Legislature(2013 - 2014)

03/14/2013 03:21 PM FIN


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 14, 2013                                                                                            
                         3:21 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
3:21:57 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 3:21 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Pete  Higgins,  Fairbanks;  Thomas  Studler,                                                                    
Staff,  Representative  Higgins;  Kris  Curtis,  Legislative                                                                    
Auditor,  Legislative  Budget   and  Audit;  Diane  Burnham,                                                                    
Legislative Auditor,  Legislative Budget and  Audit; Patrick                                                                    
Pillai,  Executive   Director,  Special   Education  Service                                                                    
Agency;  PJ Ford  Slack, Principal,  Sitka  High School  and                                                                    
Chair, SESA; Millie Ryan,  Executive Director, REACH; Daniel                                                                    
George,  Staff, Co-Chair  Stoltze;  Stacy Shuber,  Director,                                                                    
Government Affairs and Public Relations.                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Craig Ward,  Ketchikan; Jeremiah Pickett,  Special Education                                                                    
Services,  Buckland ;  Georgia Lansing,  Delta/Greely School                                                                    
District,  Delta Junction;  Tammy Boutte,  Special Education                                                                    
Services,  Salana; Marilyn  Rosene, Principal  of Dillingham                                                                    
Elementary;  Esther  Bennet,  Adak;  Eric  Havelock,  Multi-                                                                    
Family Underwriting Supervisor, AHFC.                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB  50    MULTI-UNIT HOUSING: COMMERCIAL USE                                                                                    
                                                                                                                                
          CSHB 50 (FIN) was REPORTED out of committee with                                                                      
          a "do pass" recommendation and with one                                                                               
          previously published zero fiscal note: FN1 (REV).                                                                     
                                                                                                                                
HB  87    EXTEND SPECIAL EDUCATION SERVICE AGENCY                                                                               
                                                                                                                                
          HB 87 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HOUSE BILL NO. 87                                                                                                             
                                                                                                                                
     "An Act extending the special education service                                                                            
     agency; and providing for an effective date."                                                                              
                                                                                                                                
3:22:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETE  HIGGINS,   FAIRBANKS,  introduced  the                                                                    
legislation.  He   explained  that  the   Special  Education                                                                    
Service Agency  (SESA) supported  the education  of children                                                                    
with  Low Incidence  Disabilities (LID)  in rural  areas. He                                                                    
recommended  the extension  of  the program  and the  sunset                                                                    
through June 30, 2021.                                                                                                          
                                                                                                                                
3:24:16 PM                                                                                                                    
                                                                                                                                
THOMAS STUDLER, STAFF,  REPRESENTATIVE HIGGINS was available                                                                    
to answer questions about the bill.                                                                                             
                                                                                                                                
3:24:58 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, LEGISLATIVE  AUDITOR,  LEGISLATIVE BUDGET  AND                                                                    
AUDIT, apologized  because she  was sick  and her  voice was                                                                    
suffering. She  introduced her audit manager  to provide her                                                                    
talking points.                                                                                                                 
                                                                                                                                
3:25:38 PM                                                                                                                    
                                                                                                                                
DIANE BURNHAM, LEGISLATIVE AUDITOR, LEGISLATIVE BUDGET AND                                                                      
AUDIT, presented Ms. Curtis' talking points.                                                                                    
                                                                                                                                
     The division  of Legislative  Audit conducted  a sunset                                                                    
     review of  the Special  Education Services  Agency also                                                                    
     known as  SESA and  issued our report  last year.   The                                                                    
     main objective  of the  audit was  to determine  if the                                                                    
     agency  was  operating  in   the  public  interest  and                                                                    
     whether its termination date should be extended.                                                                           
                                                                                                                                
     We conclude that  SESA is serving a public  need and is                                                                    
     essential in meeting the Federal  law that requires the                                                                    
     State ensure  that all children with  disabilities have                                                                    
     available to  them a free appropriate  public education                                                                    
     that meets  their unique needs.   SESA serves  over 200                                                                    
     students located in  mostly non-urban locations through                                                                    
     its low incidence disabilities program.                                                                                    
                                                                                                                                
     We  recommend extending  SESA's termination  date until                                                                    
     June  30,  2021.     However,  our  recommendation  for                                                                    
     extension   comes  with   recommendations  to   improve                                                                    
     collaboration and oversight.                                                                                               
                                                                                                                                
     The biggest  issue facing SESA  is the flat  funding of                                                                    
     its  Low Incidence  Disability  program.   The  funding                                                                    
     level is  set in statute  and hasn't been  increased in                                                                    
     14  years  thereby decreasing  the  real  value of  its                                                                    
     budget by  36 percent.   This has made it  difficult to                                                                    
     hire  qualified staff.    SESA's unique  organizational                                                                    
     structure has left it with  no mechanism for seeking an                                                                    
     increase  to its  budget  during  the annual  budgetary                                                                    
     process.    SESA's funding as identified  in the public                                                                    
     school funding  statute provides an amount  per student                                                                    
     as the a "not less  than" amount.  Since SESA's funding                                                                    
     comes from  the public  school funding statutes,  it is                                                                    
     funded through DEED.   DEED could ask  for increases as                                                                    
     part of  its annual budget  process but has  chosen not                                                                    
     to do so  since SESA reports to  the Governor's Council                                                                    
     on   Disabilities  and   Special  Education   which  is                                                                    
     organizationally  located  within   the  Department  of                                                                    
     Health and  Social Services.  DEED  management does not                                                                    
     consider their department's  responsible for monitoring                                                                    
     the adequacy of SESA's budget.                                                                                             
                                                                                                                                
