Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2015 08:30 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 9:00 a.m. Today --
Moved CSHB 105(FIN) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 14, 2015                                                                                            
                         9:05 a.m.                                                                                              
9:05:54 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 9:05 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Fred  Parady, Deputy  Commissioner, Department  of Commerce,                                                                    
Community,  and   Economic  Development;   Gene  Therriault,                                                                    
Deputy  Director,   Statewide  Energy   Policy  Development,                                                                    
Alaska Energy  Authority, Department of  Commerce, Community                                                                    
and  Economic   Development;  Representative   Lynn  Gattis,                                                                    
Sponsor;  Les  Morse,  Deputy  Commissioner,  Department  of                                                                    
Education  and   Early  Development;  Steve   Ricci,  Staff,                                                                    
Representative Lynn Gattis; Representative Mike Chenault.                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
Ted  Leonard, Director,  Alaska  Industrial Development  and                                                                    
Export  Authority (AIDEA);  Joe  Griffith, General  Manager,                                                                    
Matanuska     Electric     Association;    Deena     Paramo,                                                                    
Superintendent, Matsu Borough School District.                                                                                  
HB 80     REPEAL COLLEGE/CAREER READINESS ASSESS.                                                                               
          HB 80 was HEARD and HELD in committee for further                                                                     
HB 105    AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT                                                                            
          CSHB 105(FIN) was REPORTED out of committee with                                                                      
          a "do pass" recommendation and with one                                                                               
          previously published zero fiscal note: FN1 (CED).                                                                     
Co-Chair  Thompson  reviewed  the  agenda  for  the  morning                                                                    
HOUSE BILL NO. 105                                                                                                            
     "An  Act relating  to  the programs  and  bonds of  the                                                                    
     Alaska  Industrial  Development and  Export  Authority;                                                                    
     related  to  the  financing authorization  through  the                                                                    
     Alaska Industrial  Development and Export  Authority of                                                                    
     a liquefied  natural gas  production plant  and natural                                                                    
     gas  energy projects  and distribution  systems in  the                                                                    
     state;  amending  and   repealing  bond  authorizations                                                                    
     granted  to  the   Alaska  Industrial  Development  and                                                                    
     Export  Authority;  and   providing  for  an  effective                                                                    
9:06:46 AM                                                                                                                    
FRED  PARADY, DEPUTY  COMMISSIONER, DEPARTMENT  OF COMMERCE,                                                                    
COMMUNITY, AND  ECONOMIC DEVELOPMENT, placed himself  on the                                                                    
GENE  THERRIAULT, DEPUTY  DIRECTOR, STATEWIDE  ENERGY POLICY                                                                    
DEVELOPMENT,   ALASKA   ENERGY  AUTHORITY,   DEPARTMENT   OF                                                                    
COMMERCE,   COMMUNITY  AND   ECONOMIC  DEVELOPMENT,   placed                                                                    
himself on the record.                                                                                                          
Acting Commissioner  Parady provided a brief  explanation of                                                                    
the bill.  The legislation sought to  give Alaska Industrial                                                                    
Development and  Export Authority  (AIDEA) the  authority to                                                                    
consider an  alternative gas supply  to the  Interior Energy                                                                    
Project.  He  referenced  SB 23  [Short  Title:  AIDEA:  LNG                                                                    
Project;   Dividends;  Financing]   passed  in   2013  which                                                                    
provided  funding  and  specified  that a  North  Slope  gas                                                                    
supply be  used. House Bill  105 continued the  same funding                                                                    
authorities but opened the door  to consideration of propane                                                                    
or a  Cook Inlet gas  supply while retaining the  ability to                                                                    
evaluate further North Slope alternatives.                                                                                      
9:08:27 AM                                                                                                                    
Co-Chair Thompson MOVED to ADOPT Amendment 1:                                                                                   
     Page 2, line 6:                                                                                                            
          Delete "sec. 9" in both places                                                                                        
          Insert "sec. 8" in both places                                                                                        
     Page 2, lines 8 - 29:                                                                                                      
          Delete all material.                                                                                                  
     Renumber the following bill sections accordingly.                                                                          
     Page 9, line 4:                                                                                                            
          Delete "Sections 14 and 15"                                                                                           
          Insert "Sections 13 and 14"                                                                                           
Co-Chair Neuman OBJECTED for discussion.                                                                                        
Co-Chair  Thompson   announced  that  Nick   Szymoniak,  Ted                                                                    
Leonard,  and Bob  Shefchik were  online  and available  for                                                                    
Co-Chair  Neuman clarified  the  amendment  version was  29-                                                                    
GH1019\N. Co-Chair Thompson agreed.                                                                                             
9:09:00 AM                                                                                                                    
Mr. Therriault pointed out that  Amendment 1 deleted Section                                                                    
2 on page  2 which essentially left  the Fairbanks utilities                                                                    
at   the   same  status   as   other   utilities  owned   by                                                                    
municipalities  across  the  state. They  were  exempt  from                                                                    
being  regulated  by  the Regulatory  Commission  of  Alaska                                                                    
(RCA)  unless they  opted voluntarily.  The language  of the                                                                    
bill  placed them  into RCA  regulation  unless a  governing                                                                    
body of  a utility  removed them.  The feedback  he received                                                                    
from municipalities was that they desired to be non-                                                                            
regulated giving  entities more  flexibility in  the initial                                                                    
build-out  to  acclimate  rate-payers to  rate  changes.  It                                                                    
allowed costs to be spread as  demand ramped up. In terms of                                                                    
energy delivery, it was a  volume enterprise; the higher the                                                                    
demand, the lower  the per-unit cost. The initial  cost of a                                                                    
new system  would likely be  high. Therefore,  spreading out                                                                    
the  cost over  a longer  period of  time was  desirable and                                                                    
would  allow   for  an  enterprise   to  be   installed  and                                                                    
initialized. If  the section was  removed, it  [AIDEA] would                                                                    
default to  the regular statutes  as any other  utility that                                                                    
was owned by a political subdivision of the state.                                                                              
9:10:49 AM                                                                                                                    
Representative Gara  had not  followed the  controversy that                                                                    
lead  up  to  the  version   of  the  bill  in  the  finance                                                                    
committee.  He asked  about the  major  amendments added  by                                                                    
Representative Hawker in the previous committee.                                                                                
Mr. Therriault  pointed out  an addition  to the  section in                                                                    
statue that required utilities in  Interior Alaska to be RCA                                                                    
9:11:34 AM                                                                                                                    
Representative Wilson  asked about the two  utilities in the                                                                    
Interior staying  separate and  about Fairbanks  Natural Gas                                                                    
(FNG)  being regulated.  She wondered  if the  two utilities                                                                    
would be  handled differently. She  wanted to make  sure the                                                                    
committee was not making two classifications.                                                                                   
Mr.  Therriault  spoke  of the  pending  AIDEA  purchase  of                                                                    
Pentex assets; the existing FNG  system. If the purchase was                                                                    
finalized and  AIDEA became the  new owner, it would  not be                                                                    
regulated.  Fairbanks  Natural  Gas indicated  that  it  had                                                                    
applied with the RCA for a  rate regulation in case the sale                                                                    
did not materialize.                                                                                                            
9:12:28 AM                                                                                                                    
Representative  Wilson  was  trying to  understand  the  two                                                                    
different  utilities.  If  the utilities  remained  separate                                                                    
would there be less regulation  for the Interior Gas Utility                                                                    
(IGU) as a municipally owned utility or for another reason.                                                                     
Mr.  Therriault  pointed  out that  the  existing  statutory                                                                    
exemption  from  RCA  regulation   for  utilities  owned  by                                                                    
political subdivisions would  not be available to  FNG if it                                                                    
remained separate  under private  ownership. It  was AIDEA's                                                                    
intent  to eventually  blend the  two systems  together into                                                                    
one.  If  the AIDEA  purchase  moved  forward the  amendment                                                                    
would be helpful.                                                                                                               
Representative Wilson  remarked that she did  not understand                                                                    
but suggested the committee move on.                                                                                            
9:13:37 AM                                                                                                                    
Representative Pruitt  wanted to  understand why  the people                                                                    
of  Fairbanks   would  want  a  non-regulated   utility.  He                                                                    
understood the  burden of regulation. However,  he wanted to                                                                    
ensure  that the  people  of Fairbanks  were  not harmed  by                                                                    
another government  agency. He did  not want to see  a large                                                                    
burden fall on  the user because of  initial build-up costs.                                                                    
He wondered  about the costs  following build-up.  He opined                                                                    
that he  would not  want his  rates as a  consumer set  by a                                                                    
government bureaucracy.  He believed that the  RCA worked to                                                                    
