Legislature(2013 - 2014)HOUSE FINANCE 519

03/31/2014 08:30 AM FINANCE


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08:35:38 AM Start
08:37:03 AM Confirmation Hearing: Angela Rodell, Department of Revenue
09:16:41 AM HB21
10:21:29 AM HB127
10:32:07 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearing: TELECONFERENCED
- Commissioner, Dept. of Revenue, Angela Rodell
+ HB 127 OMBUDSMAN TELECONFERENCED
Heard & Held
+= HB 21 FOUR-DAY SCHOOL WEEK TELECONFERENCED
Moved CSHB 21(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 31, 2014                                                                                            
                         8:35 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
8:35:38 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 8:35 a.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 Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Angela   Rodell,   Commissioner  Designee,   Department   of                                                                    
Revenue;  Daniel George,  Staff,  Co-Chair Stoltze;  Michael                                                                    
Hanley,  Commissioner,  Department  of Education  and  Early                                                                    
Development;  Kathy   Lea,  Deputy  Director,   Division  of                                                                    
Retirement and Benefits,  Department of Administration; Andy                                                                    
Mills, Special Assistant to  the Commissioner, Department of                                                                    
Administration; Beth Leibowitz,  Assistant Ombudsman, Office                                                                    
of the Ombudsman.                                                                                                               
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Linda Lord-Jenkins, State Ombudsman, Anchorage                                                                                  
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 21     FOUR-DAY SCHOOL WEEK                                                                                                  
          CSHB 21(FIN)  was REPORTED  out of  committee with                                                                    
          no  recommendation and  with one  new zero  fiscal                                                                    
          note  from  Department   of  Education  and  Early                                                                    
          Development  and one  new  zero  fiscal note  from                                                                    
          Department of Administration.                                                                                         
                                                                                                                                
          [Note:   Action  to   report  CSHB   21(FIN)  from                                                                    
          committee was rescinded on  April 1, 2014. Further                                                                    
          discussion on  the bill and fiscal  notes occurred                                                                    
          and  the bill  was  reported out  of committee  at                                                                    
          that  time. See  minutes  for the  April 1,  2014,                                                                    
          8:30 a.m. meeting for detail.]                                                                                        
                                                                                                                                
HB 127    OMBUDSMAN                                                                                                             
                                                                                                                                
          HB  127  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
^CONFIRMATION HEARING: ANGELA RODELL, DEPARTMENT OF REVENUE                                                                   
                                                                                                                                
8:37:03 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze                                                                                                                
                                                                                                                                
ANGELA   RODELL,   COMMISSIONER  DESIGNEE,   DEPARTMENT   OF                                                                    
REVENUE,  introduced herself  as  the commissioner  designee                                                                    
for  the  Department of  Revenue  (DOR).  She gave  a  brief                                                                    
overview of  her public service  and education  history. She                                                                    
revealed  that   her  work  as   a  financial   advisor  and                                                                    
investment banker in New York  City first connected her with                                                                    
the Alaska  Housing Finance  Corporation (AHFC).  She shared                                                                    
that her visit  state in 1996 had made  a lasting impression                                                                    
on  her. She  felt that  Alaska had  weathered well  its oil                                                                    
price based, volatile financial  system and had continued to                                                                    
develop  and  grow  while   attracting  new  residents.  She                                                                    
relayed that she jumped at  the opportunity for the position                                                                    
of  Deputy  Director  for the  Department  of  Revenue.  She                                                                    
appreciated  the opportunity  to  influence discussions  and                                                                    
make   a   difference.   She  looked   forward   to   future                                                                    
opportunities.                                                                                                                  
                                                                                                                                
8:42:34 AM                                                                                                                    
                                                                                                                                
Representative  Gara appreciated  the polite  nature of  the                                                                    
commissioner designee.  He expressed dismay about  SB 21 and                                                                    
the latest revenue forecast from DOR.                                                                                           
                                                                                                                                
Ms.  Rodell  appreciated  the  kind   words.  She  spoke  to                                                                    
Alaska's  future  maneuvering  in   light  of  the  national                                                                    
financial climate.                                                                                                              
                                                                                                                                
8:45:28 AM                                                                                                                    
                                                                                                                                
Representative  Gara   wondered  if  the   commissioner  was                                                                    
working on the issue of  reducing the over 7 percent student                                                                    
loan interest rate in the state.                                                                                                
                                                                                                                                