     The  Governor's  council  did  support  legislation  to                                                                    
     increase SESA's  during the past  session but  the bill                                                                    
     was not successful.                                                                                                        
                                                                                                                                
     In recommendation  No. 1  of the  report, we  hold DEED                                                                    
     management  accountable  for  monitoring  SESA  because                                                                    
     DEED  is responsible  for  fulfilling  the federal  law                                                                    
     regarding  special  education.   Because  DEED  is  the                                                                    
     entity   the   ultimately   must   meet   the   federal                                                                    
     requirement, it should be taking  a more active role in                                                                    
     monitoring SESA.    We  recommend that  DEED management                                                                    
     and  SESA  management  collaborate to  ensure  SESA  is                                                                    
     operating and funded as intended by the legislature.                                                                       
                                                                                                                                
     DEED's   commissioner   does   not   agree   with   the                                                                    
     recommendation.  Historically the  funding for SESA has                                                                    
     been a  legislative process and  he sees no need  for a                                                                    
     change.  DEED does not  want to be held accountable for                                                                    
     SESA's operations.                                                                                                         
                                                                                                                                
     And  we understand  his viewpoint  since the  oversight                                                                    
     responsibility  for SESA  is fragmented  and confusing.                                                                    
     Which brings  me to the  Auditor's Comments  section of                                                                    
     the report.   In the Auditor's Comments  section of the                                                                    
     report,  we  discuss  SESA's  organizational  structure                                                                    
     which   has   led   to  confusion   as   to   oversight                                                                    
     responsibility for funding and  monitoring SESA.   SESA                                                                    
     is  a  nonprofit  corporation  created  by  statute  to                                                                    
     report to  the Governor's  Council on  Disabilities and                                                                    
     Special Education.   It must  report to  the Governor's                                                                    
     Council, however,  the council does not  have budgetary                                                                    
     authority over SESA.   As a component  of public school                                                                    
     funding,  SESA's   main  program,  its   Low  Incidence                                                                    
     Disabilities program, is funded through DEED.                                                                              
                                                                                                                                
     To   further  complicate   matters,   as  a   nonprofit                                                                    
     corporation, SESA has its own  bylaws and its own board                                                                    
     of directors.                                                                                                              
                                                                                                                                
     The Auditor's  Comments Section  of the  audit explains                                                                    
     SESA's  organizational  structure  and  highlights  the                                                                    
     need for  legislative clarification as to  which entity                                                                    
     should be held accountable.                                                                                                
                                                                                                                                
     The  audit contains  a second  recommendation addressed                                                                    
     to SESA's board president  to revise board policies and                                                                    
     improve SESA board oversight.   There has been a fairly                                                                    
     recent change  in the  executive director  position and                                                                    
     the board  president has  already initiated  changes to                                                                    
     help improve oversight.                                                                                                    
                                                                                                                                
                                                                                                                                
3:28:52 PM                                                                                                                    
                                                                                                                                
Ms. Burnham  detailed the  auditor's comments.  The comments                                                                    
discussed  SESA's  organizational  structure, which  led  to                                                                    
confusion   regarding  the   oversight  responsibility   for                                                                    
funding and monitoring SESA. She  added that SESA was a non-                                                                    
profit  corporation  created by  statute  to  report to  the                                                                    
Governor's  Council on  Disabilities and  Special Education.                                                                    
The council, however, did not  have budgetary authority over                                                                    
SESA. As a  component of public school  funding, SESA's main                                                                    
program  was  funded  through Department  of  Education  and                                                                    
Early Development (DEED). As  a non-profit corporation, SESA                                                                    
had its  own bylaws  and board  of directors.  The auditor's                                                                    
comment    section   of    the   audit    explained   SESA's                                                                    
organizational  structure  and   highlighted  the  need  for                                                                    
legislative clarification as to  which entity should be held                                                                    
accountable.  The audit  contained  a second  recommendation                                                                    
addressed  to   SESA's  board  president  to   revise  board                                                                    
policies  and   improve  the   SESA  board   oversight.  She                                                                    
mentioned  a   recent  change  in  the   executive  director                                                                    
position and  the board president  had initiated  changes to                                                                    
help improve oversight.                                                                                                         
                                                                                                                                
3:30:10 PM                                                                                                                    
                                                                                                                                
Representative   Wilson  asked   if   the  Commissioner   of                                                                    
education was present for questions.                                                                                            
                                                                                                                                
Co-Chair Stoltze  confirmed that  a DEED  representative was                                                                    
present at the hearing.                                                                                                         
                                                                                                                                
Representative  Wilson  recalled   much  discussion  in  the                                                                    
subcommittee   process  regarding   SESA  and   their  ideal                                                                    
location.  She asked  how the  auditors would  determine the                                                                    
best  placement for  SESA  regarding  program authority  and                                                                    
oversight.                                                                                                                      
                                                                                                                                
Ms. Curtis replied that the  decision was policy driven. The                                                                    
audit  determined  that  the   structure  was  working.  The                                                                    
highlighted aspect  of the audit addressed  the flat funding                                                                    
problem, which  compromised the  program and  led to  a LB&A                                                                    
report.                                                                                                                         
                                                                                                                                