do the right thing for the  public. He wondered if there was                                                                    
a way of  making RCA the regulatory entity  over the project                                                                    
following the build-up period.                                                                                                  
Mr.  Therriault reported  that  a municipally-owned  utility                                                                    
could choose to fall under  RCA regulations at any time. The                                                                    
attempt   would  be   to  initially   have  the   additional                                                                    
flexibility as  AIDEA was  trying to  get the  enterprise up                                                                    
and running. The Interior Gas  Utility had a locally elected                                                                    
board.  The  reason  why  a utility  owned  by  a  political                                                                    
subdivision had  the option  of being  exempt by  statue was                                                                    
because   an  elected   board   could   interact  with   its                                                                    
constituency at  a local level  to determine fair  rates. In                                                                    
the  case of  the Pentex  purchase and  the FNG  system, the                                                                    
AIDEA board  would be making  the decisions, at least  for a                                                                    
period of  time, until  the utility could  be spun  off from                                                                    
the AIDEA  board to another  utility operation such  as IGU.                                                                    
He did  not have any reason  to suspect the AIDEA  board was                                                                    
going to  somehow savage the constituency  of Fairbanks with                                                                    
unfair rates.                                                                                                                   
9:16:45 AM                                                                                                                    
Co-Chair  Thompson noted  that Speaker  Chenault had  joined                                                                    
the audience.                                                                                                                   
Representative  Guttenberg asked  about Section  2 which  he                                                                    
suggested  separated  the  IGU   from  all  other  municipal                                                                    
utilities.  He wanted  to clarify  that  no other  municipal                                                                    
utility had the obligation to operate under the RCA.                                                                            
Mr. Therriault responded affirmatively.  He added that other                                                                    
utilities owned  by political subdivisions of  the state had                                                                    
the  ability to  be  non-RCA regulated  by statute  assuming                                                                    
they had locally  elected boards. In other  words, a utility                                                                    
had another body that governed the rates to consumers.                                                                          
Representative  Guttenberg  asked   about  the  benefits  of                                                                    
including  Section 2.  He wondered  if  they outweighed  not                                                                    
including the section.                                                                                                          
Mr. Therriault suggested that  the limitation on flexibility                                                                    
outweighed the benefit of having RCA regulation in place.                                                                       
Co-Chair  Neuman  WITHDREW  his OBJECTION.  There  being  NO                                                                    
OBJECTION, Amendment 1 was adopted.                                                                                             
9:18:31 AM                                                                                                                    
Co-Chair Thompson MOVED to ADOPT Amendment 2:                                                                                   
     Page 7, line 15, following "the":                                                                                          
          Insert "members of the"                                                                                               
     Page 7, line 16:                                                                                                           
          Delete "approves"                                                                                                     
          Insert "approve by resolution"                                                                                        
Vice-Chair Saddler OBJECTED for discussion.                                                                                     
Mr.  Therriault   relayed  that  AIDEA  had   suggested  the                                                                    
amendment. There was  a desire to have  more certainty about                                                                    
moving the IEP forward. He pointed  to Section 11 on page 7,                                                                    
lines 14-21  of the bill.  He explained that, in  an attempt                                                                    
to  meet  some of  the  concerns  that  were brought  up  in                                                                    
earlier committees,  AIDEA needed to  act on an  initial set                                                                    
of  criteria  prior  to utilizing  any  remaining  financing                                                                    
tools. Amendment 2 clarified who  approved the project plan.                                                                    
Alaska  Industrial Development  and Export  Authority wanted                                                                    
approval defined by  an official action of the  board in the                                                                    
form  of a  resolution rather  than a  letter signed  by the                                                                    
chairman or a couple of committee members.                                                                                      
9:20:32 AM                                                                                                                    
Representative Pruitt  commented that  the word  "Board" was                                                                    
not included in the language of  the bill. He wondered if it                                                                    
should say "Members of the Board."                                                                                              
Mr.  Therriault  stated  that in  the  statute  establishing                                                                    
AIEDA  the  term  "board"  was   not  included.  Instead  it                                                                    
mentioned  "members".   The  word   "resolution"  inherently                                                                    
encompassed the  members who acted  together as a  board. By                                                                    
using  the word  "resolution"  it assured  that  it was  the                                                                    
board  entity   taking  an  action  rather   than  just  the                                                                    
9:21:11 AM                                                                                                                    
Vice-Chair Saddler  asked about the threshold  for passing a                                                                    
resolution.  He  wondered  if it  was  a  simple  two-thirds                                                                    
TED  LEONARD, DIRECTOR,  ALASKA  INDUSTRIAL DEVELOPMENT  AND                                                                    
EXPORT  AUTHORITY  (AIDEA) (via  teleconference),  explained                                                                    
that  AIDEA had  a seven  member board  and in  order for  a                                                                    
resolution to pass  a majority vote was needed.  Four out of                                                                    
seven  board  members had  to  vote  in  favor in  order  to                                                                    
approve a resolution.                                                                                                           
9:22:13 AM                                                                                                                    
Vice-Chair Saddler  clarified that  the majority  meant four                                                                    
members not just the majority of the members present.                                                                           
Mr. Leonard believed  that it had to be the  majority of the                                                                    
quorum but would verify the information.                                                                                        
Vice-Chair  Saddler  stated  that he  would  appreciate  the                                                                    
9:22:38 AM                                                                                                                    
Representative  Gara  reported he  had  just  sent a  public                                                                    
information request to Mr. Leonard.                                                                                             
Mr. Leonard reported that four  members had to vote in favor                                                                    
of a  resolution in order  for it  to be approved  no matter                                                                    
the quorum.                                                                                                                     
Mr. Therriault added that the  membership of the AIDEA board                                                                    
was predominantly public members.                                                                                               
Vice-Chair Saddler  WITHDREW his  OBJECTION. There  being NO                                                                    
OBJECTION, Amendment 2 was adopted.                                                                                             
9:23:31 AM                                                                                                                    
Co-Chair Thompson MOVED to ADOPT Amendment 3:                                                                                   
     Page 9, following line 4:                                                                                                  
          Insert a new bill section to read:                                                                                    
          "* Sec. 18. Section 16 of this Act is repealed                                                                        
          June 30, 2020."                                                                                                       
     Renumber the following bill section accordingly.                                                                           
Vice-Chair Saddler OBJECTED for discussion.                                                                                     
Mr.  Therriault encouraged  committee  members  to refer  to                                                                    
Section 16  on page 8  of the work  draft which added  a new                                                                    
section  establishing  a  report given  quarterly  and  also                                                                    
required  AIDEA to  be prepared  to give  a briefing  at the                                                                    
request  of  the  Legislative Budget  and  Audit  Committee.                                                                    
Amendment  3 placed  a repealer  on the  section. Without  a                                                                    
repealer  AIDEA would  be giving  quarterly  reports to  the                                                                    
legislature  long  after   financing  was  completed.  AIDEA                                                                    
understood that  the legislature wanted more  information in                                                                    
the  early years  of financing  being utilized.  However, he                                                                    
argued  that  after   a  certain  period  of   time  it  the                                                                    
obligation would be unnecessary.                                                                                                
Vice-Chair Saddler  WITHDREW his  OBJECTION. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
9:25:48 AM                                                                                                                    
Co-Chair Thompson MOVED to ADOPT Amendment 4:                                                                                   
     Page 3, line 23:                                                                                                           
          Delete "law"                                                                                                          
          Insert "the legislature [LAW]"                                                                                        
Vice-Chair Saddler OBJECTED for discussion.                                                                                     
Mr.  Therriault referred  to Section  4 on  page 3,  line 22                                                                    
explaining that "the legislature"  was substituted for "law"                                                                    
currently  in  existing  statute. The  substitution  was  an                                                                    
amendment suggested in the other  body. It had been retained                                                                    
in the  House version of the  bill. In Section 4  on page 3,                                                                    
line 23  there was another  reference to "law."  Amendment 4                                                                    
made the  two lines read  the same, changing the  word "law"                                                                    
to "the legislature."                                                                                                           
Vice-Chair Saddler  WITHDREW his  OBJECTION. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
Co-Chair Thompson WITHDREW Amendment 5.                                                                                         
9:27:16 AM                                                                                                                    
