Legislature(2017 - 2018)HOUSE FINANCE 519

02/28/2017 09:00 AM FINANCE

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09:02:03 AM Start
09:03:11 AM HB59
09:03:47 AM Department of Education and Early Development Finance Subcommittee Amendments
09:39:29 AM Department of Labor and Workforce Development Finance Subcommittee Amendments
10:28:17 AM Department of Natural Resources Finance Subcommittee Amendments
10:39:40 AM Non-agency: Debt Service Amendments
11:55:55 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 59 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ Subcommittee Reports & Amendments TELECONFERENCED
- Dept. of Education & Early Development
- Dept. of Labor & Workforce Development
- Dept. of Natural Resources
- Non-Agency: Debt Service; Fund Capitalization;
Fund Transfer; State Retirement Payments;
Special Appropriations
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 28, 2017                                                                                          
                         9:02 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:02:03 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 9:02 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
Representative Mark Neuman (Alternate)                                                                                          
                                                                                                                                
[Note:  Representative Pruitt  left during  the meeting  and                                                                    
Representative  Neuman  filled  in   as  alternate  for  the                                                                    
remainder of the meeting.]                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Heidi    Teshner,    Director,   Administrative    Services,                                                                    
Department  of  Education   and  Early  Development;  Alexei                                                                    
Painter,  Analyst,  Legislative   Finance  Division;  Paloma                                                                    
Harbour,  Director, Administrative  Services, Department  of                                                                    
Labor  and  Workforce  Development;  Pat  Pitney,  Director,                                                                    
Office  of Management  and Budget,  Office of  the Governor;                                                                    
David   Teal,   Director,  Legislative   Finance   Division;                                                                    
Representative Justin Parish.                                                                                                   
                                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 57     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          HB 57 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 59     APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          HB 59 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
Co-Chair Seaton addressed the meeting agenda.                                                                                   
                                                                                                                                
HOUSE BILL NO. 57                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;   repealing    appropriations;   making                                                                    
     supplemental  appropriations and  reappropriations, and                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution  of   the  State   of  Alaska,   from  the                                                                    
     constitutional budget  reserve fund; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
HOUSE BILL NO. 59                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
9:03:11 AM                                                                                                                    
                                                                                                                                
^DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT FINANCE                                                                        
SUBCOMMITTEE AMENDMENTS                                                                                                       
                                                                                                                                
9:03:47 AM                                                                                                                    
                                                                                                                                
Representative    Ortiz     addressed    the    subcommittee                                                                    
recommendations for the Department of Education and Early                                                                       
Development (DEED) with a prepared statement:                                                                                   
                                                                                                                                
     The  subcommittee on  the Department  of Education  and                                                                    
     Early Development  budget held 12 meetings  for a total                                                                    
     of  15.5  hours.  Included  in  that  was  some  public                                                                    
     testimony  -   the  subcommittee   took  one   hour  of                                                                    
     testimony   hearing   from   16  individuals   from   6                                                                    
     communities.   In   addition,   we   received   written                                                                    
     testimony,  emails, and  letters from  approximately 50                                                                    
     individuals. Some of the topics  of interest were early                                                                    
     learning programs, Online With  Libraries - in total 42                                                                    
     individuals testified  in opposition to  the reductions                                                                    
     to  early   learning  programs,  16  were   opposed  to                                                                    
     reductions to Online With Libraries.                                                                                       
                                                                                                                                
     As  a   part  of   our  presentation  or   report,  the                                                                    
     subcommittee  is  forwarding  six  amendments  to  this                                                                    
     committee  for our  consideration. This  includes three                                                                    
     amendments from  the governor,  one amendment  from the                                                                    
     subcommittee,  and two  intent language  statements. If                                                                    
     these amendments are adopted  today, the budget figures                                                                    
     will include unrestricted general  funds rounded off at                                                                    
     $48 million,  designated general funds at  $26 million,                                                                    
     other  funds  at  $57 million,  and  federal  funds  at                                                                    
     $251.3  million,  for a  total  of  $383.1 million.  If                                                                    
     these amendments  are adopted the  unrestricted general                                                                    
     fund difference  between the FY  15 management  plan to                                                                    
     the   FY  18   management  plan   is  a   reduction  of                                                                    
     $21,203,000 for a decrease of 30.7 percent.                                                                                
                                                                                                                                
     It  was  important  for members  of  the  committee  to                                                                    
     remember  that 98  percent of  this  general fund  (GF)                                                                    
     budget   is  grants.   This  includes   the  foundation                                                                    
     formula, pupil transportation,  and smaller grants that                                                                    
     go to school districts.  Personal services make up only                                                                    
     1  percent  of  the  general  fund  DEED  budget.  With                                                                    
     respect  to   personnel,  staff  who  work   with  K-12                                                                    
     schools,  administer federal  programs, and  administer                                                                    
     the  $1.3  billion in  GF  grants  to school  districts                                                                    
     total fewer than 100 folks (97 full-time positions).                                                                       
                                                                                                                                
     With  that  in  mind,  I'd  like  to  move  on  to  our                                                                    
     recommendations.  Before  we  actually move  the  first                                                                    
     amendment it's also important to  note that a statutory                                                                    
     recommendation    is    coming   forward    from    our                                                                    
     subcommittee.  The  subcommittee  reviewed  the  Public                                                                    
     School Trust Fund, which is  currently a revenue source                                                                    
     for   the  foundation   program.   There  was   general                                                                    
     consensus  that the  trust is  not maximizing  its full                                                                    
     earnings  potential  and   a  review  of  restructuring                                                                    
     options  is  warranted,  with the  goal  of  increasing                                                                    
     revenues for  public education.  No specific  option is                                                                    
     recommended,  but  instead  a  review  of  the  options                                                                    
     should be initiated.                                                                                                       
                                                                                                                                
Representative Ortiz  elaborated that  the idea of  a review                                                                    
had been  discussed by the  subcommittee -  the subcommittee                                                                    
believed  the topic  needed further  review to  maximize the                                                                    
potential returns for education funding.                                                                                        
                                                                                                                                
9:07:31 AM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  asked if  the  recommendation  was to  the                                                                    
[House] Education Committee.                                                                                                    
                                                                                                                                
Representative Ortiz replied in the affirmative.                                                                                
                                                                                                                                
Co-Chair Seaton  asked for verification  that Representative                                                                    
Ortiz  would  transmit  the  recommendation  to  the  [House                                                                    
Education] Committee.                                                                                                           
                                                                                                                                
Representative Ortiz responded in the affirmative.                                                                              
                                                                                                                                
Representative Ortiz MOVED to ADOPT  Amendment H DOE 1 (copy                                                                    
on file):                                                                                                                       
                                                                                                                                
     K-12 Support                                                                                                               
     Boarding Home Grants                                                                                                       
     H  DOE 1  -  Reduce Boarding  Home  Stipend Program  by                                                                    
     Underspent Amount                                                                                                          
                                                                                                                                
     Offered by Representative Ortiz                                                                                            
                                                                                                                                
     Reduces  General Fund  authority  to reflect  declining                                                                    
     use of the Stipend portion  of the Boarding Home Grants                                                                    
     program. The  Boarding Home budget funds  two programs:                                                                    
     1) the Secondary Boarding Home  Stipend Program; and 2)                                                                    
     the larger School  District Operated Residential School                                                                    
     Program.   This  amendment   does  not   impact  School                                                                    
     District Operated  Residential Schools. It  reduces UGF                                                                    
     authorization for  the Stipend program to  more closely                                                                    
     align with actual costs.                                                                                                   
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair Seaton reminded members to view the transaction                                                                        
detail sheets to follow the amendments (copy on file).                                                                          
                                                                                                                                
Representative Ortiz  explained would  reduce $70,000  in GF                                                                    
authority,  which reflected  declining  use  of the  stipend                                                                    
portion of the boarding home  grant allocation. He read from                                                                    
a statement:                                                                                                                    
                                                                                                                                
     The  Boarding Home  budget funds  two programs:  1) the                                                                    
     Secondary  Boarding Home  Stipend Program;  and 2)  the                                                                    
     larger  School District  Operated Residential  Schools.                                                                    
     The  district operated  boarding  schools included  six                                                                    
     across  the state  in  Galena,  Nenana, Chugach,  Lower                                                                    
     Kuskokwim,   and   Bering   Straits   districts.   This                                                                    
     amendment only reduces  undesignated general fund (UGF)                                                                    
     authorization for  the stipend  portion of  the budget,                                                                    
     it  does  not  impact   the  school  district  operated                                                                    
     residential  boarding   schools.  By  reducing   it  by                                                                    
     $70,000  there are  ample funds  that  remain to  cover                                                                    
     what demand  we expect  to happen on  that part  of the                                                                    
     budget.                                                                                                                    
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION. There being NO                                                                          
further OBJECTION, Amendment H DOE 1 was ADOPTED.                                                                               
                                                                                                                                
9:09:30 AM                                                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT Amendment H DOE 2 (copy                                                                     
on file):                                                                                                                       
                                                                                                                                
     Education Support Services                                                                                                 
     Executive Administration                                                                                                   
     H   DOE  2   -  School   District  Internet   Access  &                                                                    
     Educational Opportunities                                                                                                  
                                                                                                                                
     Offered by Representative Ortiz                                                                                            
                                                                                                                                
     It  is the  intent of  the legislature  that the  State                                                                    
     Board  of Education  report to  the Alaska  Legislature                                                                    
     with findings and recommendations  to ensure equity and                                                                    
     affordable  access to  high  speed internet,  broadband                                                                    
     services, and  connectivity to all School  Districts in                                                                    
     Alaska. Further,  it is the  intent of  the legislature                                                                    
     that  the  State Board  of  Education  address this  in                                                                    
     context of its Best Practices Initiative.                                                                                  
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Ortiz read from a prepared statement:                                                                            
                                                                                                                                
     Amendment 2  is intent  language that  addresses equity                                                                    
     and access to broadband  services and internet activity                                                                    
     for schools across the state.                                                                                              
                                                                                                                                
Representative  Ortiz  read  the intent  language  from  the                                                                    
amendment explanation  [see above for detail].  He continued                                                                    
to read from a prepared statement:                                                                                              
                                                                                                                                
     The   House  and   Senate  Education   Committees  have                                                                    
     dedicated a  significant amount  of time  in evaluating                                                                    
     the  value  of broadband  and  internet  access to  the                                                                    
     educational  opportunities  they   offer.  This  intent                                                                    
     language focuses on the  issue of affordable, equitable                                                                    
    access to internet-based educational opportunities.                                                                         
                                                                                                                                
Co-Chair Seaton  noted Representative Pruitt had  joined the                                                                    
meeting.                                                                                                                        
                                                                                                                                
Representative Wilson asked how  the report differed from an                                                                    
amendment offered by  Representative Guttenberg several days                                                                    
earlier, which directed the  Regulatory Commission of Alaska                                                                    
(RCA) to do a report on broadband.                                                                                              
                                                                                                                                
Representative  Ortiz  answered   the  report  addressed  by                                                                    
Amendment 2 would come from  the State Board of Education as                                                                    
opposed to the RCA.                                                                                                             
                                                                                                                                
9:11:22 AM                                                                                                                    
                                                                                                                                
Representative  Wilson replied,  "that's  the whole  point."                                                                    
She explained that  the committee had voted to  have the RCA                                                                    
look  into broadband.  She hoped  it would  include schools,                                                                    
the  University, public  buildings,  and private  residents.                                                                    
She believed  Amendment 2  was a  duplication. She  asked if                                                                    
the  subcommittee  thought  the  State  Board  of  Education                                                                    
needed to  do a report  because it  did not believe  the RCA                                                                    
would  provide  an  in-depth  report.   She  was  trying  to                                                                    
determine the difference between  the two. She believed what                                                                    
the committee  had previously directed  the RCA to  do would                                                                    
cover what Amendment 2 was aiming to address.                                                                                   
                                                                                                                                
Co-Chair  Seaton  explained  the two  amendments  came  from                                                                    
different  subcommittees. He  detailed that  items could  be                                                                    
consolidated during a later amendment process.                                                                                  
                                                                                                                                
Representative Wilson  appreciated the comment, but  she did                                                                    
not  believe  it  necessarily  required  consolidation.  She                                                                    
thought the  two amendments  may cover  the same  thing. She                                                                    
asked  if the  DEED subcommittee  was looking  for something                                                                    
different   in  a   broadband  report.   Alternatively,  she                                                                    
wondered if the amendments covered the same thing.                                                                              
                                                                                                                                
Vice-Chair  Gara believed  the  amendment passed  previously                                                                    
addressed  broadband for  communities and  did not  identify                                                                    
equal access for  schools. He asked for the  accuracy of his                                                                    
statement.                                                                                                                      
                                                                                                                                
Representative  Guttenberg   answered  that   the  broadband                                                                    
intent language  for the  RCA was meant  to compare  the ATA                                                                    
[Alaska  Telephone Association]  of the  Alaska Plan  versus                                                                    
needs  for the  state.  Whereas, the  current amendment  was                                                                    
specifically for schools.                                                                                                       
                                                                                                                                
Vice-Chair  Gara  asked  if  part the  intent  was  to  have                                                                    
someone with expertise identify  other fund sources (e.g. e-                                                                    
rate, private, and public).                                                                                                     
                                                                                                                                
Representative  Ortiz   answered  in  the   affirmative.  In                                                                    
response to  Representative Wilson's question,  he explained                                                                    
that the  amendment asked  the State  Board of  Education to                                                                    
address  broadband from  an  education perspective,  whereas                                                                    
the RCA was looking at infrastructure needs.                                                                                    
                                                                                                                                