3:31:24 PM                                                                                                                    
                                                                                                                                
CRAIG  WARD,  KETCHIKAN   (via  teleconference),  urged  the                                                                    
committee  to reauthorize  the funding  for SESA.  He stated                                                                    
that  he was  the  parent of  a child  with  trisomy 18.  He                                                                    
explained  the  details  of  her  disabilities.  He  offered                                                                    
gratitude for a country that  offered a free and appropriate                                                                    
public education  for all children.  He noted that  prior to                                                                    
SESA's involvement his local school  in Ketchikan was unable                                                                    
to  determine how  best  to help  his  daughter because  her                                                                    
needs were beyond  the scope of their training.  He spoke to                                                                    
the frustration  about educating his daughter.  He explained                                                                    
that  SESA offered  optimism,  new ideas  and  hope for  his                                                                    
daughter and family.  Because of SESA, the child  now had an                                                                    
educational plan  for her  future. He  urged an  increase in                                                                    
SESA's  funding to  allow the  sharing  of information  with                                                                    
more districts throughout the state.                                                                                            
                                                                                                                                
3:34:37 PM                                                                                                                    
                                                                                                                                
JEREMIAH  PICKETT,  SPECIAL   EDUCATION  SERVICES,  BUCKLAND                                                                    
(via  teleconference),  testified  in support  of  SESA.  He                                                                    
explained  that he  was from  a rural  village and  was born                                                                    
blind.  He  urged the  committee  to  authorize funding  for                                                                    
SESA,  which  provided an  integral  part  of his  life  and                                                                    
education.  He stated  that the  specialists at  SESA taught                                                                    
him how to  accomplish mobility and navigation  and he would                                                                    
not be able to get around as well without the help.                                                                             
                                                                                                                                
3:36:20 PM                                                                                                                    
                                                                                                                                
GEORGIA   LANSING,  DELTA/GREELY   SCHOOL  DISTRICT,   DELTA                                                                    
JUNCTION (via  teleconference), testified in support  of the                                                                    
legislation. She explained that  she was a special education                                                                    
teacher  with a  master's degree  in learning  disabilities.                                                                    
She  explained that  her school  district in  Delta Junction                                                                    
recently saw  an increase  in LID  students. She  noted that                                                                    
she was  overwhelmed with the  task of meeting the  needs of                                                                    
students  with such  a  wide and  varied  range of  learning                                                                    
difficulties  including   LID.  She  stated  that   she  was                                                                    
empowered by  the organization. She  shared a story  about a                                                                    
student delivered  to her classroom with  needs greater than                                                                    
her education had prepared her  for. She benefitted from the                                                                    
help from  SESA, which enabled  students with LID  to become                                                                    
more competent.                                                                                                                 
                                                                                                                                
3:40:12 PM                                                                                                                    
                                                                                                                                
TAMMY  BOUTTE,  SPECIAL   EDUCATION  SERVICES,  SALANA  (via                                                                    
teleconference), testified  that son  was autistic  and SESA                                                                    
helped her  son to  begin communicating and  therefore learn                                                                    
in the  classroom. She stated  that SESA helped  with travel                                                                    
by  teaching her  family  how  to react  and  behave in  the                                                                    
airport.                                                                                                                        
                                                                                                                                
3:42:45 PM                                                                                                                    
                                                                                                                                
PATRICK  PILLAI,   EXECUTIVE  DIRECTOR,   SPECIAL  EDUCATION                                                                    
SERVICE  AGENCY, provided  a brief  PowerPoint presentation.                                                                    
He  began with  slide 1:  "Special Education  Service Agency                                                                    
(SESA).                                                                                                                         
                                                                                                                                
     SESA provides consultation and  training to support the                                                                    
     unique  educational   needs  of  individuals   and  the                                                                    
     Alaskan communities that serve them.                                                                                       
                                                                                                                                
Mr. Pillai discussed slide 2: "Background."                                                                                     
                                                                                                                                
        · Created in 1986; formed as a not-for-profit                                                                           
          Corporation;                                                                                                          
        · Governed by the Alaska Governor's Council on                                                                          
          Disabilities and Special Education;                                                                                   
        · Receive   Low   Incidence   Disabilities   funding                                                                    
          through DEED based on prior years statewide total                                                                     
          enrollment;                                                                                                           
                                                                                                                                
Mr.  Pillai explained  that SESA  was not  included in  Base                                                                    
Student  Allocation (BSA)  calculations  and had  a lack  of                                                                    
funding for  the last 15  years. He stated that  many people                                                                    
were confused and  thought that SESA was a part  of BSA or a                                                                    
school district.                                                                                                                
                                                                                                                                
Mr.  Pillai   commented  on   slide  3:   "Individuals  with                                                                    
Disabilities Education Act (IDEA 2004)."                                                                                        
                                                                                                                                
     The State is required to  meet the mandate of IDEA 2004                                                                    
     to  "ensure that  all children  with disabilities  have                                                                    
     available to  them a free appropriate  public education                                                                    
     that emphasizes special  education and related services                                                                    
     designated to meet their unique needs."                                                                                    
                                                                                                                                
     The Legislature intended for SESA  to help DEED fulfill                                                                    
     this  requirement by  assisting schools  with providing                                                                    
     special education to children experiencing LID.                                                                            
                                                                                                                                
Mr.  Pillai  discussed  slide   4:  "A.S.  14.30.630(b)  (1)                                                                    
requires  SESA to  provide the  following special  education                                                                    
services."                                                                                                                      
                                                                                                                                
   A. Itinerant outreach services to students who are deaf,                                                                     
     deaf-blind, mentally retarded,  hearing impaired, blind                                                                    
     and   visually   impaired,   orthopedically   disabled,                                                                    
     health-impaired   in    other   ways,    and   severely                                                                    
     emotionally  disturbed, and  to students  with multiple                                                                    
     disabilities;                                                                                                              
   B. Special education instructional support and training                                                                      
     of local school district special education personnel;                                                                      
     and                                                                                                                        
 C. Other service appropriate to special education needs.                                                                       
                                                                                                                                