Co-Chair Thompson MOVED to ADOPT Amendment 6:                                                                                   
     Page 7, following line 31:                                                                                                 
          Insert a new bill section to read:                                                                                    
          "* Sec. 14. Section 2(a), ch. 27, SLA 1993, as                                                                        
          amended by sec. 19, ch. 111, SLA 1996, and sec.                                                                       
          10 of this Act is repealed June 30, 2019."                                                                            
     Renumber the following bill sections accordingly.                                                                          
     Page 9, line 4:                                                                                                            
          Delete "Sections 14 and 15"                                                                                           
          Insert "Sections 15 and 16"                                                                                           
Vice-Chair Saddler OBJECTED for discussion.                                                                                     
Mr.  Therriault explained  that  in  the proposed  committee                                                                    
substitute   (CS)  a   project  from   an  old   AIDEA  bond                                                                    
authorization   for  a   bulk  commodity   loading  facility                                                                    
somewhere  in  Cook  Inlet was  removed  from  the  repealer                                                                    
section of the bill,  refreshed, and reinserted into Section                                                                    
10 at the  top of page 7. He explained  that after a certain                                                                    
number  of  years if  the  refreshed  authorization was  not                                                                    
utilized, it  would automatically be repealed.  In the past,                                                                    
AIDEA's  bonding  authorizations   or  possible  loans  were                                                                    
passed without  a repealer.  If they  were never  used, they                                                                    
were still seen by  rating agencies as potential obligations                                                                    
on AIDEA's  books. As a  result, AIDEA's  rating evaluations                                                                    
were affected. If bonding authorizations  were not used by a                                                                    
certain time,  AIDEA needed to  clean them off of  its books                                                                    
by incorporating  automatic repealers. For any  new projects                                                                    
in  which  authorizations  were  granted  AIDEA  was  asking                                                                    
proposers  to include  an automatic  repealer  to avoid  any                                                                    
accumulation  of old,  unused authorizations.  The amendment                                                                    
established   a   new   sunset    for   a   refreshed   bond                                                                    
Representative  Pruitt  asked  about all  of  the  repealers                                                                    
included  in the  bill. He  noted  a repealer  for the  bulk                                                                    
commodity loading ship terminal  in Point MacKenzie, one for                                                                    
the  Sweetheart Lake  [Hydroelectric Project],  and one  for                                                                    
the Waterfall  Creek Hydroelectric Project in  King Cove. He                                                                    
wondered if  there were  things that  were not  specified in                                                                    
the bill that would be repealed.                                                                                                
Mr.  Therriault  was  looking for  the  Governor's  original                                                                    
transmittal letter  which explained  the meaning of  each of                                                                    
the  repeals. There  were  a number  of  projects that,  for                                                                    
various  reasons, never  went forward.  He  referred to  the                                                                    
sectional  analysis that  explained that  there was  one for                                                                    
the  processing  facility  for seafood,  the  Kodiak  launch                                                                    
complex  facilities,  the  Red   Dog  port,  the  Nome  port                                                                    
facility,  the development  at Hatcher  Pass,  and the  port                                                                    
facilities in  Lynn Canal. Some  of the projects  dated back                                                                    
to 1993, 1995,  1998, 2004, and 2006. The  projects were old                                                                    
enough   that  AIDEA   would  not   be  using   the  bonding                                                                    
9:31:24 AM                                                                                                                    
Representative Pruitt wondered if  the authorization for the                                                                    
Red Dog Mine had been utilized in part or at all.                                                                               
Mr. Therriault replied  that it was in  the repealer because                                                                    
it had  not been utilized at  all. If it had  been partially                                                                    
utilized  it  would  have  appeared   in  the  bill  with  a                                                                    
different structure to remove the unused portion.                                                                               
Representative  Pruitt  wondered  if there  was  a  repealer                                                                    
associated with the current IEP  project. If so, he inquired                                                                    
about the dates.                                                                                                                
Mr. Therriault invited Mr.  Leonard to answer Representative                                                                    
Pruitt's question.                                                                                                              
9:32:15 AM                                                                                                                    
Mr.  Leonard responded  that  under SB  23  he believed  and                                                                    
would  confirm that  there was  a five-year  sunset on  bond                                                                    
authorizations. He  would get the  information and  bring it                                                                    
back to the committee.                                                                                                          
Representative Wilson  asked if the five  years started upon                                                                    
the passing  of the current  bill or prior. She  wondered if                                                                    
other  projects were  included in  the bill  aside from  the                                                                    
Mr. Therriault  believed there  would be  a repealer  on all                                                                    
new authorizations contained in the bill.                                                                                       
Co-Chair Thompson  asked Mrs.  Leonard if  he had  found the                                                                    
information requested by Representative Pruitt.                                                                                 
Mr. Leonard was looking for it in SB 23 and would find it.                                                                      
Representative Pruitt did  not want to hold  up the meeting,                                                                    
but the information would be helpful.                                                                                           
Vice-Chair Saddler  WITHDREW his  OBJECTION. There  being NO                                                                    
OBJECTION, Amendment 6 was adopted.                                                                                             
9:34:12 AM                                                                                                                    
Vice-Chair Saddler MOVED to ADOPT Amendment 7:                                                                                  
     Page 1, line 11, following "project;":                                                                                     
          Insert   "authorizing    the   Alaska   Industrial                                                                    
          Development  and Export  Authority to  issue bonds                                                                    
          to  finance  the infrastructure  and  construction                                                                    
          costs of rebuilding  transmission between the Hope                                                                    
          substation  and  Portage, rebuilding  transmission                                                                    
          between Powerline Pass to  Indian, and the Eklutna                                                                    
          hydroelectric    transmission    system    upgrade                                                                    
     Page 2, line 6:                                                                                                            
          Delete "sec. 9" in both places                                                                                        
          Insert "sec. 11" in both places                                                                                       
     Page 8, following line 11:                                                                                                 
          Insert a new bill section to read:                                                                                    
           "* Sec.  15. The uncodified  law of the  State of                                                                    
          Alaska  is  amended by  adding  a  new section  to                                                                    
          LEGISLATIVE APPROVAL;  ALASKA RAILBELT COOPERATIVE                                                                    
          TRANSMISSION AND ELECTRIC  COMPANY. (a) The Alaska                                                                    
          Industrial  Development and  Export Authority  may                                                                    
          issue  bonds  to  finance the  infrastructure  and                                                                    
          construction costs for                                                                                                
               (1) rebuilding transmission  between the Hope                                                                    
               substation   and   Portage  by   the   Alaska                                                                    
               Railbelt    Cooperative   Transmission    and                                                                    
               Electric Company;                                                                                                
               (2)    rebuilding     transmission    between                                                                    
               Powerline  Pass  to   Indian  by  the  Alaska                                                                    
               Railbelt    Cooperative   Transmission    and                                                                    
               Electric Company; and                                                                                            
               (3)  the  Eklutna hydroelectric  transmission                                                                    
               system   upgrade   project  by   the   Alaska                                                                    
               Railbelt    Cooperative   Transmission    and                                                                    
               Electric Company.                                                                                                
          (b)  The projects  listed in  (a) of  this section                                                                    
          shall be  owned and  operated by the  authority or                                                                    
          financed under AS 44.88.172.                                                                                          
          (c) The principal amount of  the bonds provided by                                                                    
          the authority  for the projects in  (a)(1) and (2)                                                                    
          of this  section may not  exceed a  combined total                                                                    
          of  $107,100,000, and  may  include  the costs  of                                                                    
          issuing    bonds    considered   reasonable    and                                                                    
          appropriate by  the Alaska  Industrial Development                                                                    
          and Export Authority.                                                                                                 
          (d) The principal amount of  the bonds provided by                                                                    
          the authority  for the project  in (a)(3)  of this                                                                    
          section  may   not  exceed  $20,400,000   and  may                                                                    
          include  the  costs  of issuing  bonds  considered                                                                    
          reasonable   and   appropriate   by   the   Alaska                                                                    
          Industrial Development and Export Authority.                                                                          
          (e) This section  constitutes legislative approval                                                                    
          required by AS 44.88.095(g)."                                                                                         
     Renumber the following bill sections accordingly.                                                                          
     Page 9, line 4:                                                                                                            
