Legislature(2013 - 2014)HOUSE FINANCE 519

02/04/2014 01:30 PM FINANCE


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01:30:50 PM Start
01:32:08 PM HB266 || HB267
01:42:04 PM Fy 15 Governor's Budget Overview: University of Alaska
02:45:50 PM Fy 15 Governor's Budget Overview: Department of Administration
03:09:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 266 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 267 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ - FY15 Governor's Budget Overviews: TELECONFERENCED
University of Alaska
Dept. of Administration
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 4, 2014                                                                                           
                         1:30 p.m.                                                                                              
                                                                                                                                
1:30:50 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Austerman called the House Finance Committee                                                                           
meeting to order at 1:30 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mark Neuman, Vice-Chair                                                                                          
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Patrick  Gamble, President,  University of  Alaska; Michelle                                                                    
Rizk,  Associate  Vice  President,  Statewide  Planning  and                                                                    
Budget, University  of Alaska; Curtis  Thayer, Commissioner,                                                                    
Department  of  Administration;   Michael  Barnhill,  Deputy                                                                    
Commissioner, Department of Administration.                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 266    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          HB 266 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 267    APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          HB 267 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
FY 15 BUDGET OVERVIEWS:                                                                                                         
     UNIVERSITY OF ALASKA                                                                                                       
     DEPARTMENT OF ADMINISTRATION                                                                                               
                                                                                                                                
HOUSE BILL NO. 266                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain  programs,   capitalizing  funds,   and  making                                                                    
     reappropriations; making appropriations  under art. IX,                                                                    
     sec. 17(c),  Constitution of the State  of Alaska, from                                                                    
     the constitutional budget reserve fund."                                                                                   
                                                                                                                                
HOUSE BILL NO. 267                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health program."                                                                                      
                                                                                                                                
1:32:08 PM                                                                                                                    
                                                                                                                                
^FY 15 GOVERNOR'S BUDGET OVERVIEW: UNIVERSITY OF ALASKA                                                                       
                                                                                                                                
PATRICK GAMBLE, PRESIDENT,  UNIVERSITY OF ALASKA, introduced                                                                    
Gloria  O'Neill, Regent,  Board  of  Regents, University  of                                                                    
Alaska (UA)  and Courtney Enright, Student  Regent, Board of                                                                    
Regents,  UA   who  were  in   attendance.  He   provided  a                                                                    
PowerPoint  presentation  titled  "FY  15  Budget  Overview:                                                                    
House  Finance Committee"  (copy on  file). He  communicated                                                                    
that the university was very  budget conscious and had begun                                                                    
leveling its  budget in the  past two years.  The university                                                                    
had increased  the budget for academic  programs 1.8 percent                                                                    
in FY  13, in FY  14 the increase  was 1.7 percent  over the                                                                    
prior year and the proposed  FY 15 increase was 0.9 percent.                                                                    
He utilized the single  budget appropriation granted through                                                                    
legislative  authorization to  sustain  programs during  the                                                                    
lean budget  years by internally moving  funding to priority                                                                    
items. He  spoke to  the university's  internal work  on the                                                                    
budget. He  pointed out that  the university was  working to                                                                    
address  and answer  the  questions  about the  university's                                                                    
operations in relation to the  budget routinely asked by the                                                                    
committee   members   and   regents.  He   highlighted   the                                                                    
governor's  proposed budget.  The  university was  currently                                                                    
responsible  for paying  50 percent  of  benefits. He  noted                                                                    
that the  split with the  state was  60 percent paid  by the                                                                    
state and 40 percent paid  by the university. The university                                                                    
was  working to  reign  in contractual  obligations and  pay                                                                    
increases  to  very  low  levels.   He  discussed  that  the                                                                    
university received "good funding" in  the past and the goal                                                                    
was  to use  the current  amount of  funding and  "level the                                                                    
program expenses." He  noted that even a  slight increase in                                                                    
50  percent of  the  personnel  contractual obligations  the                                                                    
university paid  resulted in millions  of dollars  in budget                                                                    
increments and impacted the university's programs.                                                                              
                                                                                                                                
President Gamble continued to  discuss the budget. He shared                                                                    
that  his  principal  concern was  related  to  the  state's                                                                    
budget  challenges  in  FY  16  and FY  17.  In  FY  15  the                                                                    
university's  budget  starting  point was  a  $14.9  million                                                                    
decrement  from the  FY 14  budget. The  university had  not                                                                    
received a cut of that size  since sometime in the 1980s. He                                                                    
related that the university could  absorb the cuts up to the                                                                    
current  year, but  it will  become harder  to achieve  much                                                                    
more belt  tightening and efficiencies in  the coming years.                                                                    
He  announced  that  he  along  with  the  chancellors  were                                                                    
looking ahead and  attempting to deal with  what comes next.                                                                    
He moved to  slide 2 that included  the university's mission                                                                    
statement:                                                                                                                      
                                                                                                                                
     The UA Mission                                                                                                             
                                                                                                                                
     "The  University  of   Alaska  inspires  learning,  and                                                                    
     advances and  disseminates knowledge  through teaching,                                                                    
     research,  and public  service,  emphasizing the  North                                                                    
     and its diverse peoples."                                                                                                  
                                                                                                                                
President Gamble turned to slide  3 that depicted the campus                                                                    
locations, and  facilities throughout the state.  He relayed                                                                    
that  the  campuses' operations  were  a  "fixed cost."  The                                                                    
multiple  locations offered  Alaskans  the "opportunity"  to                                                                    
attend  classes   on  a  campus.  Electronic   learning  and                                                                    
increased  bandwidth  was  changing the  paradigm.  How  the                                                                    
changes would  affect the needs  of a fixed campus  would be                                                                    
revealed in the future. He cited slide 4:                                                                                       
                                                                                                                                
     Shaping Alaska's Future …                                                                                                  
                                                                                                                                
     A   major   institutional    push   toward   increasing                                                                    
     enrollment, retention, and graduation in higher                                                                            
     education and workforce development                                                                                        
President Gamble discussed slide 5:                                                                                             
                                                                                                                                
     Shaping Alaska's Future                                                                                                    
                                                                                                                                
     A  solid, balanced  university system  is crucial  to a                                                                    
     state's healthy growth and development.                                                                                    
     As a  university system, the  value we bring  to Alaska                                                                    
     depends on the  number and quality of  our graduates at                                                                    
     every level.                                                                                                               
     UA's reputation for offering a  premier education and a                                                                    
     world-class  research  opportunity  will  substantially                                                                    
     drive  Alaska's future.  To a  large degree  that is  a                                                                    
     choice we can make and an outcome we can control.                                                                          
                                                                                                                                
President   Gamble  expounded   that  the   objectives  were                                                                    
established  two   years  ago.   The  result   identified  a                                                                    
"polished   draft"  of   22  issues   comprising  academics,                                                                    
facilities,  and services  system wide  and 22  effects that                                                                    
the  "university  would like  to  create  as outcomes."  The                                                                    
issues  and questions  were addressed  and answered  and the                                                                    
"prospects for change were better  than they had ever been."                                                                    
He  emphasized  that  Shaping Alaska's  Future  was  a  very                                                                    
important initiative.                                                                                                           
                                                                                                                                