3:47:24 PM                                                                                                                    
                                                                                                                                
Mr.  Pillai  explained  slide  5:  A  picture  of  a  vision                                                                    
specialist working with a child in rural Alaska.                                                                                
                                                                                                                                
Mr.  Pillai discussed  slide 6:  "Total  Number of  Students                                                                    
Served." He stated  that SESA served 270  students with LID.                                                                    
He explained that  the needs of the  district determined the                                                                    
number  of  specialists in  the  area.  Most schools  had  a                                                                    
special  education  teacher,  but   the  uniqueness  of  the                                                                    
disability sometimes  required help from a  SESA specialist.                                                                    
He provided  an example of  a disability that led  to severe                                                                    
and multiple infractions of behavior.                                                                                           
                                                                                                                                
3:48:24 PM                                                                                                                    
                                                                                                                                
Mr. Pillai described slide 7: "SESA Services."                                                                                  
                                                                                                                                
   · Itinerant service                                                                                                          
   · In-service training                                                                                                        
   · Alaska State Special Education Conference                                                                                  
   · Courses designed and offered for university credit                                                                         
   · Alaska State Deaf Education Advisory Board                                                                                 
   · Governor's   Council/Rural    Education/Autism/   Early                                                                    
     Intervention                                                                                                               
   · AARC/BTKH/DSI                                                                                                              
   · Other Non-profits - Stone Soup/Center for Human                                                                            
     Development/ILP                                                                                                            
   · Distance Education                                                                                                         
                                                                                                                                
3:49:24 PM                                                                                                                    
                                                                                                                                
Mr.  Pillai commented  on slide  8: The  screen shot  of the                                                                    
SESA website, which was  recently redesigned and illustrated                                                                    
links available  to those  students with  LID and  the staff                                                                    
that work with them.                                                                                                            
                                                                                                                                
Mr.  Pillai  discussed  slide  9:  The  picture  depicted  a                                                                    
specialist working with a child with LID in rural Alaska.                                                                       
                                                                                                                                
Mr.  Pillai   described  slide  10:  "SESA   FY  12  Student                                                                    
Consultation  by  District."   The  graph  captured  student                                                                    
consultation in each one of  the districts. He mentioned the                                                                    
Bering  Strait  School  District (BSSD),  which  used  SESAs                                                                    
services  frequently.   He  added  that  SESA   might  serve                                                                    
anywhere from 39 to 45 school districts from year to year.                                                                      
                                                                                                                                
3:50:44 PM                                                                                                                    
                                                                                                                                
Mr. Pillai discussed slide 11: "Legislative Audit Report."                                                                      
                                                                                                                                
     Recommendation #1                                                                                                          
     Reiteration from the prior report that the Legislature                                                                     
     should review SESA funding; and                                                                                            
                                                                                                                                
     "Over  the   past  14  years,  school   districts  have                                                                    
     received  increases  in   their  funding  formula,  yet                                                                    
     SESA's   funding  formula   has  not   increased.  …the                                                                    
     historical process  for evaluating and  increasing SESA                                                                    
     funding has been a legislative process…"                                                                                   
                                                                                                                                
Mr. Pillai added  that SESA would be forced  to reduce three                                                                    
specialists in  the next  year if  the organization  did not                                                                    
receive funding  increases. He  reminded that  the inflation                                                                    
index affected  SESA by 36  percent over the last  15 years.                                                                    
He added that the specialist  hired by SESA were invested in                                                                    
working with students  with LID, so much that  they slept on                                                                    
the floor when travelling to  rural Alaska. He compared SESA                                                                    
specialists'  earnings   with  those  of  teachers   in  the                                                                    
Anchorage  School District  (ASD)  and noted  that at  entry                                                                    
level, SESA  specialists earned $6000 -  $9000 less annually                                                                    
than the  ASD teacher.  The specialists were  identified and                                                                    
recruited for their expertise and  SESA employed one teacher                                                                    
with  a PhD  in  autism from  Boston  University, which  was                                                                    
helpful as  autism had increased  more than 1000  percent in                                                                    
Alaska.  Well trained  specialists  were  more difficult  to                                                                    
recruit when  they were  paid so much  less. He  stated that                                                                    
the  specialists  also  contributed   30  percent  of  their                                                                    
earnings for medical insurance premiums.                                                                                        
                                                                                                                                
3:52:27 PM                                                                                                                    
                                                                                                                                
Mr. Pillai  discussed slide  12: "This  graph shows  how LID                                                                    
student  count has  increased while  SESA's overall  funding                                                                    
has  decreased due  to decreased  ADM."  The graph  depicted                                                                    
SESA's actual  funding compared to funding  if equivalent to                                                                    
BSA compared  to Student  Count. The red  bars in  the graph                                                                    
depicted the amount of funding  that would have come to SESA                                                                    
if it had been equivalent to BSA.                                                                                               
                                                                                                                                
Co-Chair Stoltze recommended that  the discussion be held in                                                                    
the education subcommittee process.                                                                                             
                                                                                                                                
Mr. Studler stated that the will  of the sponsor was to move                                                                    
the bill from committee to extend the sunset date.                                                                              
                                                                                                                                
3:53:40 PM                                                                                                                    
                                                                                                                                
Representative Wilson  argued the fact that  SESA was funded                                                                    
through  DEED, with  oversight from  DHSS.  She opined  that                                                                    
without oversight, the funding  should not be routed through                                                                    
DEED.  She  was  unsure  about   the  proper  solution,  but                                                                    
advocated  for further  investigation  of SESA's  placement.                                                                    
She  stressed that  she  understood the  value  of SESA  and                                                                    
supported  the program,  but wanted  to  detail the  funding                                                                    
organization for budgetary reasons.                                                                                             
                                                                                                                                