Ms.  Rodell  replied  that  she  was on  the  board  of  the                                                                    
corporation   and   had   reviewed  multiple   options   for                                                                    
improvement. She  said that  currently the  market penalized                                                                    
student loan  borrowers who had  no collateral.  She relayed                                                                    
that   the  federal   government   had  applied   structures                                                                    
governing loan  programs. She mentioned a  statute passed by                                                                    
the legislature that provided  assistance to the corporation                                                                    
through a  letter of credit  that would help  to recalibrate                                                                    
the balance sheet and make them more competitive.                                                                               
                                                                                                                                
8:48:15 AM                                                                                                                    
                                                                                                                                
Representative Costello  asked what  Ms. Rodell  thought the                                                                    
state's greatest challenges would be  in the future, and how                                                                    
the designee was suited face the challenges.                                                                                    
                                                                                                                                
Ms. Rodell  replied that  the state  would need  to maintain                                                                    
patience in  order to see  through to fruition  the policies                                                                    
that had  been enacted. She  mentioned SB 21,  and explained                                                                    
that  it would  take  time to  see how  the  new tax  regime                                                                    
worked  and  would  generate  results.  She  felt  that  the                                                                    
greatest challenge  facing the state was  the willingness to                                                                    
be patient and  to take on some risk for  huge benefits 5 to                                                                    
10 years in the future.                                                                                                         
                                                                                                                                
8:50:19 AM                                                                                                                    
                                                                                                                                
Representative Thompson  asked whether  Ms. Rodell  would be                                                                    
able  to  successfully  lead the  department  with  possibly                                                                    
fewer personnel due to Alaska's lean economic future.                                                                           
                                                                                                                                
Ms. Rodell replied  that she had complete  confidence in the                                                                    
department's staff.  She stressed that she  strove to arrive                                                                    
at  solutions to  operating  with less.  She  felt that  the                                                                    
investment in technology coupled  with the creativity of the                                                                    
staff  would continue  to deliver  positive results  for the                                                                    
state.                                                                                                                          
8:51:56 AM                                                                                                                    
                                                                                                                                
Representative  Munoz  asked  how   Ms.  Rodell  viewed  the                                                                    
state's  financial  future.  She wondered  how  the  state's                                                                    
retiree security compared to Virginia and Illinois.                                                                             
                                                                                                                                
Ms. Rodell  replied that  the state  was on  solid financial                                                                    
footing because  of its reserve position.  She applauded the                                                                    
legislators  for not  taking the  reserves for  granted. The                                                                    
unfunded  liability  provided  the flag  for  investors  and                                                                    
outsiders.   She   noted   that   the   actuarial   required                                                                    
contributions  were always  made  and  benefits were  always                                                                    
paid. She  felt that it was  incumbent on the state  to meet                                                                    
its  responsibility in  term of  past obligations.  She said                                                                    
that Virginia had  figured out a way to  include the funding                                                                    
requests.   Illinois   turned   funding  of   pensions   and                                                                    
retirement into  one-shot questions  each year,  and started                                                                    
using it to  balance, or not balance,  their budget, causing                                                                    
their unfunded liability to grow.                                                                                               
                                                                                                                                
8:56:09 AM                                                                                                                    
                                                                                                                                
Representative   Guttenberg   thought  that   Ms.   Rodell's                                                                    
confidence was  reassuring. He wondered how  the state would                                                                    
balance  the  opposing  forces   of  moving  from  a  taxing                                                                    
regulatory agency to being a commercial partner.                                                                                
                                                                                                                                
Commissioner  Rodell replied  that balancing  the two  would                                                                    
provide  a  challenge for  Alaska.  She  believed that  only                                                                    
being  a taxing  regulatory agency  placed the  state in  an                                                                    
adversarial role that  cost the state time,  legal fees, and                                                                    
lost  revenue  collection.  By   moving  into  a  commercial                                                                    
partnership the state  would move onto the same  side of the                                                                    
table as  industry and would  ensure that revenues  were not                                                                    
impacted as  they had  been in the  past. She  believed that                                                                    
the  change would  result in  future revenue  growth to  the                                                                    
state, ensure commercialization of  North Slope gas, and get                                                                    
gas to Alaskans.                                                                                                                
                                                                                                                                
8:59:37 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg queried  Ms. Rodell's  experience                                                                    
working  with  other  entities involved  in  commercial  and                                                                    
regulatory processes.                                                                                                           
                                                                                                                                
Commissioner Rodell replied that  the closest comparison she                                                                    
could  offer included  privatizing  the  electric system  in                                                                    
California, which had failed miserably.  She worked with the                                                                    
state  on  an $11  billion  bale  out of  the  privatization                                                                    
effort.  She  believed  that the  experience,  although  not                                                                    
directly  connected to  the oil  and gas  issues of  Alaska,                                                                    
provided her  enough skills to  handle a large project  in a                                                                    
regulatory environment.                                                                                                         
                                                                                                                                