1:42:04 PM                                                                                                                    
                                                                                                                                
President Gamble turned to slide 6:                                                                                             
                                                                                                                                
     FY15 Budget                                                                                                                
                                                                                                                                
     UA is in  year three of a  continuous improvement plan…                                                                    
     a   comprehensive   and   collaborative   system   wide                                                                    
     initiative to:                                                                                                             
                                                                                                                                
     ·    expand student access;                                                                                                
     ·    improve student outcomes;                                                                                             
     ·    create greater academic and research value;                                                                           
     ·    gain a reputation for institutional excellence at                                                                     
          every level.                                                                                                          
                                                                                                                                
     Accordingly, the  FY15 budget is directly  aligned with                                                                    
     the  UA mission  and the  anticipated improvements  and                                                                    
     outcomes of  the system wide change  initiative we call                                                                    
     Shaping Alaska's Future.                                                                                                   
                                                                                                                                
President Gamble  spoke to the  FY 15 budget in  relation to                                                                    
the   Shaping  Alaska's   Future  initiative   outcomes.  He                                                                    
remarked that the goals were  achieved internally and budget                                                                    
increments were  not necessary. He  shared that in  the past                                                                    
decision  making among  the  university  system was  "almost                                                                    
impossible" and  often deferred or  avoided. He  referred to                                                                    
the university's  Summit Team that included  the chancellors                                                                    
and provosts  of the three universities,  the vice-president                                                                    
for  academic  affairs  (the presidents  principal  academic                                                                    
advisor),  and President  Gamble; the  group was  meeting to                                                                    
address   system  wide   issues.   He   believed  that   the                                                                    
cooperation  and collaboration  between the  team had  never                                                                    
been better;  objective system wide  decision making  was in                                                                    
progress. He  discussed that the 22  objectives from Shaping                                                                    
Alaska's Future  was a new  foundation for  the university's                                                                    
future.  The   Summit  Team's  ability  to   make  decisions                                                                    
facilitated  the implementation  and progress  of the  goals                                                                    
defined  in  the  initiative. He  explained  that  the  team                                                                    
utilized "governance"  and decision  making to  move forward                                                                    
towards  the   goals.  He  stressed  that   the  change  was                                                                    
significant.                                                                                                                    
                                                                                                                                
President Gamble briefly addressed slide 7;                                                                                     
                                                                                                                                
     Inspiring Opportunity                                                                                                      
                                                                                                                                
     ·    Access, institutional excellence and                                                                                  
          affordability are guiding principals                                                                                  
     ·    33,000 students; 50 nationalities                                                                                     
     ·    More than 500 degree programs, 125 completely on-                                                                     
          line                                                                                                                  
     ·    4,491 degrees, certificates and endorsements                                                                          
     ·    Research expenditures of $129.8 million                                                                               
                                                                                                                                
President  Gamble pointed  to  the "FY  13  Report Card"  on                                                                    
slide  9.  He  communicated that  funding  appropriated  for                                                                    
advising was  delivering results. He informed  the committee                                                                    
that   a  social   education  national   agenda  and   major                                                                    
initiatives for  higher education  was about to  be revealed                                                                    
by the  White House. He  did not know  if some of  the items                                                                    
needed Congressional  approval; however, some items  did not                                                                    
require  the  approval  for implementation  and  would  come                                                                    
through the federal Department  of Education. The university                                                                    
would  be accountable  for a  certain  level of  performance                                                                    
measureable  by a  set of  metrics. He  guessed the  changes                                                                    
would  occur  prior  to the  next  legislative  session.  He                                                                    
looked at the university's challenges on slide 10:                                                                              
                                                                                                                                
     Challenges                                                                                                                 
                                                                                                                                
     State and Federal budget reductions                                                                                        
     Federal performance expectations                                                                                           
     Dynamic higher education environment                                                                                       
     Aging infrastructure and need for appropriate, modern                                                                      
     teaching and lab facilities                                                                                                
     Online competition                                                                                                         
     Enrollment growth                                                                                                          
                                                                                                                                
President Gamble turned to slide 11:                                                                                            
                                                                                                                                
Commitment to Improvement.                                                                                                      
                                                                                                                                
Higher education paradigm shift:                                                                                                
     greater value and accountability                                                                                           
     less tuition and fees                                                                                                      
     compete, stay relevant, embrace institutional                                                                              
     excellence Important partnerships:                                                                                         
     commercial organizations                                                                                                   
     non-profits                                                                                                                
     other universities, K-12 school districts                                                                                  
     state and national leaders                                                                                                 
                                                                                                                                
     Innovative solutions to difficult UA issues likely to                                                                      
     transcend Alaska and gain recognition nationwide                                                                           
                                                                                                                                
President   Gamble  discussed   that   what  motivated   the                                                                    
cooperation between  the Summit  Team was the  commitment to                                                                    
improvement. He  wanted to  "raise the  bar" with  regard to                                                                    
the  university system  which went  beyond  a commitment  to                                                                    
improvement.  He  stressed  the university's  goal  to  take                                                                    
"center  stage"  in  terms of  Arctic  research  and  Arctic                                                                    
policy  and  related  issues: fisheries  research,  resource                                                                    
security,  Law of  the Sea  regarding  melting ice,  climate                                                                    
change science, and  the social impact of  climate change on                                                                    
Alaska.  He reported  an increased  interest in  Alaska from                                                                    
individuals  and   organizations  that  want   to  implement                                                                    
national Artic  policy but had no  expertise. The university                                                                    
was being asked to facilitate  the policy making process and                                                                    
bring Alaskan  experts together to help  create the policies                                                                    
and build  a "national focus"  on the issue.  The university                                                                    
was  contacted by  the  White House  Office  of Science  and                                                                    
Technology  and the  State Department  requesting assistance                                                                    
in  expertise to  help build  artic  policy. The  university                                                                    
wanted  to  be  "center  stage" in  Artic  policy  creation,                                                                    
especially in relation to Alaska's  federal land and federal                                                                    
offshore issues.  If the university was  not proactive other                                                                    
universities would "rush in" to  fill the gap. He emphasized                                                                    
his  desire to  develop the  university's reputation  as the                                                                    
country's Artic and Circumpolar experts.                                                                                        
                                                                                                                                
President  Gamble discovered  that  the  university was  not                                                                    
well known  nationally. He wanted  to attract  more students                                                                    
to UA  in order to  create an alternative source  of income.                                                                    
He stated that the demographics  in Alaska were changing and                                                                    
the  potential  Alaskan  student pool  was  decreasing.  The                                                                    
university wanted  to attract students, who  had not decided                                                                    
to  attend college,  to its  2-year  program and  eventually                                                                    
matriculate the students into the  four year degree program.                                                                    
In  addition, another  goal was  retaining  students in  the                                                                    
four year degree program where  the dropout rates were high.                                                                    
He  stressed that  going forward;  the university  would not                                                                    
depend  on receiving  increased  funding  to accomplish  its                                                                    
goals.                                                                                                                          
                                                                                                                                