          Delete "Sections 14 and 15"                                                                                           
          Insert "Sections 14 - 16"                                                                                             
Co-Chair Thompson OBJECTED for discussion.                                                                                      
Vice-Chair  Saddler  explained  his  amendment  which  would                                                                    
authorize  AIDEA to  issue up  to $127  million in  bonds to                                                                    
finance   some   additional    critical   state   electrical                                                                    
transmission  upgrades. He  relayed  that  the Bradley  lake                                                                    
power transmission  system in the Kenai  area provided power                                                                    
for the entire Homer to  Fairbanks Railbelt. However, it was                                                                    
constrained  by   inadequate  old  lines   and  transmission                                                                    
towers.   These    inhibited   the   development    of   big                                                                    
hydroelectric  projects   in  the  Railbelt  and   made  the                                                                    
transmission  of power  less  reliable  and less  efficient.                                                                    
There was an  Alaska Energy Authority (AEA)  study two years                                                                    
previously  that showed  the  state  was potentially  losing                                                                    
more  than $100  million  worth of  energy  efficiency as  a                                                                    
result of  inadequate transmission  lines. The  $127 million                                                                    
in projects would be bonded  through the amendment and would                                                                    
take  care of  much  of  the Anchorage-to-Kenai  limitations                                                                    
although  not the  entire  problem. He  spoke  of two  major                                                                    
elements  that the  authorization  would  fund including  an                                                                    
upgrade  of the  Quartz  Creek to  the  Anchorage and  Kenai                                                                    
transmission lines at a cost  of about $107 million. The two                                                                    
segments were from  the Hope substation to  Portage and from                                                                    
Power Line  Pass to  Indian that  would replace  50-year old                                                                    
transmission lines. Also, towers  with higher capacity lines                                                                    
would be upgraded  from 115 kilovolts to  230 kilovolts. The                                                                    
study from AEA indicated that  there would be a cost-benefit                                                                    
ratio of 1 to 4.6, meaning  that for every dollar in capital                                                                    
expenditures  the  state   contributed  the  state  received                                                                    
nearly $5 in  benefits to consumers along  the Railbelt from                                                                    
Anchorage to Homer  and Fairbanks to Kenai in  terms of more                                                                    
economical  and  reliable  power. The  second  portion  that                                                                    
would  be  funded  was  a $20  million  project  called  the                                                                    
Eklutna   Hydroelectric  Transmission   System  that   would                                                                    
improve  the  connections  between  the  existing  Municipal                                                                    
Light and Power (MLP) plants  in Muldoon with the Matanuska-                                                                    
Susitna Electric Association's  (MEA) new Eklutna generation                                                                    
station. The project  would have a cost benefit  ratio of $1                                                                    
to $23.  He suggested that with  a little bit of  input from                                                                    
bonding  there would  be tremendous  benefits  of an  entire                                                                    
state  transmission   system;  improved  reliability   of  a                                                                    
transmission  system and  improved use  of the  Bradley Lake                                                                    
Hydroelectric System that Railbelt  rate payers were already                                                                    
paying for.  He remarked that  the project fell  squarely in                                                                    
the  tradition  of  some  of the  other  state  projects  to                                                                    
generate   hydroelectric   and  improve   transmission.   He                                                                    
encouraged members to support the amendment.                                                                                    
Co-Chair Thompson informed the  committee that Joe Griffith,                                                                    
the  general manager  of Matanuska  Electric  was online  to                                                                    
answer any questions.                                                                                                           
9:36:48 AM                                                                                                                    
Representative  Wilson was  not  aware of  the project.  She                                                                    
wanted  to know  if the  bonds  were going  directly to  the                                                                    
utility  and  whether  the  utility   would  be  the  entity                                                                    
requesting  the  bond.  She  was  assuming  AIDEA  would  be                                                                    
providing due diligence.                                                                                                        
Mr.  Therriault deferred  to Mr.  Leonard  who could  better                                                                    
speak to the AIDEA process.                                                                                                     
Mr. Leonard stated that the bonds  allowed under SB 23 had a                                                                    
sunset date of June 30, 2018.                                                                                                   
Mr. Therriault interjected that  Mr. Leonard's answer was in                                                                    
response to Representative Pruitt's question.                                                                                   
He  responded   to  Representative  Wilson's   question.  He                                                                    
explained  that before  AIDEA issued  bonds  for a  project,                                                                    
such  as the  one being  discussed, full  due diligence  was                                                                    
required  in   order  to  issue  bonds.   Alaska  Industrial                                                                    
Development  and Export  Authority's  process  would be  the                                                                    
same  in issuing  any other  bond  authorizations that  came                                                                    
before the committee.                                                                                                           
9:38:27 AM                                                                                                                    
Representative  Wilson  asked  about due  diligence  and  if                                                                    
there  was discussion  about the  use of  transmission lines                                                                    
for other projects.                                                                                                             
Mr. Leonard specified  that for a project owned  by AIDEA or                                                                    
financed  through AS  44.88.172 there  was usually  language                                                                    
that  dealt with  how the  process  could incorporate  other                                                                    
entities using the lines as long  as the lines were owned or                                                                    
the project was financed by AIDEA.                                                                                              
Representative  Wilson asked  where the  funds where  coming                                                                    
from and whether they came from other hydro power funds.                                                                        
Mr. Leonard clarified that all  the bond authorization would                                                                    
allow AIDEA  to utilize bonding  as a tool when  examining a                                                                    
project  for financing  or owning  the  project and  issuing                                                                    
bonds. In the due diligence  process of evaluating a project                                                                    
AIDEA  would be  looking at  its  capacity and  the type  of                                                                    
bonds that would  best serve the project  like revenue bonds                                                                    
or general  obligation bonds.  The evaluation  process would                                                                    
determine whether AIDEA would  finance the project, and what                                                                    
type of bonds would be utilized for financing.                                                                                  
9:41:22 AM                                                                                                                    
Representative Wilson asked why  it [the bond authorization]                                                                    
was in  the bill and  whether the  amount was a  factor. She                                                                    
suggested that  in the case  of a lesser  amount legislation                                                                    
was not needed.                                                                                                                 
Mr.  Leonard  concurred.  He  stated  that  based  on  state                                                                    
statutes,  a project  financed  through  AS 44.88.172  AIDEA                                                                    
currently  had to  have an  authorization  for bonds  issued                                                                    
over $10 million.                                                                                                               
9:41:59 AM                                                                                                                    
Vice-Chair Saddler wanted to clarify  that the Eklutna Hydro                                                                    
facility  was  an  existing  and   very  old  facility.  His                                                                    
amendment   proposed   AIDEA   issuing  bonds   to   finance                                                                    
transmission  lines  which  would connect  the  old  Eklutna                                                                    
facility with  the new power generation  facility at Muldoon                                                                    
and to  the new Eklutna generation  station, MEA's gas-fired                                                                    
plant being  constructed. He  pointed out it  was not  a new                                                                    
hydro facility.                                                                                                                 
Representative Wilson  mentioned that  she was  just talking                                                                    
about  transmission lines.  As the  state installed  more of                                                                    
them she suggested they could  be shared with other entities                                                                    
to reduce costs.                                                                                                                
9:42:43 AM                                                                                                                    
Representative  Pruitt responded  that  the amendment  would                                                                    
benefit  more  than  just  one  or  two  of  the  utilities.                                                                    
Currently,  there was  a bottleneck  for energy  produced at                                                                    
Bradley  Lake  Hydroelectric  Plant.  The  lines  could  not                                                                    
accommodate  additional power.  If there  were any  problems                                                                    
with the lines  the gas-fired generation plants  such as the                                                                    
one in  Beluga would  be turned on.  He understood  that all                                                                    
six  of the  utilities on  the Railbelt  benefited from  the                                                                    
energy  at Bradley  Lake.  However, if  the  line could  not                                                                    
transmit the  affordable energy then no  one benefitted. The                                                                    
utilities in the valley, Fairbanks,  and Anchorage would all                                                                    
benefit  greatly  from  the expansion  of  the  transmission                                                                    
lines in  the critical  connecting sector between  the Kenai                                                                    
area  and Anchorage.  He  believed  Fairbanks would  benefit                                                                    
from   low-cost  power   by  improving   the  Bradley   Lake                                                                    
transmission system.                                                                                                            
Co-Chair Thompson  suggested that  the rate-payers  would be                                                                    
the beneficiaries.                                                                                                              