9:14:35 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg   explained  e-rate   for  school                                                                    
libraries  was a  unique fund  source, which  operated as  a                                                                    
subsidy and  drove the  cost down.  He noted  that sometimes                                                                    
public libraries  were included  as well. He  believed every                                                                    
department had a unique focus  on their individual needs. He                                                                    
reasoned  that it  would be  plausible  to do  a report  for                                                                    
every  department.  He  used   telemedicine  as  an  example                                                                    
pertaining to the Department of  Health and Social Services.                                                                    
He  believed  it was  appropriate  for  schools to  evaluate                                                                    
their needs.                                                                                                                    
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Representative Wilson  OBJECTED. She did not  have a problem                                                                    
with the  amendment, but she  was concerned  the legislature                                                                    
was doing  things in  silos. She  stated that  broadband had                                                                    
been a huge  problem. She continued that  the University was                                                                    
using broadband,  but it  did not  necessarily go  into high                                                                    
schools.  Additionally, they  were addressing  broadband for                                                                    
schools.  She continued  that  some  agencies had  vocalized                                                                    
they were  not able to do  work in some rural  areas because                                                                    
there  was insufficient  broadband and  another group  would                                                                    
not  share their  access. She  did not  want to  continue to                                                                    
splinter out  broadband -  a topic she  viewed as  one major                                                                    
issue that  would have a  big impact on the  state's ability                                                                    
to move forward. She WITHDREW her OBJECTION.                                                                                    
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DOE 2  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
9:16:48 AM                                                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT  Amendment GA 4 (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Teaching and Learning Support                                                                                              
     Student and School Achievement                                                                                             
     GA  4 2/15  Alaska Technical  and Vocational  Education                                                                    
     Formula Funding                                                                                                            
                                                                                                                                
     The Alaska  Technical and Vocational  Education Program                                                                    
     (TVEP),  is   funded  by   0.16  percent   of  employee                                                                    
     contributions  to  the   unemployment  insurance  trust                                                                    
     fund. The  taxable wages  collected have  declined more                                                                    
     rapidly  than originally  anticipated.  A reduction  in                                                                    
     TVEP authority  is required in  order to  not overspend                                                                    
     the fund.  This is a  new item  for FY2018. It  was not                                                                    
     included in the FY2018  Governor's Budget due to timing                                                                    
     of updated revenue collection projections.                                                                                 
                                                                                                                                
     TVEP,  established under  AS  23.15.830, provides  non-                                                                    
     competitive grants  to institutions that are  part of a                                                                    
     statewide  vocational   training  system.  Institutions                                                                    
     provide  technical  and  vocational  training  programs                                                                    
     that align with workforce regional demands.                                                                                
                                                                                                                                
     The  Department  of  Labor  and  Workforce  Development                                                                    
     (DOLWD)  manages  the  TVEP  administration,  including                                                                    
     projecting available revenue  for distribution. DOLWD's                                                                    
     proposal  for  the  TVEP  distribution  in  the  FY2018                                                                    
     Governor's  Budget  assumed  flat TVEP  revenue  FY2016                                                                    
     through FY2018.  There was a carryforward  balance from                                                                    
     unspent  prior year  TVEP distributions  at the  end of                                                                    
     FY2016 that  was anticipated to be  sufficient to cover                                                                    
     reduced revenues  in FY2017 and FY2018.  Actual revenue                                                                    
     collections through  the first  two quarters  of FY2017                                                                    
     indicate taxable  wages are declining faster  than what                                                                    
     was anticipated prior to the  start of the fiscal year.                                                                    
     An overall  adjustment of $1,319.2 is  needed, bringing                                                                    
    the total available for distribution to $11,970.1.                                                                          
                                                                                                                                
     The Galena Interior  Learning Academy's distribution is                                                                    
     set  by AS  23.15.835(d), and  will receive  $478.8, or                                                                    
     four  percent,   of  total  receipts   available.  This                                                                    
     decreases  the   Galena  Interior   Learning  Academy's                                                                    
     authority by $52.8 from the FY2017 distribution level.                                                                     
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Ortiz read from a prepared statement:                                                                            
                                                                                                                                
     This amendment reduces  Alaska Technical and Vocational                                                                    
     Education Program  (TVEP) funding  by $52,800  to align                                                                    
     budget  authorization  with   revenue  collection.  The                                                                    
     revenue  source  was  0.16   percent  of  the  employee                                                                    
     contributions  to  the   Unemployment  Insurance  Trust                                                                    
     Fund.   The   Department   of   Labor   and   Workforce                                                                    
     Development manages  this program  and makes  awards to                                                                    
     the  vocational training  program  as  specified by  AS                                                                    
     23.15.830  with  TVEP  funds.   This  one  grantee  who                                                                    
     receives TVEP  funds is in  the DEED budget and  is the                                                                    
     Galena  Interior   Learning  Academy.   This  amendment                                                                    
     reduces   their  grant   by  $52,800   to  align   with                                                                    
     anticipated  revenues. This  amendment  was adopted  by                                                                    
     the subcommittee with no objection.                                                                                        
                                                                                                                                
Co-Chair Foster  pointed out that  the only reason  that the                                                                    
Galena Interior Learning Academy  was listed was because out                                                                    
of a number of recipients  receiving funds from the program,                                                                    
it was the  only one that fell within  the education budget.                                                                    
The other vocational schools  fell underneath the Department                                                                    
of  Labor and  Workforce Development  (DLWD). He  stated the                                                                    
amendment was not singling out  on entity. He clarified that                                                                    
the  decrease had  been  proposed given  that  the fund  was                                                                    
depleting caused by fewer people paying into the fund.                                                                          
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being  NO  further  OBJECTION,  Amendment  GA  4  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Representative Ortiz MOVED to ADOPT Amendment GA 5 (copy on                                                                     
file):                                                                                                                          
                                                                                                                                
     Teaching and Learning Support                                                                                              
     Child Nutrition                                                                                                            
     GA 5  2/15 Additional  Child Nutrition Grants  from the                                                                    
     US Department of Agriculture                                                                                               
                                                                                                                                
     Due to  increased growth in  the National  School Lunch                                                                    
     Program,  School  Breakfast  Program, and  Summer  Food                                                                    
     Service    Program     additional    federal    receipt                                                                    
     authorization is needed for  acceptance of the increase                                                                    
     in  United  States  Department  of  Agriculture  (USDA)                                                                    
     grant  funds. These  are  100% USDA  funds  and do  not                                                                    
     require  an   increase  in   state  general   funds  or                                                                    
     additional staff. This is a  new request for FY2018. It                                                                    
     was  not  included  in   the  FY2018  Governor  request                                                                    
     because  at  the  time of  budget  development  it  was                                                                    
     unknown   whether  an   amendment   request  would   be                                                                    
     necessary due to pending information from the                                                                              
     U.S. Department of Education.                                                                                              
                                                                                                                                
     The  Child  Nutrition  Programs (CNP)  has  experienced                                                                    
     significant  program  growth  in  the  National  School                                                                    
     Lunch  Program, School  Breakfast  Program, and  Summer                                                                    
     Food Service  Program, as well  as continued  growth in                                                                    
     remaining programs. The programs  have been impacted by                                                                    
     an  overall  shift  in   economic  status  of  children                                                                    
     served,  with  an  increase  of  children  meeting  the                                                                    
     Alaska  adjusted  poverty  guidelines, resulting  in  a                                                                    
     substantial  increase  in   the  federal  reimbursement                                                                    
     rate.  It  is anticipated  that  CNP  will continue  to                                                                    
     receive  these same  grants, as  well  as a  technology                                                                    
     grant,  which will  increase  the  need for  additional                                                                    
     federal    authority.   Additional    federal   receipt                                                                    
     authorization is needed for  acceptance of the increase                                                                    
     in  United  States  Department  of  Agriculture  (USDA)                                                                    
     grant funds.                                                                                                               
                                                                                                                                
     CNP  growth is  expected to  continue beyond  2017. The                                                                    
     funds  are from  a  block grant,  which provides  claim                                                                    
     reimbursement money to  schools, child care facilities,                                                                    
     etc.  The  department   receives  incremental  receipts                                                                    
     throughout  the year  based on  USDA  estimates on  the                                                                    
     department's  CNP  actuals.  The federal  receipts  are                                                                    
     received  by weekly  draws. These  are 100%  USDA funds                                                                    
     and do not require an  increase in state general funds.                                                                    
     The  department  has  existing,  100%  federally-funded                                                                    
     positions, which  provide oversight and  management for                                                                    
     the various food programs; no  additional staff will be                                                                    
     required.                                                                                                                  
                                                                                                                                
     Without this additional  authority, the department will                                                                    
     not   be  able   to   accept  the   grant  or   provide                                                                    
     reimbursements  to Alaska  school  districts and  other                                                                    
     agencies  for  food  and nutrition  programs.  Affected                                                                    
     services and recipients  include statewide food service                                                                    
     programs   that    provide   meals    to   economically                                                                    
     disadvantaged Alaskans.                                                                                                    
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
9:19:27 AM                                                                                                                    
                                                                                                                                
Representative Ortiz read from a prepared statement:                                                                            
                                                                                                                                
     This amendment increases  federal authorization for the                                                                    
     Child   Nutrition  Programs   by  approximately   $10.2                                                                    
     million. These are  100 percent USDA funds  that do not                                                                    
     require  an   increase  in   state  general   funds  or                                                                    
     additional  staff. Staff  that  administer these  funds                                                                    
     are  100  percent  federally  funded.  Child  Nutrition                                                                    
     Programs  include the  National  School Lunch  Program,                                                                    
     School  Breakfast  Program,  and  Summer  Food  Service                                                                    
     Program.   These  federally   funded  Child   Nutrition                                                                    
     Programs  have been  impacted by  an  overall shift  in                                                                    
     economic status  of children served -  with an increase                                                                    
     in  numbers of  children  meeting  the Alaska  Adjusted                                                                    
     Poverty   Guidelines,   resulting  in   a   substantial                                                                    
     increase  in the  federal  reimbursement rate.  Without                                                                    
     this additional  authority the department would  not be                                                                    
     able   to  accept   the   federal   grant  or   provide                                                                    
     reimbursement  to  Alaska  school districts  and  other                                                                    
     agencies   for  food   and  nutrition   programs.  This                                                                    
     amendment  was  adopted  by the  subcommittee  with  no                                                                    
     objection.                                                                                                                 
                                                                                                                                
Representative  Wilson asked  to hear  from the  department.                                                                    
She  stated that  a few  years earlier  the legislature  had                                                                    
heard from  numerous school districts because  the funds had                                                                    
not  been sufficient  to  cover the  cost  for breakfast  or                                                                    
lunch;  therefore, districts  had  needed  to use  operating                                                                    
funds to  supplement the  costs (especially  for breakfast).                                                                    
She asked if  districts were still using  operating funds to                                                                    
supplement  costs.  Alternatively,  she  wondered  if  funds                                                                    
available for breakfast or lunch had increased over time.                                                                       
                                                                                                                                
HEIDI    TESHNER,    DIRECTOR,   ADMINISTRATIVE    SERVICES,                                                                    
DEPARTMENT  OF  EDUCATION  AND EARLY  DEVELOPMENT,  answered                                                                    
that the  districts did  subsidize with  their GF  money for                                                                    
the  breakfast and  lunch  programs. She  did  not have  the                                                                    
precise data  on hand. The  department had an  annual report                                                                    
that included the data.                                                                                                         
                                                                                                                                
Representative  Wilson addressed  the breakfast  program and                                                                    
remarked  that  it  had  become a  big  issue  in  Fairbanks                                                                    
because the  buses often arrived just  before classes began.                                                                    
She asked whether taking the  funds meant districts (Title 1                                                                    
schools) were  required to offer  the programs if  there was                                                                    
no time for students to utilize the service.                                                                                    
                                                                                                                                
Ms. Teshner  answered it  was up to  the school  district to                                                                    
choose to participate in the programs.                                                                                          
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being  NO  further  OBJECTION,  Amendment  GA  5  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
9:22:41 AM                                                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT  Amendment H DOE 3 (copy                                                                    
on file):                                                                                                                       
                                                                                                                                
     Early Learning Coordination                                                                                                
     H DOE 3 - Early Childhood Programs                                                                                         
                                                                                                                                
     Offered by Representative Ortiz                                                                                            
                                                                                                                                
     It  is the  intent of  the legislature  that the  State                                                                    
     Board  of Education  evaluate and  make recommendations                                                                    
     on  strategies  to  secure   access  to  quality  early                                                                    
     educational  opportunities  for all  Alaskan  children.                                                                    
     Further,  it  is the  intent  of  the legislature  that                                                                    
     early  learning be  prioritized by  the Department  and                                                                    
     State  Board  of  Education  as   they  set  long  term                                                                    
     strategies to address Alaska's educational challenges.                                                                     
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Ortiz read from a prepared statement:                                                                            
                                                                                                                                
     The intent  of this  amendment directs the  State Board                                                                    
     of  Education  to consider  and  address  the issue  of                                                                    
     early learning  programs as  the board  considers long-                                                                    
     term strategies to improve education.                                                                                      
                                                                                                                                
Representative  Ortiz  read  the intent  language  from  the                                                                    
amendment explanation  [see above for detail].  He continued                                                                    
to read from a prepared statement:                                                                                              
                                                                                                                                
     Research   shows   that    a   high-quality   preschool                                                                    
     experience  makes  a   significant  difference  in  the                                                                    
     outcomes  for children.  Alaska has  been strategic  in                                                                    
     its  investment of  limited pre-K  dollars. Nationally,                                                                    
     Alaska scored 10 on a rating  scale of 1 to 10, with 10                                                                    
     the  highest  rating,  on  the  quality  of  its  pre-K                                                                    
     programs.  According   to  a  study  done   by  Rutgers                                                                    
     University in  2016. However, Alaska ranks  39th out of                                                                    
     50 states  in access to  pre-K programs. The  intent of                                                                    
     this language  encourages the  state board  to consider                                                                    
     and make recommendations on  early learning programs as                                                                    
     they  examine  long-term   strategies  to  improve  the                                                                    
     state's educational system.                                                                                                
                                                                                                                                