1:52:24 PM                                                                                                                    
                                                                                                                                
MICHELLE RIZK, ASSOCIATE  VICE PRESIDENT, STATEWIDE PLANNING                                                                    
AND BUDGET, UNIVERSITY OF ALASKA, spoke to slide 12:                                                                            
                                                                                                                                
The Model: Eliminate Cost + Generate Revenue                                                                                    
     Reallocating and prioritizing resources                                                                                    
     Space utilization, reducing leased space,                                                                                  
     consolidation                                                                                                              
     Systemwide collaboration                                                                                                   
     Mitigating energy expense                                                                                                  
     Commercialization  and  investment                                                                                         
    opportunities…unmanned aerial systems, alternative                                                                          
     energy, arctic research, climate research, fisheries,                                                                      
     oceans, natural disasters…have never been better                                                                           
     Long-term facility management plan… Sightlines,                                                                            
     university building fund                                                                                                   
                                                                                                                                
Ms. Rizk moved to slides 13:                                                                                                    
                                                                                                                                
     FY15 Program: Reduced to just the basics                                                                                   
                                                                                                                                
     Completes UA mandatory comprehensive advising                                                                              
     Increases high school graduate readiness for                                                                               
     college/workforce through dual credit programs                                                                             
     Strengthens Alaska's teacher education program                                                                             
     Meets strong demand for expanded health/biomedical                                                                         
     education                                                                                                                  
     Responds to requests for greater workforce                                                                                 
     professional development from Alaska's major                                                                               
     industries                                                                                                                 
     Engages in badly needed instate research work                                                                              
                                                                                                                                
                                                                                                                                
Ms.  Rizk  addressed  slide  14.   She  explained  that  the                                                                    
university's FY15  Program GF Increment was  $90,000 for the                                                                    
UAS mining program.  The request was included  in the budget                                                                    
last  year as  one  time funding.  The  increment this  year                                                                    
moved  the  funding  into  the  base  funding  in  order  to                                                                    
continue the program.  She turned to slide  15 that included                                                                    
a summary of the Governor's  proposed FY 15 operating budget                                                                    
requests. She cited the $14.9  million budget reduction that                                                                    
represented 4  percent of unrestricted general  funds (UGF).                                                                    
She  highlighted   the  50   percent  split   between  state                                                                    
appropriations   and   university  receipts   for   employee                                                                    
compensation.  One significant  item  included  in the  $2.1                                                                    
million for facility costs was  for the University of Alaska                                                                    
Anchorage (UAA)  new sports arena. One  other increment that                                                                    
was included in program requests  was $51.8 thousand for the                                                                    
Technical Vocational Education Program.                                                                                         
                                                                                                                                
President Gamble addressed the capital budget on slide 16:                                                                      
                                                                                                                                
     FY15 Capital Request                                                                                                       
                                                                                                                              
     Deferred Maintenance No. 1 overall priority                                                                              
     UAF Heat and Power Plant Upgrade No. 1 deferred                                                                          
     maintenance project                                                                                                        
     Engineering Buildings Completion No. 1 academic                                                                          
     project                                                                                                                    
     Research for Alaska UAF's Alaska Earthquake Center                                                                       
     Arctic oil spill response                                                                                                  
     Statewide Digital Mapping Initiative                                                                                       
                                                                                                                                
President Gamble briefly  spoke to two items  in the capital                                                                    
budget. He moved to slide 17:                                                                                                   
                                                                                                                                
     FY15 Capital Request                                                                                                       
     DM $37.5                                                                                                                   
     Engineering vs. Heat and Power Plant Upgrade                                                                               
                                                                                                                                
President Gamble  reminded the  committee that  the governor                                                                    
requested $37.5  million per year  for the previous  5 years                                                                    
for UA  deferred maintenance. The  funding had  a tremendous                                                                    
impact  on  the university.  He  pointed  to projects  under                                                                    
construction that fell into two  categories. The funding was                                                                    
reduced to  $30 million  last year  and FY  15 was  the last                                                                    
year  of  the governor's  program.  The  university was  not                                                                    
currently planning  projects for future  large construction.                                                                    
After  the  FY  15 deferred  maintenance  appropriation  was                                                                    
spent,  the university  planned "a  tremendous drop-off"  in                                                                    
capital budget  request. The university planned  to renovate                                                                    
and   maintain  the   existing  structures   and  focus   on                                                                    
purchasing  new  high  tech equipment  for  the  engineering                                                                    
program. He remarked that the  program was "doing well" with                                                                    
a  high number  of graduates.  The  demand was  high for  UA                                                                    
engineering  graduates  for jobs  on  the  North Slope.  Two                                                                    
engineering  buildings  were  currently  under  construction                                                                    
that would cover the demand.  He worried that capital budget                                                                    
funding  would  be  insufficient  for  both  completing  the                                                                    
engineering  buildings and  constructing  the University  of                                                                    
Alaska  Fairbanks (UAF)  heat and  power  plant. He  thought                                                                    
that the  two projects intersecting  at the same would  be a                                                                    
difficult  issue  during   a  "contentious"  capital  budget                                                                    
process. He  trusted that the  legislature was aware  of the                                                                    
importance of both projects.                                                                                                    
                                                                                                                                
Ms. Rizk turned  to slide 18 that included a  summary of the                                                                    
FY  15  governor's  proposed capital  budget  requests.  The                                                                    
requests included state appropriations  of $37.5 million for                                                                    
deferred  maintenance, $10  million  for  completion of  the                                                                    
engineering buildings  and $20 million in  receipt authority                                                                    
for  capital  projects.  She noted  that  the  final  slides                                                                    
contained graphs from the  Legislative Finance Division. She                                                                    
explained that  slide 20 depicted the  percentage of general                                                                    
fund  received by  the university,  which steadily  declined                                                                    
[15.85 percent  in FY 06 to  13.22 percent in FY  15]. Slide                                                                    
21 showed a decline in  unrestricted general funds over time                                                                    
[10.89  percent in  FY 06  to 8.25  percent in  FY 15].  She                                                                    
pointed to  slide 22 that  depicted the funding mix  for the                                                                    
university that  included federal receipts at  16 percent of                                                                    
the total budget, designated general  funds at 34 percent of                                                                    
the total  budget (including tuition), other  state funds at                                                                    
9  percent of  the  total budget,  and unrestricted  general                                                                    
funds at 40  percent of the total budget.  Slide 23 included                                                                    
a summary  of the 10-year  fiscal plan. The average  rate of                                                                    
general fund  growth had been  3.4 percent in the  past; the                                                                    
university was looking  to reduce the growth  in the future.                                                                    
She  addressed slide  24 that  portrayed the  overall annual                                                                    
growth of  the university budget  at 2.8 percent,  which the                                                                    
university planned to reduce in the future.                                                                                     
                                                                                                                                
Co-Chair  Austerman surmised  that attracting  more students                                                                    
and  retention had  been a  problem for  the university.  He                                                                    
referred to  the governor's scholarship program  designed to                                                                    
attract and  retain students. He wondered  whether something                                                                    
was amiss  in the entire  education system that  created the                                                                    
problem.                                                                                                                        
                                                                                                                                