9:01:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Austerman discussed volatility  of being a resource                                                                    
export state. He wondered whether  Ms. Rodell had considered                                                                    
the work that would need to be  done by the state in its new                                                                    
commercial partner role.                                                                                                        
                                                                                                                                
Commissioner  Rodell replied  that the  state had  over $100                                                                    
billion   under  the   management   Alaska  Permanent   Fund                                                                    
Corporation  and the  Department  of  Revenue. She  believed                                                                    
that there were tremendous  financial resources in the state                                                                    
that could be  used to stimulate the growth  of an industry.                                                                    
She  thought  that  there was  an  opportunity  to  generate                                                                    
different  types of  work; technology  had  changed how  the                                                                    
world worked  and the  state needed  to look  beyond natural                                                                    
resources for  generating jobs. She said  that management of                                                                    
asset allocation would  continue to need to  be monitored in                                                                    
order to ensure  that the state maintained  a certain amount                                                                    
of  revenue. She  said that  hedging against  oil production                                                                    
and oil  price had been  discussed and would continue  to be                                                                    
considered. She  relayed that some policies  were easier and                                                                    
less expensive to pursue when  there were more resources and                                                                    
a better rating. She stressed  that people were more willing                                                                    
to lend money  to an entity with plenty of  money and a good                                                                    
credit rating.                                                                                                                  
                                                                                                                                
9:05:24 AM                                                                                                                    
                                                                                                                                
Co-Chair Austerman  commented that  it would take  some time                                                                    
to  change  the economics  of  a  state  that was  based  on                                                                    
nonrenewable  resources. He  was hopeful  that the  economic                                                                    
base would be determined sooner rather than later.                                                                              
                                                                                                                                
Representative Gara paraphrased quote  from Roger Marks in a                                                                    
March 28,  2014, Alaska Dispatch  article that spoke  to the                                                                    
state's scoping investment and  25 percent responsibility in                                                                    
the gasline.  He expressed concern  that the risk  the state                                                                    
was  taking was  disproportionate  to the  benefit it  would                                                                    
reap.                                                                                                                           
                                                                                                                                
9:08:24 AM                                                                                                                    
                                                                                                                                
Commissioner Rodell  replied that government take  in Alaska                                                                    
included  federal   take.  She  said  that   BP,  Exxon  and                                                                    
ConocoPhillips  would   take  on  all  of   the  liabilities                                                                    
associated  with federal  income  tax. She  shared that  the                                                                    
royalty in  value vs. royalty in-kind  study had highlighted                                                                    
what  the royalty  take  would  need to  be;  in most  other                                                                    
countries  the royalty  take was  significantly reduced  and                                                                    
production tax  take was increased.  In Alaska  royalty went                                                                    
not  only  to  the  state  general fund,  but  also  to  the                                                                    
permanent fund. The department had  made a conscience effort                                                                    
to not  ask for any  reduction in royalty, which  meant that                                                                    
the  other factor  for adjustment  would  be the  production                                                                    
tax.  She disagreed  with Mr.  Mark's  assessment. She  said                                                                    
that there was  a possibility that the gasline  would not go                                                                    
forward, but  the state  should still  be at  the investment                                                                    
table.                                                                                                                          
                                                                                                                                
Co-Chair Stoltze  supported the advancement of  Ms. Rodell's                                                                    
name for the appointment as commissioner.                                                                                       
                                                                                                                                
9:13:40 AM                                                                                                                    
                                                                                                                                
Representative Costello MOVED to  advance the name of Angela                                                                    
Rodell for  appointment as  commissioner for  the Department                                                                    
of  Revenue.  This  name  will  be  forwarded  to  the  full                                                                    
membership  for   the  Legislature  in  joint   session  for                                                                    
consideration and  a final vote.  There being  NO OBJECTION,                                                                    
it was so ordered.                                                                                                              
                                                                                                                                
9:14:36 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:16:31 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 21                                                                                                             
                                                                                                                                
     "An Act relating to the length of a school week; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
9:16:41 AM                                                                                                                    
                                                                                                                                
Representative   Costello  MOVED   to  ADOPT   the  proposed                                                                    
committee  substitute for  HB  21,  Work Draft  28-LS0137\S,                                                                    
(Mischel, 3/30/14).                                                                                                             
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
DANIEL GEORGE,  STAFF, CO-CHAIR  STOLTZE, discussed  the CS.                                                                    
He  explained   that  the   version  before   the  committee                                                                    
mentioned  "alternate school  term"  in place  of "four  day                                                                    
school week."  He said  that Sections  1 and  2 of  the bill                                                                    
defied the  criteria required for  school boards  to address                                                                    
their application  to pursue a  calendar that was  less than                                                                    
172  total  days.   A  section  was  added   to  provide  an                                                                    
alternative  "Days  of  Service" chart,  in  which  teachers                                                                    
could receive  credits toward their retirement  and benefits                                                                    
while working in a shortened calendar year.                                                                                     
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered. The CS was adopted.                                                                               
                                                                                                                                
