some way  to get  around                                                                   
federal  requirements.  Mr.  Persily   responded  that  there                                                                   
probably  was not;  he thought  there  would be  considerable                                                                   
discussion regarding the issue.                                                                                                 
                                                                                                                                
Representative  Austerman queried  requirements for  Items 36                                                                   
and  37 and  asked why  the items  were not  in the  original                                                                   
budget.  Ms.  Hanrahan  replied that  originally  the  energy                                                                   
funds assurances  applied to  all three  programs or  only to                                                                   
one.   She   reported   receiving   conflicting   information                                                                   
regarding  which  programs  were  affected.  She  added  that                                                                   
another issue tied weatherization  was the requirement to use                                                                   
the  prevailing wage,  which is  not  how weatherization  has                                                                   
been operated in Alaska.                                                                                                        
                                                                                                                                
11:43:21 AM                                                                                                                   
                                                                                                                                
Mr. Butcher explained  that Davis-Bacon Act wages  [a federal                                                                   
law requiring the payment of prevailing  wage on public works                                                                   
projects] have  historically been exempted for  federal funds                                                                   
coming in  for weatherization,  but ARRA stipulates  that the                                                                   
provision  would  apply to  stimulus  funds.  All states  are                                                                   
waiting for guidance  from the U.S. Department  of Energy. He                                                                   
did  know  that  the Department  of  Energy  would  make  the                                                                   
decision, not the individual states.                                                                                            
                                                                                                                                
11:44:24 AM                                                                                                                   
                                                                                                                                
Mr. Fauske  stated that  AHFC was anxious  to hear  back from                                                                   
the federal government  about the issue; the  corporation did                                                                   
not  want   to  "taint"   the  $200   million  currently   in                                                                   
weatherization  by adding  federal  money  that requires  the                                                                   
measure.                                                                                                                        
                                                                                                                                
Representative  Gara  wondered  why  the  administration  had                                                                   
rejected Items 36  and 37. He felt that  the administration's                                                                   
recent response had been offensive.  Ms. Hanrahan stated that                                                                   
the administration  had not taken  the decision  lightly. She                                                                   
shared  that   the  administration   had  been  told   to  be                                                                   
conservative  in its  approach  until hearing  from the  U.S.                                                                   
Department of Energy.                                                                                                           
                                                                                                                                
Representative Austerman  asked for clarification  concerning                                                                   
federal  requirements  related   to  the  block  grants.  Mr.                                                                   
Persily  detailed  that the  U.S.  Department  of Energy  had                                                                   
officially  determined  that $9.6  million  would  go to  the                                                                   
state for  energy efficiency  and conservation block  grants;                                                                   
$4.5 million  would bypass the  state and go directly  to the                                                                   
10  largest  cities  and  boroughs.   He  specified  that  in                                                                   
addition, 60  percent of the state's  $9.5 million had  to go                                                                   
to communities too small to received direct funding.                                                                            
                                                                                                                                
11:48:59 AM                                                                                                                   
                                                                                                                                
Mr.  Fauske  replied  that  AHFC  is  not  aware  of  strings                                                                   
attached  to the  funds.  Ms.  Hanrahan reiterated  that  the                                                                   
department had  had no guidance  concerning the  funds, aside                                                                   
from the weatherization funds.                                                                                                  
                                                                                                                                
Representative  Gara wondered how  the 90 percent  compliance                                                                   
would  be measured.  Mr. Persily  replied  that within  eight                                                                   
years from the  act at least 90 percent of  new and renovated                                                                   
residential  and commercial  buildings  space  must meet  the                                                                   
requirements.   Representative   Gara   asked   for   further                                                                   
clarification. Mr.  Persily felt that the answers  would come                                                                   
from  the  U.S. Department  of  Energy.  He stated  that  the                                                                   
definition of "new" was not clear.                                                                                              
                                                                                                                                
11:52:24 AM                                                                                                                   
                                                                                                                                
Mr. Fauske  concurred with  Ms. Hanrahan  about the  issue of                                                                   
compliance.                                                                                                                     
                                                                                                                                
Ms.  Hanrahan stated  that the  governor would  need to  sign                                                                   
certification  that she  will comply  with the assurances  to                                                                   
implement an  energy building code  and that the  state would                                                                   
implement a  general policy  ensuring that utility  financial                                                                   
incentives  are   in  line.  She  emphasized   the  issue  of                                                                   
decoupling, which would have a  significant impact on Alaska;                                                                   
the administration  wanted to make the assurance  without the                                                                   
decoupling. Regarding  the state  energy building  codes, she                                                                   
believed the question of preemption  of local codes needed to                                                                   
be answered. She  felt that the cost to the  homeowner needed                                                                   
to  be  addressed;  renovating  a  house  in  Fairbanks,  for                                                                   
example, would cost around $12,500.                                                                                             
                                                                                                                                
Co-Chair  Hawker  questioned  the relevancy  of  her  remarks                                                                   
about renovation costs, since  the assurances would relate to                                                                   
new construction. Ms. Hanrahan believed renovation applied.                                                                     
                                                                                                                                
11:55:20 AM                                                                                                                   
                                                                                                                                
Mr. Persily  stated that any  renovation would  be voluntary.                                                                   
Ms. Hanrahan  replied  that the statewide  energy code  would                                                                   
cost private homeowners when there  was new construction on a                                                                   
residential building.                                                                                                           
                                                                                                                                
Vice-Chair  Thomas felt  that Alaskans  should learn  to help                                                                   
themselves  when  it  comes to  conserving  energy  in  their                                                                   
homes. He  relayed personal experience.  He felt  that public                                                                   
buildings, especially schools,  need to be brought up to some                                                                   
kind of standard.                                                                                                               
                                                                                                                                
Representative Fairclough noted  that the communities of Tok,                                                                   
Glennallen, and Kodiak had asked  the legislature to consider                                                                   
weatherization.                                                                                                                 
                                                                                                                                