President Gamble replied in the  affirmative and stated that                                                                    
the  problem  was  a  national  issue.  He  elaborated  that                                                                    
students  were bypassing  college  because  of the  expense,                                                                    
debt, and  time investment of  a degree program.  Alaska had                                                                    
highly paid  [non-degree] jobs available,  which contributed                                                                    
to the problem. The argument  was; what point was college if                                                                    
a person could  get a good job without  a university degree.                                                                    
The  other  national issue  was  that  graduation from  high                                                                    
school did  not mean  readiness for college.  The university                                                                    
was  working   with  members  in  the   state's  educational                                                                    
community  to  shift the  focus  on  "readiness" instead  of                                                                    
graduation.  Youths  needed  to  be   ready  to  go  into  a                                                                    
vocational  program  or  into higher  education.  The  issue                                                                    
needed  further  work  in Alaska.  The  university  provided                                                                    
workforce training and  could expand it; if  mines, dams and                                                                    
pipelines were going to be built  in the state it would take                                                                    
an increased skilled workforce.  The university wanted to be                                                                    
the "significant source" of the  workforce. The high schools                                                                    
and  workforce development  in the  university was  the only                                                                    
path  to   workforce  readiness.  The  university   was  not                                                                    
currently in  the position to  make enough people  ready but                                                                    
wanted to confront the issue.                                                                                                   
                                                                                                                                
2:05:34 PM                                                                                                                    
                                                                                                                                
Representative Gara offered that  the university had a range                                                                    
of students  across the achievement spectrum.  He understood                                                                    
that one of the  university's problems was student retention                                                                    
through graduation. He  referenced budget appropriations for                                                                    
student advising and  wondered if the advising  was aimed at                                                                    
helping students graduate.                                                                                                      
                                                                                                                                
President Gamble  answered in the affirmative  and explained                                                                    
that  the   focus  was  on  "comprehensive   advising."  The                                                                    
university  had stretched  the  advising funding  throughout                                                                    
much of  the university  system and had  already experienced                                                                    
retention   and  graduation   improvement.  He   noted  that                                                                    
completion  rates were  low in  two year  programs where  he                                                                    
believed  much of  the workforce  would  come from.  Through                                                                    
comprehensive  advising the  university had  discovered that                                                                    
students left  for a  variety of  reasons. He  exemplified a                                                                    
story about an  Alaska Native engineering student  who was a                                                                    
high  achieving  student  the  first  couple  of  semesters.                                                                    
Through the  advising computer system his  advisor discerned                                                                    
that the student  was about to drop out due  to his father's                                                                    
job  loss.  The  student  was eligible  for  many  types  of                                                                    
scholarships,  the  advisor  was   able  to  help,  and  the                                                                    
university retained the student.                                                                                                
                                                                                                                                
Representative  Gara  asked  whether the  advising  was  not                                                                    
available at all university locations.                                                                                          
                                                                                                                                
President Gamble replied in the affirmative.                                                                                    
                                                                                                                                
Representative Gara  asked whether  the university  had data                                                                    
regarding   graduation   and    retention   rates   due   to                                                                    
comprehensive  advising. President  Gamble  replied that  he                                                                    
could provide  data, but was  uncertain how accurate  it was                                                                    
so early in the  program. National data proved comprehensive                                                                    
advising  worked and  he  believed that  it  was working  in                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Representative Wilson  cited slide 15 and  surmised that the                                                                    
university  budget  was   approximately  $913  million.  She                                                                    
wondered how much it cost  the state for each graduate based                                                                    
on the number of graduates.                                                                                                     
                                                                                                                                
President Gamble  replied that it  cost more in  Alaska than                                                                    
in  the Lower  48 and  significantly more  for the  two year                                                                    
programs than  the four year  programs. Tuition for  the two                                                                    
year  programs cost  the  same as  the  four year  programs.                                                                    
Community  colleges in  the lower  48 cost  approximately 50                                                                    
percent  less than  UA. He  wished  to reduce  the two  year                                                                    
program tuition. He relayed  that employee benefits consumed                                                                    
60  percent  of the  university's  total  budget, which  was                                                                    
consistent with  the national trend. The  university was the                                                                    
largest owner of  facilities in the state.  Paying the bills                                                                    
for the facilities at each  location was very expensive. The                                                                    
various   campus   locations    offer   higher   educational                                                                    
opportunities throughout the state, but  at a high cost that                                                                    
other universities  do not  have. He  concluded that  UA was                                                                    
"more expensive than our counterparts."                                                                                         
                                                                                                                                
Representative Wilson remarked that  K-12 education cost the                                                                    
state $1.4  billion and the  university cost  almost another                                                                    
$1  billion.  She  questioned whether  the  state  education                                                                    
funding was going to be  appropriated based on outcomes. She                                                                    
wondered what  the appropriate measures  should be  to weigh                                                                    
the cost  of keeping  students in  Alaska against  the total                                                                    
cost per student  and whether it was possible  for the state                                                                    
to afford offering  the variety of degree  programs in order                                                                    
to retain students.                                                                                                             
                                                                                                                                
2:14:54 PM                                                                                                                    
                                                                                                                                
President Gamble  replied that  it would be  impossible. One                                                                    
of the  issues facing the  state dealt with  program review.                                                                    
He  communicated  that it  was  difficult  to determine  the                                                                    
value of  a program. He  related that the  university "could                                                                    
not be all  things to all people." The  university needed to                                                                    
define   what   programs   were  necessary   for   workforce                                                                    
development and degree graduates  and avoid "mission creep."                                                                    
He stated  that the  accelerated program review  process was                                                                    
currently underway  and programs were being  consolidated or                                                                    
dropped. He referred  to the report card on  slide 9 related                                                                    
to measurable  outcomes. He thought that  indicators such as                                                                    
the rise  in Baccalaureate Engineering degrees,  in Bachelor                                                                    
degree  students  completing  30   credits  each  year,  and                                                                    
completion  times  decreasing   were  important  markers  of                                                                    
efficiencies.  The  changes  were a  recent  occurrence  and                                                                    
important to watch as quality outcomes.                                                                                         
                                                                                                                                
Representative   Wilson   requested   numbers   instead   of                                                                    
percentages on slide 9.                                                                                                         
                                                                                                                                
Representative Costello informed the  committee that she had                                                                    
met with Dr.  Helena Wisniewski from UA  on growing Alaska's                                                                    
economy.  She   was  intrigued  by  the   Seawolf  Fund  and                                                                    
subsequently   held  a   hearing  where   she  invited   Dr.                                                                    
Wisniewski  to  testify.  She  asked   for  details  on  the                                                                    
university's work on the fund.                                                                                                  
                                                                                                                                