Representative Wilson endorsed the  changes reflected in the                                                                    
new bill version. She said  that the bill would allow school                                                                    
districts to operate  regularly based on the  number of days                                                                    
in session, or on an alternative schedule based on hours.                                                                       
                                                                                                                                
9:20:34 AM                                                                                                                    
                                                                                                                                
Representative  Costello  relayed   that  other  states  had                                                                    
adopted the practice of measuring  the school year in hours.                                                                    
She  believed that  the practice  would provide  for greater                                                                    
flexibility for crafting  curriculum specific to communities                                                                    
and families.  She believed  that innovative  methods should                                                                    
be explored for delivering education across the state.                                                                          
                                                                                                                                
9:22:17 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg discussed  Page  2,  line 16.  He                                                                    
asked  how   the  public  comment  would   be  gathered  and                                                                    
presented to the commissioner.                                                                                                  
                                                                                                                                
Representative Wilson  responded that discussion  and public                                                                    
comment would take place at community meetings.                                                                                 
                                                                                                                                
Representative Guttenberg understood that  it would be up to                                                                    
the  school districts  to  demonstrate  to the  commissioner                                                                    
that a meeting was held and that public comment was taken.                                                                      
                                                                                                                                
Representative Wilson  agreed. She  stressed that a  vote of                                                                    
some  sort must  occur by  district  or school  in order  to                                                                    
determine  support.  She  stressed  the  importance  of  not                                                                    
micromanaging districts in order to give them flexibility.                                                                      
                                                                                                                                
9:25:07 AM                                                                                                                    
                                                                                                                                
Representative  Gara  understood  that school  boards  would                                                                    
have  to adopt  any  changes put  forth  by communities.  He                                                                    
cited stipulations in Section 2.                                                                                                
                                                                                                                                
Representative  Wilson  replied  that  a  community  meeting                                                                    
would  occur   first  in  order   to  assess   the  majority                                                                    
consensus. She  stated that  the intent of  the bill  was to                                                                    
achieve  higher  attendance  rates  and  to  enable  student                                                                    
participation in sports and other  activities. She said that                                                                    
another  discussion would  occur at  the school  board level                                                                    
where public testimony would again be taken.                                                                                    
                                                                                                                                
Representative  Gara surmised  that the  school board  would                                                                    
make the ultimate decision on the school schedule.                                                                              
                                                                                                                                
9:28:18 AM                                                                                                                    
                                                                                                                                
Representative  Wilson  replied   in  the  affirmative.  She                                                                    
clarified  that the  bill required  that there  be a  public                                                                    
comment period  and that  the public  opinion, not  just the                                                                    
school board's decision, be taken  into consideration by the                                                                    
commissioner.                                                                                                                   
                                                                                                                                
Representative  Gara  requested   assurances  that  students                                                                    
would be  required to be in  school for a certain  number of                                                                    
hours,  regardless of  the number  of days,  and that  there                                                                    
would be no changes in retirement benefits for teachers.                                                                        
                                                                                                                                
9:30:16 AM                                                                                                                    
                                                                                                                                
Representative  Wilson  said  that the  bill  addressed  the                                                                    
retirement  issue; teachers  would receive  the full  year's                                                                    
retirement credit.                                                                                                              
                                                                                                                                
Co-Chair Stoltze OPENED public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze  warned of  the complications  and possible                                                                    
litigation that could arise from altering schedules.                                                                            
MICHAEL  HANLEY, COMMISSIONER,  DEPARTMENT OF  EDUCATION AND                                                                    
EARLY  DEVELOPMENT,   replied  that   the  ability   for  an                                                                    
alternate calendar  was in current  statute. He  shared that                                                                    
the language of the statute  specified that the hours needed                                                                    
to be  equivalent to  a 180  school year.  He said  that the                                                                    
schedule  could  be  crafted  in  order  to  meet  the  time                                                                    
requirements for retirement benefits.  He referenced Page 2,                                                                    
line  3, which  stated that  the hours  no longer  needed to                                                                    
meet the equivalent  of a 180 day school  year. He furthered                                                                    
that the hours currently  referenced in statute were minimal                                                                    
floor hours and were used  for situations in which disasters                                                                    
took  place and  calendars needed  to be  adjusted. He  said                                                                    
that  by removing  the 180  connection  the school  district                                                                    
would be allowed to approve  a calendar that met the minimal                                                                    
number of  hours and could result  in up to 7  weeks less of                                                                    
instruction  for  students.  He  felt  that  shortening  the                                                                    
school year  would not  be beneficial  to students.  He felt                                                                    
that  very   few  school  districts   would  switch   to  an                                                                    
alternative  schedule  and  those   would  likely  be  small                                                                    
districts that had unique situations.                                                                                           
                                                                                                                                