9:44:10 AM                                                                                                                    
Representative Guttenberg  asked for more  information about                                                                    
the   Alaska  Railbelt   Cooperative  Transmission   Company                                                                    
(ARCTEC).  He   was  not  familiar   with  the   entity.  He                                                                    
understood  about the  transmission bottleneck  but wondered                                                                    
about  who would  be  paying for  the  improvements and  who                                                                    
would benefit. He wanted to assure parity across all users.                                                                     
Mr. Therriault answered  that ARCTEC was a  creation of four                                                                    
Railbelt utilities. It was an  entity created by the parties                                                                    
to work  together, particularly  on transmission.  In answer                                                                    
to Representative Wilson's question,  as part of AIDEA's due                                                                    
diligence board members  would look at what  kind of traffic                                                                    
would be  expected if  a line was  created. They  would also                                                                    
consider whether it  would be operated under  an open access                                                                    
tariff. More business would be  anticipated with a line with                                                                    
commonly understood  reliability standards.  He acknowledged                                                                    
the  legislature's  interest  in making  sure  a  governance                                                                    
structure  was   in  place  for  the   entire  Railbelt.  He                                                                    
commented  on  the  savings numbers  Representative  Saddler                                                                    
noted explaining  that the  numbers came  from an  AEA study                                                                    
done on the entire  Railbelt system. Alaska Energy Authority                                                                    
and its  consultant suggested there  would be  a substantial                                                                    
savings from  de-bottlenecking the system. He  reported that                                                                    
his  staff compared  the suggested  project  to the  project                                                                    
list  from  AEA's  study  and   found  all  components  were                                                                    
recommended for upgrades.                                                                                                       
9:46:33 AM                                                                                                                    
Representative  Guttenberg restated  his question  regarding                                                                    
equitability across the project.                                                                                                
Mr.  Therriault suggested  that as  the lines  were improved                                                                    
and debt  was accumulated there  would be a cost  built into                                                                    
the  tariff.  Therefore,  anyone  shipping  power  across  a                                                                    
particular portion of the system would pay an equal tariff.                                                                     
9:47:14 AM                                                                                                                    
Vice-Chair  Saddler  thought  Mr.  Therriault's  answer  was                                                                    
"yes." He asked  Mr. Therriault to explain  the Bradley Lake                                                                    
funding  model  including  how  different  utilities  shared                                                                    
expenses   and  how   that   example   might  parallel   the                                                                    
transmission line work.                                                                                                         
Mr. Therriault  was uncertain of the  comparison to Bradley.                                                                    
He  explained that,  in  terms of  Bradley  Lake, the  state                                                                    
provided  a portion  of the  funding.  The utilities  bonded                                                                    
through  the state  for the  remaining funds.  As power  was                                                                    
produced  there  was a  cost  associated  with repaying  the                                                                    
bonds. Once  the bonds  were paid back,  the charge  for the                                                                    
power continued until the  state recuperated its investment;                                                                    
anywhere from 25 to 30 years.                                                                                                   
Vice-Chair Saddler  suggested that Joe Griffith  with ARCTEC                                                                    
was   on   the   line  and   could   answer   Representative                                                                    
Guttenberg's  questions  about   the  organization  and  the                                                                    
potential benefits of the upgrades.                                                                                             
9:48:30 AM                                                                                                                    
JOE   GRIFFITH,   GENERAL    MANAGER,   MATANUSKA   ELECTRIC                                                                    
ASSOCIATION (via teleconference),  explained that ARCTEC was                                                                    
created  in  2010  or  2011 to  principally  deal  with  the                                                                    
generation and  transmission [G&T]  issues in  the Railbelt.                                                                    
The company's thrust  over the previous five  years had been                                                                    
on  transmission that  would de-constrain  the Bradley  Lake                                                                    
delivery method. It was a huge benefit for the Railbelt.                                                                        
9:49:49 AM                                                                                                                    
Representative Gara stated  that obviously the legislature's                                                                    
job was  to support the  entire state. He indicated  that he                                                                    
was  concerned about  the  resistance  from other  Anchorage                                                                    
legislators earlier  in the  session. He  wanted to  know if                                                                    
Alaska  Energy  Authority had  future  plans  to expand  the                                                                    
production at Bradley Lake. It  was clean and cost-efficient                                                                    
power.  He  thought the  energy  would  go  all the  way  to                                                                    
Fairbanks. He was wondering about a plan for Bradley Lake.                                                                      
Mr. Therriault  relayed that the utilities  had been working                                                                    
closely  with  AEA on  a  project  called the  Battle  Creek                                                                    
Diversion  which would  put more  water behind  Bradley Lake                                                                    
damn  to generate  more  power.  The de-bottlenecking  would                                                                    
ensure that the  power could get to the  utilities along the                                                                    
Railbelt  at the  optimum time  of  the day  to achieve  the                                                                    
largest  benefit for  the consumer  as  far as  the cost  of                                                                    
power.  It was  his  understanding that  an application  had                                                                    
been  filed with  the Federal  Energy Regulatory  Commission                                                                    
(FERC) for Bradley  Lake to add the  Battle Creek diversion.                                                                    
He stressed that AEA was  working closely with the utilities                                                                    
to get more power out of the existing infrastructure.                                                                           
9:52:06 AM                                                                                                                    
Representative Gara  stated that it was  important and would                                                                    
also reduce reliance on natural gas in Cook Inlet.                                                                              
Co-Chair  Thompson WITHDREW  his OBJECTION.  There being  NO                                                                    
OBJECTION, Amendment 7 was adopted.                                                                                             
Co-Chair Thompson MOVED to ADOPT Amendment 8:                                                                                   
     Page 2, line 6:                                                                                                            
          Delete "sec. 9" in both places                                                                                        
          Insert "sec. 11" in both places                                                                                       
Vice-Chair Saddler OBJECTED for discussion.                                                                                     
Mr.   Therriault  indicated   that  the   amendment  was   a                                                                    
conforming amendment.  In the bill  there was  language that                                                                    
clarified   that  the   IEP  and   the  Sustainable   Energy                                                                    
Transmission and Supply Development  Funds (SETS) were to be                                                                    
used  only  for  the  IEP.   He  stated  that  the  drafters                                                                    
identified a change needed on  page 2, line 6 to incorporate                                                                    
the addition rolled into the CS.                                                                                                
Vice-Chair Saddler  WITHDREW his  OBJECTION. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
9:53:56 AM                                                                                                                    
Co-Chair  Thompson  commented  that  members  of  the  House                                                                    
expressed concerned with AIDEA  getting too stretched in its                                                                    
ability to bond. He asked for Mr. Leonard's remarks.                                                                            
Mr.  Leonard  reported  that the  authorizations  were  just                                                                    
endorsements  that allowed  AIDEA to  utilize the  tools. If                                                                    
AIDEA's  capacity was  ever pushed  to a  point where  board                                                                    
members  did  not  feel  AIDEA   had  the  bonding  capacity                                                                    
available,  then the  authorizations would  not be  used. He                                                                    
added that  as AIDEA  went forward  in examining  several of                                                                    
the larger energy projects it  would be looking at more than                                                                    
just the general  obligations but also at  revenue bonds. In                                                                    
using   revenue  bonds   based  on   the  revenues   from  a                                                                    
transmission  line,  for  example,   they  would  not  count                                                                    
against  AIDEA's bonding  capacity  because  revenue from  a                                                                    
project  would be  used to  back the  bonds. Several  of the                                                                    
projects  would likely  use revenue  bonds  which would  not                                                                    
affect   AIDEA's   capacity.    He   reiterated   that   the                                                                    
authorizations  allowed   AIDEA  to   utilize  bonds   as  a                                                                    
financing tool.                                                                                                                 
Co-Chair  Thompson discussed  that SB  23 contained  certain                                                                    
restrictions. The  original legislation removed  four words,                                                                    
"On the  North Slope".  He stated that  the AIDEA  board was                                                                    
initiated by  the legislature  to take  the politics  out of                                                                    
the equation. However,  he felt that HB 105  had turned into                                                                    
a political football. He pointed  out that projects of which                                                                    
the  AIDEA  board  had  performed  its  due  diligence  were                                                                    
profitable and  successful. He added that  the only projects                                                                    
that had  failed were those that  the legislature interfered                                                                    
with by  directing AIDEA.  He reiterated  his disappointment                                                                    
in the  politicizing of the  current legislation  before the                                                                    
9:57:23 AM                                                                                                                    
Vice-Chair Saddler  MOVED to  REPORT CSHB  105 (FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSHB  105(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with  one previously published zero                                                                    