Co-Chair Stoltze expressed that  the conversation was tardy,                                                                    
as  the  operating  budget  had  passed  out  of  the  House                                                                    
already.                                                                                                                        
                                                                                                                                
3:55:04 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki hoped that  Mr. Pillai could address                                                                    
the LB&A audit.                                                                                                                 
                                                                                                                                
Mr.  Pillai  stated  that  the process  was  funded  by  the                                                                    
legislature and  the Governor's Council determined  that the                                                                    
system  was working  and did  not require  change. He  added                                                                    
that DEED focused more on  compliance, where SESA focused on                                                                    
service. He  added that the  state administrator  of special                                                                    
education sat on  the SESA board and  attended every meeting                                                                    
and  received a  full report  of every  board meeting  along                                                                    
with an annual report.                                                                                                          
                                                                                                                                
Co-Chair Stoltze requested further information.                                                                                 
                                                                                                                                
Representative  Kawasaki  noted  the audit's  comments  that                                                                    
board meetings failed  to have public notice  and DEED staff                                                                    
did  not consistently  attend meetings.  He wondered  if the                                                                    
practices had changed with the release of the audit.                                                                            
                                                                                                                                
Mr. Pillai  replied that  all of  the audit's  concerns were                                                                    
addressed and  DEED was  present at  all board  meetings for                                                                    
the last 18 months.                                                                                                             
                                                                                                                                
3:57:32 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman pointed  out various  issues detailed  in                                                                    
the  audit along  with commentary  from SESA.  He understood                                                                    
the  recommendation   that  the  legislature   review  their                                                                    
oversight  responsibility. He  opined that  the program  was                                                                    
great and  funding must be used  appropriately. He suggested                                                                    
extending the  date for a  shorter period to allow  for more                                                                    
frequent   legislative  review.   He   wished  for   further                                                                    
committee discussion.                                                                                                           
                                                                                                                                
Mr. Pillai responded that SESA  had clean fiscal audits. The                                                                    
LB&A  audit  was  also  clean  in  terms  of  finances.  The                                                                    
previous executive  director did enter into  a contract with                                                                    
her husband  with board  approval. He  pointed out  that the                                                                    
arrangement did not lead to fiscal implications.                                                                                
                                                                                                                                
3:59:58 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  stated that  he worked  with auditors                                                                    
regularly outside  of his legislative efforts.  He supported                                                                    
the  program,  but  listed the  deficiencies  cited  in  the                                                                    
audit.  He  stated  that  he   didn't  understand  that  the                                                                    
structure  of the  SESA program.  He pointed  out that  SESA                                                                    
funding   was  not   adequately   evaluated   by  DEED   for                                                                    
operational  needs and  the operating  plan  did not  comply                                                                    
with  state  statutes. He  stated  that  both findings  were                                                                    
material. He asked  how to better structure  the program. He                                                                    
asked for recommendations from SESA's executive director.                                                                       
                                                                                                                                
Mr.  Pillai replied  that DEED  did not  take responsibility                                                                    
for increasing revenue to SESA  as the Governor's Council on                                                                    
Disabilities  and  Special   Education  had  oversight.  The                                                                    
department  opined that  legislative  appropriation was  the                                                                    
proper method  of increasing funding. He  stressed that SESA                                                                    
remained in an awkward place  where they were told that they                                                                    
were a good agency and  they would benefit from the funding,                                                                    
but    always    confusion   regarding    the    legislative                                                                    
appropriation versus  funding from  DEED. The  audit pointed                                                                    
to the area of confusion.                                                                                                       
                                                                                                                                
4:02:10 PM                                                                                                                    
                                                                                                                                
Representative Edgmon asked about SESA's classification.                                                                        
                                                                                                                                
Mr. Pillai replied that SESA  was a political subdivision of                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative Edgmon  asked if the bylaws  and budgets were                                                                    
governed  by the  Governor's Council  on Disabilities  or by                                                                    
DEED.                                                                                                                           
                                                                                                                                
Mr. Pillai  replied that  a minimum of  five and  maximum of                                                                    
seven members  from the  Governor's Council  on Disabilities                                                                    
were required to  serve on the board. The  state director of                                                                    
special education had  a mandatory position on  the board as                                                                    
well.                                                                                                                           
                                                                                                                                
Co-Chair  Stoltze  stated  that  he planned  to  review  the                                                                    
legislation further in the committee in further meetings.                                                                       
                                                                                                                                
4:04:05 PM                                                                                                                    
                                                                                                                                
MARILYN  ROSENE,  PRINCIPAL  OF DILLINGHAM  ELEMENTARY  (via                                                                    
teleconference),  explained that  SESA's  staff worked  well                                                                    
with her school. She stated  that her district was unable to                                                                    
serve the children  with LID without SESA's  help. She noted                                                                    
that her district employed SESA  resources over the last six                                                                    
years  from behavior  specialists,  which helped  transition                                                                    
students from  elementary to middle  school. She  added that                                                                    
SESA's  help allowed  students to  remain in  the community.                                                                    
She spoke to SESA's specialist's quality training.                                                                              
                                                                                                                                