9:36:47 AM                                                                                                                    
                                                                                                                                
KATHY  LEA,  DEPUTY  DIRECTOR, DIVISION  OF  RETIREMENT  AND                                                                    
BENEFITS,  DEPARTMENT  OF   ADMINISTRATION,  testified  that                                                                    
teacher's working  for a school  district that  had received                                                                    
approval  from   the  Department  of  Education   and  Early                                                                    
Development to be on an  alternate school term would receive                                                                    
a year's worth of service toward retirement.                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked about the contract  negotiations. He                                                                    
understood  the responsibility  to fund,  but wondered  what                                                                    
would happen  if the change  was unsuccessful and had  to be                                                                    
reversed mid-year.                                                                                                              
                                                                                                                                
9:38:06 AM                                                                                                                    
                                                                                                                                
Representative Wilson  replied that contracts would  need to                                                                    
be  renegotiated.  She  believed  that  some  schools  would                                                                    
embrace the  idea and that  others would not  take advantage                                                                    
of the opportunity.                                                                                                             
                                                                                                                                
Co-Chair Stoltze  reiterated that  it would be  difficult to                                                                    
reverse from a four day week back to a five day week.                                                                           
                                                                                                                                
9:41:03 AM                                                                                                                    
                                                                                                                                
Representative  Munoz asked  how  many  hours students  were                                                                    
required to be in school during the 180 days.                                                                                   
                                                                                                                                
Commissioner  Hanley replied  that  the school  day was  6.5                                                                    
hours  long; typically  1020  hours in  the  180 day  school                                                                    
year.                                                                                                                           
                                                                                                                                
Representative  Munoz understood  that the  proposal in  the                                                                    
bill would lower the hours by 120.                                                                                              
                                                                                                                                
Commissioner  Hanley replied  yes, that  it would  allow the                                                                    
minimum  number of  hours. He  clarified  that the  district                                                                    
currently had  a 180 day school  year with 10 of  those days                                                                    
being in-service days.                                                                                                          
                                                                                                                                
9:42:47 AM                                                                                                                    
                                                                                                                                
Representative Gara  understood that  the bill  would result                                                                    
in some districts offering less school hours.                                                                                   
                                                                                                                                
Commissioner   Hanley  replied   that   the  minimal   hours                                                                    
recognized a minimum  school day set at 4  hours for younger                                                                    
students, and  5 hours for older.  He said that that  was in                                                                    
statute to  recognize days with parent  conferences or early                                                                    
release. He  said that there  were no school  districts that                                                                    
operated daily for  4 or 5 hours, but for  longer periods of                                                                    
time. He  stressed that even  though the minimum  was there,                                                                    
when the  180 or 170  student days  was in place,  over 1000                                                                    
hours was typical.                                                                                                              
                                                                                                                                
Representative  Gara asked  if  student  would be  attending                                                                    
school  for the  same  number  of hours  or  less under  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Commissioner  Hanley replied  that  it would  be  up to  the                                                                    
districts. The  bill would allow  them to come  forward with                                                                    
fewer days and fewer hours.                                                                                                     
                                                                                                                                
Representative Gara expressed concern  that student would be                                                                    
attending school for fewer hours than they were currently.                                                                      
                                                                                                                                
Commissioner  Hanley  replied   that  currently  all  school                                                                    
districts  exceeded the  minimum  number of  hours. He  said                                                                    
that shifting  to 4  days a week,  while keeping  the school                                                                    
day the  same number  of hours,  would reduce  the student's                                                                    
time in school by 20 percent.                                                                                                   
                                                                                                                                
9:46:32 AM                                                                                                                    
                                                                                                                                
Representative Edgmon asked why  the schedule approval would                                                                    
be left up to the board and not the department.                                                                                 
                                                                                                                                
Representative Wilson replied the  decision would be a local                                                                    
one.  She said  that once  the  plan was  determined by  the                                                                    
school  board it  would advance  to the  department and  the                                                                    
department  would  ensure  that  the plan  met  all  of  the                                                                    
necessary requirements.                                                                                                         
                                                                                                                                
Representative  Edgmon  asked  why the  board  of  education                                                                    
needed to  be involved  when the  decision could  be handled                                                                    
solely be the department.                                                                                                       
                                                                                                                                