11:58:43 AM                                                                                                                   
                                                                                                                                
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT                                                                                 
                                                                                                                                
Co-Chair Hawker  wanted to discuss  the larger  dollar items,                                                                   
Items 10, 22,  and the Unemployment Insurance  Modernization.                                                                   
He  pointed out  that  the  last line  item  was  found in  a                                                                   
supplemental document.                                                                                                          
                                                                                                                                
GUY  BELL, ASSISTANT  COMMISSIONER, DEPARTMENT  OF LABOR  AND                                                                   
WORKFORCE  DEVELOPMENT   (DLWD),  discussed  Item   19,  $4.3                                                                   
million for  Employment and  Training Services. He  explained                                                                   
that  the  funding  would allow  the  department  to  provide                                                                   
enhanced  services to  out-of-work  Alaskans  through a  web-                                                                   
based labor exchange  system and would fund  eight positions,                                                                   
including counselors  and employment security  specialists in                                                                   
Anchorage, Fairbanks, Wasilla, and Kenai.                                                                                       
                                                                                                                                
Co-Chair  Hawker  asked  if the  job  centers  would  provide                                                                   
services  to rural  Alaskans.  Mr.  Bell responded  that  the                                                                   
department  already provides  services  to  rural areas;  the                                                                   
item  would  address   areas  with  the  largest   influx  of                                                                   
unemployed workers.                                                                                                             
                                                                                                                                
Representative Gara  asked about the  closing of the  Tok job                                                                   
center and wondered if it should be reopened.                                                                                   
                                                                                                                                
12:03:35 PM                                                                                                                   
                                                                                                                                
Mr. Bell replied  that job centers in Tok and  Glennallen had                                                                   
been kept  open; Delta Junction  and Petersburg  were closed.                                                                   
He  explained that  DLWD workload  declines  during the  good                                                                   
times and  increases in  more difficult  times; 31  positions                                                                   
had been  eliminated over  the past  five years through  both                                                                   
layoff and attrition.                                                                                                           
                                                                                                                                
Representative  Joule asked if  the eight positions  would be                                                                   
in places with  the highest unemployment. Mr.  Bell clarified                                                                   
that the  positions were not  necessarily in places  with the                                                                   
highest unemployment  but the places with the  largest volume                                                                   
of job center activity.                                                                                                         
                                                                                                                                
Representative Joule  explained that unemployment  numbers in                                                                   
rural   Alaska  may  not   reflect  the   actual  number   of                                                                   
individuals who  are unemployed. He wanted attention  paid to                                                                   
people who have given up on getting a job.                                                                                      
                                                                                                                                
12:06:35 PM                                                                                                                   
                                                                                                                                
Representative  Fairclough  asked if  the  31 positions  were                                                                   
reclassified  or   if  the  budget  was  reduced.   Mr.  Bell                                                                   
responded  that the number  of full-time  positions  had been                                                                   
reduced in the budget.                                                                                                          
                                                                                                                                
Representative  Fairclough queried  the year  the budget  had                                                                   
been reduced.                                                                                                                   
                                                                                                                                
TOM   NELSON,   DIRECTOR,   EMPLOYMENT   SECURITY   DIVISION,                                                                   
DEPARTMENT OF  LABOR AND WORKFORCE DEVELOPMENT,  informed the                                                                   
committee that since  2005, DLWD has reduced  31 positions in                                                                   
its  employment and  training component.  The department  has                                                                   
been  able to  manage  the  workload by  reclassification  of                                                                   
remaining staff. He noted that  the unemployment rate was 6.2                                                                   
percent in 2007.                                                                                                                
                                                                                                                                
Representative  Fairclough asked  if she  would then  see the                                                                   
dollar reduction  to the department  in the 2005  budget. Mr.                                                                   
Bell responded that the reduction  in position count could be                                                                   
seen, as  well as a reduction  in dollars. He noted  that the                                                                   
Division  of  Employment  Security   is  nearly  100  percent                                                                   
federally funded.  The reduction in federal  funding over the                                                                   
period was reflected in the budget.                                                                                             
                                                                                                                                
12:08:44 PM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker  queried  the   department's  need  for  the                                                                   
positions.  Mr. Bell acknowledged  sensitivity to  increasing                                                                   
staff but assured the public that  asking for the funds would                                                                   
not mean creating long-term costs.                                                                                              
                                                                                                                                
Co-Chair Hawker  asked if  collective bargaining  would allow                                                                   
the   department  to   hire  positions   with  the   up-front                                                                   
understanding  that  they  would  not  have a  job  when  the                                                                   
federal funds  ran out. Mr.  Bell replied no;  however, there                                                                   
is considerable turnover, which he explained.                                                                                   
                                                                                                                                
12:11:12 PM                                                                                                                   
                                                                                                                                
Co-Chair Hawker  asked if the  positions could be hired  on a                                                                   
contractual services basis with  a termination date. Mr. Bell                                                                   
responded  that the department  could consider  non-permanent                                                                   
positions, with the understanding  that the individuals would                                                                   
not be  receiving standard  state benefits  because they  are                                                                   
project  employees. He  stated  that the  department felt  it                                                                   
would  be more  fair and  appropriate to  hire the  positions                                                                   
with benefits.                                                                                                                  
                                                                                                                                
Co-Chair  Hawker  asked  whether   the  positions  should  be                                                                   
filled.  Mr. Bell answered  in the  affirmative; he  believed                                                                   
the criteria could  be met and the funds spent  creatively in                                                                   
a way that avoids future commitment from the state.                                                                             
                                                                                                                                
Ms. Hanrahan pointed out that  the agencies had been asked to                                                                   
describe what could be done with  the funds without expanding                                                                   
government.                                                                                                                     
                                                                                                                                
Representative   Kelly   expressed   concerns   with   adding                                                                   
employees that would  not have work in several  years. He was                                                                   
concerned about timing and asked  why the positions should be                                                                   
filled.                                                                                                                         
                                                                                                                                