fiscal note: FN1 (CED).                                                                                                         
9:57:57 AM                                                                                                                    
AT EASE                                                                                                                         
10:00:49 AM                                                                                                                   
Co-Chair  Thompson reviewed  the list  of testifiers  online                                                                    
and invited Representative Gattis,  the sponsor of the bill,                                                                    
to make her presentation.                                                                                                       
HOUSE BILL NO. 80                                                                                                             
     "An Act repealing the requirement for secondary                                                                            
     students to take college and career readiness                                                                              
10:01:10 AM                                                                                                                   
REPRESENTATIVE LYNN  GATTIS, SPONSOR,  explained that  HB 80                                                                    
was  a  repeal  of  the mandate  from  the  previous  year's                                                                    
omnibus  education  bill,  HB  278.  School  districts  were                                                                    
required  to  facilitate  the   mandate  for  all  secondary                                                                    
students  to  take  the   American  College  Testing  (ACT),                                                                    
Scholarship  Aptitude Test  (SAT),  or  WorkKeys exam.  Last                                                                    
session HB 278  had provisions for funding  for the purchase                                                                    
of the  exam within  the Department  of Education  and Early                                                                    
Development  (DEED).  However,  school districts  were  left                                                                    
with an unfunded mandate. She  pointed out that testing took                                                                    
instruction  time away  between  teachers  and students  and                                                                    
created  an administrative  burden for  school districts  to                                                                    
coordinate and provide testing. She  argued that HB 80 would                                                                    
relieve school  districts from an  administrative obligation                                                                    
and  would   save  DEED  $525  thousand   per  year.  School                                                                    
districts   supported  the   elimination  of   all  unfunded                                                                    
mandates due to  the current budget crunch.  The testing was                                                                    
an additional hurdle for students  that had fulfilled all of                                                                    
the other  criteria necessary to  graduate. She  pointed out                                                                    
that  the packet  she had  distributed  to members  included                                                                    
several letters  from school districts detailing  the burden                                                                    
of providing the testing to  students. She concluded that HB                                                                    
80 would remove the new  testing mandate before it became an                                                                    
expected tradition.                                                                                                             
10:04:27 AM                                                                                                                   
Representative Gara  reported that he had  been contacted by                                                                    
a  number  of  school  officials about  the  possibility  of                                                                    
administering  an  annual exam  once  every  four years.  He                                                                    
could not  recollect the name  of the test. In  changing the                                                                    
time  between testing  the state  would  save a  significant                                                                    
amount of  money. He wondered if  Representative Gattis knew                                                                    
the name of the test.                                                                                                           
Representative  Gattis  believed  he  was  speaking  of  the                                                                    
Alaska Measures  of Progress (AMP)  test which was  not part                                                                    
of  the current  legislation. She  had thought  of including                                                                    
the  AMP test  in  the bill  and  went so  far  as having  a                                                                    
committee  substitute drafted,  but  felt  limited on  time.                                                                    
There  were other  issues having  to  do with  the AMP  test                                                                    
including  federal  funding  that needed  to  be  thoroughly                                                                    
investigated which  would take time. Therefore,  she left it                                                                    
out  of the  bill.  She added  that the  Senate  had a  bill                                                                    
currently  being   vetted  regarding   the  AMP   test.  She                                                                    
summarized that HB  80 was limited to the ACT,  the SAT, and                                                                    
the WorkKeys exam.                                                                                                              
10:05:45 AM                                                                                                                   
Representative Gara wanted  to hear from DEED  about the AMP                                                                    
test because of the potential cost savings.                                                                                     
10:06:12 AM                                                                                                                   
Representative Wilson clarified the  version of the bill for                                                                    
consideration.  She asked  about what  happened to  the test                                                                    
information  once  a  student completed  one  of  the  three                                                                    
Representative Gattis did not  know but the department would                                                                    
be able to answer the question.                                                                                                 
Representative Wilson  wanted to  know the answer.  She also                                                                    
wanted to know about any  requirements in terms of providing                                                                    
exam locations. She wanted to know how the state benefited.                                                                     
Co-Chair  Thompson  relayed  that   Deena  Paramo  from  the                                                                    
Matanuska   Borough  School   District  was   available  for                                                                    
questions as well as Les Morse with DEED available.                                                                             
10:07:40 AM                                                                                                                   
LES MORSE, DEPUTY COMMISSIONER,  DEPARTMENT OF EDUCATION AND                                                                    
EARLY DEVELOPMENT, reiterated that  the question was how the                                                                    
data was used. He stated  that for the particular assessment                                                                    
the  department  received  the   data  for  the  purpose  of                                                                    
verifying  student participation.  The state  also took  the                                                                    
number   of  participating   students  and   calculated  the                                                                    
percentage  of  students  participating within  the  state's                                                                    
school  rating system  to  determine  whether students  were                                                                    
taking   the  assessment.   The  exam   was  the   means  of                                                                    
determining college career readiness  and the state's school                                                                    
accountability system.                                                                                                          
10:08:57 AM                                                                                                                   
Representative  Wilson asked  if the  state was  grading its                                                                    
schools  based  on  whether  students  participated  in  the                                                                    
assessment test rather than student performance.                                                                                
Mr.  Morse  responded  that the  exam  was  a  participation                                                                    
requirement. He added that the  state used other assessments                                                                    
for  achievement  and  performance.  The test  was  used  to                                                                    
determine   performance    for   the    Alaska   Performance                                                                    
Scholarship but not for state purposes of accountability.                                                                       
Representative  Wilson   wanted  to  hear  from   the  Matsu                                                                    
superintendent. She  relayed her personal  experience taking                                                                    
the ACT. She wondered if  the school districts were required                                                                    
to administer the test during the school day.                                                                                   
DEENA PARAMO, SUPERINTENDENT,  MATSU BOROUGH SCHOOL DISTRICT                                                                    
(via teleconference), indicated  that the current discussion                                                                    
was what  the district  had evidenced  in the  current year.                                                                    
She  pointed  out  some   of  the  unintended  consequences;                                                                    
additional  work for  counselors, lost  instruction time  in                                                                    
the  classroom  because  of assessments  being  administered                                                                    
during school hours, and a  significant amount of paperwork.                                                                    
The fact that  students could choose one  of three different                                                                    
tests  also complicated  the process.  Another downside  was                                                                    
that students  were given  one attempt.  If, for  example, a                                                                    
student was  ill on the day  of the exam, changing  the date                                                                    
required  completing a  hurdle of  paperwork. It  also meant                                                                    
that a  student would have to  register on a weekend  day on                                                                    
their  own  time. She  added  that  ACT, SAT,  and  WorkKeys                                                                    
scores remained with a child's transcript.                                                                                      
10:11:15 AM                                                                                                                   
Representative  Wilson understood  that  the primary  reason                                                                    
for the  test was  to satisfy a  requirement for  the Alaska                                                                    
Performance  Scholarship. She  thought the  fee to  take the                                                                    
test was minimal.  She was concerned with the  costs and the                                                                    
classroom time lost because of the test requirement.                                                                            
10:11:50 AM                                                                                                                   
Vice-Chair  Saddler asked  about  the  second repealer  that                                                                    
repealed  AS 14.03.75(b)  regarding  students  that did  not                                                                    
qualify for a  diploma because of failing to  take a college                                                                    
and  career  assessment. He  wanted  to  know the  practical                                                                    
result if the bill was  amended and the statute repealed. He                                                                    
wanted to  clarify that if a  student did not take  the test                                                                    
they could still receive a diploma.                                                                                             
Representative  Gattis  stated  that essentially  the  state                                                                    
mandated each  student to take  one of three  tests, whether                                                                    
or  not they  passed  it, in  order to  get  a diploma.  She                                                                    
emphasized  that even  if  a student  did  all the  required                                                                    
course  work and  passed all  of  the associated  assessment                                                                    
measures, they could not receive  a diploma unless they took                                                                    