President Gamble  replied that  the fund  was an  example of                                                                    
innovation at  work. He shared  that other  universities had                                                                    
been successful in commercialization  of patens and wondered                                                                    
why  the  university  was  not   engaged  in  the  work.  He                                                                    
initiated  the  concept  and  both UAF  and  UAA,  with  the                                                                    
support  of   the  Board  of  Regents   and  the  President,                                                                    
developed  the "offices  of innovation."  The  office was  a                                                                    
mechanism   that   had   the   capacity   to   commercialize                                                                    
intellectual  property either  through  patens or  investors                                                                    
with seed money  to start a business and share  a portion of                                                                    
the profits  with the university.  A large number  of patens                                                                    
had been  advanced through both  offices and  huge potential                                                                    
existed.  He pointed  to the  University of  Wisconsin as  a                                                                    
successful example. In Wisconsin,  the venture created jobs,                                                                    
additional  revenue   and  tax  base  to   the  communities,                                                                    
additional revenue to the  university and provided incentive                                                                    
for  growth  in  the  venture   fund.  The  venture  brought                                                                    
attention   to   the   university  and   would   raise   the                                                                    
university's reputation.                                                                                                        
                                                                                                                                
Representative  Costello believed  that  innovation was  the                                                                    
number one way  to grow the economy and  that the university                                                                    
was  an  economic  driver. She  supported  the  university's                                                                    
encouragement of innovation.                                                                                                    
                                                                                                                                
Co-Chair Stoltze  related a  prior year's  committee meeting                                                                    
concerning  discussions  with  the three  chancellors  about                                                                    
charitable  giving   and  non-governmental   private  sector                                                                    
initiatives  to the  university.  He believed  that UAS  was                                                                    
lacking  in both.  He had  heard  that UAS  recently made  a                                                                    
charitable contribution. He wondered  whether UAS was giving                                                                    
money instead of asking for it.                                                                                                 
                                                                                                                                
President  Gamble replied  that  he  was generally  familiar                                                                    
with the issue. The community  event that UAS contributed to                                                                    
raised $300,000  of charitable giving. He  believed that the                                                                    
contribution was  not out of  the ordinary and  was entirely                                                                    
reasonable.                                                                                                                     
                                                                                                                                
2:24:31 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  asked  about the  announcement  from  the                                                                    
Board   of  Regents   regarding   a   more  rigid   entrance                                                                    
requirement  in  the  university.   He  wondered  about  the                                                                    
potential impacts.                                                                                                              
                                                                                                                                
President Gamble  answered that  the discussion  centered on                                                                    
meeting a  certain academic requirement to  be admitted into                                                                    
a degree program such as  engineering. An unprepared student                                                                    
could  not   advance.  He  related  that   the  university's                                                                    
approach  was to  work with  unprepared  students and  place                                                                    
them  into   the  system  where   they  would   succeed  and                                                                    
eventually   move  them   into  four   year  programs.   The                                                                    
university wanted  to attract as  many students  as possible                                                                    
into  the system  and help  them  succeed. Raising  academic                                                                    
standards  would  not  decrease opportunities  but  actually                                                                    
increase opportunities with the new approach.                                                                                   
                                                                                                                                
Co-Chair  Stoltze   asked  whether  the  university   had  a                                                                    
committee on community fundraising.                                                                                             
                                                                                                                                
President  Gamble  answered   that  the  Vice-President  for                                                                    
Advancement system-wide or the  advancement office through a                                                                    
chancellor  would decide  whether the  university wanted  to                                                                    
donate money for a cause.                                                                                                       
                                                                                                                                
Co-Chair  Stoltze did  not believe  that  the university  or                                                                    
quasi-governmental organizations should  be allowed to spend                                                                    
on charity. He wanted to  determine how widespread the issue                                                                    
was. He  was concerned  over "appearances." He  thought that                                                                    
the issue warranted further examination.                                                                                        
                                                                                                                                
President Gamble replied that he would look into the issue.                                                                     
                                                                                                                                
Representative  Munoz  appreciated the  Co-Chair's  concerns                                                                    
related   to  private   events.  She   clarified  that   the                                                                    
fundraiser  that  UAS  contributed   to  was  related  to  a                                                                    
publicly and privately funded  institution that was involved                                                                    
in Native  language preservation and cultural  heritage. She                                                                    
noted  that the  committee did  approve two  separate budget                                                                    
appropriations for the same project.                                                                                            
                                                                                                                                
2:31:49 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:34:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^FY   15   GOVERNOR'S   BUDGET   OVERVIEW:   DEPARTMENT   OF                                                                  
ADMINISTRATION                                                                                                                
                                                                                                                                
CURTIS THAYER,  COMMISSIONER, DEPARTMENT  OF ADMINISTRATION,                                                                    
introduced    Michael    Barnhill,   Deputy    Commissioner,                                                                    
Department   of  Administration,   and  Cheryl   Lowenstein,                                                                    
Director,  Division of  Administrative Services,  Department                                                                    
of  Administration. He  provided  a PowerPoint  presentation                                                                    
titled  "Alaska  Department   of  Administration  Department                                                                    
Overview" (copy on  file). He noted that the  mission of the                                                                    
Department of Administration (DOA)  was to provide efficient                                                                    
and consistent support services  to state agencies to better                                                                    
serve Alaskans.  He listed  the department's  core services:                                                                    
legal  advocacy, regulatory  services,  family support,  and                                                                    
enterprise support services.                                                                                                    
                                                                                                                                
Commissioner   Thayer  discussed   slide  2:   "Organization                                                                    
Chart." He  reported that DOA organization  consisted of two                                                                    
deputy  commissioners (one  currently  vacant), two  special                                                                    
assistants,  ten divisions,  and five  commissions. Services                                                                    
to the public included the  Division of Motor Vehicles (DMV)                                                                    
and  Public Defenders  and services  to  the state  agencies                                                                    
included  General  Services.  The  services  the  department                                                                    
provided were diverse.                                                                                                          
                                                                                                                                
Commissioner Thayer continued with  slide 3: "Service across                                                                    
Alaska." He  related that  the department  provided services                                                                    
and had offices throughout the  state, primarily for DMV and                                                                    
the Public  Defender's office. The offices  were located all                                                                    
over the state from Barrow to Ketchikan.                                                                                        
                                                                                                                                
Commissioner Thayer turned to  slide 4: "Legal, Advocacy and                                                                    
Regulatory  Services."  He discussed  performance  measures.                                                                    
One  target  measure for  DOA  was  to serve  DMV  customers                                                                    
within 20  minutes of  arrival and had  met the  target 71.8                                                                    
percent  of  the  time.  A second  measure  was  the  Public                                                                    
Defender  Agency's  cost  per  criminal  case  and  cost  to                                                                    
represent a client.  The costs were continuing  to grow even                                                                    
with attempts  to contain  the costs. He  moved to  slide 5:                                                                    
"Family Support" that addressed  family support services. He                                                                    
noted that the department  attempted to shelter public wards                                                                    
100  percent  of  the  time.  Public  guardian  clients  had                                                                    
shelter 100  percent of the time  in 2012 and 99  percent in                                                                    
2013. He  discussed the average  personal services  cost per                                                                    
child in  need of  aid (CINA).  The department  attempted to                                                                    
hold  down costs  but  the number  had  increased since  the                                                                    
prior  year.  He  looked  at  slide  6:  Enterprise  Support                                                                    
Services.  The  department  measured its  five  year  budget                                                                    
growth trend which was 4.3  percent in 2013 and 3.66 percent                                                                    
in FY 2014. He added  that the current overall increase from                                                                    
the FY  15 governor's  proposed budget  to FY  14 management                                                                    
plan  cost  growth  trend  was  1.7  percent.  The  customer                                                                    
satisfaction  graph   measured  the   department's  internal                                                                    
services. The  satisfaction level dipped to  76.6 percent in                                                                    
2013.                                                                                                                           
                                                                                                                                