12:15:20 PM                                                                                                                   
                                                                                                                                
Mr. Bell  reiterated that  the department  was accustomed  to                                                                   
jobs coming  and going depending  on the economy.  He thought                                                                   
the goal  to upgrade the skills  of Alaskan residents  and to                                                                   
reduce  non-resident  hires was  good.  He pointed  out  that                                                                   
there are job opportunities for Alaskans.                                                                                       
                                                                                                                                
Representative  Kelly reiterated  concerns about the  timing.                                                                   
He would rather say no to the  effort than get people to work                                                                   
and cut off later.                                                                                                              
                                                                                                                                
12:18:33 PM                                                                                                                   
                                                                                                                                
Representative  Joule  talked  about references  to  "Velcro"                                                                   
describing  jobs that  the state  is stuck  with. He  thought                                                                   
there were two sides to the story;  for some people, the jobs                                                                   
would  provide an  important level  of security.  He did  not                                                                   
think the question was where the  work was but where the work                                                                   
was going  to be when  the recession  was over. He  wanted to                                                                   
provide vision for the future.                                                                                                  
                                                                                                                                
Representative   Joule  listed   the   necessities  for   his                                                                   
constituents:  education,  healthcare,   transportation,  and                                                                   
some  level  of resource  development.  He  supported  moving                                                                   
rural people  who cannot  find work  in construction  towards                                                                   
the jobs in  education and health care that  are being filled                                                                   
by imported workers. He felt strongly  that DWLD's ability to                                                                   
retrain Alaskans  is important  and stressed  the need  for a                                                                   
vision for Alaska's workforce.                                                                                                  
                                                                                                                                
12:21:15 PM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas  told  the   committee  that  while  doing                                                                   
research  for HB  58 (debt  retirement  for college  students                                                                   
from Alaska) he  was shocked to discover that  the state does                                                                   
not track the  need for professional jobs such  as engineers,                                                                   
teachers, or  biologists in Alaska.  He thought  there should                                                                   
be  focus on  tracking more  than  workforce development.  He                                                                   
pointed  out  that  highly trained  workers  end  up  leaving                                                                   
Alaska.  He  asked if  two  of  the new  positions  could  be                                                                   
dedicated  to   determining  the  needs   for  professionally                                                                   
trained workers.                                                                                                                
                                                                                                                                
Mr. Bell explained  that industry and occupational  forecasts                                                                   
are done by  the department's research and  analysis section.                                                                   
Projections  for   job  growth   and  decline  are   made  by                                                                   
occupation. The  most recent projection  covers from  2006 to                                                                   
2016 and  shows there  will be a  need for 30,000  positions.                                                                   
Identifying  the supply  side or  how to  train for  priority                                                                   
occupations   is   more  difficult.   He   sympathized   with                                                                   
Representative Thomas  regarding HB 58;  he hoped to  come up                                                                   
with a workable method to track the need.                                                                                       
                                                                                                                                
12:26:38 PM                                                                                                                   
                                                                                                                                
Vice-Chair Thomas  noted that the  lack of inventory  of need                                                                   
made it difficult for families  to plan the future related to                                                                   
returning to Alaska and finding  a job. He asked again if two                                                                   
of the positions could be dedicated to the research.                                                                            
                                                                                                                                
Mr.  Bell  commented  that  the  department  is  waiting  for                                                                   
information  on  how  many  jobs  would  be  created  by  the                                                                   
stimulus  package.  He thought  there  might  be a  role  for                                                                   
research analysis economists to  set up a tracking mechanism.                                                                   
                                                                                                                                
Vice-Chair  Thomas asked if  the answer  to his question  was                                                                   
no.  He did  not  hear  anything  from the  department  about                                                                   
helping college students. Mr.  Bell responded that he was not                                                                   
saying yes or  no. The department acknowledges  that the need                                                                   
is  important.  He stated  that  there may  be  opportunities                                                                   
within the funding.                                                                                                             
                                                                                                                                
12:29:39 PM                                                                                                                   
                                                                                                                                
Representative Gara relayed a  story of a constituent who had                                                                   
been a  job counselor  for DLWD. His  position had  been cut.                                                                   
The man expressed  frustration at being unable to  have a job                                                                   
where he knew  he could help multiple people  find work, when                                                                   
there were so many  out of work. He asked for  an explanation                                                                   
of how  the department  operated in  terms of getting  people                                                                   
retrained and able  to get new jobs, and how  this related to                                                                   
the new positions.                                                                                                              
                                                                                                                                
Mr.  Nelson   explained  that  DLWD  front-line   staff  (the                                                                   
counselors  and employment  security  specialists, which  the                                                                   
eight positions  would be) helps  people get re-employed.  In                                                                   
current conditions, the department  is serving an increase of                                                                   
68 percent  of  initial unemployment  insurance claims;  that                                                                   
activity started in June 2008.  The front-line staff tries to                                                                   
intervene  and  immediately  reconnect  the  workers  to  the                                                                   
workforce. The  ideal is to reconnect  them in the  areas and                                                                   
industries they  worked previously; if that  is not possible,                                                                   
staff tries  to find  them something  suitable. If  there are                                                                   
significant barriers,  more intensive services  are required.                                                                   
The counselor  positions  spend more time  dealing with  more                                                                   
complex  cases,  such  as  drug  and  alcohol  treatment  and                                                                   
referrals  to  child  services.  The system  is  designed  to                                                                   
facilitate  those kinds  of referrals.  At any  one point  in                                                                   
time  on the  continuum of  services, workers  can exit  into                                                                   
suitable employment.                                                                                                            
                                                                                                                                
12:33:10 PM                                                                                                                   
                                                                                                                                
Representative Kelly pointed to  Vice-Chair Thomas's question                                                                   
regarding  the  needed  research.   He  wanted  the  question                                                                   
answered. Mr. Nelson  responded that part of  the answer lies                                                                   
in two  legislative appropriations  over the past  two fiscal                                                                   
years. One appropriation was for  a variable reporting system                                                                   
and  the   other  was  for   a  credentialing   project.  The                                                                   
combination of both  will allow DLWD to inventory  the skills                                                                   
in communities in  Alaska and to provide variable  reports to                                                                   
employers who have the needs.  For example, if an employer in                                                                   
a hospital  has  a need  and lists  the jobs  with DLWD,  the                                                                   
department will be  able to tell them ahead of  time how many                                                                   
of the  skills or credentials  exist in a certain  geographic                                                                   
area. That  work along  with the  research and analysis  will                                                                   
provide the needed information.                                                                                                 
                                                                                                                                