Representative Wilson  stated that  she hoped  the amendment                                                                    
language addressed  public and  private pre-K  programs. She                                                                    
had  concern with  prioritizing one  program over  all other                                                                    
programs.  Currently   the  state's   constitution  mandated                                                                    
providing K-12  education. Although she had  no problem with                                                                    
looking at early learning, she  was also concerned about the                                                                    
state's  dropout  rate  and   ensuring  that  children  were                                                                    
reading  at   a  certain  grade   level.  She   wondered  if                                                                    
prioritizing meant raising pre-K  over and above the mandate                                                                    
the  board  had  for  K-12. She  noted  the  discussion  had                                                                    
occurred the  previous day when the  committee had addressed                                                                    
athletics and  the University. She  stressed that  the state                                                                    
board  was not  mandated to  do early  learning, but  it was                                                                    
mandated to do K-12.                                                                                                            
                                                                                                                                
9:25:38 AM                                                                                                                    
                                                                                                                                
Representative  Ortiz   did  not  look  at   the  intent  as                                                                    
prioritizing  early  learning  over  K-12, but  as  a  sound                                                                    
investment  in  the  education for  children.  For  example,                                                                    
statistics  showed that  when children  had access  to early                                                                    
learning opportunities,  the dropout rate and  likelihood of                                                                    
further educational remediation expenses were reduced.                                                                          
                                                                                                                                
Vice-Chair Gara appreciated the  amendment and liked that it                                                                    
would  encourage   the  department  to   explore  leveraging                                                                    
federal funds 3 to 1 or 6  to 1 to expand pre-K. He believed                                                                    
there  was a  competitive  federal grant.  He  asked if  the                                                                    
committee or the department had further detail.                                                                                 
                                                                                                                                
9:27:34 AM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  pointed  to   the  last  sentence  of  the                                                                    
amendment  that read  "prioritized...as they  set long  term                                                                    
strategies to address." The intent  language did not mandate                                                                    
anything but  asked the department  to address pre-K  as one                                                                    
of its long-term strategies.                                                                                                    
                                                                                                                                
Representative  Guttenberg  expressed appreciation  for  the                                                                    
amendment. He  noted that  most of the  studies he  had seen                                                                    
pertaining to the  success rate of pre-K  had been national.                                                                    
He wanted to  see the department prioritize  the success. He                                                                    
noted that nothing in the  intent language specified whether                                                                    
the pre-K was private or  public or other. He was interested                                                                    
in strategies on what had been successful in the past.                                                                          
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There being NO further OBJECTION, H DOE 3 was ADOPTED.                                                                          
                                                                                                                                
9:29:05 AM                                                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT  Amendment GA 6 (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Alaska Student Loan Corporation                                                                                            
     Loan Servicing                                                                                                             
     GA 6 2/15 FY2018 Health Insurance Rate Increase                                                                            
                                                                                                                                
     Alaska Student  Loan Corporation (ASLC)  contracts with                                                                    
     the  Alaska   Commission  on   Postsecondary  Education                                                                    
     (ACPE) for  loan servicing and pays  for these services                                                                    
     with ASLC  receipts. The health insurance  increase was                                                                    
     added  to  ACPE's   interagency  receipt  funding  line                                                                    
     within  the appropriation  but  not  within the  ASLC's                                                                    
     appropriation,   which  funds   ACPE.  This   amendment                                                                    
     provides   FY2018   funding    based   on   an   FY2017                                                                    
     supplemental request of $115.1.                                                                                            
                                                                                                                                
Vice-Chair Gara OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Ortiz read from a prepared statement:                                                                            
                                                                                                                                
     GA 6  relates to  the Alaska Student  Loan Corporation;                                                                    
     it   contracts   with    the   Alaska   Commission   on                                                                    
     Postsecondary  Education for  loan  servicing and  pays                                                                    
     for these  services with student loan  receipts. Health                                                                    
     insurance  increases  were  added to  the  commission's                                                                    
     interagency  receipt  authority  without  a  concurrent                                                                    
     adjustment  to  the   Student  Loan  Corporation.  This                                                                    
     amendment makes that adjustment.                                                                                           
                                                                                                                                
Representative  Wilson  disagreed  that the  amendment  only                                                                    
aligned. She  believed it would mean  individuals with loans                                                                    
would have  to pay  more. She reasoned  that the  money came                                                                    
from  Alaskans  who  had loans  with  the  corporation.  She                                                                    
wondered  if  all  the funds  were  utilized  annually.  She                                                                    
wondered  how it  would impact  students with  high interest                                                                    
loans. She asked  how much more the state would  need to get                                                                    
from the students to cover costs.                                                                                               
                                                                                                                                
9:30:53 AM                                                                                                                    
                                                                                                                                
ALEXEI  PAINTER,  ANALYST,   LEGISLATIVE  FINANCE  DIVISION,                                                                    
replied  that  the  Alaska   Student  Loan  Corporation  had                                                                    
funding in one appropriation,  which was transferred to ACPE                                                                    
in another  appropriation. The  salary adjustments  had been                                                                    
made  in  the  ACPE  appropriation,  but  not  in  the  ASLC                                                                    
appropriation. The  amendment was  a technical  adjustment -                                                                    
the money  was already in  the budget  on the ACPE  side. He                                                                    
relayed  that the  corporation paid  out a  dividend to  the                                                                    
state in the current year,  which was the first payout since                                                                    
around FY 09.                                                                                                                   
                                                                                                                                
Representative  Wilson  asked   for  verification  that  the                                                                    
corporation had paid out a  dividend to the state, but could                                                                    
not lower the interest on its loans to students.                                                                                
                                                                                                                                
Mr.  Painter answered  that his  understanding was  that the                                                                    
corporation  had set  its rates  to not  make a  profit, but                                                                    
costs had been reduced  because of operational efficiencies.                                                                    
Consequently,  the corporation  had  made a  profit and  had                                                                    
returned a portion to the state as statutorily required.                                                                        
                                                                                                                                
Representative Wilson did  not want to see  the state profit                                                                    
from the interest rate the  state was charging students. She                                                                    
considered  that  a statute  change  may  be necessary  that                                                                    
would return  money to students  paying on loans.  She noted                                                                    
that  the  specific  portion  of the  DEED  budget  was  not                                                                    
scrutinized  as closely  by the  legislature because  it was                                                                    
not general fund  dollars. She underscored there  was a real                                                                    
problem if the state was profiting off students with loans.                                                                     
                                                                                                                                
Vice-Chair Gara WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being  NO  further  OBJECTION,  Amendment  GA  6  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Representative   Ortiz  provided   concluding  remarks.   He                                                                    
believed  it  was important  to  remember  that the  funding                                                                    
reductions to  the department  had not  been inconsequential                                                                    
to  DEED. He  spoke to  loss to  the department  and overall                                                                    
education  system because  of budget  cuts. For  example, it                                                                    
was  important   to  recognize  the  loss   of  the  Teacher                                                                    
Mentoring  Program. He  furthered  that  the department  was                                                                    
trying to  improve teacher retention, particularly  in rural                                                                    
areas  -  the  Teacher  Mentoring  Program  had  helped  new                                                                    
teachers with curriculum and adjustments  to living in rural                                                                    
Alaska. The  department was trying  to improve  the delivery                                                                    
of  services  and education  to  the  state's children,  but                                                                    
funding reductions resulted in  the loss of programs working                                                                    
to  deliver education  to the  children. He  noted that  the                                                                    
Alaska  Learning  Network program  had  also  been lost.  He                                                                    
recognized  the fiscal  situation, but  it was  important to                                                                    
remember  there was  an opportunity  cost of  addressing the                                                                    
issue.                                                                                                                          
                                                                                                                                
Representative  Ortiz  relayed  that  the  subcommittee  had                                                                    
discussed potential amendments in  early learning that would                                                                    
have   reduced  or   eliminated  early   learning  programs.                                                                    
Proposals had included the elimination  of funding for pre-K                                                                    
competitive grants by 25 percent  and a reduction in Parents                                                                    
as Teachers by 20 percent.  Members had discussed the merits                                                                    
of  early  learning  programs  and  its  importance  to  the                                                                    
comprehensive educational system.  He continued that members                                                                    
who  had  spoken in  support  of  reducing the  program  had                                                                    
talked about  the need  for state  budget reductions  in the                                                                    
face  of the  state's fiscal  situation and  saw pre-K  as a                                                                    
lower  priority.  The subcommittee  had  also  looked at  an                                                                    
amendment that  would have impacted  funding for  Bree's and                                                                    
Erin's Law. The amendment  would have eliminated funding for                                                                    
the implementation  of Chapter II  SLA 15. He  recalled loud                                                                    
and  clear  support for  the  laws;  however, districts  had                                                                    
vocalized the difficulty of adding  the items to the list of                                                                    
unfunded  mandates  facing  state  districts.  He  explained                                                                    
there was  very little  funding in  the budget  to implement                                                                    
the  laws, which  the amendment  would  have eliminated  and                                                                    
would  have  resulted  in  a  greater  unfunded  mandate  to                                                                    
districts; therefore, he had been opposed.                                                                                      
                                                                                                                                
Vice-Chair Gara to hear from  the department about a federal                                                                    
competitive  grant program  for  pre-K. He  wondered if  the                                                                    
department had taken any action.                                                                                                
                                                                                                                                
Ms. Teshner replied that she  was aware of the federal grant                                                                    
Vice-Chair  Gara was  referring to,  but the  department had                                                                    
not submitted anything for the grant.                                                                                           
                                                                                                                                
Vice-Chair Gara  discussed that many committee  members were                                                                    
looking at ways to expand pre-K,  but the state was facing a                                                                    
fiscal crisis. He asked if  Ms. Teshner would follow up with                                                                    
information  on  the  specific grant  program  and  why  the                                                                    
department  had   not  applied.  He  recalled   former  DEED                                                                    
Commissioner  Mike  Hanley  had relayed  that  a  successful                                                                    
applicant could  leverage either 3  to 1  or 6 to  1 federal                                                                    
matching dollars. He asked the  department to follow up with                                                                    
a description of the program and why DEED had not applied.                                                                      
                                                                                                                                
Ms. Teshner agreed.                                                                                                             
                                                                                                                                
^DEPARTMENT  OF  LABOR  AND  WORKFORCE  DEVELOPMENT  FINANCE                                                                  
SUBCOMMITTEE AMENDMENTS                                                                                                       
                                                                                                                                
9:39:29 AM                                                                                                                    
                                                                                                                                
Co-Chair  Foster provided  a  subcommittee  report. He  read                                                                    
from a prepared statement:                                                                                                      
                                                                                                                                
     The finance  subcommittee for  the Department  of Labor                                                                    
     and   Workforce  Development   had  six   meetings  and                                                                    
     recommends the  House Finance Committee budget  for the                                                                    
     Department of  Labor and Workforce  Development include                                                                    
     the  following  funding:  $20,982,000  in  undesignated                                                                    
     general  funds,   $36,292,400  in   designated  general                                                                    
     funds,  $20,410,100  in  other  funds,  $84,337,900  in                                                                    
     federal funds, for  a total of $162,022,400  for FY 18.                                                                    
     This  is a  decrease  from the  FY  17 management  plan                                                                    
     unrestricted general fund of  $1,515,400, a 6.7 percent                                                                    
     decrease.  The  subcommittee  had no  statutory  change                                                                    
     proposals. There are two  governor's amendments and two                                                                    
     subcommittee amendments.                                                                                                   
                                                                                                                                
Co-Chair Foster MOVED to ADOPT Amendment H DOL 1:                                                                               
                                                                                                                                
     Labor Standards and Safety                                                                                                 
     Occupational Safety and Health                                                                                             
     H DOL 1 - Maintain Workers' Safety Programs                                                                                
                                                                                                                                
     Offered by Representative Foster                                                                                           
                                                                                                                                
     There is a sufficient  Workers' Safety and Compensation                                                                    
     Administration Account (WSCAA)  fund balance to support                                                                    
     more of the state's workers' safety program expenses.                                                                      
                                                                                                                                
     WSCAA is a designated  general fund revenue established                                                                    
     via  statute  (AS  23.05.067)  for  the  administrative                                                                    
     expenses of the state's  workers' safety programs under                                                                    
     AS 18.80.                                                                                                                  
                                                                                                                                
Vice-Chair Gara OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair  Foster explained  the  amendment  with a  prepared                                                                    
statement:                                                                                                                      
                                                                                                                                
     This amendment  is a fund  source change,  reducing the                                                                    
     department's  UGF by  $600,000 and  increasing spending                                                                    
     from the  Workers' Compensation  Administration Account                                                                    
     Fund  by   $600,000.  The  funds   will  be   used  for                                                                    
     administrative expenses  of the state's  workers safety                                                                    
     programs and the fund balance can support this change.                                                                     
                                                                                                                                
Co-Chair Foster  added that a department  representative was                                                                    
available for any questions.                                                                                                    
                                                                                                                                
9:41:26 AM                                                                                                                    
                                                                                                                                
Representative Pruitt  referenced the H DOL  2 amendment. He                                                                    
relayed that  the DLWD subcommittee had  heard the amendment                                                                    
and  he  objected.  He agreed  the  amendment  would  simply                                                                    
transferring  money from  GF  to  the Workers'  Compensation                                                                    
Administration  Account, which  looked  like  a simple  fund                                                                    
source  switch.  However, H  DOL  2  increased the  cost  by                                                                    
$600,000.  He did  not believe  the explanation  was a  good                                                                    
representation of  exactly what  would take place.  He spoke                                                                    
to some  challenges he  had with  changing fund  sources. He                                                                    
understood  that  the  worker's   safety  account  may  have                                                                    
sufficient  funds,   but  changing   fund  sources   so  the                                                                    
legislature could  then use the  GF funding on  other things                                                                    
did not  result in  the needed savings.  Additionally, there                                                                    
was  intent  by  the  legislature   on  how  to  manage  the                                                                    
reduction. He  believed the amendment  would go back  on the                                                                    
legislature's  intent. He  objected to  the increase  in the                                                                    
budget resulting from the two  combined amendments. He asked                                                                    
to stick  only with H DOL  1, although he believed  it was a                                                                    
false savings.                                                                                                                  
                                                                                                                                