Commissioner  Thayer  continued  with  slide  7  "Department                                                                    
Level  Results" which  depicted the  satisfaction level  for                                                                    
the  following departmental  agencies:  Division of  Finance                                                                    
(DOF), Division of General  Services, Division of Personnel,                                                                    
Enterprise Technology  Services (ETS), and Division  of Risk                                                                    
Management. He noted that  the satisfaction level fluctuated                                                                    
depending  on the  service or  task. He  addressed slide  8:                                                                    
"Share  of   Total  Agency  Operations"  generated   by  the                                                                    
Division  of Legislative  Finance  (LFD), which  represented                                                                    
the department's  share of general  funds relative  to other                                                                    
agencies.   The  department  received 2.2  percent of  total                                                                    
general funds in FY 15  which increased .01 percent since FY                                                                    
06. General Funds represented  one-third of the department's                                                                    
budget. The bulk  of the unrestricted general  funds went to                                                                    
the  Office  of Public  Advocacy  and  the Public  Defenders                                                                    
Agency followed by DOF, ETS.  He noted that DMV consumed the                                                                    
largest  portion  of  restricted general  funds  at  $16.429                                                                    
million  followed  by  the Alaska  Oil  and  Gas  Commission                                                                    
(AOGC) at $7.2  million. He turned to slide  9; "Line Items"                                                                    
prepared by  LFD. He  explained that  as a  service provider                                                                    
the  department's largest  expense  was contractual  service                                                                    
line items  followed by personal  services. The total  FY 14                                                                    
budget was approximately $343 million.                                                                                          
                                                                                                                                
Commissioner  Thayer pointed  to  Slide  10: "Total  Funding                                                                    
Comparison by Fund Group" prepared  by LFD. He detailed that                                                                    
most  of the  items shown  on slide  10 were  paid for  with                                                                    
other  funds.  He  listed  the   other  funds:  Division  of                                                                    
Retirement  and Benefit  Trust Funds,  ISF, and  Interagency                                                                    
Receipts Division  of General Services. The  majority of UGF                                                                    
was appropriated  to the Office  of Public Advocacy  and the                                                                    
Public  Defender Agency  followed  by DOF.  The Division  of                                                                    
Motor Vehicles  expended the majority of  designated general                                                                    
funds (DGF).  Federal funds comprised  a very  small portion                                                                    
of  the department's  budget and  were  appropriated to  the                                                                    
Office of Public Advocacy (OPA),  AOGC, DMV, and the Victims                                                                    
Compensation Board.                                                                                                             
                                                                                                                                
Commissioner  Thayer moved  to  slide  11: Continued  Budget                                                                    
Growth  Compared  to  10-Year  Plan"  prepared  by  LFD.  He                                                                    
expounded that the  graph depicted the growth  of all budget                                                                    
funds  but did  not  include personal  services growth.  The                                                                    
budget  grew 4.7  percent since  2005 compared  to 5.5  last                                                                    
year.  He   summarized  that   the  graph   underscored  the                                                                    
department's challenges  in attempting to reduce  the budget                                                                    
growth rate.  He declared that the  department made progress                                                                    
in  growth  reduction.  He discussed  slide  12:  "Continued                                                                    
Budget  Growth Compared  to the  10-Year  Plan" prepared  by                                                                    
LFD.  He  reported that  the  slide  graphed the  growth  in                                                                    
general funds  and grew 5.6  percent since 2005  compared to                                                                    
7.3  percent last  year. In  prior years,  the general  fund                                                                    
supported  divisions grew  faster  overall.  The costs  were                                                                    
"somewhat" contained. He noted  that the largest two general                                                                    
fund supported  agencies were the Office  of Public Advocacy                                                                    
and   the  Public   Defender  Agency;   both  agencies   had                                                                    
experienced  significant growth.  Since 2006  the department                                                                    
added 80  new positions of which  69 were hired for  OPA and                                                                    
the Public Defenders Agency. He examined slide 13:                                                                              
     Focus on Cost Avoidance                                                                                                    
                                                                                                                                
     • Labor Contracts - reasonable contracts                                                                                   
     • Health Care Spend - reduce the rate of growth                                                                            
     • Reduction of Unfunded Liability - lower future costs                                                                     
     • Utilization of Space - better use our space                                                                              
     • Procurement Savings - lower costs for what we                                                                            
       already buy                                                                                                              
                                                                                                                                
Commissioner  Thayer  indicated   that  the  department  was                                                                    
currently negotiating  five labor contracts:  Public Safety,                                                                    
Alaska Vocational  Technical Center (AVTEC), and  the marine                                                                    
unions.  The marine  unions  were asking  for  a 30  percent                                                                    
increase  and   the  department  planned  to   reduce  their                                                                    
expectations through  sharing the  results of a  cost study.                                                                    
In addition, the  state leased or owned over  5 million feet                                                                    
of office space and was  employing space standards to create                                                                    
potential  savings. The  department was  also attempting  to                                                                    
reduce procurement costs.                                                                                                       
                                                                                                                                
2:45:50 PM                                                                                                                    
                                                                                                                                
Commissioner Thayer pointed to slide 14:                                                                                        
                                                                                                                                
     "Average Yearly Base Salary for FY 13."                                                                                    
                                                                                                                                
     Yearly Average Pay*                                                                                                        
                                                                                                                                
     AVTECTA   -   Alaska  Vocational   Technical   Teachers                                                                    
     Association - $75,876.24                                                                                                   
     IBU   -  Inlandboatmen's   Union  of   the  Pacific   -                                                                    
     $51,334.92                                                                                                                 
     MEBA  -  Marine  Engineers'  Beneficial  Association  -                                                                  
     $73,228.68                                                                                                                 
     MMP - Masters, Mates and Pilots - $85,077.00                                                                               
     PSEA   -   Public   Safety  Employees   Association   -                                                                    
     $84,632.40 (AA), $70,169.52 (AP) AA - DPS; AP - DOTPF                                                                      
     ACOA  -  Alaska  Correctional  Officers  Association  -                                                                    
     $61,716.48                                                                                                                 
     LTC - Public Employees, Local 71 - $54,697.80                                                                              
     TEAME   -  Teachers'   Education  Association   of  Mt.                                                                    
     Edgecumbe - $64,363.20                                                                                                     
     ASEA - Alaska State Employees Association - $57,087.72                                                                     
     APEA   -   Alaska   Public  Employees   Association   -                                                                    
     $82,825.68                                                                                                                 
     CEA - Confidential Employees Association - $58,096.20                                                                      
     Non-Covered - Exempt, Partially Exempt and Excluded -                                                                      
     $99,474.48                                                                                                                 
     Average employee benefits percentage is 49%                                                                                
     * Includes geographic differential                                                                                         
     SOURCE: Bargaining Unit Profiles, collected June 30,                                                                       
     2013                                                                                                                       
                                                                                                                                