Representative Kelly  expected an answer to  the question. He                                                                   
expressed concerns that the department  dealt more with union                                                                   
jobs.  He  thought  the  department   should  work  with  the                                                                   
university's data.                                                                                                              
                                                                                                                                
12:37:11 PM                                                                                                                   
                                                                                                                                
Mr.  Bell moved  to Item  22,  $9.2 million  for the  Working                                                                   
Investment  Act,  a  federal  program  directed  towards  re-                                                                   
training unemployed or dislocated  workers. He explained that                                                                   
in FY09 the department received  about $12 million in funding                                                                   
under  the  program;  the item  would  increase  that  amount                                                                   
significantly.                                                                                                                  
                                                                                                                                
Mr. Bell  detailed that  there were  three categories  to the                                                                   
program.  The  first is  a  program  focused on  at-risk  and                                                                   
economically disadvantaged  youth between the ages  of 14 and                                                                   
24.  The  $4  million would  focus  on  a  summer  employment                                                                   
program  to increase  work preparedness.  The department  has                                                                   
begun contacting  agencies that administer youth  programs to                                                                   
get the  word out  that the program  might be available  this                                                                   
summer.  The department  hoped  to  serve about  1,600  youth                                                                   
through  the program.  The employment  opportunities for  the                                                                   
youth would be 100 percent subsidized.                                                                                          
                                                                                                                                
Co-Chair Hawker  questioned what would happen  when the money                                                                   
runs  out. Mr.  Bell  replied  that they  would  have a  work                                                                   
skill; the  person could  go into a  trade or continue  their                                                                   
education.                                                                                                                      
                                                                                                                                
12:40:49 PM                                                                                                                   
                                                                                                                                
Representative  Joule asked  if  the program  would apply  to                                                                   
college  students who  come home  in the  summer months.  Mr.                                                                   
Bell replied that  the student would need to  meet income and                                                                   
other  eligibility   criteria;   the  program  is   generally                                                                   
intended more for young people who are disconnected.                                                                            
                                                                                                                                
Representative Austerman asked  if the program would span two                                                                   
summers.  Mr. Bell responded  that the  funding would  expire                                                                   
June 30, 2011.                                                                                                                  
                                                                                                                                
12:42:35 PM                                                                                                                   
                                                                                                                                
Representative  Crawford asked who  would get the  benefit of                                                                   
the young people's  labor and what criteria would  be used to                                                                   
decide  who  would  get  the  subsidized  workers.  Mr.  Bell                                                                   
described  a  similar  program  in  Anchorage.  The  entities                                                                   
getting the workers could be in  the private, public, or non-                                                                   
profit sector.                                                                                                                  
                                                                                                                                
Representative  Crawford  asked  for  more  information.  Mr.                                                                   
Nelson  gave  the  example  of  the  King  Career  Center,  a                                                                   
construction  academy  in Anchorage.  The  trained youth  are                                                                   
hired by a consortium of construction  companies and industry                                                                   
leaders.  The youth  learn industry  standards  and then  the                                                                   
industry hires  them. Last year,  all but three of  more than                                                                   
70 youth  that went through  the center were  hired. Ideally,                                                                   
the positions would later be unsubsidized.                                                                                      
                                                                                                                                
Representative  Crawford thought  companies would fight  over                                                                   
the fully subsidized positions.                                                                                                 
                                                                                                                                
12:45:23 PM                                                                                                                   
                                                                                                                                
Mr.  Nelson agreed.  One  of DLWD's  tasks  is  to develop  a                                                                   
relationship with  the employers to promote  the programs for                                                                   
youth as well as adult workers.                                                                                                 
                                                                                                                                
Representative  Crawford did not  understand the  100 percent                                                                   
subsidy.  He described  experience  of industry  giving a  40                                                                   
percent  break   for  a  first-period  apprentice.   Industry                                                                   
competes  for the  40 percent  break. He  wondered why  there                                                                   
would be such  a high break, when  it could be spread  out to                                                                   
more kids  at a 50 percent  subsidy, for example.  Mr. Nelson                                                                   
pointed out that  the emphasis of the incentive  funds in the                                                                   
program is  that the full subsidy  is better than  the normal                                                                   
50  percent  or  less.    The  formula  under  the  workforce                                                                   
investment  act  works  to  develop  an  on-the-job  training                                                                   
opportunity    or   federally    recognized    apprenticeship                                                                   
opportunity.   The  incentive  is   to  get  more   employers                                                                   
involved. The incentive is short-term.                                                                                          
                                                                                                                                
Representative  Crawford  spoke  of  experience  with  prison                                                                   
labor contracts that were ended  because some businesses were                                                                   
at a huge advantage with the cheap  labor force. He could see                                                                   
possibility of abuse.  He queried the criteria  that would be                                                                   
used to decide which company would get the free workers.                                                                        
                                                                                                                                
12:48:52 PM                                                                                                                   
                                                                                                                                
Mr.  Bell  admitted he  did  not  have  all the  details  and                                                                   
offered to get more information.                                                                                                
                                                                                                                                
Representative  Crawford reported that  every year  50,000 to                                                                   
70,000  or one in  four Alaskan  jobs are  filled by  workers                                                                   
from out-of-state,  mainly in tourism, the  fishing industry,                                                                   
and  the construction  industry.   He thought  that a  better                                                                   
case could  be made  for connecting  Alaskan kids with  those                                                                   
jobs. He felt the 100 percent  subsidy proposed would benefit                                                                   
employers more than employees.                                                                                                  
                                                                                                                                