Co-Chair  Foster agreed  that  H  DOL 1  and  H  DOL 2  were                                                                    
connected.   He  explained   that   with   an  increase   in                                                                    
unemployment  rates,  fewer  people  were  paying  into  the                                                                    
unemployment insurance program.  He detailed that vocational                                                                    
schools, Alaska Construction  Academy, and regional training                                                                    
centers   around   the   state  received   TVEP   [Technical                                                                    
Vocational  Education  Program]  funds;  with  fewer  people                                                                    
paying  into   the  unemployment  insurance   program  (0.16                                                                    
percent  of payments  went into  TVEP funding),  fewer funds                                                                    
were  available  for  the training  programs.  The  training                                                                    
programs  helped to  keep people  employed by  acquiring new                                                                    
skills in the event of job  loss. The goal was to find other                                                                    
funds to backfill.                                                                                                              
                                                                                                                                
9:45:25 AM                                                                                                                    
                                                                                                                                
Representative  Wilson stated  the construction  academy did                                                                    
not receive  TVEP funds. She  asked for the  current balance                                                                    
in the Workers' Compensation Administration Account.                                                                            
                                                                                                                                
PALOMA    HARBOUR,   DIRECTOR,    ADMINISTRATIVE   SERVICES,                                                                    
DEPARTMENT  OF  LABOR  AND WORKFORCE  DEVELOPMENT,  answered                                                                    
that the  department was projecting  a fund balance  for the                                                                    
Workers'   Compensation  Administration   Account  of   $4.1                                                                    
million at the  end of FY 18. The amendment  would bring the                                                                    
number down by $600,000.                                                                                                        
                                                                                                                                
Representative Wilson  asked what  money went into  the fund                                                                    
and what was paid out of the fund.                                                                                              
                                                                                                                                
Ms.  Harbour   answered  that  the  fund   source  had  been                                                                    
established in  statute to support the  administrative costs                                                                    
of the  state's Workers'  Safety and  Compensation programs.                                                                    
Currently  the account  supported the  Worker's Compensation                                                                    
component,   the    Worker's   Compensation    and   Appeals                                                                    
Commission, and occupational safety and health programs.                                                                        
                                                                                                                                
Representative Wilson  asked if it  was money going  into or                                                                    
out of the account. She  asked for the incoming and outgoing                                                                    
funds for the last year.                                                                                                        
                                                                                                                                
Ms. Harbour answered that in  FY 16, $7.2 million in revenue                                                                    
had been collected and $7.9 million had been expended.                                                                          
                                                                                                                                
Representative Wilson observed that  the account had been in                                                                    
the negative  in FY  16. Ms. Harbour  agreed, but  there had                                                                    
been a remaining balance in the account of $5.7 million.                                                                        
                                                                                                                                
Representative  Wilson  agreed  with  Representative  Pruitt                                                                    
that the amendment would mean  a switch in fund sources. She                                                                    
asked how  many years the fund  had brought in less  than it                                                                    
had spent. She asked if  taking money from the account would                                                                    
cause problems  in the future.  She was concerned  about the                                                                    
ability to fulfill obligations in the future.                                                                                   
                                                                                                                                
Ms.  Harbour   answered  that  currently  the   account  was                                                                    
expending more than  it was bringing in,  but the department                                                                    
had  worked with  the governor  to introduce  legislation to                                                                    
reduce the draw on the  fund. There were currently two bills                                                                    
under consideration  - HB  69 and  HB 79  - that  would help                                                                    
improve the health of the  fund. There were several years to                                                                    
get the bills through the  process before there would be any                                                                    
fund sufficiency problems.                                                                                                      
                                                                                                                                
Representative   Wilson  asked   why   the  department   had                                                                    
initially chosen  to use  $600,000 in  UGF match  instead of                                                                    
funds   from   the  Workers'   Compensation   Administration                                                                    
Account.                                                                                                                        
                                                                                                                                
Ms.  Harbour   answered  that  the  governor's   budget  had                                                                    
included a  fund source change  for the  Occupational Safety                                                                    
and  Health  programs  of  $191,000.   The  issue  had  been                                                                    
reevaluated  during the  subcommittee process.  When working                                                                    
through the  subcommittee process the department  had looked                                                                    
at  what it  could accommodate  in the  next several  fiscal                                                                    
years to have time to get the legislation through.                                                                              
                                                                                                                                
9:49:43 AM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  appreciated the  amendment and  believed it                                                                    
would create  a benefit for  people seeking work.  He stated                                                                    
that the  last year  and in years  prior, the  committee had                                                                    
"cannibalized"  the Higher  Education Fund  for things  that                                                                    
had nothing  to do with  education. He believed  the current                                                                    
amendment seemed  like a much  more reasonable use  of funds                                                                    
than funds that had been used from the education fund.                                                                          
                                                                                                                                
Representative Wilson  asked if  she could expect  to always                                                                    
have  comments made  based  on  questions committee  members                                                                    
asked. She  believed it  was the  committee's responsibility                                                                    
to  understand and  help the  public  understand details  on                                                                    
account balances and what funds  were meant to do to prevent                                                                    
harming the  balances. She agreed with  Vice-Chair Gara that                                                                    
the Higher Education Fund was  being used for things that it                                                                    
should not be.  She pointed out that at the  end of the day,                                                                    
the  funds  were all  GF.  She  still  believed it  was  the                                                                    
committee's  responsibility   to  make  sure   the  accounts                                                                    
remained  healthy  enough  to  fulfill  their  purpose.  She                                                                    
questioned  whether the  department would  have to  go after                                                                    
general  funds to  pay for  items that  were supposed  to be                                                                    
taken care of by the other accounts.                                                                                            
                                                                                                                                
Co-Chair  Seaton replied  that  the  department had  already                                                                    
commented that it had proposed taking some of the funds.                                                                        
                                                                                                                                
Representative  Wilson countered  that  Vice-Chair Gara  had                                                                    
brought  the  issue up.  She  believed  Vice-Chair Gara  was                                                                    
making it sound like other  committee members were trying to                                                                    
do something, which she did  not believe they were trying to                                                                    
do. She  agreed that  the department  had brought  the issue                                                                    
forward because  everyone was looking for  other non-GF fund                                                                    
sources.  She  wondered  whether the  legislature  would  be                                                                    
required to use UGF to pay  for items typically funded by an                                                                    
account if the account was  depleted to a certain level. She                                                                    
reasoned  that committee  members sat  on the  House Finance                                                                    
Committee for a purpose.                                                                                                        
                                                                                                                                
9:52:44 AM                                                                                                                    
                                                                                                                                
Ms. Harbour replied  that at present there  was a sufficient                                                                    
fund balance to  cover expenses proposed in  the budget. She                                                                    
agreed  that  if  the department  was  unsuccessful  getting                                                                    
additional legislation through the  process there would be a                                                                    
fund  sufficiency  problem  in   the  future.  However,  the                                                                    
department had identified ways to  save costs to prevent the                                                                    
problem.  She  explained   that  it  would  be   up  to  the                                                                    
legislature in three fiscal years  to determine if it wanted                                                                    
to  make  cuts  to  the  programs  if  the  administration's                                                                    
proposed legislation had not passed.                                                                                            
                                                                                                                                
Co-Chair  Foster believed  it was  the legislature's  job to                                                                    
make  the   best  guess  possible.  He   detailed  that  the                                                                    
subcommittee had  worked with the  department to  assess the                                                                    
risk;  it had  been determined  there were  sufficient funds                                                                    
available.  Additionally,  plans  were underway  to  try  to                                                                    
minimize  any  risk  in  the  future.  He  observed  it  was                                                                    
necessary to make the best  guess and he believed the action                                                                    
proposed in the amendment was prudent.                                                                                          
                                                                                                                                
Vice-Chair Gara WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DOL 1  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
9:54:28 AM                                                                                                                    
                                                                                                                                
Co-Chair  Foster   MOVED  to  ADOPT  Amendment   GA  10  and                                                                    
Amendment GA 11 (copy on file):                                                                                                 
                                                                                                                                
     Employment and Training Services                                                                                           
     Workforce Development                                                                                                      
     GA 10  2/15 Alaska  Technical and  Vocational Education                                                                    
     Formula Funding                                                                                                            
                                                                                                                                
     The Alaska  Technical and Vocational  Education Program                                                                    
     (TVEP),  is   funded  by   0.16  percent   of  employee                                                                    
     contributions  to  the   unemployment  insurance  trust                                                                    
     fund. The  taxable wages  collected have  declined more                                                                    
     rapidly  than originally  anticipated.  A reduction  in                                                                    
     TVEP authority  is required in  order to  not overspend                                                                    
     the fund.  This is a  new item  for FY2018. It  was not                                                                    
     included in the FY2018  Governor's Budget due to timing                                                                    
     of updated revenue collection projections.                                                                                 
                                                                                                                                
     The Alaska  Technical and Vocational  Education Program                                                                    
     (TVEP), established  under AS 23.15.830,  provides non-                                                                    
     competitive grants  to institutions that are  part of a                                                                    
     statewide  vocational   training  system.  Institutions                                                                    
     provide  technical  and  vocational  training  programs                                                                    
     that align with workforce regional demands.                                                                                
                                                                                                                                
     The  Department of  Labor  and Workforce  Development's                                                                    
     proposal  for  the  TVEP  distribution  in  the  FY2018                                                                    
     Governor's  Budget  assumed  flat TVEP  revenue  FY2016                                                                    
     through FY2018.  There was a carryforward  balance from                                                                    
     unspent  prior year  TVEP distributions  at the  end of                                                                    
     FY2016 that  was anticipated to be  sufficient to cover                                                                    
     reduced revenues  in FY2017 and FY2018.  Actual revenue                                                                    
     collections through  the first  two quarters  of FY2017                                                                    
     indicate taxable  wages are declining faster  than what                                                                    
     was anticipated prior to the  start of the fiscal year.                                                                    
     An overall  adjustment of $1,319.2 is  needed, bringing                                                                    
    the total available for distribution to $11,970.1.                                                                          
                                                                                                                                
     The   Workforce  Development   component  grants   TVEP                                                                    
     funding  to   select  institutions  prescribed   in  AS                                                                    
     23.15.835(d). They are as follows:                                                                                         
                                                                                                                                
     Alaska Technical Center will  receive $1,077.3, or nine                                                                    
     percent,  of total  receipts available.  This decreases                                                                    
     the  component's  authority   $118.7  from  the  FY2017                                                                    
     distribution level.                                                                                                        
                                                                                                                                
     Amundsen  Educational Center  will  receive $239.4,  or                                                                    
     two   percent,  of   total  receipts   available.  This                                                                    
     decreases  the  component's  authority $26.4  from  the                                                                    
     FY2017 distribution level.                                                                                                 
                                                                                                                                
     Ilisagvik   College  will   receive  $598.5,   or  five                                                                    
     percent,  of total  receipts available.  This decreases                                                                    
     the  component's   authority  $66.0  from   the  FY2017                                                                    
     distribution level.                                                                                                        
                                                                                                                                
     Northwestern  Alaska Career  and Technical  Center will                                                                    
     receive  $359.1, or  three percent,  of total  receipts                                                                    
    available. This decreases the component's authority                                                                         
     $39.6 from the FY2017 distribution level.                                                                                  
                                                                                                                                
     Partners  for Progress  in  Delta,  Inc., will  receive                                                                    
     $359.1, or three percent,  of total receipts available.                                                                    
     This  decreases the  component's  authority $39.6  from                                                                    
     the FY2017 distribution level.                                                                                             
                                                                                                                                
     Southwest Alaska  Vocational and Education  Center will                                                                    
     receive  $359.1, or  three percent,  of total  receipts                                                                    
    available. This decreases the component's authority                                                                         
     $39.6 from the FY2017 distribution level.                                                                                  
                                                                                                                                
     Yuut Elitnaurviat,  Inc. People's Learning  Center will                                                                    
     receive $1,077.3,  or nine  percent, of  total receipts                                                                    
    available. This decreases the component's authority                                                                         
     $118.7 from the FY2017 distribution level.                                                                                 
                                                                                                                                
     Alaska Vocational Technical Center                                                                                         
                                                                                                                                
     GA 11  2/15 Alaska  Technical and  Vocational Education                                                                    
     Formula Funding                                                                                                            
                                                                                                                                
     The Alaska  Technical and Vocational  Education Program                                                                    
     (TVEP),  is   funded  by   0.16  percent   of  employee                                                                    
     contributions  to  the   unemployment  insurance  trust                                                                    
     fund. The  taxable wages  collected have  declined more                                                                    
     rapidly  than originally  anticipated.  A reduction  in                                                                    
     TVEP authority  is required in  order to  not overspend                                                                    
     the fund.  This is a  new item  for FY2018. It  was not                                                                    
     included in the FY2018  Governor's Budget due to timing                                                                    
     of updated revenue collection projections.                                                                                 
                                                                                                                                
     The Alaska  Technical and Vocational  Education Program                                                                    
     (TVEP), established  under AS 23.15.830,  provides non-                                                                    
     competitive grants  to institutions that are  part of a                                                                    
     statewide  vocational   training  system.  Institutions                                                                    
     provide  technical  and  vocational  training  programs                                                                    
     that align with workforce regional demands.                                                                                
                                                                                                                                
     The  Department of  Labor  and Workforce  Development's                                                                    
     proposal  for  the  TVEP  distribution  in  the  FY2018                                                                    
     Governor's  Budget  assumed  flat TVEP  revenue  FY2016                                                                    
     through FY2018.  There was a carryforward  balance from                                                                    
     unspent  prior year  TVEP distributions  at the  end of                                                                    
     FY2016 that  was anticipated to be  sufficient to cover                                                                    
     reduced revenues  in FY2017 and FY2018.  Actual revenue                                                                    
     collections through  the first  two quarters  of FY2017                                                                    
     indicate taxable  wages are declining faster  than what                                                                    
     was anticipated prior to the  start of the fiscal year.                                                                    
     An overall  adjustment of $1,319.2 is  needed, bringing                                                                    
    the total available for distribution to $11,970.1.                                                                          
                                                                                                                                