Commissioner Thayer  related that  AVTECTA, IBU,  MEBA, MMP,                                                                    
and PSEA  were paid very  well. The current  benefit package                                                                    
added  49 percent  to the  base salary.  The department  was                                                                    
currently  negotiating $100  million  in  salaries with  the                                                                    
five contracts.  He pointed  out that  90 percent  of Inland                                                                    
Boatman's  Union  members  resided in  Alaska.  Thirty-eight                                                                    
percent of  MEBA employees resided  out of state  and almost                                                                    
20 percent of the MMP membership resided out of state.                                                                          
                                                                                                                                
Commissioner Thayer  addressed "Benefits"  on slide  15. The                                                                    
graph showed contributions to  active employee health plans.                                                                    
The cost  of healthcare continued  to rise. Alaska  was only                                                                    
one of seven  states that fully funded  family premiums. The                                                                    
department was looking  at strategies to reduce  the rate of                                                                    
growth in  health plans. He  mentioned that  some strategies                                                                    
utilized were  the implementation  of the  employee wellness                                                                    
program,  improved consumerism,  appropriate utilization  of                                                                    
services, plan  design changes, new  contracting strategies,                                                                    
and   procurement  of   AETNA   as  the   new  third   party                                                                    
administrator.                                                                                                                  
                                                                                                                                
Commissioner Thayer moved to slide 16:                                                                                          
                                                                                                                                
     NEW TPA - AETNA and MODA                                                                                                   
                                                                                                                                
     •AlaskaCare -- 84,000 covered lives (active + retiree)                                                                     
     •FY13 claim costs: $600mm                                                                                                  
     •RFP split into 4 major components awarded 3 to Aetna                                                                      
     and one to Moda                                                                                                            
     •New networks: estimated savings of $50mm/yr.                                                                              
     •Introduction of a dental network                                                                                          
     •Revising and updating plan booklets                                                                                       
     •Use of data warehouse to inform plan decisions                                                                            
     •Single point of contact concierge team                                                                                    
     •Goal: high quality health care at sustainable and                                                                         
     reasonable cost                                                                                                            
                                                                                                                                
Commissioner  Thayer  discussed  that  when  the  department                                                                    
released a request for proposal  (RFP) for a new third-party                                                                    
administrator the goal was  to determine which administrator                                                                    
could save the state the  most money in claims costs instead                                                                    
of which administrator cost less.  Aetna believed they could                                                                    
save  the state  potentially  $50  million. The  third-party                                                                    
contract  totaled $100  million  and was  divided into  four                                                                    
major components.  Three of the components  had been awarded                                                                    
to Aetna  and one had been  given to Moda for  dental health                                                                    
care.  He mentioned  that the  department  revised the  plan                                                                    
booklets  for   active  employees  and  retirees   and  were                                                                    
accepting comments.  He reported that over  50,000 calls had                                                                    
been placed  by beneficiaries  to Aetna  and any  issues had                                                                    
been  resolved easily  thus far.  The department's  goal was                                                                    
high  quality  healthcare   at  sustainable  and  reasonable                                                                    
costs.                                                                                                                          
                                                                                                                                
Commissioner Thayer moved to  slide 17: "Benefits: PERS/TRS"                                                                    
related to  Public Employees'  Retirement System  (PERS) and                                                                    
the  Teachers' Retirement  System  (TRS) benefits  payments.                                                                    
The graph  depicted benefit  payments totaling  $140 billion                                                                    
over the next  seventy years. He reported  that the Division                                                                    
of  Retirement and  Benefits  was undergoing  reorganization                                                                    
due to  an expected  surge in  retirement. The  current PERS                                                                    
and TRS account  balance was $19.9 billion. He  spoke to the                                                                    
$11.9  billion unfunded  liability. The  graph on  slide 18:                                                                    
"Benefits:  PERS/TRS"  showed  what   a  payment  under  the                                                                    
percentage level  of pay plan  would be, which grew  to over                                                                    
$1 billion in 2026. The  governor's proposal was depicted on                                                                    
slide  19:  "Benefits:  PERS/TRS." The  governor's  proposal                                                                    
reduced the  overall liability  in FY  15 and  capped yearly                                                                    
payments  at $500  million  through FY  35.   He  identified                                                                    
Slide 20:                                                                                                                       
                                                                                                                                
     New Universal Space Standards                                                                                              
                                                                                                                                
     Why space standards?                                                                                                       
     Save the state over $125 million the next 20 years in                                                                      
     reduced lease costs.                                                                                                       
     Through WSCA contract the state saves significantly on                                                                     
     systems furniture                                                                                                          
     New space will be better for teamwork and                                                                                  
     collaboration among "neighborhoods"                                                                                        
     Better airflow with fewer walls                                                                                            
     Natural light for everyone with private offices toward                                                                     
     core of building                                                                                                           
     Shared printers, scanners and copiers reduce the cost                                                                      
     of individual units                                                                                                        
     Employees can move from one office to another and have                                                                     
     the same working experience in any department                                                                              
     Clean desk policy addresses need for document privacy                                                                      
     in agencies                                                                                                                
                                                                                                                                
Commissioner Thayer  commented that the  department believed                                                                    
that  approximately  $137 million  or  more  could be  saved                                                                    
through universal  space standards  in reduced  lease costs.                                                                    
The  clean desk  policy  had been  implemented  in order  to                                                                    
avoid leaving out confidential documents.  He pointed to the                                                                    
images on slide  21: "What We Use To have"  showing a before                                                                    
and  after  of  the  new  space  standards.  He  photographs                                                                    
depicted  the  Department  of  Corrections  (DOC)  occupying                                                                    
three floors in the Atwood  building in Anchorage and how it                                                                    
looked before and after. He  informed the committee that the                                                                    
space  consolidation,  through   the  new  space  standards,                                                                    
reduced  DOC's space  to one  floor.   He  shared that  many                                                                    
employees had been apprehensive,  but many liked the changes                                                                    
and felt the standards had made a tremendous difference.                                                                        
                                                                                                                                
2:55:20 PM                                                                                                                    
                                                                                                                                
Commissioner Thayer turned to slide 21:                                                                                         
                                                                                                                                
     Purchasing - FY 13 Savings                                                                                                 
                                                                                                                                
     The Division of General Services (DGS) awards multi-                                                                       
     department contracts for use by all Executive Branch                                                                       
     agencies and various political subdivisions of the                                                                         
     state.                                                                                                                     
                                                                                                                                
     The  total   savings  realized  by  DGS   for  FY13  is                                                                    
     $56,691,337,  with  $43,258,568  being saved  by  state                                                                    
     agencies and  the remaining $13,553,567 being  saved by                                                                    
     political subdivisions of the state.                                                                                       
                                                                                                                                
     Some examples of state savings:                                                                                            
          PC Contracts (WSCA-NASPO) - annual savings                                                                            
          $7,918,550                                                                                                            
          Office Supplies - annual savings $7,276,928                                                                           
          Travel - annual savings $6,994,179                                                                                    
          Software - annual savings $5,613,726                                                                                  
      Fuel: Heating, Diesel, Unleaded, Jet A, etc. -                                                                            
          annual savings $5,031,115                                                                                             
       Systems Furniture - annual savings $2,727,574                                                                            
                                                                                                                                