Mr.  Bell  promised   to  get  more  information   about  the                                                                   
perimeters of the program.                                                                                                      
                                                                                                                                
12:50:45 PM                                                                                                                   
                                                                                                                                
Representative Austerman  wanted to know, regarding  Item 22,                                                                   
if additional  employees  would need  to be  hired to do  the                                                                   
training. Mr. Bell  replied that the department  did not plan                                                                   
to  add  additional  staff.  The work  will  be  done  mostly                                                                   
through  training  providers;  DLWD will  be  directing  more                                                                   
people   to   training.   Eligibility   criteria   is   being                                                                   
established. More  people will be trained  without increasing                                                                   
staff.                                                                                                                          
                                                                                                                                
Co-Chair  Hawker queried  the strings  attached to the  item.                                                                   
Mr.  Bell  explained  that  there  will  be  a  federal  fund                                                                   
increase in  the operating budget.  The department  will work                                                                   
with other training  providers such as the  university rather                                                                   
than  create  permanent  training programs.  He  cited  other                                                                   
experience  with federal  grants for large  amounts of  money                                                                   
for specific training.  He pointed to good  partnerships with                                                                   
training providers around the state.                                                                                            
                                                                                                                                
Co-Chair Hawker asked if the goal  could be accomplished. Mr.                                                                   
Bell answered yes.                                                                                                              
                                                                                                                                
12:53:32 PM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker asked  if the  governor's  office found  the                                                                   
program acceptable in terms of  risk. Ms. Hanarahan responded                                                                   
that the  policy issue  must be decided  by the governor  and                                                                   
the legislature.                                                                                                                
                                                                                                                                
Mr. Bell turned  to the department's last  item, Unemployment                                                                   
Insurance  Modernization. He  noted that  the issue  has been                                                                   
controversial  for  other  states   because  of  the  strings                                                                   
attached.                                                                                                                       
                                                                                                                                
Co-Chair Hawker added that the  issue had been discussed with                                                                   
the governor's  office.  He believed the  item would  require                                                                   
careful scrutiny.                                                                                                               
                                                                                                                                
Mr.  Bell  explained  that  the   item  was  related  to  the                                                                   
unemployment  insurance  program  administered  by  DLWD.  In                                                                   
general, unemployment insurance  (UI) is an insurance program                                                                   
funded  in Alaska  by both  employers and  workers. A  weekly                                                                   
benefit  is provided  to  workers  who become  unemployed  to                                                                   
support them until  they are re-employed. The  maximum weekly                                                                   
benefit was  increased during  the last  session to  $370 per                                                                   
week.  Alaska is  one  of three  states  nationally in  which                                                                   
employees pay  a portion of the  UI tax; in all  other states                                                                   
the UI tax is paid fully by employers.                                                                                          
                                                                                                                                
12:56:34 PM                                                                                                                   
                                                                                                                                
Representative Crawford interjected  that the legislature had                                                                   
substantially raised the share that employees paid.                                                                             
                                                                                                                                
Mr. Bell  continued that the  ARRA provision offers  monetary                                                                   
incentive  to  states that  adopt  certain changes  or  offer                                                                   
certain conditions for the purposes  of qualifying for the UI                                                                   
benefits. For  Alaska, the incentive would be  $15.6 million;                                                                   
if  Alaska met  the criteria,  the money  would be  deposited                                                                   
into Alaska's  UI trust by  the federal government.  He noted                                                                   
that a legislative  appropriation would not  be required; the                                                                   
deposit would automatically occur  when the criteria were met                                                                   
and the state applied for the funds.                                                                                            
                                                                                                                                
Mr. Bell  detailed that the  first condition to  receive one-                                                                   
third of the incentive would be  Alaska adding an alternative                                                                   
base period for the purpose of  qualifying individuals for UI                                                                   
benefits. The rest of the funding  would be dependent on both                                                                   
the alternate base period and  the state meeting at least two                                                                   
of four specifically  identified criteria. The  Department of                                                                   
Law  (LAW)  has  already determined  that  Alaska  meets  the                                                                   
second  set  of criteria.  Therefore,  Alaska  is  compliant.                                                                   
However, in  order to receive  anything, the state  must meet                                                                   
the first criteria; Alaska is not compliant on that.                                                                            
                                                                                                                                
Co-Chair Hawker asked if the committee  could stipulate point                                                                   
two, while recognizing  that point one is at  issue. Mr. Bell                                                                   
disclosed  that   Legislative  Legal  had   raised  questions                                                                   
regarding the issue; LAW believes the criteria are met.                                                                         
                                                                                                                                
Mr. Bell reported that one of  the primary concerns regarding                                                                   
the provision in  other states has been specific  language in                                                                   
ARRA  indicating that  in order  to be  in compliance,  there                                                                   
needs to  be a change  to permanent  law. A number  of states                                                                   
have  asked what  that means.  On  March 19,  2009, the  U.S.                                                                   
Department  of Labor  indicated  that the  change  had to  be                                                                   
permanent; however,  if a state eventually decides  to repeal                                                                   
or  modify  any of  the  provisions,  it  may do  so  without                                                                   
returning the incentive payments.                                                                                               
                                                                                                                                
1:00:07 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked reaction  to the  idea of passing  the                                                                   
law with  an inherent repeal  provision. Mr. Persily  replied                                                                   
that his understanding was that  a sunset provision could not                                                                   
be put in  the law. To receive  the one-third funds,  the law                                                                   
making the  provision permanent  in statute could  be passed,                                                                   
and then it could be repealed later.                                                                                            
                                                                                                                                
Mr. Bell provided  more information about the  alternate base                                                                   
period.  The base  period  is  the period  of  time that  the                                                                   
department  looks  at  to  determine   if  an  individual  is                                                                   
qualified for UI  benefits and the amount they  will receive.                                                                   
For  example, if  a person  applied  for UI  benefits in  the                                                                   
present  quarter (January  1, 2009 through  March 31,  2009),                                                                   
the department looks back at the  four quarters preceding the                                                                   
last quarter  they could  have worked,  or September  1, 2007                                                                   
through  September  31,  2008; the  most  recently  completed                                                                   
quarter is skipped  in determining eligibility.  The recovery                                                                   
act would change the law so that  a person would be evaluated                                                                   
under the  alternate base if they  did not qualify  under the                                                                   
current base.                                                                                                                   
                                                                                                                                