     The  Alaska   Vocational  Technical   Center's  (AVTEC)                                                                    
     distribution  is  set  by  AS  23.15.835(d),  and  will                                                                    
     receive  $2,034.9,  or   seventeen  percent,  of  total                                                                    
     receipts  available.  This  decreases  the  component's                                                                    
     authority $224.3 from the FY2017 distribution level.                                                                       
                                                                                                                                
Vice-Chair Gara OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair Foster explained the amendments with a prepared                                                                        
statement:                                                                                                                      
                                                                                                                                
     These  amendments  reduce   the  Alaska  Technical  and                                                                    
     Vocational   Education   program  (TVEP)   funding   to                                                                    
     grantees   and  Alaska   Vocational  Technical   Center                                                                    
     (AVTEC).  The  TVEP  revenues collected  have  declined                                                                    
     faster than expected and  the adjustments reflected are                                                                    
     required so  that we  do not  overspend from  the fund.                                                                    
     The decrement  is divided up  to all grantees  in AVTEC                                                                    
     using TVEP funds.                                                                                                          
                                                                                                                                
Vice-Chair Gara WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There being NO further OBJECTION, Amendment GA 10 and                                                                           
Amendment GA 11 were ADOPTED.                                                                                                   
                                                                                                                                
9:55:27 AM                                                                                                                    
                                                                                                                                
Co-Chair Foster MOVED to ADOPT Amendment H DOL 2:                                                                               
                                                                                                                                
     H DOL 2 - Restore Alaska Construction Academy Funding                                                                      
                                                                                                                                
     Offered by Representative Foster                                                                                           
                                                                                                                                
     In accordance  with legislative intent,  the Governor's                                                                    
     budget   reduced   the   unrestricted   general   funds                                                                    
     supporting   the  Construction   Academy  Training   by                                                                    
     $600.0. This  is shortsighted  given there  are already                                                                    
     not enough trained Alaskans to  meet workforce needs as                                                                    
     evidenced by  the high nonresident  hire rate  in these                                                                    
     occupations.  Restoring this  funding  is necessary  to                                                                    
     meet  demand for  a  trained  Alaskan workforce.  Along                                                                    
     with  current  Construction   Academies,  this  funding                                                                    
     still supports construction training at:                                                                                   
     · Alaska Technical Center in Kotzebue $150.0                                                                               
     ·  Northwestern Alaska Career  and Technical  Center in                                                                    
        Nome $150.0                                                                                                             
     ·  Southwest Alaska  Vocational &  Education Center  in                                                                    
        King Salmon $50.0                                                                                                       
                                                                                                                                
Vice-Chair Gara OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair Foster explained the amendment with a prepared                                                                         
statement:                                                                                                                      
                                                                                                                                
     This   amendment  restores   funding   to  the   Alaska                                                                    
     Construction Academy and  the regional training centers                                                                    
     cut in  recent years so  they can continue to  meet the                                                                    
     demand for  a trained  Alaska workforce  throughout all                                                                    
     of Alaska.  The restoration  is $600,000 in  UGF, which                                                                    
     had been noted in the prior amendment [H DOL 1].                                                                           
                                                                                                                                
Representative  Kawasaki did  not  have a  problem with  the                                                                    
increment, but he took issue  with a comment that there were                                                                    
not enough  trained Alaskans to  meet the workforce  and the                                                                    
evidence cited  of high nonresident  hire rates.  He relayed                                                                    
that  in  Fairbanks,  it  was   clearly  not  the  case.  He                                                                    
furthered that  individuals who  used to  work on  the North                                                                    
Slope  were being  replaced by  out-of-state workers  rather                                                                    
than  in-state  workers.  He  appreciated  the  Construction                                                                    
Academy providing  opportunities for new,  young individuals                                                                    
to  get into  the industry.  He  remarked that  it was  also                                                                    
necessary  to   have  industry  partners  willing   to  hire                                                                    
residents.                                                                                                                      
                                                                                                                                
9:56:49 AM                                                                                                                    
                                                                                                                                
Representative Wilson  referred to the  construction academy                                                                    
and stated  that "when  this was  put in and  it was  a wrap                                                                    
down of five years," which  was to be based private matching                                                                    
funds. She asked  if any private funding had come  in to the                                                                    
program.                                                                                                                        
                                                                                                                                
Co-Chair Foster  deferred to the  department. He  noted that                                                                    
the administration had voiced  strong support for the Alaska                                                                    
Construction Academies.                                                                                                         
                                                                                                                                
Ms.   Harbour  answered   that   the   academies  had   been                                                                    
administered by  the Construction Education Foundation  as a                                                                    
passthrough  grant. She  furthered that  the department  did                                                                    
not have  all the information  on funding for  each academy.                                                                    
The grants  to school  districts for  construction academies                                                                    
had been eliminated from the budget  - as cuts had been made                                                                    
there  was not  sufficient funding  for the  programs. There                                                                    
were  still  construction   academies  occurring  in  school                                                                    
districts,  which were  now 100  percent supported  by other                                                                    
funds. There  had been successes,  but she did not  have the                                                                    
specifics because  funds generated  from private  donors was                                                                    
up to each school district.                                                                                                     
                                                                                                                                
Representative Wilson was replied  that the answer "tells me                                                                    
that we don't know." She remarked  that it was a grant given                                                                    
by the  state and it had  been made clear several  years ago                                                                    
that  they  [private   donors]  needed  to  be   more  of  a                                                                    
participant.  Based on  Ms. Harbour's  answer, she  believed                                                                    
the state did not know who  the partners were. She owned the                                                                    
Southwest  Alaska  Vocational   Educational  Center  (SAVEC)                                                                    
located in King Salmon.                                                                                                         
                                                                                                                                
Ms.   Harbour   answered   that   SAVEC   is   a   nonprofit                                                                    
organization.                                                                                                                   
                                                                                                                                
Representative  Wilson  did  not  believe  SAVEC  owned  the                                                                    
school.  She believed  a private  corporation had  built the                                                                    
facility,  but it  was not  a  school. She  stated that  the                                                                    
Alaska  Technical Center  was a  school offering  year-round                                                                    
classes. She continued that the  Northwest Alaska Career and                                                                    
Technical Center  in Nome was  a great program  that brought                                                                    
kids in year-round.  She believed SAVEC was  a facility that                                                                    
could be rented for training, but  that it was not a school.                                                                    
She asked if her understanding was accurate.                                                                                    
                                                                                                                                
Ms.  Harbour  answered  that  SAVEC  owned  the  center  and                                                                    
partnered with program training  providers. She relayed that                                                                    
the center  was rented  out for all  sorts of  training. She                                                                    
did not have the  Technical and Vocational Education Program                                                                    
Report on hand,  but it outlined all  the training occurring                                                                    
in the center.                                                                                                                  
                                                                                                                                
Representative Wilson had issues  with the amendment because                                                                    
she  believed it  involved picking  winners and  losers. She                                                                    
understood the decline  in TVEP funds, but there  was a long                                                                    
list  of  other  schools  losing funds  as  well  (e.g.  the                                                                    
University  and  AVTEC).  She  believed  two  of  the  three                                                                    
schools   listed  were   more   traditional  "school   type"                                                                    
facilities and not places that  were rented to hold courses.                                                                    
She was disappointed that the  legislature had made it clear                                                                    
in the past that it  wanted more [private] participation and                                                                    
to understand  more where the  other grant money  was coming                                                                    
from. She recognized  the money was being  utilized, but she                                                                    
wondered  where  the  partnerships were.  Additionally,  she                                                                    
questioned  why only  construction  had  been selected.  She                                                                    
reasoned there were out-of-state  workers on the North Slope                                                                    
and in  the mining  industry as well.  She wondered  why the                                                                    
construction industry rose to  the top and deserved $600,000                                                                    
in GF. She continued that  the academies could ask for funds                                                                    
from  the participants.  She stressed  that the  academy was                                                                    
free;  the same  education  at the  University  or in  AVTEC                                                                    
would  cost a  participant money.  She believed  the academy                                                                    
was focused  on helping  individuals determine  whether they                                                                    
wanted to get into the  construction field versus going into                                                                    
a union. She  stressed that the program did  not provide the                                                                    
same  training   as  was  offered   in  other   places.  She                                                                    
emphasized that  the amendment picked a  winner for $600,000                                                                    
- a  program that had not  shown whether it had  gone out in                                                                    
the  past  three  years to  find  alternative  funding.  She                                                                    
stated it had  been a $2 million appropriation  in the past.                                                                    
She determined  that the  program had  not raised  the funds                                                                    
because it was not doing the things it had in the past.                                                                         
                                                                                                                                
10:02:58 AM                                                                                                                   
                                                                                                                                
Co-Chair  Foster relayed  that  the  three regional  centers                                                                    
included in the  amendment were the only ones  that had lost                                                                    
UGF. The centers  had received a small amount  of TVEP money                                                                    
and GF over the years; over  the past few years, the centers                                                                    
were the  only ones  that had  lost all or  most of  the UGF                                                                    
component, which was  the reason they had  been selected for                                                                    
the amendment.                                                                                                                  
                                                                                                                                
Vice-Chair Gara WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Gara, Guttenberg, Kawasaki,  Grenn, Ortiz, Foster,                                                                    
Seaton                                                                                                                          
OPPOSED: Thompson, Tilton, Wilson                                                                                               
                                                                                                                                
Representative Pruitt was absent from the vote.                                                                                 
                                                                                                                                
The MOTION  PASSED (7/3). There being  NO further OBJECTION,                                                                    
H DOL 2 was ADOPTED.                                                                                                            
                                                                                                                                
10:04:57 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:27:31 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Seaton noted  that Representative  Pruitt was  ill                                                                    
and had left  for the day. Representative  Neuman would fill                                                                    
in as an alternate for the day.                                                                                                 
                                                                                                                                
^DEPARTMENT  OF   NATURAL  RESOURCES   FINANCE  SUBCOMMITTEE                                                                  
AMENDMENTS                                                                                                                    
                                                                                                                                
10:28:17 AM                                                                                                                   
                                                                                                                                
Representative  Guttenberg provided  a subcommittee  report.                                                                    
He relayed  that the House  Finance Budget  Subcommittee for                                                                    
the Department  of Natural Resources  held 11  meetings with                                                                    
the  department during  the  budget  overview. He  requested                                                                    
that  the  committee  adopt   the  recommended  numbers.  He                                                                    
pointed  an  incorrect  number  had  been  used  during  the                                                                    
subcommittee  process   -  it  had  included   the  language                                                                    
section.  The  following  numbers   had  been  corrected  to                                                                    
exclude the  language section and  the total was  about 8.75                                                                    
percent  lower than  the numbers  provided in  subcommittee.                                                                    
Without  budget amendments  the  unrestricted general  funds                                                                    
were    $59,200,000,   designated    general   funds    were                                                                    
$30,694,000,  other funds  were  $38,259,000, federal  funds                                                                    
were  $15,820,000.  The UGF  difference  between  the FY  15                                                                    
[management plan]  and the FY  18 [governor  amended budget]                                                                    
was  a  reduction  of  $27.4 million  (a  decrease  of  31.7                                                                    
percent).                                                                                                                       
                                                                                                                                
Representative Guttenberg  communicated that  four statutory                                                                    
changes were  recommended including  the repeal of  AS 27.30                                                                    
to eliminate the mining  Exploration Incentive Credit, which                                                                    
had  not been  used  since  FY 11;  repeal  AS 38.05.160  or                                                                    
require  legislative  approval  of  any shale  oil  rent  or                                                                    
royalty waiver  the commissioner  recommended -  because the                                                                    
department had  never used  the waiver,  the waiver  had not                                                                    
met  its legislative  intent; repeal  AS 38.05.180(f)(6)  to                                                                    
eliminate  royalty relief  for Cook  Inlet platforms,  which                                                                    
benefits six  producers, and  between FY 11  and FY  16 cost                                                                    
the  state  $69.1  million  in foregone  revenue  -  it  was                                                                    
unclear  how   the  state  benefitted   from  oil   and  gas                                                                    
production  for which  it received  no  royalties or  taxes;                                                                    
and, repeal  AS 38.05.180(f)(5) to eliminate  royalty relief                                                                    
for Cook  Inlet small  discoveries -  the provision  had not                                                                    
been  used since  FY 12,  and  appeared to  have served  its                                                                    
purpose in  restarting production  from Cook Inlet  leases -                                                                    
it was unclear how the  state benefitted from oil production                                                                    
for which it received no royalties or taxes.                                                                                    
                                                                                                                                
Representative  Guttenberg continued  that  there were  five                                                                    
proposals, which had not been  advanced by the subcommittee.                                                                    
He had  offered two of  the proposals, which had  been taken                                                                    
off the agenda due to  opposition. One dealt with a forester                                                                    
in Haines, two  related to parks, one related  to the Public                                                                    
Access Defense  Fund, and one  pertained to the  land banks.                                                                    
He noted the detailed information was available.                                                                                
                                                                                                                                
10:32:26 AM                                                                                                                   
                                                                                                                                
Representative  Neuman  referenced the  recommendations  for                                                                    
repealing statute.  He asked  what the  subcommittee chair's                                                                    
intent  had   been  and  observed  that   the  changes  were                                                                    
substantive.  He  wondered  if  Representative  Guttenberg's                                                                    
intent  was  for  bills  to  be  introduced  to  repeal  the                                                                    
statutes. Alternatively, he  wondered if the recommendations                                                                    
only pertained to the funding sources for the items.                                                                            
                                                                                                                                
Co-Chair  Seaton explained  that he  had set  the parameters                                                                    
for the  subcommittees; one of the  things subcommittees had                                                                    
been  asked  to  look  at  was  indirect  expenditures.  The                                                                    
subcommittee  was   asked  to  submit   recommendations  for                                                                    
statutory amendments  to the House Resources  Committee. The                                                                    
House  Resources Committee  would  have to  determine if  it                                                                    
agreed  with  the recommendations  and  would  then have  to                                                                    
submit either personal or committee bills.                                                                                      
                                                                                                                                
Co-Chair Neuman  explained that he had  wanted clarification                                                                    
about whether  the recommendations went to  the full finance                                                                    
committee  for the  elimination of  funds. He  reasoned that                                                                    
the committee approved or disapproved the funds.                                                                                
                                                                                                                                