9:48:06 AM                                                                                                                    
                                                                                                                                
Commissioner  Hanley  replied  that currently  local  school                                                                    
boards set the yearly  calendars, which the bill maintained.                                                                    
The only change  would be approval from  the commissioner of                                                                    
the  department  when dropping  below  a  certain number  of                                                                    
days.                                                                                                                           
                                                                                                                                
9:50:11 AM                                                                                                                    
                                                                                                                                
Representative Munoz asked  whether the commissioner already                                                                    
had the ability to approve the alternative schedule.                                                                            
                                                                                                                                
Commissioner Hanley replied yes.                                                                                                
                                                                                                                                
Representative   Munoz  wondered   whether   the  bill   was                                                                    
necessary  given  the  authority   already  offered  to  the                                                                    
commissioner.                                                                                                                   
                                                                                                                                
Commissioner Hanley  replied that the bill  changed the time                                                                    
a  teacher  needed to  work  to  achieve  the full  year  of                                                                    
retirement credit.                                                                                                              
                                                                                                                                
Representative  Wilson   thought  that   the  commissioner's                                                                    
authority was based on a 4 day school week.                                                                                     
                                                                                                                                
Commissioner Hanley  replied that the authority  offered him                                                                    
the  ability  to approve  an  alternate  calendar that  fell                                                                    
below the currently required days.  He noted that there were                                                                    
a  significant number  of  alternative  calendars that  were                                                                    
already being used.                                                                                                             
                                                                                                                                
Representative  Wilson believed  that if  that was  the case                                                                    
then  the  main  issue  would be  to  ensure  that  teachers                                                                    
received the  full year's retirement credit  for working the                                                                    
alternate calendar  years. She  stressed that the  intent of                                                                    
the bill was not about  teachers working less, but addressed                                                                    
that a  school with  a 172  day calendar  did not  mean that                                                                    
students were  in the school  for all  of the 172  days. She                                                                    
said that the alternate schedule was to improve attendance.                                                                     
                                                                                                                                
9:54:10 AM                                                                                                                    
                                                                                                                                
Representative  Thompson  wondered  whether  shortening  the                                                                    
school week would result in a better product.                                                                                   
                                                                                                                                
Representative Wilson appreciated  the concern. She believed                                                                    
that  allowing   flexibility  to  districts   would  improve                                                                    
attendance  levels. She  believed  that  the community  lead                                                                    
decision making process was a safeguard.                                                                                        
                                                                                                                                
9:57:36 AM                                                                                                                    
                                                                                                                                
Representative Edgmon understood that  the bill would put in                                                                    
place a pilot program that  would enable school districts to                                                                    
better utilize custom calendar  models. He expressed concern                                                                    
that  only  a small  number  of  school districts  statewide                                                                    
would  be able  to participate  in the  program. He  relayed                                                                    
that  in bush  Alaska  the  schools were  the  pulse of  the                                                                    
community  during the  school year.  He expressed  disbelief                                                                    
that any of the smaller schools  would elect to shift to a 4                                                                    
day week.  He thought that  the bill was idealistic  and not                                                                    
realistic.                                                                                                                      
                                                                                                                                
9:59:52 AM                                                                                                                    
                                                                                                                                
Representative  Costello asked  if  the conscience  decision                                                                    
had been  made by the sponsor  to not involve a  policy call                                                                    
in changing what  was currently required in  statute for the                                                                    
minimum hours for schools.                                                                                                      
                                                                                                                                
Representative Wilson  responded that the 4  day school week                                                                    
was already statute  and could be implemented  by the school                                                                    
board  without  community  involvement. She  said  that  the                                                                    
issue that  the bill  addressed was the  retirement portion.                                                                    
She felt that further discussions  needed to be had with the                                                                    
commissioner  concerning  the  parameters of  the  alternate                                                                    
schedule possibilities. She felt  that any changes should be                                                                    
directed  by   a  community   decision.  She   thought  that                                                                    
community   involvement  in   dramatic   changes  would   be                                                                    
imperative in order for the change to be successful.                                                                            
                                                                                                                                
Co-Chair Stoltze  clarified that  the latest version  of the                                                                    
bill did not categorize the program as a pilot program.                                                                         
                                                                                                                                
10:02:35 AM                                                                                                                   
                                                                                                                                
Representative  Costello  asked  if the  legislature  should                                                                    
increase  the  minimum  hours  of  a  school  day  in  state                                                                    
statute.                                                                                                                        
                                                                                                                                
Commissioner  Hanley replied  that  a separate  conversation                                                                    
was necessary to address the issue.                                                                                             
                                                                                                                                