Mr.  Bell continued  that the  department looked  at 2008  to                                                                   
determine  whether  making the  change  would  have a  fiscal                                                                   
impact  on the  UI trust.  Individual claims  denied in  2008                                                                   
were  re-evaluated  to  see  if  the  applicants  would  have                                                                   
qualified under  the alternate base criteria.  The department                                                                   
determined  that approximately  1,300 additional  individuals                                                                   
would have  qualified for UI  benefits; the estimated  payout                                                                   
would have been  approximately $1.5 million.  The information                                                                   
was then given to the UI actuary,  Jim Wilson, who determined                                                                   
that  the  result  would  be a  $10  per  employer  per  year                                                                   
increase for an  annualized worker. The relative  cost to the                                                                   
employer would have gone from $376 to $386.                                                                                     
                                                                                                                                
1:03:45 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  if  raising benefits  encouraged                                                                   
workers to  get back to work as  soon as possible or  to stay                                                                   
on benefits. Mr. Nelson believed  the intent of the UI weekly                                                                   
amount is  only a partial replacement  of wages, or  about 35                                                                   
percent. About half of applicants receive the benefits.                                                                         
                                                                                                                                
Representative  Kelly asked  if benefits  were a stimulus  to                                                                   
employment.  Mr. Nelson did  not think it  was a  stimulus to                                                                   
employment.                                                                                                                     
                                                                                                                                
Co-Chair  Hawker  asked if  the  increase in  benefits  would                                                                   
motivate people  to return  to work or  to be deadbeats.  Mr.                                                                   
Nelson stated  that the department  stimulates people  to get                                                                   
back  to  work.  He  did  not   think  the  amount  of  money                                                                   
accomplished that, but he believed  the department did a good                                                                   
job engaging  people in  order to re-employ  them as  soon as                                                                   
possible.                                                                                                                       
                                                                                                                                
Representative  Crawford interjected  that unemployment  is a                                                                   
stimulus to  keep workers  in Alaska, especially  apprentices                                                                   
and trainees.  Otherwise,  they go other  places where  wages                                                                   
are as  high or higher.  The legislature raised  unemployment                                                                   
to keep people in the state.                                                                                                    
                                                                                                                                
1:07:08 PM                                                                                                                    
                                                                                                                                
Representative  Gara opined  that  the public  might  support                                                                   
rejecting stimulus funds for the  item, which does not create                                                                   
jobs. He reminded the committee  that UI money goes to people                                                                   
who are looking  for work and does not  subsidizes deadbeats.                                                                   
He asserted that  the benefits support economic  recovery; he                                                                   
estimated $15.6  million would enter  the local economy  at a                                                                   
cost of $2 to $3 million to employers.                                                                                          
                                                                                                                                
Mr.  Bell spoke  to the  Unemployment  Insurance Trust  Fund,                                                                   
which  has a  surplus  as of  Dec 31,  2008.  He thought  the                                                                   
system was working well.                                                                                                        
                                                                                                                                
1:09:55 PM                                                                                                                    
                                                                                                                                
Mr. Bell presented  the employer's perspective,  whose UI tax                                                                   
burden is lessening  from 2008 to 2010. The  average employer                                                                   
rate was 2.5 percent in 2005;  in 2009 it is at 1.15 percent.                                                                   
Mr.  Wilson figured  the  rate impact  of  an alternate  base                                                                   
period  with the  2010  employer  share, assuming  the  state                                                                   
recognizes 100  percent of the alternate base  liability. The                                                                   
employer rate would  be 1.12 percent with the  alternate base                                                                   
period; without  it would  be 1.1 percent.  There would  be a                                                                   
relative increase in cost, but  because the employer share is                                                                   
declining, the relative impact is still trending downward.                                                                      
                                                                                                                                
Mr. Persily thought  the calculations assume  that the entire                                                                   
$15 million put  into the trust fund is appropriated  out for                                                                   
eligible items under the program,  as opposed to leaving some                                                                   
behind  in the  trust fund,  which  would result  in a  lower                                                                   
employer  rate.  Mr.  Bell agreed;  the  department  did  not                                                                   
factor in the additional $15.6 million.                                                                                         
                                                                                                                                
Co-Chair  Hawker   wanted  to  be  sure  the   committee  was                                                                   
following the  conversation. Representative Gara  said he was                                                                   
not.  Co-Chair Hawker  referred  to a  remedy  that would  be                                                                   
presented later.                                                                                                                
                                                                                                                                
1:13:27 PM                                                                                                                    
                                                                                                                                
Mr. Bell explained  another pertinent provision  in ARRA that                                                                   
does  not  relate  to the  alternate  base  period  but  that                                                                   
affects Alaska.  In order  to meet the  criteria of  the act,                                                                   
Alaska also has  to be in compliance with all  the provisions                                                                   
of the federal  UI act. Alaska is on notice that  it does not                                                                   
conform to the  ability to allow federally  recognized tribal                                                                   
entities to  become self-insured  or reimbursable  employers.                                                                   
Generally  speaking, employers  in  the state  are charged  a                                                                   
rate for  UI based  on experience.  A reimbursable  employer,                                                                   
such  as some  non-profits,  the  state, and  other  entities                                                                   
reimburse  the trust for  actual experience,  or UI  benefits                                                                   
paid  to workers  that left  them. The  federal law  requires                                                                   
states to enable federally recognized  tribal entities to opt                                                                   
to become reimbursable  employers. There are  around 305 such                                                                   
entities in  Alaska. The department  did not think  very many                                                                   
of the  entities would  become reimbursable,  but the  option                                                                   
has  to be  available. The  conformity  issue exists  outside                                                                   
ARRA, but is also a condition of the act.                                                                                       
                                                                                                                                