the  ACT,  SAT,  or  WorkKeys exam.  Simply  stated,  HB  80                                                                    
allowed  students who  had completed  their course  work and                                                                    
received all of their credits to receive their diploma.                                                                         
10:12:55 AM                                                                                                                   
Representative Gara  understood that the tests  would become                                                                    
voluntary.  He  wanted  to know  why  Representative  Gattis                                                                    
removed the provision that the  state or the school district                                                                    
could pay for the testing.                                                                                                      
Representative  Gattis responded,  "That  is an  interesting                                                                    
word, whether they can or they shall."                                                                                          
Representative   Gara  clarified   that  currently   it  was                                                                    
Representative Gattis stated he  was correct. She added, "It                                                                    
must. The state must pay for it. This is mandated."                                                                             
10:13:48 AM                                                                                                                   
Representative Gara asked Representative  Gattis why she was                                                                    
deleting the provision for the  state to pay for testing for                                                                    
students that  wanted to go  to college or to  pursue higher                                                                    
education through vocational training.                                                                                          
Representative Gattis  responded that she deleted  it so the                                                                    
state would  not have to bear  the cost of the  testing. The                                                                    
student  would pay  to take  one of  the three  exams rather                                                                    
than the  state having to pay  for it. She pointed  out that                                                                    
there was a  provision for students who could  not afford to                                                                    
pay for the testing. Her staff would explain.                                                                                   
10:14:28 AM                                                                                                                   
STEVE  RICCI, STAFF,  REPRESENTATIVE LYNN  GATTIS, indicated                                                                    
that  there was  a  provision for  a  waiver for  low-income                                                                    
students.  The College  Board, the  company  that sells  and                                                                    
distributes the ACT and SAT,  reported that for students who                                                                    
received  a  waiver  they   would  also  receive  additional                                                                    
benefits  that  were not  available  through  the state.  He                                                                    
suggested  that,  for  instance, low-income  students  would                                                                    
receive   four   free   college  application   waivers.   He                                                                    
highlighted  that  low-income  students  benefited  more  by                                                                    
attaining the  waiver from the College  Board than receiving                                                                    
the testing from the state.                                                                                                     
10:15:31 AM                                                                                                                   
Representative   Gara    understood   that    free   college                                                                    
application waivers were available.  However, he wondered if                                                                    
a student  could get a  waiver for the fees  associated with                                                                    
taking the  ACT, SAT,  or WorkKeys exam.  He asked  if there                                                                    
was a  WorkKeys waiver. He  also asked  if there was  an ACT                                                                    
and SAT waiver based on income.                                                                                                 
Representative Gattis stated there was  a waiver for the ACT                                                                    
and SAT exams  through the College Board.  The WorkKeys test                                                                    
was available through the Department  of Labor and Workforce                                                                    
Development (DOLWD).                                                                                                            
Representative  Gara  wondered   why  Representative  Gattis                                                                    
removed  the regulations  for people  with disabilities  and                                                                    
referred to AS 14.07.165.                                                                                                       
Mr. Ricci asked Representative Gara to repeat his question.                                                                     
Representative  Gara indicated  that the  statutes addressed                                                                    
regulations the  department was allowed  to adopt  to assist                                                                    
students with disabilities. He  wondered why the legislature                                                                    
would take  away the power  to grant assistance  to students                                                                    
with disabilities.                                                                                                              
Mr.   Ricci  offered   to   do   additional  research.   His                                                                    
interpretation  was  that  people  with  disabilities  would                                                                    
still  have the  ability to  test, but  it was  not explicit                                                                    
that it was mandatory that the state provide the testing.                                                                       
10:17:04 AM                                                                                                                   
Representative Gara  commented that  it was  not the  way he                                                                    
read it but  thought more information was  necessary. He had                                                                    
one  question for  Ms.  Paramo regarding  the  AMP test.  He                                                                    
purported  that it  costed  school  districts a  significant                                                                    
amount to provide the test on  an annual basis. He asked for                                                                    
her thoughts on alternatively  providing the test once every                                                                    
four  years.  He  wondered  if  it  would  save  her  school                                                                    
district money.                                                                                                                 
Ms. Paramo  emphatically supported a four-year  rotation for                                                                    
the  AMP  test.  Additionally,  the  test  provided  similar                                                                    
information  about  schools  rather  than  about  individual                                                                    
children's learning. There were  other assessments that were                                                                    
more  informative that  parents  and teachers  relied on  as                                                                    
well  as school  districts  in making  daily decisions.  She                                                                    
would also support eliminating the AMP test completely.                                                                         
Representative Gara  asked about the potential  savings from                                                                    
moving the test  from an annual exam to  a test administered                                                                    
once every four years.                                                                                                          
Ms.  Paramo relayed  that the  state  paid for  the cost  of                                                                    
testing materials.  The school district  spent approximately                                                                    
$15 Thousand per testing session  for additional staffing to                                                                    
accommodate and process the assessment.                                                                                         
10:19:10 AM                                                                                                                   
Representative  Guttenberg  wondered  what the  state  would                                                                    
lose in  terms of  test scores. He  suggested that  the bill                                                                    
would change  the demographics of  students taking  the test                                                                    
regardless  of the  availability to  students who  could not                                                                    
afford  it. He  wanted to  know if  there was  something the                                                                    
state  needed or  required to  determine  a student's  grade                                                                    
which  the state  would no  longer have  access to  with the                                                                    
passing of HB 80.                                                                                                               
Representative  Gattis verified  that he  was talking  about                                                                    
the ACT and SAT exams versus the AMP test.                                                                                      
Representative  Guttenberg confirmed  he  was talking  about                                                                    
the ACT and the SAT.                                                                                                            
Representative  Gattis  tried to  paraphrase  Representative                                                                    
Guttenberg's  question about  those  students  that did  not                                                                    
take any  of the  tests. She clarified  that in  the current                                                                    
statute if  a student did not  take one of the  three tests,                                                                    
they  would not  graduate.  She  wondered if  Representative                                                                    
Guttenberg's  question  had  to   do  with  determining  the                                                                    
purpose of the testing mandate.                                                                                                 
Representative  Guttenberg  responded  in the  negative.  He                                                                    
discussed the  ranking of  states in terms  of how  they are                                                                    
doing in  educating students. He suggested  that by changing                                                                    
the way  Alaska was doing  its testing the numbers  would be                                                                    
skewed one way or another.  He wondered if Alaska would lose                                                                    
credibility with a scoring system.                                                                                              
Representative  Gattis  remarked  that because  it  was  the                                                                    
first year  there were no numbers  to lose or gain.  She was                                                                    
looking to eliminate the test  before the state utilized the                                                                    
initial data.  She was  unaware of what  the state  would do                                                                    
with the testing numbers being a new mandate.                                                                                   
Mr.  Morse  indicated  that currently  the  state  used  the                                                                    
information to  verify participation. He did  not anticipate                                                                    
any loss  of credibility with any  ranking organization. All                                                                    
students  chose  to  take  one  of  three  assessments.  The                                                                    
legislation  was  brought forward  to  create  a college  or                                                                    
career readiness environment within  schools. With the state                                                                    
covering the costs associated with  the testing it broadened                                                                    
student  access and  helped  students  to meet  requirements                                                                    
associated  with  the  Alaska  Performance  Scholarship.  He                                                                    
reiterated  that waivers  for  the ACT  and  SAT exams  were                                                                    
available  to low-income  students  and  helped to  preserve                                                                    
student access to testing.                                                                                                      
Mr.  Morse  anticipated a  loss  in  the number  of  testing                                                                    
sites.  He relayed  that without  a  state contract  testing                                                                    
could not  be conducted during school  hours, thus, reducing                                                                    
the  number of  testing  sites. He  stressed  that the  main                                                                    
question was whether the test  should be required to receive                                                                    