Representative Costello  agreed. She stressed that  the bill                                                                    
was  not  an  effort  to  reduce the  number  of  hours  for                                                                    
schools, but was an effort  to give schools more flexibility                                                                    
in their calendar.                                                                                                              
                                                                                                                                
ANDY   MILLS,  SPECIAL   ASSISTANT   TO  THE   COMMISSIONER,                                                                    
DEPARTMENT OF  ADMINISTRATION, pointed out to  the committee                                                                    
that Page 2,  line 19. He spoke to AS  14.25.22, which spoke                                                                    
to a  calendar for pension  service credit for  teacher that                                                                    
was 133 days or more.                                                                                                           
                                                                                                                                
Co-Chair  Stoltze agreed  that changes  should be  made with                                                                    
caution.                                                                                                                        
                                                                                                                                
Mr. Mills replied  that it would be something  to watch for.                                                                    
He said that any changes to  hours would be very much a part                                                                    
of the contract negotiations.                                                                                                   
                                                                                                                                
Co-Chair Stoltze  asserted that absolutely changes  would be                                                                    
addressed in the contract negotiation process.                                                                                  
                                                                                                                                
Representative Gara  expressed concern that  districts would                                                                    
reduce the number of student school hours.                                                                                      
                                                                                                                                
10:09:19 AM                                                                                                                   
                                                                                                                                
Representative  Wilson   believed  that  the  issue   was  a                                                                    
separate discussion.  She said that the  state currently did                                                                    
not  mandate  more than  172  days.  She asked  whether  the                                                                    
success of  a student  was measured by  the amount  of hours                                                                    
spent  in the  classroom  or test  scores.  She assured  the                                                                    
committee  that the  bill  would not  change  the amount  of                                                                    
hours currently required. The bill  was meant to address the                                                                    
issue of retirement. She contended  that the district needed                                                                    
support and flexibility rather than additional regulation.                                                                      
                                                                                                                                
10:13:24 AM                                                                                                                   
                                                                                                                                
Representative Guttenberg asked whether  there was an appeal                                                                    
process in place  for those who could be  opposed to changes                                                                    
in their districts.                                                                                                             
                                                                                                                                
Commissioner Hanley replied  that items 1 through  3 on Page                                                                    
2 listed the current requirements.  He said that the current                                                                    
statute  indicated  that  the school  board  would  adopt  a                                                                    
schedule that would be approved by the commissioner.                                                                            
                                                                                                                                
10:15:40 AM                                                                                                                   
                                                                                                                                
Representative  Costello  discussed  the two  fiscal  notes.                                                                    
Both had zero fiscal impact.                                                                                                    
                                                                                                                                
Co-Chair Stoltze  stated that a  letter of intent  should be                                                                    
drafted  to   accompany  the  legislation   that  recognized                                                                    
unstated but potential future costs.                                                                                            
                                                                                                                                
Representative Wilson agreed to include a letter of intent.                                                                     
                                                                                                                                
Representative Costello MOVED to  REPORT CSHB 21(FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  21(FIN)   was  REPORTED  out  of   committee  with  no                                                                    
recommendation  and  with  one  new zero  fiscal  note  from                                                                    
Department of  Education and Early  Development and  one new                                                                    
zero fiscal note from Department of Administration.                                                                             
                                                                                                                                
10:18:54 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:21:18 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 127                                                                                                            
                                                                                                                                
     "An Act clarifying that the Alaska Bar Association is                                                                      
     an agency for purposes of investigations by the                                                                            
     ombudsman;  relating to  compensation of  the ombudsman                                                                    
     and  to  employment of  staff  by  the ombudsman  under                                                                    
     personal  service  contracts;  providing  that  certain                                                                    
     records of communications between  the ombudsman and an                                                                    
     agency are  not public records; relating  to disclosure                                                                    
     by  an  agency  to   the  ombudsman  of  communications                                                                    
     subject  to attorney-client  and attorney  work-product                                                                    
     privileges; relating to informal  and formal reports of                                                                    
     opinions and  recommendations issued by  the ombudsman;                                                                    
     relating  to  the privilege  of  the  ombudsman not  to                                                                    
     testify  and  creating  a  privilege  under  which  the                                                                    
     ombudsman   is  not   required   to  disclose   certain                                                                    
     documents;  relating to  procedures for  procurement by                                                                    
     the ombudsman;  relating to the definition  of 'agency'                                                                    
     for  purposes  of  the   Ombudsman  Act  and  providing                                                                    
     jurisdiction  of the  ombudsman over  persons providing                                                                    
     certain  services   to  the  state  by   contract;  and                                                                    
     amending Rules 501 and 503, Alaska Rules of Evidence."                                                                     
                                                                                                                                