Co-Chair Seaton  appreciated the clarification.  He detailed                                                                    
that the  items were  statutory recommendations and  did not                                                                    
currently change budgetary items.                                                                                               
                                                                                                                                
10:34:41 AM                                                                                                                   
                                                                                                                                
Representative Guttenberg  MOVED to ADOPT Amendment  H DNR 1                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Administration & Support Services                                                                                          
     Mental Health Trust Lands Administration                                                                                   
     H DNR 1 - Eliminate funding for public relations                                                                           
     contracting.                                                                                                               
                                                                                                                                
     Offered by Representative Guttenberg                                                                                       
                                                                                                                                
     The  Trust   Land  Office   published  a   request  for                                                                    
     proposals  from public  relations  contractors, with  a                                                                    
     contract  ceiling of  $250.0 per  year. The  TLO should                                                                    
     not  contract  with  any public  relations  firm.  This                                                                    
     amendment eliminates funding for TLO PR outsourcing.                                                                       
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Guttenberg  explained that the  amendment was                                                                    
a  reduction to  the  Alaska Mental  Health Trust  Authority                                                                    
(AMHTA) Mental Health  Land Office. The land  office had put                                                                    
out a request  for proposal (RFP) for $250,000  per year for                                                                    
the  next five  years;  the  RFP had  been  canceled by  the                                                                    
office.  However, when  the subcommittee  had looked  at the                                                                    
budget it  had determined the  land office had  excess funds                                                                    
exceeding at least "twice $250,000  in the last five years,"                                                                    
with similar numbers going back  ten years. The subcommittee                                                                    
did not recommend cutting any  GF, but it would decrease the                                                                    
authorization  for the  land office.  He explained  that the                                                                    
Mental Health  Trust Authority Authorized  Receipts (MHTAAR)                                                                    
would go back into the AMHTA  fund for use on their clients,                                                                    
which was its primary purpose.                                                                                                  
                                                                                                                                
10:36:00 AM                                                                                                                   
                                                                                                                                
Representative Wilson asked if  AMHTA would have the ability                                                                    
to  take the  money and  use it  for something  else if  the                                                                    
amendment was approved.                                                                                                         
                                                                                                                                
Co-Chair  Seaton  answered  that  it could  come  in  as  an                                                                    
additional  amendment  in  round  two  of  amendments  after                                                                    
public testimony.                                                                                                               
                                                                                                                                
Representative  Wilson asked  for  clarification that  AMHTA                                                                    
could use the  funds for anything if they  found a committee                                                                    
member to carry an amendment.                                                                                                   
                                                                                                                                
Co-Chair Seaton answered in the affirmative.                                                                                    
                                                                                                                                
Representative  Guttenberg clarified  it  was MHTAAR  money;                                                                    
therefore,  the  funds  could  only  be  used  for  purposes                                                                    
established for the trust.                                                                                                      
                                                                                                                                
Representative Wilson clarified that  she was speaking about                                                                    
the AMHTA  making a  request to  a finance  committee member                                                                    
for  the  offering of  an  amendment  to  use the  funds  in                                                                    
another  location.  She  believed  committee  members  could                                                                    
offer an amendment on their own,  but she did not believe it                                                                    
should be the intent.                                                                                                           
                                                                                                                                
10:38:04 AM                                                                                                                   
                                                                                                                                
Representative  Kawasaki asked  for  verification the  money                                                                    
was  specifically  for  public  relations,  not  advertising                                                                    
expenses.                                                                                                                       
                                                                                                                                
Representative Guttenberg replied that  the canceled RFP had                                                                    
been  for   a  public  relations  campaign.   The  amendment                                                                    
proposed to  decrease the  Trust Land  Office authorization,                                                                    
which would  mean the funds  would not leave the  trust. The                                                                    
agency could  still manage  its office as  it wished  with a                                                                    
decreased  authorization.  He  added  that  going  back  ten                                                                    
years, the agency had always had excess funds.                                                                                  
                                                                                                                                
Co-Chair  Foster  WITHDREW  his OBJECTION.  There  being  NO                                                                    
further OBJECTION, Amendment H DNR 1 was ADOPTED.                                                                               
                                                                                                                                
^NON-AGENCY: DEBT SERVICE AMENDMENTS                                                                                          
                                                                                                                                
10:39:40 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:40:15 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Seaton provided a report.                                                                                              
                                                                                                                                
Co-Chair Seaton MOVED to ADOPT Amendment H DBT 1:                                                                               
                                                                                                                                
     Debt Service                                                                                                               
     General Obligation Bonds                                                                                                   
     L  H  DBT   1  -  Delete  Sec.  19(m)   re  2012  State                                                                    
     Transportation Project Fund Lapse Extension                                                                                
                                                                                                                                
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J.10, Wallace, 1-31-17 [copy on file].                                                                         
                                                                                                                                
     Section  19(m) attempted  to use  lapsed  money and  is                                                                    
     ineffective.  The  Governor  submitted  a  supplemental                                                                    
     request  to accomplish  the  same  purpose--to use  the                                                                    
     remaining  balance  of  the 2012  State  Transportation                                                                    
     Project Fund.                                                                                                              
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
Co-Chair  Seaton explained  the  amendment  with a  prepared                                                                    
statement:                                                                                                                      
                                                                                                                                
     This  amendment deletes  a subsection  in the  debt and                                                                    
     other  obligation sections  -  Section  19(i) page  65,                                                                    
     lines 1 through  7 - in the  governor's original budget                                                                    
     this subsection was 19(m). In  version J of the bill it                                                                    
     is 19(i). The subsection  attempted to use lapsed money                                                                    
     and is  ineffective. This amendment  deletes subsection                                                                    
     (i).  The  governor  also  submitted  an  amendment  to                                                                    
     accomplish the  same purpose and  proposed supplemental                                                                    
     request to replace this provision.                                                                                         
                                                                                                                                
10:41:26 AM                                                                                                                   
                                                                                                                                
Representative  Neuman   asked  if  the  debt   service  had                                                                    
performed better  than expected.  He asked  for verification                                                                    
the amendment made the debt service payment lower.                                                                              
                                                                                                                                
Co-Chair   Seaton   answered   that   there   had   been   a                                                                    
transportation  project  fund  lapse  extension,  which  the                                                                    
amendment pertained  to. Section 19(m) had  attempted to use                                                                    
the lapse money and  was ineffective. Supplemental money had                                                                    
replaced the funds and the old language.                                                                                        
                                                                                                                                
Representative  Neuman  asked  for verification  the  lapsed                                                                    
money was  money that  had been proposed  for bonds  but not                                                                    
used.                                                                                                                           
                                                                                                                                
Co-Chair Seaton agreed  and detailed that it was  to use the                                                                    
remaining balance  of the 2012 State  Transportation Project                                                                    
Fund.                                                                                                                           
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DBT 1  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
10:42:51 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton MOVED to ADOPT Amendments  H DBT 2, H DBT 3,                                                                    
H DBT 4, and H DBT 5 (copy on file):                                                                                            
                                                                                                                                
     International Airport Revenue Bonds                                                                                        
     L  H  DBT 2  -  Reduce  funding  for debt  service  and                                                                    
     trustee  fees  for outstanding  international  airports                                                                    
     revenue bonds                                                                                                              
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J53, Wallace, 2-18-17 [copy on file].                                                                          
                                                                                                                                
     This  amends   sec.  19(j)(3)  and  was   a  Governor's                                                                    
     amendment  request to  reduce the  estimate of  funding                                                                    
     necessary  for   debt  service  and  trustee   fees  on                                                                    
     outstanding international  airports revenue  bonds from                                                                    
     $39.8 million to $34.4 million.                                                                                            
                                                                                                                                
     L  H  DBT 3  -  Funding  for  the early  redemption  of                                                                    
     international airports revenue bonds                                                                                       
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J57, Wallace, 2-20-17 [copy on file].                                                                          
                                                                                                                                
     This amends section 19(j) by  adding a new paragraph to                                                                    
     appropriate funding  required for the  early redemption                                                                    
     of  international  airports   revenue  bonds  from  the                                                                    
     International Airports Revenue Fund.                                                                                       
                                                                                                                                
     It rewords an amendment submitted by the Governor                                                                          
                                                                                                                                
     H DBT  4 - Allow  general fund cash flow  borrowing for                                                                    
     International Airports Revenue Fund projects                                                                               
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J54, Wallace, 2-20-17 [copy on file].                                                                          
                                                                                                                                
     This amends rewords a Governor's amendment.                                                                                
                                                                                                                                
     L H  DBT 5  - Federal  funds in  International Airports                                                                    
     Revenue Fund to repay general fund                                                                                         
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J58, Wallace, 2-20-17 [copy on file].                                                                          
                                                                                                                                
     The Governor  submitted an amendment for  this purpose,                                                                    
     but Legislative  Legal has  revised it.  This amendment                                                                    
     allows  for  cash  flow borrowing  repayment  from  the                                                                    
     International Airports Revenue Fund.                                                                                       
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton explained the amendments with a prepared                                                                        
statement:                                                                                                                      
                                                                                                                                
     These amendments  affect Section 19(j), debt  and other                                                                    
     obligations,  on   page  65  -  they   were  governor's                                                                    
     amendments but have been reworded.                                                                                         
                                                                                                                                
     Amendment  2   amends  Section   19(j)(3)  and   was  a                                                                    
     governor's amendment request to  reduce the estimate of                                                                    
     the  funding necessary  for  debt  service and  trustee                                                                    
     fees  on  outstanding   international  airport  revenue                                                                    
     bonds  by $5.4  million  (from $39.8  million to  $34.4                                                                    
     million).                                                                                                                  
     Amendment 3 amends  19(j) by adding a  new paragraph to                                                                    
     appropriate  $31.1  million   required  for  the  early                                                                    
     redemption of international  airport revenue bonds from                                                                    
     the international airport's revenue fund.                                                                                  
                                                                                                                                
     Amendments 4 and 5 add a  new paragraph to 19(j) - over                                                                    
     $40  million  of  Alaska International  Airport  System                                                                    
     projects are  annually funded  by the  Federal Aviation                                                                    
     Administration   reimbursement  grants.   Although  the                                                                    
     projects are ultimately paid  by the federal government                                                                    
     they require cash flow to  accomplish this cash flow as                                                                    
     historically been provided by  the state's General Fund                                                                    
     without  any appropriation  or any  cost to  the Alaska                                                                    
     International  Airport System.  This implementation  of                                                                    
     the state's  new accounting  system, the  past practice                                                                    
     was  determined  to  lack  transparency  in  structure.                                                                    
     Options reviewed  to solve this issue  were to increase                                                                    
     landing fees at the  airports, obtain a commercial line                                                                    
     of  credit from  the  capital markets,  or formalize  a                                                                    
     relationship  with   in  use   of  the   General  Fund.                                                                    
     Amendment  4  allows  the General  Fund  borrowing  and                                                                    
     Amendment 5 is the federal fund's repayment language.                                                                      
                                                                                                                                
10:45:18 AM                                                                                                                   
                                                                                                                                
Co-Chair  Neuman asked  if the  amendments were  eliminating                                                                    
matching state funds associated with federal funding.                                                                           
                                                                                                                                
Co-Chair Seaton  replied that  the amendments  would provide                                                                    
cash flow  with state  GF until the  federal money  from the                                                                    
airport   system  came   in.   The   amendments  offered   a                                                                    
transparent and formalized process.                                                                                             
                                                                                                                                
Representative Wilson asked  for verification the amendments                                                                    
were  changing language  related to  the funding  mechanism,                                                                    
but the amount owed did not change.                                                                                             
                                                                                                                                
Co-Chair  Seaton  answered  that  Amendment H  DBT  2  would                                                                    
reduce  the estimated  funding necessary  for  the debt  and                                                                    
trustee fees by $5.4 million  (a decrease from $39.8 million                                                                    
to  $34.4 million).  He  expounded that  Amendment  H DBT  3                                                                    
would  add a  new paragraph  to appropriate  $31.1 [million]                                                                    
required  for  early the  redemption  of  airport funds.  He                                                                    
summarized  that one  section involved  early redemption  of                                                                    
funds to  save money and  the other included a  reduction in                                                                    
debt service and trustee fees.                                                                                                  
                                                                                                                                
10:47:19 AM                                                                                                                   
                                                                                                                                
Representative  Wilson asked  for  a  definition of  trustee                                                                    
fees.                                                                                                                           
                                                                                                                                
Co-Chair    Seaton   deferred    the    question   to    the                                                                    
administration.                                                                                                                 
                                                                                                                                
Representative  Wilson asked  for the  current fund  balance                                                                    
and what would remain if the amendments passed.                                                                                 
                                                                                                                                
PAT  PITNEY,  DIRECTOR,  OFFICE OF  MANAGEMENT  AND  BUDGET,                                                                    
OFFICE  OF  THE GOVERNOR,  answered  that  when a  bond  was                                                                    
issued  there   were  trustee   fees  associated   with  the                                                                    
financial consultants  for the bonds.  She did not  have the                                                                    
balance of the fund at present. She offered to follow up.                                                                       
                                                                                                                                
Representative  Wilson assumed  there was  a surplus  in the                                                                    
fund. She  remarked that the money  had to be paid  into the                                                                    
international airport  and could  not be utilized  for other                                                                    
things. She wanted to know how  much was going into the fund                                                                    
annually  to determine  whether there  was potential  to pay                                                                    
debt off earlier.                                                                                                               
                                                                                                                                
10:49:09 AM                                                                                                                   
                                                                                                                                
Representative Neuman  remarked that it seemed  there was $5                                                                    
million less  in appropriation bonds  needed. He  noted that                                                                    
Co-Chair  Seaton had  mentioned the  amendments allowed  for                                                                    
spending  authority  if  there  were  future  federal  funds                                                                    
coming in.                                                                                                                      
                                                                                                                                