a  diploma. He  conveyed that  DEED  did not  have a  strong                                                                    
feeling about  the issue  one way  or another.  He confirmed                                                                    
that the  department thought it  was good to take  the test.                                                                    
However, it  also understood the current  financial climate.                                                                    
Returning  to Representative  Guttenberg's question,  he did                                                                    
not believe there would be a loss of credibility.                                                                               
10:24:20 AM                                                                                                                   
Representative  Guttenberg asked  if the  waiver applied  to                                                                    
the fee or having to take the test.                                                                                             
Mr.  Morse  clarified  that if  students  met  a  low-income                                                                    
requirement, the  non-profit companies, ACT and  the College                                                                    
Board, would give those students  a fee waiver to allow them                                                                    
to take the test without cost.                                                                                                  
10:24:54 AM                                                                                                                   
Representative  Munoz  mentioned  getting rid  of  the  high                                                                    
stakes  exam, the  High  School  Graduation Qualifying  Exam                                                                    
(HSGQE)  in the  previous  year and  replacing  it with  the                                                                    
three  choices  of  exams.  She wanted  to  make  sure  that                                                                    
students did  not have to  pass the  exam to get  a diploma,                                                                    
they simply had to take it. She asked if she was correct.                                                                       
Mr.  Morse  responded  in the  affirmative.  He  added  that                                                                    
taking any of the three  tests (ACT, SAT, or WorkKeys) would                                                                    
satisfy a student's participation requirement.                                                                                  
Representative  Munoz asked  the sponsor  about whether  she                                                                    
had  considered also  removing the  testing requirement  for                                                                    
the Alaska Performance Scholarship  (APS) and rather relying                                                                    
on a student's grade point  average for qualification of the                                                                    
Representative Gattis responded that  she had not thought of                                                                    
Representative Munoz's idea. She  reported that the feedback                                                                    
she received from different people  was that they would find                                                                    
the funding for  their children to take the  exam. She spoke                                                                    
of her  first two  years as  the Education  Committee Chair.                                                                    
She had asked school districts  to provide her with unfunded                                                                    
mandates  so she  could address  them. In  the current  year                                                                    
schools were  focused on eliminating unfunded  mandates. She                                                                    
opined  that the  testing detracted  from  the state's  main                                                                    
mission. She also  offered that the testing  results did not                                                                    
help the school  districts teach kids adding  that many kids                                                                    
were  moving  to  different  areas.  She  believed  she  had                                                                    
addressed and  discussed the issue  of folks not  being able                                                                    
to afford  an exam.  She conveyed  that if  school districts                                                                    
had kids that  could not afford the test but  wanted to take                                                                    
one they would find a way to fund the testing.                                                                                  
10:27:06 AM                                                                                                                   
Vice-Chair  Saddler asked  about the  way in  which students                                                                    
with disabilities  were treated.  He wanted to  know whether                                                                    
students  with  disabilities  who   wanted  to  take  career                                                                    
assessment tests,  even in the  absence of a  mandate, would                                                                    
be able  to do so. If  so, he wondered if  the schools would                                                                    
be required  to accommodate  disabled students  with special                                                                    
needs by state policy.                                                                                                          
Representative  Gattis  relayed  that schools  already  made                                                                    
accommodations  for students  on a  daily basis  as part  of                                                                    
their Individualized  Education Program  (IEP). In  terms of                                                                    
testing,   schools   would   continue  to   make   necessary                                                                    
accommodations.  She  stipulated  that she  was  basing  her                                                                    
answer on her own life experience.                                                                                              
Vice-Chair Saddler  specifically asked  if schools  would be                                                                    
mandated to  accommodate disabled students. He  restated his                                                                    
first  question  which  was whether  disabled  students  who                                                                    
wanted to take  the assessments in the absence  of the state                                                                    
mandate be allowed to do so.                                                                                                    
Mr. Morse responded in the affirmative.                                                                                         
Vice-Chair  Saddler asked  if schools,  by policy,  would be                                                                    
obligated to accommodate the special  needs of students with                                                                    
Mr.  Morse  specified that  if  the  testing was  not  state                                                                    
mandated  the  testing  would  not  be  administered  during                                                                    
school hours.  The testing would  not be run by  the schools                                                                    
but by either the non-profit  for SAT [ACT] or College Board                                                                    
for  SAT. Both  assessments allowed  for accommodations  and                                                                    
were made available to students that needed them.                                                                               
10:29:14 AM                                                                                                                   
Vice-Chair Saddler clarified that  schools would not have to                                                                    
make  accommodations  but  the  College  Board  or  the  ACT                                                                    
authority would make accommodations.                                                                                            
Mr. Morse responded affirmatively.                                                                                              
10:29:26 AM                                                                                                                   
Vice-Chair  Saddler wanted  to clarify  a question  asked by                                                                    
Representative Munoz. He wondered if  it was correct that in                                                                    
order to  qualify for the APS  a student had to  take one of                                                                    
the assessments.                                                                                                                
Mr. Morse responded positively.                                                                                                 
10:29:42 AM                                                                                                                   
Representative Gara referred to  the disability provision in                                                                    
AS 14.07.165 (a)(5)  and (b). Currently, for  a student with                                                                    
a   disability  the   department  was   required  to   adopt                                                                    
regulations  that might  address  the conditions,  criteria,                                                                    
procedure and  scheduling of  the assessment,  things needed                                                                    
to  accommodate someone  with a  disability and  required to                                                                    
adopt regulation. He asked why it was no longer needed.                                                                         
Mr.  Morse stated  that the  reason  it would  no longer  be                                                                    
needed  was  that  the  schools   would  not  be  doing  the                                                                    
assessment. The  College Board and ACT  would be responsible                                                                    
for   conducting   assessments   and   providing   necessary                                                                    
accommodations  provisions. He  elaborated that  the current                                                                    
statute was mandating schools to  follow the same provisions                                                                    
laid out by  ACT and SAT. He concluded that  the world would                                                                    
not change for students with disabilities.                                                                                      
10:30:59 AM                                                                                                                   
Representative Gara asked about WorkKeys.                                                                                       
Mr. Morse's understanding was that  WorkKeys was part of ACT                                                                    
and  the same  accommodations  would  be provided.  However,                                                                    
WorkKeys  was not  conducted  in the  same  type of  setting                                                                    
where there were certain test days.                                                                                             
Representative Gara  asked what AMP  stood for and  where he                                                                    
would find it in the statutes.                                                                                                  
Mr. Morse  answered that AMP  stood for  Assessment Measures                                                                    
of Progress. It was  the standards-based assessment required                                                                    
in statute,  also required  under federal  law, and  was the                                                                    
assessment used  for state accountability given  in grades 3                                                                    
through 10.                                                                                                                     
10:32:42 AM                                                                                                                   
Representative  Gara  asked  if  the  state  would  incur  a                                                                    
federal penalty if  the legislature decided to  move the AMP                                                                    
to being administered every four years.                                                                                         
Mr. Morse confirmed  that there would be  a federal penalty.                                                                    
He elaborated that the $97.5  million the state received for                                                                    
the  elementary  and secondary  education  act  would be  at                                                                    
Co-Chair  Thompson stated  that HB  80 would  be brought  up                                                                    
again at  1:30 pm  at which time  public testimony  would be                                                                    
10:33:46 AM                                                                                                                   
The meeting was adjourned at 10:33 a.m.                                                                                         

Document Name Date/Time Subjects
HB80 Supporting Documents - Becoming an SAT test center is easy.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB80_SupportDocuments_Matsu.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB80_SupportDocuments_Dr. Paramo.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB80 Supporting Documents - Letter Sara Moore.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB80 Supporting Documents - Letter Griffin.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB 105 PP slides.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 4.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 3.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB80 Supporting Documents -ASA Resolution Opposing Unfunded Mandates 3-8-2015.pdf HFIN 4/14/2015 8:30:00 AM
HB 80
HB 105 Amendment N 5.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
Hb 105 Amendment N 10.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 AMENDMENT N.9.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 8.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 7.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 6.pdf HFIN 4/14/2015 8:30:00 AM
HB 105
HB 105 Amendment N 4.pdf HFIN 4/14/2015 8:30:00 AM
HB 105