Commissioner Thayer  reported that  the Division  of General                                                                    
Services strove to achieve savings  each year. He pointed to                                                                    
Slide 23:                                                                                                                       
     Operating Increments                                                                                                       
                                                                                                                                
     APOC: Program receipts for lobbyist registration,                                                                          
     $75.2 GF/PR                                                                                                                
     AOGCC: Petroleum Measurement Technical Support, $750.0                                                                     
     AOGCC receipts                                                                                                             
     DRB/HPA: Third Party Administrator Contract Costs,                                                                         
     $5.5M DRB Funds                                                                                                            
     DGS Lease Admin: Transition from GF to I/A, $130.4 GF                                                                      
     --> I/A                                                                                                                    
     DGS Facilities: Transition from I/A to GF, $130.4 I/A                                                                      
     --> GF                                                                                                                     
     DGS Facilities: Transfer Nome SOB from DOT, $201.1 GF                                                                      
     DGS NPBF Facilities: Transfer I/A receipts for General                                                                     
     Services Facilities Maintenance Component, $39.7 I/A                                                                       
     DGS Facilities Maintenance: Transfer out I/A receipts,                                                                     
     -$39.7 I/A                                                                                                                 
     DMV: Vehicle Identification Number Decoder, $28.0                                                                          
     GF/PR                                                                                                                      
     DMV: Knowledge Test System Maintenance, $50.0 GF/PR                                                                        
     OPA: Training for Defense Attorneys, $15.0 MHTAAR                                                                          
     PDA: Social Services Specialist, $138.8 MHTAAR                                                                             
                                                                                                                                
Commissioner Thayer understood that any budget increase was                                                                     
discouraged   and   would    discuss   the   increments   in                                                                    
subcommittee. He Moved to slide 24:                                                                                             
                                                                                                                                
     Deferred Maintenance                                                                                                       
                                                                                                                                
     •DGS: Deferred Maintenance Public Building Fund,                                                                           
      $3,250.0 GF, $3,000.0 other •DGS: Deferred                                                                                
     Maintenance Non-Public Building Fund, $1,000.0 GF                                                                          
     •ETS: SATS Deferred Maintenance year 5 of 5, $3,000.0                                                                      
      GF                                                                                                                        
                                                                                                                                
     Capital Requests                                                                                                           
                                                                                                                                
     •DMV: Replace Outdated information Technology                                                                              
      Infrastructure, $900.0 GF/PR                                                                                              
     •DMV: Real Time Driving Records, $350.0 GF/PR                                                                              
     •ETS: UPS Replacement for Juneau Data Center, $1,200.0                                                                     
      GF                                                                                                                        
                                                                                                                                
Commissioner Thayer relayed that DOA had $80 million in                                                                         
internal deferred maintenance and capital requests and                                                                          
reduced the amount to $10 million. He looked at slide 25:                                                                       
                                                                                                                                
     Other Issues                                                                                                               
                                                                                                                                
     Bargaining Unit Negotiations Marine Units Masters,                                                                         
     Mates and Pilots (MMP)                                                                                                     
     Inlandboatmen's Union of the Pacific (IBU)                                                                                 
     Marine Engineers' Beneficial Association (MEBA)                                                                            
                                                                                                                                
     Public Safety Employees Association (PSEA)                                                                                 
     Alaska Vocational Technical Teachers Association                                                                           
     (AVTECTA)                                                                                                                  
     Legal & Advocacy Appropriation                                                                                             
     - Plea Policy Change                                                                                                       
     IRIS Transition                                                                                                            
     Broadband Access in Rural Alaska                                                                                           
                                                                                                                                
Commissioner Thayer  qualified that the Department  of Law's                                                                    
(DOL)  change in  plea policy  affected DOA  via the  Public                                                                    
Defenders  Agency  and OPA.  He  added  that the  Integrated                                                                    
Resource  Information  System  (IRIS)  transition  cost  $80                                                                    
million  and replaced  the statewide  integrated systems  of                                                                    
accounting and payroll and a  new procurement system and was                                                                    
scheduled to  begin on July  1. 2015. The transition  was on                                                                    
budget and on time. The  department through ETS continued to                                                                    
look  at  bandwidth  concerns in  rural  Alaska.  Other  ETS                                                                    
issues  were  security,  mobile  device  strategy,  identity                                                                    
management, the enhanced base rate  and base rate setting in                                                                    
the  budget process,  and merging  ETS  facilities into  one                                                                    
state of the art facility in Anchorage.                                                                                         
                                                                                                                                
Representative Gara discussed foster  youths. He stated that                                                                    
the number of  fostered youth had increased  and he wondered                                                                    
whether the number of guardian ad litems increased.                                                                             
                                                                                                                                
MICHAEL   BARNHILL,  DEPUTY   COMMISSIONER,  DEPARTMENT   OF                                                                    
ADMINISTRATION, explained that  he did not have  the data to                                                                    
answer  the  question.  The primary  way  OPA  managed  case                                                                    
growth load in  the past was through the  CASA program where                                                                    
volunteers  serve as  guardian ad  litems. He  supported the                                                                    
idea of  utilizing volunteers whenever possible.  He offered                                                                    
to follow up with more specific data.                                                                                           
                                                                                                                                
Representative Gara requested the follow up.                                                                                    
                                                                                                                                
Representative Edgmon discussed  the problems with bandwidth                                                                    
in rural  Alaska and encouraged  the department  to continue                                                                    
its work.                                                                                                                       
                                                                                                                                
Commissioner  Thayer replied  that he  would follow  up with                                                                    
bandwidth statistics  across the  state. The  department had                                                                    
been  watching  Dillingham   specifically  and  thought  the                                                                    
information would be useful.                                                                                                    
                                                                                                                                
Representative  Costello  understood that  the  commissioner                                                                    
had  a tough  job. She  commended the  commissioner and  his                                                                    
staff  on  the innovative  way  they  approach the  work  of                                                                    
creating efficiencies  in state government. She  asked about                                                                    
the   customer  service   survey  and   wondered  if   other                                                                    
departments could employ the survey.                                                                                            
Commissioner  Thayer  replied  that  the  department  relied                                                                    
heavily on the use of surveys for feedback.                                                                                     
                                                                                                                                
Mr.  Barnhill  replied  that   the  department  used  Survey                                                                    
Monkey. He believed  it was important for  any service based                                                                    
organization to touch base with  customers to determine what                                                                    
the  department  was  doing   right,  wrong,  and  could  be                                                                    
improved.                                                                                                                       
                                                                                                                                
HB  266  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  267  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:09:58 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:09 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
UOA FY15 HFIN-Overview.pdf HFIN 2/4/2014 1:30:00 PM
UOA Budget Overview HFIN
DOA-DeptOverview2014(02-04-14) HFin-Final.pdf HFIN 2/4/2014 1:30:00 PM
DOA Budget Overview HFIN