Co-Chair Seaton replied that Amendments H  DBT 4 and H DBT 5                                                                    
formalized the procedure that did  not show up under the new                                                                    
accounting system.  The amendments would mean  that the cash                                                                    
flow used  while waiting for  federal receipts  would appear                                                                    
on  the books.  He expounded  that the  method of  using the                                                                    
General  Fund  as  cash flow  until  federal  receipts  were                                                                    
received had been used in the  past. He was trying to ensure                                                                    
there was a clear and transparent process.                                                                                      
                                                                                                                                
Co-Chair  Neuman elucidated  that  he wanted  to ensure  the                                                                    
amendments did  not mean the legislature  would be approving                                                                    
future  federal  funds  coming into  the  program  that  the                                                                    
legislature was unaware of.                                                                                                     
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendments H DBT  2, H DBT 3, H DBT 4,                                                                    
and H DBT 5 were ADOPTED.                                                                                                       
                                                                                                                                
10:51:08 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DBT 6  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     School Debt Reimbursement                                                                                                  
     L H DBT 6 - Reduce Unrestricted General Fund                                                                               
     Appropriation by 50 percent                                                                                                
                                                                                                                                
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J.26, Wallace, 1-31-17 [copy on file].                                                                         
                                                                                                                                
     This amends section 19(l) of HB 57, version J.                                                                             
                                                                                                                                
     This  amendment revises  a  general fund  appropriation                                                                    
     for  municipal school  debt service  reimbursement from                                                                    
     an estimated amount  of $116 million to  a fixed amount                                                                    
     of $67,278,294, a reduction of 50 percent.                                                                                 
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
Co-Chair  Seaton explained  the  amendment  with a  prepared                                                                    
statement:                                                                                                                      
                                                                                                                                
This  amendment  reduces  a General  Fund  appropriation  in                                                                    
19(l)(2) for  school debt reimbursement by  50 percent, from                                                                    
an estimated  $97,356,587 to a  fixed amount  of $48,478,294                                                                    
from the  General Fund. That  change results in a  change to                                                                    
the lead  in language  from the amount  necessary, estimated                                                                    
to be  $115,956,587 to a  fixed amount of  $67,278,294 being                                                                    
appropriated for school debt reimbursement.                                                                                     
                                                                                                                                
Representative Wilson  asked if  the amendment  would change                                                                    
the funding  from 70 percent  state/30 percent  districts to                                                                    
65 percent state/35 percent districts.                                                                                          
                                                                                                                                
Co-Chair Seaton  replied in the negative.  He clarified that                                                                    
the  amendment would  reduce the  bond debt  from UGF  by 50                                                                    
percent,  which was  approximately  42 percent  of the  bond                                                                    
debt reimbursement because there  were school trust funds in                                                                    
the bond  debt reimbursement  section as well.  He furthered                                                                    
that the amendment would cut the  UGF by 50 percent used for                                                                    
the  70/30 or  60/40 bond  debt reimbursement  - the  amount                                                                    
would depend on the bond mix.                                                                                                   
                                                                                                                                
10:53:16 AM                                                                                                                   
                                                                                                                                
Representative  Wilson asked  what  70/30  bonds would  look                                                                    
like (e.g. 50/50, 40/60, or  other) if the numbers were kept                                                                    
separate.  She  wondered  how the  60/40  would  change  the                                                                    
percentages.  She  remarked  that legislators  had  made  it                                                                    
clear  to their  districts  that the  70/30  was not  always                                                                    
possible and was only available as  long as it was funded by                                                                    
the  state. She  thought it  would  be helpful  to know  the                                                                    
different percentages.                                                                                                          
                                                                                                                                
Co-Chair Seaton answered there would  be a general reduction                                                                    
of 42 percent because the  bond debt reimbursement came from                                                                    
two  different sources  -  UGF and  school  trust funds.  He                                                                    
furthered that  a 50/50 reduction  in the UGF  portion would                                                                    
reduce  the number  from $97,356,000  to  $48,478,000 -  the                                                                    
change represented half of the UGF portion.                                                                                     
                                                                                                                                
Representative  Wilson   asked  for  the   calculation.  She                                                                    
surmised the  42 percent  could not  be taken  directly from                                                                    
the 70 percent to make the change.                                                                                              
                                                                                                                                
Co-Chair Seaton  answered that  the calculations  were based                                                                    
on  the  bond debt  amounts  and  depended  on the  mix.  He                                                                    
referred  to 60/40  and 70/30  for a  municipality that  had                                                                    
incurred bond  debt. He did  not have  specific percentages,                                                                    
but of  the $119 million,  $97 million  was UGF and  the UGF                                                                    
was being reduced by 50 percent.                                                                                                
                                                                                                                                
Representative  Wilson noted  that in  the past  someone had                                                                    
produced a chart  showing what the state was  paying in each                                                                    
district and what  impact the change would  have. She agreed                                                                    
that  the  impact of  the  change  depended on  whether  the                                                                    
reimbursement  was  60/40 or  70/30  and  how much  debt  an                                                                    
entity had.  She asked to  receive the detail  before public                                                                    
testimony.                                                                                                                      
                                                                                                                                
10:56:15 AM                                                                                                                   
                                                                                                                                
Co-Chair  Seaton  replied  he   would  follow  up  with  the                                                                    
calculations.                                                                                                                   
                                                                                                                                
Representative  Thompson  surmised   the  amendment  shifted                                                                    
$48,678,300 of  debt payments on bonds  back to communities.                                                                    
He explained  the communities had  voted on  bonding knowing                                                                    
the state  would pay a  certain portion (30 or  40 percent).                                                                    
He  did   not  support   putting  the  payments   back  onto                                                                    
communities.  He spoke  to  voter  imposed restrictions  and                                                                    
caps on budget  items such as property tax.  He stated there                                                                    
had been a  reduction the previous year  and communities had                                                                    
already suffered when  trying to determine how  to deal with                                                                    
the consequences. He believed  the amendment hit communities                                                                    
again.  He  stated that  the  issue  had been  addressed  by                                                                    
stopping   school  bonding   until  the   budget  had   been                                                                    
stabilized.  He had  communities  wondering  what they  were                                                                    
supposed to  do, with  no way  of raising  additional money.                                                                    
Communities were  wondering if  they were  going to  have to                                                                    
default on their bonds.                                                                                                         
                                                                                                                                
10:58:20 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton  answered there was  a $2.7 billion  hole in                                                                    
the state's budget. He believed  everyone had been talked to                                                                    
and understood  that K-12 education  was one of  the biggest                                                                    
components  of   the  state's  budget.  He   continued  that                                                                    
reductions to  education could occur in  the following ways:                                                                    
through a  base student  allocation decrease; with  a change                                                                    
to the Public  Employees' Retirement System (PERS)/Teachers'                                                                    
Retirement  System  (TRS)   formula,  which  would  directly                                                                    
impact schools  by taking money  from their budgets;  with a                                                                    
raise in the  local contribution mill rate back  to 4 mills,                                                                    
which would require a statutory  change; or by reducing bond                                                                    
debt reimbursement, which had been  done by the governor the                                                                    
previous  year. He  continued  that  unfortunately when  the                                                                    
governor  had  reduced  the  bond  debt  reimbursement  [the                                                                    
previous  year]  it  had  been  as a  veto  and  the  school                                                                    
districts and  municipalities had  no time to  react because                                                                    
budgets had  already been passed.  The amendment  would give                                                                    
municipalities  lead time  and  school budgets  had not  yet                                                                    
been adopted. The cut did  not go directly to the classroom,                                                                    
which  the other  options generally  did. He  furthered that                                                                    
when municipalities  had voted on  the bonds there  had been                                                                    
an  expectation, but  an understanding  that the  bonds were                                                                    
subject to appropriation  and that they may  not receive the                                                                    
reimbursement  at  the same  rates.  He  continued that  two                                                                    
years  ago  the legislature  had  specified  that any  bonds                                                                    
issued  in  the next  five  years  would receive  zero  debt                                                                    
reimbursement. He  reiterated that the last  cut by governor                                                                    
veto  had been  very challenging  for people  to handle.  He                                                                    
reasoned that providing  school districts and municipalities                                                                    
with  more  lead  time  to handle  the  reduction  in  their                                                                    
budgetary process  was appropriate (instead of  making a cut                                                                    
at the end of session via  conference committee or by way of                                                                    
governor's veto).  He reasoned  that if a  comprehensive and                                                                    
sustainable  budget was  not passed,  all  the things  would                                                                    
"roll downhill"  at the  end of  session after  budgets were                                                                    
in. He agreed the reduction  was to $48 million. He believed                                                                    
schools  should know  where their  options were  long before                                                                    
their budgets were passed.                                                                                                      
                                                                                                                                
11:01:26 AM                                                                                                                   
                                                                                                                                
Representative Thompson would like  to see something showing                                                                    
how  much  the amendment  would  impact  each community.  He                                                                    
believed  legislators  would  receive  significant  pushback                                                                    
from  their  constituents.  He believed  constituents  would                                                                    
vocalize  their inability  to make  up the  differences that                                                                    
would occur.                                                                                                                    
                                                                                                                                
Representative Neuman  agreed with  Representative Thompson.                                                                    
He spoke  to the  state's obligation to  municipalities when                                                                    
entering  into  a   debt  service  agreement.  Additionally,                                                                    
municipalities  also paid  into  their  own education  costs                                                                    
because  they  were in  organized  areas  of the  state.  He                                                                    
stated,  "we're upwards  of  80  percent of  what  I pay  in                                                                    
property taxes";  his personal  payment was at  least $2,500                                                                    
going  directly   to  schools  (his  residence   was  in  an                                                                    
organized area). He emphasized  that the amendment would not                                                                    
treat people equally. He stated  the amendment hit people in                                                                    
municipalities  with  a  bigger   hit  from  government.  He                                                                    
thought  Co-Chair Seaton  had explained  that the  amendment                                                                    
reduced education funding; however,  he did not believe that                                                                    
was the amendment's result. He  explained that the amendment                                                                    
reduced  debt  service  in  the  statewide  portion  of  the                                                                    
budget, but  did not  reduce education  funding and  was not                                                                    
tied to the education funding  formula. He stressed that the                                                                    
amendment placed further debt  on municipal governments, not                                                                    
school districts.  He stated that  the issue was  similar to                                                                    
tax  credits.  He  explained  that the  state  had  made  an                                                                    
obligation  or commitment  to the  municipalities for  their                                                                    
school districts and he believed  reneging on the commitment                                                                    
was a bad precedent for the state to set.                                                                                       
                                                                                                                                
Co-Chair Neuman continued that the  legislature had voted to                                                                    
implement  a  five-year  moratorium   on  all  debt  service                                                                    
starting  the preceding  year.  Additionally,  the debt  had                                                                    
been reduced to  60/40 only. He was  concerned the amendment                                                                    
would  take money  away from  municipalities that  the state                                                                    
was  obligated to  pay. He  reiterated his  belief that  the                                                                    
amendment did not reduce the  education funding. He referred                                                                    
to $18,600,000 from the school  debt bond (line 6). He asked                                                                    
if  the bond  had  been overperforming  to  result in  extra                                                                    
additional funding in the School Trust Fund for education.                                                                      
                                                                                                                                
11:05:23 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton  answered that  historically the  mixture of                                                                    
funds used  to fund  bond debt  reimbursement came  from the                                                                    
School  Trust  Fund and  UGF.  He  detailed that  the  $18.6                                                                    
million  from  the  school  fund   was  the  normal  mix  of                                                                    
appropriation   that  had   been   used  historically.   The                                                                    
amendment did  not reduce  the amount of  school funds  - it                                                                    
had been  separated out.  Only the UGF  portion of  the bond                                                                    
debt  reimbursement would  be reduced  by the  amendment. He                                                                    
added  that  DEED  would  be able  to  provide  the  numbers                                                                    
related to municipalities.                                                                                                      
                                                                                                                                
Co-Chair Neuman  explained that he wanted  an explanation of                                                                    
debt and the fund source.                                                                                                       
                                                                                                                                
Representative  Ortiz noted  that  how  the amendment  would                                                                    
impact the various  districts was included in  a document he                                                                    
was referring  to ["School  Construction Debt  Retirement AS                                                                    
14.11.100  -  FY2018  Estimated State  Aid  for  October  15                                                                    
Reporting" (copy  on file)]. The sheet  included the amounts                                                                    
funded at the  current rate. He reasoned  that the amendment                                                                    
would reduce the figures by half.                                                                                               
                                                                                                                                
Co-Chair Seaton agreed, but the  amendment would only reduce                                                                    
50  percent of  the UGF  portion;  it was  about 20  percent                                                                    
school fund,  which was not  being reduced. He  explained it                                                                    
was about 42 percent, but the  impact depended on the mix of                                                                    
bonds (60/40 or 70/30) a municipality had.                                                                                      
                                                                                                                                
11:07:41 AM                                                                                                                   
                                                                                                                                
Vice-Chair Gara did  not understand the math  related to the                                                                    
amendment. He  referred to the  amendment and  observed that                                                                    
of  $116 million  that would  have been  due in  school debt                                                                    
reimbursement,  $67.2  million  would  be  paid,  which  the                                                                    
amendment  called a  reduction  of 50  percent. He  remarked                                                                    
that  the  reduction  looked smaller  than  50  percent.  He                                                                    
pointed to the transaction detail for reference.                                                                                
                                                                                                                                
Co-Chair  Seaton  answered  there  was  approximately  $18.6                                                                    
million of school  fund money included in  the $116 million.                                                                    
To get  to the final  number it  was necessary to  reduce it                                                                    
and  take 50  percent of  the remaining  portion, which  was                                                                    
UGF, and  add back  the school fund  amount. The  result was                                                                    
$48,478,294.                                                                                                                    
                                                                                                                                
11:09:59 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:13:57 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Representative  Wilson pointed  to  the school  construction                                                                    
debt retirement  document the  committee had  just received.                                                                    
She used the  North Slope as an example, which  had only one                                                                    
bond at the  60/40 level and compared it  to Unalaska, which                                                                    
had one  bond at  70/30. She reasoned  the example  would be                                                                    
straightforward because  it did not involve  a district with                                                                    
a  blended  amount.  She  thought  the  example  would  help                                                                    
committee  members  calculate  the   totals  for  their  own                                                                    
districts.                                                                                                                      
                                                                                                                                