10:21:29 AM                                                                                                                   
                                                                                                                                
BETH LEIBOWITZ, ASSISTANT OMBUDSMAN, OFFICE OF THE                                                                              
OMBUDSMAN, offered a sponsor statement:                                                                                         
                                                                                                                                
     The  Ombudsman  Act (AS  24.55)  has  not changed  much                                                                    
     since  enactment in  1975, which  speaks  well for  its                                                                    
     basic structure.  The ombudsman requested  and obtained                                                                    
     some  modifications of  the Ombudsman  Act in  1990. It                                                                    
     has  become  apparent  that  the  Ombudsman  Act  would                                                                    
     benefit  from updates  to address  several issues  that                                                                    
     have arisen since 1990.                                                                                                    
                                                                                                                                
     The following  is a brief sectional  description of the                                                                    
     bill:                                                                                                                      
                                                                                                                                
        · Section 1 of CSHB 127(JUD) provides that the                                                                          
          ombudsman may  receive a step increase  in salary,                                                                    
          rather than remaining  Step A of Range  26 for the                                                                    
          ombudsman's entire term or terms.                                                                                     
        · Section 2 clarifies the ombudsman's authority to                                                                      
          hire  additional staff  using a  personal services                                                                    
          contract pursuant to AS 24.55.060(f).                                                                                 
        · Section 3 amends a section on the ombudsman's                                                                         
          investigatory   authority  to   refer  simply   to                                                                    
          "agency"  instead of  "state agency."  This brings                                                                    
          the section into conformance with  the rest of the                                                                    
          Ombudsman  Act  (AS   24.55),  which  consistently                                                                    
          refers   to    the   ombudsman's    authority   to                                                                    
          investigate an administrative "agency."                                                                               
        · Section 4 prevents a general waiver of attorney-                                                                      
          client  privilege by  an agency  if it  shares its                                                                    
          attorney's  advice with  the Officer  Ombudsman in                                                                    
          order to explain the agency's actions.                                                                                
        · Section 5 improves the wording of the ombudsman's                                                                     
          existing  privilege  not  to  testify  or  produce                                                                    
          records   regarding   matters   brought   to   the                                                                    
          ombudsman's  attention   in  the  course   of  her                                                                    
          duties.                                                                                                               
        · Section 6 modernizes the ombudsman's procurement                                                                      
          authority.                                                                                                            
        · Sections 7 and 8 state that sections 4 and 5 are                                                                      
          indirect  court   rule  amendments   because  they                                                                    
          modify  evidentiary  rules,   and  that  therefore                                                                    
          sections  4   and  5  only  take   effect  if  the                                                                    
          legislation is  approved by a  two-thirds majority                                                                    
          vote  of  each  house,  as required  by  Art.  IV,                                                                    
          Section  15 of  the Constitution  of the  State of                                                                    
          Alaska.                                                                                                               
                                                                                                                                
10:26:41 AM                                                                                                                   
                                                                                                                                
LINDA   LORD-JENKINS,   STATE  OMBUDSMAN,   ANCHORAGE   (via                                                                    
teleconference),  supported  the  comments provided  by  her                                                                    
assistant.                                                                                                                      
                                                                                                                                
Representative Guttenberg  asked whether  sections 4  and 5.                                                                    
applied when the ombudsman was not an attorney.                                                                                 
                                                                                                                                
Ms. Leibowitz  clarified that the  section did not  speak to                                                                    
attorney-client privilege.  She said that the  privilege was                                                                    
typical of ombudsman  statutes and was designed  to keep the                                                                    
ombudsman   from  being   a  witness   in  other   forms  of                                                                    
litigation.                                                                                                                     
                                                                                                                                
Representative Guttenberg  understood that the  courts could                                                                    
not compel an ombudsman or their staff under Section 5.                                                                         
                                                                                                                                
Ms.  Leibowitz replied  that that  was her  understanding of                                                                    
the section.                                                                                                                    
                                                                                                                                
10:29:13 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze asked about jurisdiction and interface                                                                         
between criminal activities of a statutorily empowered                                                                          
agency.                                                                                                                         
                                                                                                                                
Ms. Lord-Jenkins replied nothing had changed in the way the                                                                     
office had historically handled those matters.                                                                                  
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
HB 127 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:32:07 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:32 a.m.                                                                                         

Document Name Date/Time Subjects
HB127 Sponsor Statement March 26 2014.pdf HFIN 3/31/2014 8:30:00 AM
HB 127
HB127 Explanation of Changes March 26 2014.pdf HFIN 3/31/2014 8:30:00 AM
HB 127
HB 21 - CS(FIN) - Ver S - 3.30.14.pdf HFIN 3/31/2014 8:30:00 AM
HB 21