1:15:30 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  asked how long the  department has                                                                   
been aware  of the  non-compliance. Mr.  Nelson replied  that                                                                   
the  department   was  made  aware  in  2002   when  Congress                                                                   
prevented  the  U.S.  Department of  Labor  from  sanctioning                                                                   
Alaska with federal funds.                                                                                                      
                                                                                                                                
Representative  Fairclough wondered  why legislation  had not                                                                   
been introduced  to remedy the situation. Mr.  Bell responded                                                                   
that DLWD  hoped legislation  was going  to be introduced  to                                                                   
address the matter.                                                                                                             
                                                                                                                                
Representative  Fairclough   asked  who  was   reviewing  the                                                                   
provision.  Mr.  Bell  replied that  the  Attorney  General's                                                                   
Office  has reviewed  the legislation  and  aggress that  the                                                                   
state needs to move forward with compliance.                                                                                    
                                                                                                                                
Representative  Fairclough wondered  if  the tribal  entities                                                                   
had given support. Mr. Bell did  not think the department had                                                                   
reached out  to tribal entities.  He said analysis  had shown                                                                   
that  the actual  benefit payouts  in the  aggregate for  the                                                                   
entities is significantly  greater than the  amount taken in.                                                                   
When an employer  becomes reimbursable, the  employer becomes                                                                   
100 percent responsible  for the liability of  the UI claims;                                                                   
the employees do not pay a rate.                                                                                                
                                                                                                                                
1:18:46 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked  about pooling  with  other                                                                   
organizations. Mr.  Nelson answered that the  tribal entities                                                                   
are  listed on  an annual  eligibility  federal register  and                                                                   
able to  receive services from  the Bureau of  Indian Affairs                                                                   
the  U.S.  Department  of the  Interior.  The  list  includes                                                                   
tribal employers  and sub-entities that they  wholly own. The                                                                   
department had not  reached out to the entities  because each                                                                   
one is different.                                                                                                               
                                                                                                                                
Co-Chair   Hawker  asked  whether   Alaska's  child   support                                                                   
division and some  block grants require the  same recognition                                                                   
of  federally  recognized  tribal  entities  as  the  UI  tax                                                                   
provision.   Mr.  Nelson   replied   that  the   department's                                                                   
sanctions result in a de-certification  to receive funds from                                                                   
the  U.S.  Department   of  Labor  Employment   and  Training                                                                   
Administration.                                                                                                                 
                                                                                                                                
1:21:00 PM                                                                                                                    
                                                                                                                                
Mr. Nelson  noted  that the state  would lose  a current  5.4                                                                   
percent  federal  unemployment  tax  act  credit,  valued  at                                                                   
approximately  $111 million.  The state  would have  to start                                                                   
paying   the  amount   at  de-certification.   In   addition,                                                                   
approximately  $20 million in  UI administrative  funds would                                                                   
be lost; potentially job center funding could also be lost.                                                                     
                                                                                                                                
Co-Chair Hawker  believed the  Department of Revenue  and the                                                                   
Department of  Health and Social  Services would  be affected                                                                   
as  well.  Mr.  Nelson  agreed.   He  pointed  out  that  the                                                                   
requirements would still remain.                                                                                                
                                                                                                                                
Representative  Kelly  asked  whether  the  law  hand  to  be                                                                   
changed  to accept  the stimulus  funds.  Mr. Nelson  replied                                                                   
that the law would need to be changed.                                                                                          
                                                                                                                                
Representative Gara  asked whether other federal  money would                                                                   
be at risk if the legislature  does not pass a law by the end                                                                   
of session. Mr. Bell replied that  significant progress needs                                                                   
to be  demonstrated. He did not  think there was  an absolute                                                                   
answer to the question.                                                                                                         
                                                                                                                                
Representative  Crawford   asked  about  timing   related  to                                                                   
compliance. Mr. Nelson replied that he did not know.                                                                            
                                                                                                                                
1:25:42 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  said  the  issue   would  be  revisited  in                                                                   
committee. He believed that the  compliance put several other                                                                   
state  programs at  risk. He  spoke of  legislation that  had                                                                   
been introduced to remedy the situation.                                                                                        
                                                                                                                                
Mr. Bell described the progression  of events that would take                                                                   
place with compliance:                                                                                                          
                                                                                                                                
   · The $15.6 would be deposited into the Alaska UI trust.                                                                     
   · The money would be held by the trust and earn interest.                                                                    
   · The money could be used to pay for benefits.                                                                               
   · Alternatively, subject to legislative appropriation,                                                                       
     the money could be used either for UI program                                                                              
     administration or technology improvements, or for re-                                                                      
    employment services through the job center network.                                                                         
   · There is no time limit on expenditure of the funds.                                                                        
                                                                                                                                
1:27:41 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker asked  whether  the department  factored  in                                                                   
adjustments  to the  trust for  the investment  of the  $15.6                                                                   
million. Mr. Bell replied that they did not.                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked  about   a  possible  remedy  to  the                                                                   
increase in employer UI rates.  Mr. Persily stated that there                                                                   
had  been  some  objections  from   employers,  the  National                                                                   
Federation of  Independent Businesses (NFIB), and  the Alaska                                                                   
State Chamber  of Commerce. He  explained that  the provision                                                                   
works  like a  capital appropriation  that goes  into the  UI                                                                   
trust fund. The  fund is then overfunded and  earns interest.                                                                   
The legislature  has the option  under ARRA of  appropriating                                                                   
out any  or all  of the  $15.6 million  to spend on  eligible                                                                   
items. The  $10 per year cost  to the employer does  not kick                                                                   
in until  after three  years and  only if  all of the  amount                                                                   
were  appropriated out  and never  earned  interest. He  said                                                                   
that a solution  could be found in finding out  how much must                                                                   
stay  in  the  trust  fund  so  that  there  is  no  cost  to                                                                   
employers; the rest can be used for eligible items.                                                                             
                                                                                                                                