DAVID  TEAL, DIRECTOR,  LEGISLATIVE FINANCE  DIVISION, asked                                                                    
for clarification on the question.                                                                                              
                                                                                                                                
Representative Wilson explained the  committee was trying to                                                                    
ascertain how the amendment would  impact each district. She                                                                    
used the North Slope as  an example that had current bonding                                                                    
of $75,272. She  cited Unalaska as an example  of a district                                                                    
with one  70/30 bond at  $672,831. The committee  was trying                                                                    
to  determine the  new amount  the  municipalities would  be                                                                    
responsible for if the amendment passed.                                                                                        
                                                                                                                                
Mr. Teal  believed Co-Chair Seaton had  already explained it                                                                    
would  all  be  prorated;  it  would  not  matter  what  the                                                                    
reimbursement rate  was. The amount would  be half; however,                                                                    
the confusion was it was  not exactly half. He explained the                                                                    
calculation  would involve  starting with  the $115  million                                                                    
total debt  service and  subtract approximately  $18 million                                                                    
of school  funds, which  left about  $97 million  in general                                                                    
funds. That end  amount would be cut in  half; $48.6 million                                                                    
would be cut from the  General Fund portion only, which left                                                                    
$48 million  and the  $18 million in  school funds  would be                                                                    
added  back   in.  Everyone  would   have  a   reduction  of                                                                    
approximately 42  percent regardless of their  bond debt mix                                                                    
(e.g. 70/30,  80/20, 90/10,  or other).  It was  possible to                                                                    
determine the impact on each  community by taking 42 percent                                                                    
of the numbers in the right column on the sheet provided.                                                                       
                                                                                                                                
11:17:06 AM                                                                                                                   
                                                                                                                                
Representative  Kawasaki  appreciated   the  amendment,  but                                                                    
commented  that there  were  valid  concerns from  different                                                                    
districts. For example, Fairbanks  had ten projects that had                                                                    
about $40  million that qualified  for reimbursement  at the                                                                    
70 percent rate [from the  state]. Kenai had about the same,                                                                    
with three projects at the 70  percent rate. He pointed to a                                                                    
community  like  Mat-Su  that   had  over  $250  million  in                                                                    
qualifying projects  at the 70  percent rate. He  noted that                                                                    
the  impact  would  differ by  community  based  on  whether                                                                    
school  boards recently  acquired new  schools or  other. He                                                                    
felt cautious about moving forward with the amendment.                                                                          
                                                                                                                                
Vice-Chair  Gara  remarked  there  was no  proposal  in  the                                                                    
budget  to cut  classroom funding,  Base Student  Allocation                                                                    
(BSA) funding,  or other school  funding -  funding remained                                                                    
flat.  The amendment's  proposal related  to money  going to                                                                    
municipalities to  pay their debt.  He thought it  seemed to                                                                    
be less than  the Senate's proposal to cut  $65 million from                                                                    
school funding. He believed the  amendment was an attempt to                                                                    
cut the budget  while not directly cutting  from schools. He                                                                    
had   concerns   about   the  amendment,   but   asked   for                                                                    
verification that the  intent was to avoid  a school funding                                                                    
cut. He did not support the Senate's approach.                                                                                  
                                                                                                                                
11:20:26 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton  answered in the  affirmative. The  goal was                                                                    
to look  at a large  portion of the state's  budget expense:                                                                    
education,  without   damaging  the  education   system.  He                                                                    
continued that  reductions to education  could occur  in the                                                                    
following ways:  through a  BSA decrease;  with a  change to                                                                    
the  Public  Employees' Retirement  System  (PERS)/Teachers'                                                                    
Retirement  System  (TRS)   formula,  which  would  directly                                                                    
impact schools  by taking money  from their budgets;  with a                                                                    
raise in  the local contribution  mill rate back to  4 mills                                                                    
from 2.65 mills, which would  require a statutory change; or                                                                    
by reducing bond debt reimbursement,  which did not directly                                                                    
impact  school budgets.  There could  be ancillary  impacts,                                                                    
municipalities could  make decisions,  but it  would provide                                                                    
them with  time to make  decisions on options such  as taxes                                                                    
or using money  from reserve funds on a  temporary basis. He                                                                    
reasoned  that  at  least the  communities  would  have  the                                                                    
information in time  to factor the cut  into their budgetary                                                                    
process. He  noted that the  previous year funding  had been                                                                    
vetoed  at the  last minute  after school  budgets had  been                                                                    
set.  He stated  that if  cuts were  made during  conference                                                                    
committee, it  would put  schools in  the same  situation as                                                                    
the previous  year. The  amendment was  an attempt  to avoid                                                                    
directly impacting  the school  system. The  amendment would                                                                    
reduce  school bond  debt  reimbursement to  municipalities.                                                                    
The  other  purpose  was  to  get  the  amendment  into  the                                                                    
upcoming committee substitute so  the public could weigh in.                                                                    
He furthered  that if the  public decided it would  prefer a                                                                    
BSA cut  or PERS/TRS  option, he  hoped the  committee would                                                                    
hear about it.  The state was facing a  $2.7 billion deficit                                                                    
and the goal  was to determine how to have  some savings and                                                                    
lower   expenses  with   the  least   impact  on   the  most                                                                    
vulnerable.                                                                                                                     
                                                                                                                                
11:23:49 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:42:27 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster recapped that  the committee was considering                                                                    
H DBT 6 related to school bond debt reimbursement.                                                                              
                                                                                                                                
Representative  Wilson  believed  the  amendment  should  be                                                                    
considered  later in  the  day. She  noted  there were  many                                                                    
unknown  components. She  addressed  options  such as  using                                                                    
PERS and TRS  or using the BSA, and the  impacts the options                                                                    
would  have.  She stated  that  the  committee members  kept                                                                    
hearing  about how  things  were supposed  to  be fair.  She                                                                    
supposed the amendment was fair in  one sense - she had told                                                                    
her constituents that the 70/30  reimbursement could go away                                                                    
at  any  time. She  stated  that  the Fairbanks  North  Star                                                                    
Borough had  passed a  bond the previous  year and  its debt                                                                    
obligation would be 100 percent.  She pointed to the list of                                                                    
communities  and remarked  that Mat-Su  was $22  million and                                                                    
Anchorage was $43 million, mostly  because some of the areas                                                                    
grew faster than  other areas or had not gotten  on the list                                                                    
as  early  as others.  She  wondered  about trying  to  keep                                                                    
things equal between districts.  She remarked on frustration                                                                    
vocalized by  committee members on areas  that paid property                                                                    
taxes and those that did not.  She noted that caps were also                                                                    
a factor, but she believed  debt fell under a separate area.                                                                    
She did  not know what the  TRS obligation would be  for her                                                                    
district if it  was changed. She continued that  in the past                                                                    
there  had been  significant concern  from school  districts                                                                    
when TRS legislation  was considered - the  concern had been                                                                    
that it would do more damage  than flat funding the BSA (not                                                                    
adding  a  $50  increase).   She  was  uncomfortable  moving                                                                    
forward  at  present  because  she  did  not  have  all  the                                                                    
information.  She thought  it was  prudent  for the  finance                                                                    
committee  to know  all the  financial  impacts. She  wanted                                                                    
time to  talk to members of  her district and she  wanted to                                                                    
ensure the amendment was accurate.                                                                                              
                                                                                                                                
11:46:21 AM                                                                                                                   
                                                                                                                                
Representative  Neuman  remarked  that  the  Mat-Su  Borough                                                                    
School District  was one of  the fastest  growing districts.                                                                    
He  added that  the district  had great  schools. He  stated                                                                    
that the borough  had needed to build a  new school annually                                                                    
- the  burden had been  voted on and accepted  by residents.                                                                    
He would prefer to see  a reduction in the education funding                                                                    
formula. Committee members had  been told by Co-Chair Seaton                                                                    
that  there  would  be an  opportunity  when  the  committee                                                                    
looked at  the full budget.  He was concerned  the amendment                                                                    
went back  to Mat-Su taxpayers.  He noted that  the governor                                                                    
had cut  $7 million  or more to  the Mat-Su  School District                                                                    
the previous  year. He explained  that the cut  had depleted                                                                    
the   district's  reserve   fund.  He   stressed  that   the                                                                    
amendments  cut of  $11  million to  $12  million would  hit                                                                    
taxpayers.  The state  had already  made  the obligation  to                                                                    
communities. He  had asked the Legislative  Finance Division                                                                    
about  reducing other  debt service.  He relayed  that other                                                                    
debt service was just over  $200 million; however, they were                                                                    
general obligation  bonds providing  the full  commitment of                                                                    
the state  and had  to be paid  statutorily -  therefore, it                                                                    
was not  an option.  He supported  a reduction  to education                                                                    
funding because  everything else  had been hit;  however, he                                                                    
was uncertain the amendment was the appropriate action.                                                                         
                                                                                                                                
11:48:35 AM                                                                                                                   
                                                                                                                                
Representative  Guttenberg surmised  that the  situation was                                                                    
perhaps like  a quote by Winston  Churchill about democracy:                                                                    
"it's terrible,  except for everything else."  He considered                                                                    
which  of the  options on  the  table (a  reduction to  debt                                                                    
service,  PERS/TRS  funding,  and  K-12  funding)  hurt  the                                                                    
least. He  was leaning  towards supporting the  amendment to                                                                    
get something on  the table. He stressed  that doing nothing                                                                    
did not equate to dodging a  bullet. He stated it would be a                                                                    
requirement  and  not  an  option   in  the  future  if  the                                                                    
legislature did  not come  up with a  fiscal plan.  He added                                                                    
that other  draconian measures would  be needed as  well. He                                                                    
believed managing  the situation  was occurring  because the                                                                    
legislature  had  been unable  to  put  the state  on  sound                                                                    
fiscal footing. He stressed that  the situation would worsen                                                                    
if  nothing  was done.  He  supported  moving the  amendment                                                                    
forward  to put  something on  the table  for comparison  to                                                                    
other options; it was better  than no proposal. He wanted to                                                                    
determine if the  proposal was better or worse  than some of                                                                    
the options proposed  by the Senate, which  he believed were                                                                    
more draconian.                                                                                                                 
                                                                                                                                
Vice-Chair  Gara remarked  that if  the state  had a  fiscal                                                                    
plan the  committee would not be  considering the amendments                                                                    
at  present. Currently  no  plan had  been  adopted by  both                                                                    
houses.  He remarked  that he  had supported  school funding                                                                    
his entire  legislative tenure.  He understood  the comments                                                                    
from  Co-Chair Neuman,  which  he stated  were  the same  as                                                                    
those coming  from the  Senate. He  did not  support cutting                                                                    
the  BSA -  he  believed it  would be  the  hardest cut  for                                                                    
schools to  handle. He recognized  that the  amendment would                                                                    
hit Mat-Su  harder than some  other areas. He stated  that a                                                                    
cut proposed  by the  Senate would be  $65 million  from the                                                                    
BSA, which represented  a $200 BSA cut. He  stressed that it                                                                    
would  be  massively  damaging to  schools.  He  stated  the                                                                    
amendment   would    mean   a   transfer   [of    debt]   to                                                                    
municipalities,  which   was  not  comfortable   either.  He                                                                    
reasoned that a $2.9 billion  deficit and no fiscal plan was                                                                    
also  uncomfortable.  He remarked  that  if  he got  to  run                                                                    
things  by  himself  there  would   be  a  fiscal  plan.  He                                                                    
understood  if it  was the  will of  the chair  to have  the                                                                    
amendment included so the public  could comment. He believed                                                                    
the option was the least harmful  on schools, but it did not                                                                    
come without cost  to municipalities. He leaned  in favor of                                                                    
supporting the amendment, but made  no commitment to support                                                                    
it  throughout the  legislative process.  He wanted  to hear                                                                    
from people and wanted to avoid a BSA cut.                                                                                      
                                                                                                                                
11:53:14 AM                                                                                                                   
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DBT 6  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
11:53:39 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:53:47 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DBT 7  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Sport Fish Hatchery Bonds                                                                                                  
     L H DBT 7 - Technical wording correction                                                                                   
     Offered by Representative Seaton                                                                                           
    See 30-GH1855J.5, Wallace, 1-30-17 [copy on file].                                                                          
                                                                                                                                
     This  amendment just  adds the  word  "and" before  the                                                                    
     last phrase  in section  19(m)in HB  57, version  J, so                                                                    
     that it  reads "  . .  ., and  for early  redemption of                                                                    
     those bonds."                                                                                                              
                                                                                                                                
Vice-Chair Gara OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair  Seaton  explained  the  amendment.  The  amendment                                                                    
added  the word  "and"  before the  last  phrase in  Section                                                                    
19(m)  regarding sport  fish hatchery  bond  debt (page  66,                                                                    
line  3 of  the legislation,  version  J) to  read "and  for                                                                    
early redemption" of those bonds.                                                                                               
                                                                                                                                
Co-Chair Neuman asked for verification  the amendment was to                                                                    
ensure that  any additional funds  out of the fish  and game                                                                    
fund or other funds received  went towards reducing the bond                                                                    
debt for the fish hatcheries.                                                                                                   
                                                                                                                                
Co-Chair  Seaton answered  the amendment  would allow  early                                                                    
redemption of the bonds at a lower interest rate.                                                                               
                                                                                                                                
Vice-Chair Gara WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DBT 7  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
HB  57  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  59  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
11:55:55 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:55 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
DNR-Subcommittee Packet HFIN.pdf HFIN 2/28/2017 9:00:00 AM
HB 57
DEED-Subcommittee Packet HFIN.pdf HFIN 2/28/2017 9:00:00 AM
HB 57
DOL- Subcommittee Packet HFIN.pdf HFIN 2/28/2017 9:00:00 AM
HB 57
Debt Service Supporting Doc DOE School Constr Debt.pdf HFIN 2/28/2017 9:00:00 AM
HB 57