4:06:41 PM                                                                                                                    
                                                                                                                                
PJ  FORD  SLACK, PRINCIPAL,  SITKA  HIGH  SCHOOL AND  CHAIR,                                                                    
SESA, explained  that when she  began her position  as board                                                                    
chair,  she soon  found that  an inappropriate  contract was                                                                    
initiated by the former director  of SESA in 2011. She noted                                                                    
that the director was removed  and Mr. Pillai was hired. She                                                                    
mentioned  working  with  the School  Board  Association  to                                                                    
assure  that all  of  the current  SESA  board members  were                                                                    
trained in  correct public and  board policy.  She mentioned                                                                    
that in 2012, Joseph Reeves  reviewed the board's policy and                                                                    
the  board received  training regarding  audit reports.  She                                                                    
promised that the board would  follow proper procedure under                                                                    
her lead.                                                                                                                       
                                                                                                                                
Representative  Munoz  asked about  the  "intensive-funding"                                                                    
rate. She wondered  if the district shared a  portion of the                                                                    
"intensive-funding" with SESA.                                                                                                  
                                                                                                                                
Ms.  Slack replied  that  the district  was  not allowed  to                                                                    
share the  funds because SESA  was not allowed  to establish                                                                    
fees as  a non-profit organization. She  added that students                                                                    
identified with LID  were not necessarily "intensive-funded"                                                                    
students.                                                                                                                       
                                                                                                                                
Co-Chair  Stoltze  remarked  that  passage of  HJR  1  might                                                                    
enable the sharing of funds.                                                                                                    
                                                                                                                                
Representative Munoz asked about  the difference between the                                                                    
"intensive-funding" rate  and the special  education funding                                                                    
rate in the BSA.                                                                                                                
                                                                                                                                
Ms. Slack  replied that  she would do  her best.  She stated                                                                    
that   "intensive-funding"  was   specific  to   Alaska  and                                                                    
appropriated   by  the   legislature.  She   explained  that                                                                    
"intensive-funded" students  must meet at least  five or six                                                                    
criteria   and  LID   students  had   rare  and   infrequent                                                                    
disabilities   that  required   very   specific  help.   She                                                                    
mentioned a student with LID  funding who did not have arms.                                                                    
She noted that he was not an "intensive-funded" student.                                                                        
                                                                                                                                
4:11:13 PM                                                                                                                    
                                                                                                                                
Representative  Munoz   asked  for   a  rough   estimate  of                                                                    
"intensive-funding"   versus   regular   special   education                                                                    
funding rates.                                                                                                                  
                                                                                                                                
Ms.  Slack replied  that the  director of  finance for  DEED                                                                    
could better answer the question.                                                                                               
                                                                                                                                
4:12:07 PM                                                                                                                    
                                                                                                                                
MILLIE  RYAN, EXECUTIVE  DIRECTOR,  REACH,  stated that  she                                                                    
served  as  an  ex  officio  member of  SESA  in  her  prior                                                                    
position  as executive  director  of  the Alaska  Governor's                                                                    
Council   on  Disabilities   and   Special  Education.   She                                                                    
addressed  the   question  about  SESA's  location   in  the                                                                    
council.  Upon creation  of SESA,  the council  served as  a                                                                    
special  education advisory  panel  and SESA  was a  special                                                                    
education  program.  The  council, located  in  DHSS  became                                                                    
designated  as a  special education  advisory panel  because                                                                    
the  legislature, at  the time,  did not  want to  establish                                                                    
another  board with  a narrow  purpose. Because  the council                                                                    
had  the  similar  purpose,  it   was  chosen.  The  council                                                                    
received  regular reports  on SESA  during meetings  and the                                                                    
education  committee received  the  same communication.  She                                                                    
admitted that the situation was  awkward, but she understood                                                                    
that  SESA was  located  in DEED  because  SESA provided  an                                                                    
education service.                                                                                                              
                                                                                                                                
Representative Wilson asked if  SESA might receive oversight                                                                    
from DEED alone.                                                                                                                
                                                                                                                                
Ms. Ryan stated  that the situation was  awkward because the                                                                    
council  looked  for  funding  changes  for  SESA  and  made                                                                    
recommendations  regarding the  Alaska  Mental Health  Trust                                                                    
Authority,  which  represented   people  with  developmental                                                                    
disabilities.  She  added  that   the  council  provided  an                                                                    
advocacy role  that the state  board of education  might not                                                                    
address as thoroughly.                                                                                                          
                                                                                                                                
4:15:49 PM                                                                                                                    
                                                                                                                                
Representative   Kawasaki  asked   about   the  timing.   He                                                                    
understood that some SESA employees  had contracts that were                                                                    
set to expire.                                                                                                                  
                                                                                                                                
Ms.  Ryan agreed  that an  assurance was  necessary for  the                                                                    
teachers.                                                                                                                       
                                                                                                                                
4:16:40 PM                                                                                                                    
                                                                                                                                
ESTHER  BENNET, ADAK  (via  teleconference), explained  that                                                                    
her son  had benefitted  greatly from SESA's  involvement in                                                                    
his education. She  mentioned that she served  on the school                                                                    
board and  was aware that the  agency had not had  a funding                                                                    
increase in  15 years.  She stated that  her son  waited for                                                                    
SESA's services and  she wondered if the  wait resulted from                                                                    
the lack of funding  increases. She suggested that committee                                                                    
members  get to  know SESA  specialists. She  explained that                                                                    
travel around Alaska was unpredictable  and wondered if that                                                                    
might   explain  board   member   absences.  She   expressed                                                                    
gratitude  that her  son  had access  to  the services  from                                                                    
SESA.                                                                                                                           
                                                                                                                                
4:19:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
HB  87  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
4:20:02 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:21:27 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 50                                                                                                             
                                                                                                                                