Mr. Bell  added that the  issue is complicated;  however, the                                                                   
$15.6  million would  go  into the  trust  and increases  the                                                                   
solvency of the fund and earns interest.                                                                                        
                                                                                                                                
1:30:42 PM                                                                                                                    
                                                                                                                                
Mr. Bell  pointed out that  more careful analysis  would have                                                                   
to be made  to determine how  long the money would  cover the                                                                   
liability.                                                                                                                      
                                                                                                                                
Mr. Persily noted  that the decision about  appropriating the                                                                   
$15.6  million  does not  need  to  be  made this  year.  The                                                                   
current  decision is  whether the legislature  wants  to make                                                                   
the statutory  change  in the  base period  to get the  $15.6                                                                   
million into the trust.                                                                                                         
                                                                                                                                
Co-Chair Hawker believed only  a few million dollars would be                                                                   
needed to  keep employers  from an increase  in UI  rates and                                                                   
asked  how much  of  the $15.6  million  would  be used.  Mr.                                                                   
Persily reported  that there  is preliminary conjecture  that                                                                   
it  might  be  enough  to  leave   $3  million  in  the  fund                                                                   
permanently,  leaving  $12  million   for  appropriation.  He                                                                   
agreed that the department should  calculate projections with                                                                   
its actuary if the intent is to hold employers harmless.                                                                        
                                                                                                                                
Co-Chair Hawker  emphasized that  $3 million was  an educated                                                                   
guess and  wanted stronger numbers,  but noted that  the NFIB                                                                   
and chamber of commerce were supportive of the option.                                                                          
                                                                                                                                
1:32:54 PM                                                                                                                    
                                                                                                                                
Representative  Gara  queried what  could  be  done with  the                                                                   
other $12  million. Mr.  Bell replied  that the amount  could                                                                   
possibly be used  in the general fund as long  as it was used                                                                   
for eligible purposes.  He disclosed that the  department has                                                                   
received general  funds over the  past couple years  to cover                                                                   
salary increases because of the  declines in federal funding;                                                                   
he did not know  if the general funds would  still be needed.                                                                   
The department  gave up  general funds  for the UI  division,                                                                   
because workloads  were up and  federal cash flow  increased.                                                                   
He detailed that  there were some general funds  still in the                                                                   
employment services component.                                                                                                  
                                                                                                                                
Representative Gara  asked if the  $12 million could  be used                                                                   
anywhere.  Mr. Bell  replied  that he  could  not comment  on                                                                   
possible  conversations  with  the chamber  of  commerce.  He                                                                   
reiterated the need for the department  actuary to conduct an                                                                   
analysis before  he could comment.  He believed  whether DLWD                                                                   
needed general funds could be re-evaluated.                                                                                     
                                                                                                                                
1:35:57 PM                                                                                                                    
                                                                                                                                
Representative Gara  viewed the money as free  money until he                                                                   
heard otherwise.  Co-Chair Hawker believed there  was a route                                                                   
forward,  although more  calculations needed  to be  done. He                                                                   
had originally viewed  the ARRA provision as one  of the most                                                                   
problematical.                                                                                                                  
                                                                                                                                
Mr.  Bell  noted that  the  measure  would take  a  statutory                                                                   
change that will allow more people  to become eligible for UI                                                                   
benefits; therefore, it increases  liability to the UI trust.                                                                   
He  reiterated  that  future   legislative  committees  could                                                                   
revisit the law if it is passed.                                                                                                
                                                                                                                                
1:38:02 PM                                                                                                                    
                                                                                                                                
Ms.  Hanrahan noted  confusions  due to  uneven guidance  and                                                                   
lack  of  guidance.  She  added   her  appreciation  for  the                                                                   
committee and the process.                                                                                                      
                                                                                                                                
Co-Chair  Hawker  pointed to  a  need  for much  more  policy                                                                   
discussion.                                                                                                                     
                                                                                                                                
HB  199  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 1:39 PM.                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
A M E N D M E N T 1 - Gara.doc HFIN 3/27/2009 1:30:00 PM
HB 35
A M E N D M E N T 2 - Gara.doc HFIN 3/27/2009 1:30:00 PM
HB 35
CSHB161 Explanation of Changes from (H)CRA.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Exec Budg Act-HB127-detailed comments 3-23-09.pdf HFIN 3/27/2009 1:30:00 PM
HB 127
AK Railroad briefing.ppt HFIN 3/27/2009 1:30:00 PM
HB 127
AMHTA Subport HB161 Admin Briefing Paper 3 24 09.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Blank Rome memo to ARRC 032309.pdf HFIN 3/27/2009 1:30:00 PM
HB 127
A M E N D M E N T 3 - Gara.doc HFIN 3/27/2009 1:30:00 PM
HB 35
A M E N D M E N T 4 - Gara.doc HFIN 3/27/2009 1:30:00 PM
HB 35
A M E N D M E N T 5 - Gara.doc HFIN 3/27/2009 1:30:00 PM
HB 35
CSHB161(CRA)-DOR-TRS-03-27-09FN Corrected.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
DHSS Response 033009.doc HFIN 3/27/2009 1:30:00 PM
HB 35
HB127 Letter AK Miners Assoc..pdf HFIN 3/27/2009 1:30:00 PM
HB 127
HB127 Opposition Letter.pdf HFIN 3/27/2009 1:30:00 PM
HB 127
HB127_Sponsor_Stmt.pdf HFIN 3/27/2009 1:30:00 PM
HB 127
HB161 SPONSOR STATEMENT.mht HFIN 3/27/2009 1:30:00 PM
HB 161
HB161 Labor Bldg. Lease Costs.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Rep Millet Response from Dept of Admin.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Rep Millet Response from The Land Trust.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Rep. Millet Questions.pdf HFIN 3/27/2009 1:30:00 PM
HB 161
Subport Architect Presentation.ppt HFIN 3/27/2009 1:30:00 PM
HB 161