     "An   Act  authorizing   the  Alaska   Housing  Finance                                                                    
     Corporation  to  allow  certain commercial  uses  in  a                                                                    
     multi-unit  residential  housing development  owned  or                                                                    
     financed by the corporation  and limiting the Alcoholic                                                                    
     Beverage Control  Board's issuance of  certain licenses                                                                    
     to premises in the residential housing development."                                                                       
                                                                                                                                
4:21:42 PM                                                                                                                    
                                                                                                                                
Representative   Costello  MOVED   to  ADOPT   the  proposed                                                                    
committee  substitute for  HB 50,  Work Draft,  28-LS0155/C,                                                                    
Strasbaugh,  3/14/13 (FIN).  Co-Chair  Stoltze OBJECTED  for                                                                    
discussion.                                                                                                                     
                                                                                                                                
DANIEL  GEORGE,  STAFF,   CO-CHAIR  STOLTZE,  explained  the                                                                    
changes in  the CS. He noted  the change on the  final page,                                                                    
which  removed the  wording  between lines  9  and 17,  "the                                                                    
corporation may  not authorize the  commercial use  of space                                                                    
in  a multi-unit  residential housing  development owned  or                                                                    
financed  by  the  corporation for  the  manufacture,  sale,                                                                    
transfer  or  storage  of cigarettes  or  tobacco  products"                                                                    
replaced  with  "the  corporation   may  not  authorize  the                                                                    
commercial use of space in  a multi-unit residential housing                                                                    
development  owned  or financed  by  the  corporation for  a                                                                    
business   that  primarily   sells,  transfers,   or  stores                                                                    
cigarettes or tobacco related products.                                                                                         
                                                                                                                                
There  being  NO  FURTHER  OBJECTION,  it  was  so  ordered,                                                                    
Version C was ADOPTED.                                                                                                          
                                                                                                                                
4:23:15 PM                                                                                                                    
                                                                                                                                
Representative Costello explained that  the bill allowed the                                                                    
Alaska Housing  Finance Corporation (AHFC) to  authorize the                                                                    
combination  of commercial  use  and multi-unit  residential                                                                    
housing developments  owned or financed by  the corporation.                                                                    
She  pointed  out three  sections  of  the bill.  Under  the                                                                    
authorizations  allowed to  the corporations,  "the addition                                                                    
of  the ability  for  AHFC to  authorize certain  commercial                                                                    
uses in  a multi-unit residential housing  development owned                                                                    
or financed by the corporation."                                                                                                
                                                                                                                                
Representative Costello added that  the final section of the                                                                    
bill   excluded  certain   types  of   businesses  such   as                                                                    
charitable   gaming,  adult   entertainment,  the   sale  of                                                                    
alcoholic  beverages,   unless  the   sale  occurs   with  a                                                                    
restaurant  licensed  under  the  alcohol  beverage  control                                                                    
board as  a restaurant.  The first section  of the  bill was                                                                    
new and  allowed the ABC  board to  approve a request  for a                                                                    
new  location if  AHFC approved  a  business in  one of  the                                                                    
multi-unit housing areas. She  explained that the purpose of                                                                    
the  bill  was  to  allow more  flexibility  for  multi-unit                                                                    
housing  in Alaska.  She  mentioned  other communities  that                                                                    
utilized commercial  use space  in buildings,  which allowed                                                                    
residents  to benefit  from  the  commercial properties  and                                                                    
allowed   AHFC  greater   flexibility  when   pursuing  more                                                                    
affordable housing for Alaskans.                                                                                                
                                                                                                                                
4:25:10 PM                                                                                                                    
                                                                                                                                
STACY  SHUBER,  DIRECTOR,   GOVERNMENT  AFFAIRS  AND  PUBLIC                                                                    
RELATIONS, explained  that AHFC  was involved  in mortgages,                                                                    
bonds, financing,  public housing  and energy  programs. The                                                                    
mortgage  and investment  aspect of  the business  supported                                                                    
the diversity of  work at AHFC. She explained  that the bill                                                                    
would   help  meet   the  need   for  more   housing  across                                                                    
communities and helping the  corporation to strengthen their                                                                    
position financially.                                                                                                           
                                                                                                                                
Ms.  Shuber  explained  that   AHFC's  family  loan  program                                                                    
performed   well  and   remained  an   important  tool   for                                                                    
construction  of new,  safe, quality  and affordable  multi-                                                                    
unit   housing.  She   stated   that   AHFC  supported   the                                                                    
legislation and urged the committee's support.                                                                                  
                                                                                                                                
4:26:03 PM                                                                                                                    
                                                                                                                                
Representative  Wilson   asked  about  the   exclusions  and                                                                    
whether they were tied to federal grants.                                                                                       
                                                                                                                                
Representative  Costello replied  that  the exclusions  were                                                                    
not  mandated  by  the   relationship  between  the  federal                                                                    
government  and AHFC.  The exclusions  were included  in the                                                                    
legislation to promote family-friendly living environments.                                                                     
                                                                                                                                
4:26:49 PM                                                                                                                    
                                                                                                                                
Representative Wilson asked if  other communities were using                                                                    
the  model.  She wished  to  better  understand the  family-                                                                    
friendly portion of the legislation.                                                                                            
                                                                                                                                
Representative Costello  replied that AHFC could  best speak                                                                    
to  community  models. She  added  that  there was  a  trend                                                                    
across  the country  to incorporate  commercial and  housing                                                                    
opportunities.  She   was  unsure  about   exact  statistics                                                                    
regarding these types of housing opportunities.                                                                                 
                                                                                                                                
Representative   Wilson  stated   that  she   supported  the                                                                    
commercial portion of the legislation,  but wanted to remain                                                                    
flexible with the language.                                                                                                     
                                                                                                                                
4:27:48 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki agreed  that  the proposed  housing                                                                    
trends were infectious in the  Lower 48. He asked if similar                                                                    
units were overseen in Alaska by AHFC.                                                                                          
                                                                                                                                
Ms.  Shuber referred  to the  Inlet Tower  Hotel, which  was                                                                    
included in AHFC's  portfolio. She noted that  a property in                                                                    
the Mountain  View subdivision in Anchorage  resulted from a                                                                    
partnership  between   AHFC  and  Cook  Inlet   Housing  and                                                                    
included  retail shops  on the  bottom of  the building  and                                                                    
housing units on the top.                                                                                                       
                                                                                                                                
Representative Kawasaki  asked if AHFC  must fill a  void in                                                                    
the area because of the need for housing.                                                                                       
                                                                                                                                
Ms. Shuber replied that AHFC  saw the opportunity to address                                                                    
housing issues  in Kodiak, Anchorage,  Nome and  Barrow. She                                                                    
highlighted  that  the  commercial space  made  the  housing                                                                    
options more affordable across all income levels.                                                                               
                                                                                                                                
Co-Chair Stoltze  asked if Mountain View  would have similar                                                                    
options without AHFC and Cook Inlet Housing.                                                                                    
                                                                                                                                
Ms. Shuber replied  that she did not know the  answer to the                                                                    
question.                                                                                                                       
                                                                                                                                
4:30:01 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon  asked  about the  charitable  gaming                                                                    
element of the bill  and the potential restrictions implied.                                                                    
He  pointed  out  that rural  Alaskan  communities  utilized                                                                    
gaming   for  fundraising   purposes,  and   senior  housing                                                                    
facilities employed similar routines.                                                                                           
                                                                                                                                
4:30:29 PM                                                                                                                    
                                                                                                                                
Ms. Shuber replied that AHFC did  not have a position on the                                                                    
gaming and profitability aspect of  HB 50. She supposed that                                                                    
gaming  might  affect the  profitability  of  a business  in                                                                    
certain circumstances, but AHFC  did not speculate without a                                                                    
proposed project to detail.                                                                                                     
                                                                                                                                
Representative Costello  responded that the bill  provided a                                                                    
tremendous  opportunity for  businesses. The  intent of  the                                                                    
exclusion was  to provide for a  family-friendly environment                                                                    
in the facility.                                                                                                                
                                                                                                                                
Representative Edgmon did not  know if the restriction might                                                                    
provide an unintended impediment in rural Alaska.                                                                               
                                                                                                                                
4:31:57 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked if the  restriction might  prevent a                                                                    
senior center from hosting a bingo event.                                                                                       
                                                                                                                                
Ms. Shuber referred the question to an AHFC underwriter.                                                                        
                                                                                                                                
ERIC  HAVELOCK, MULTI-FAMILY  UNDERWRITING SUPERVISOR,  AHFC                                                                    
(via teleconference),  commented that venues  for charitable                                                                    
gaming  were   sometimes  located  near   the  corporation's                                                                    
housing projects  but typically not within  the facility. He                                                                    
stated  that a  senior  center would  have  bingo night  and                                                                    
pull-tab  operations. He  stated that  AHFC did  not have  a                                                                    
position on the gaming operations.                                                                                              
                                                                                                                                
Co-Chair Stoltze understood the corporation's neutrality.                                                                       
                                                                                                                                
Mr. Havelock  stated that he  had witnessed  gaming utilized                                                                    
in other projects outside of the residential housing.                                                                           
                                                                                                                                
4:33:15 PM                                                                                                                    
                                                                                                                                
Representative Munoz asked about  developments that were tax                                                                    
exempt under  city or municipal  code. She assumed  that the                                                                    
owner  would be  liable  for  the property  tax  due to  the                                                                    
commercial  portion of  the property.  She wondered  how the                                                                    
division  of  property  assessment   was  addressed  by  the                                                                    
corporation.                                                                                                                    
                                                                                                                                
Ms. Shuber requested Mr. Havelock's opinion.                                                                                    
                                                                                                                                
Mr.  Havelock  stated that  the  local  tax authority  would                                                                    
determine the taxing structure for  the business and housing                                                                    
unit. A  municipality could offer  a tax exemption  for real                                                                    
property taxes.  The taxation of the  commercial space would                                                                    
be determined by each municipality.                                                                                             
                                                                                                                                
4:34:31 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze understood  that  bingo  and other  events                                                                    
constituted common  fundraising opportunities.  He suggested                                                                    
a  conceptual  amendment  to strike  the  charitable  gaming                                                                    
language from the bill.                                                                                                         
                                                                                                                                
Representative Gara offered a conceptual amendment:                                                                             
                                                                                                                                
     Delete "charitable gaming under AS 05.15," page 6,                                                                         
     line 11.                                                                                                                   
                                                                                                                                
There being NO OBJECTION, it  was so ordered. The conceptual                                                                    
amendment was adopted.                                                                                                          
                                                                                                                                
4:36:29 PM                                                                                                                    
                                                                                                                                
Representative  Costello highlighted  one  zero fiscal  note                                                                    
from Department of Revenue (DOR).                                                                                               
                                                                                                                                
4:37:16 PM                                                                                                                    
                                                                                                                                
Representative Costello  MOVED to  REPORT CSHB 50  (FIN) out                                                                    
of  committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSHB 50 (FIN) was REPORTED out of committee with a "do                                                                          
pass" recommendation and with one previously published zero                                                                     
fiscal note: FN1 (REV).                                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:38 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects