Legislature(2017 - 2018)HOUSE FINANCE 519

01/29/2018 01:30 PM FINANCE

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Audio Topic
01:33:06 PM Start
01:34:23 PM Overview: University of Alaska
02:14:07 PM Overview: Department of Labor and Workforce Development
02:40:59 PM Overview: Department of Transportation and Public Facilities
03:13:01 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 286 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 285 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ FY19 Dept. Budget Overviews: TELECONFERENCED
- University of AK
- Dept. of Labor & Workforce Development
- Dept. of Transportation & Public Facilities
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 29, 2018                                                                                           
                         1:33 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:33:06 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:33 p.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 Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Mark Neuman - Alternate                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Tammie Wilson                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
James  Johnsen, President,  University  of Alaska;  Michelle                                                                    
Rizk,  Associate  Vice  President,  Statewide  Planning  and                                                                    
Budget,   University   of   Alaska;  Greg   Cashen,   Acting                                                                    
Commissioner,    Department   of    Labor   and    Workforce                                                                    
Development;  Mark   Luiken,  Commissioner,   Department  of                                                                    
Transportation  and   Public  Facilities;   Amanda  Holland,                                                                    
Acting  Deputy  Commissioner, Department  of  Transportation                                                                    
and  Public Facilities.  Paloma Harbour,  Director, Division                                                                    
of   Administrative  Services,   Department  of   Labor  and                                                                    
Workforce Development.                                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 285    APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          HB 285 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 286    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          HB 286 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
OVERVIEW: UNIVERSITY OF ALASKA                                                                                                  
                                                                                                                                
OVERVIEW: DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT                                                                         
                                                                                                                                
OVERVIEW:   DEPARTMENT   OF    TRANSPORTATION   AND   PUBLIC                                                                    
FACILITIES                                                                                                                      
                                                                                                                                
Co-Chair  Seaton  reviewed  the   agenda  for  the  day.  He                                                                    
indicated  that Representative  Neuman would  be filling  in                                                                    
for Representative Wilson for the week.                                                                                         
                                                                                                                                
^OVERVIEW: UNIVERSITY OF ALASKA                                                                                               
                                                                                                                                
Co-Chair Seaton asked  the presenter when he  wanted to take                                                                    
questions from committee members.                                                                                               
                                                                                                                                
1:34:23 PM                                                                                                                    
                                                                                                                                
JAMES  JOHNSEN, PRESIDENT,  UNIVERSITY OF  ALASKA, responded                                                                    
that  he  wanted  to  take  questions  at  the  end  of  his                                                                    
presentation.  He  introduced the  PowerPoint  presentation:                                                                    
"University of Alaska  FY 19 Budget Overview."  He noted the                                                                    
sources on slide 2: "Sources."                                                                                                  
                                                                                                                                
Mr.  Johnsen turned  to slide  3:  "University Mission."  He                                                                    
indicated  the  University's  mission  was  standard  for  a                                                                    
public  university system.  There  were three  parts to  the                                                                    
mission -  education, research, and service.  He pointed out                                                                    
that what was  unique to the University  of Alaska's mission                                                                    
was  that it  served Alaska.  Alaska was  geographically the                                                                    
largest state.  He elaborated that the  Ketchikan Campus was                                                                    
1,342 miles from the Kotzebue Campus.                                                                                           
                                                                                                                                
Mr.  Johnsen continued  that  the University's  geographical                                                                    
reach was unlike any other  institution in the U.S. In terms                                                                    
of research,  the University was  unique in that  it's focus                                                                    
in  research was  on the  arctic  and on  the North,  highly                                                                    
relevant  to  Alaska. He  reported  that  the University  of                                                                    
Alaska (UA)  ranked number  one in the  world in  arctic and                                                                    
Northern topics.                                                                                                                
                                                                                                                                
Mr.  Johnsen reviewed  the third  piece of  the University's                                                                    
mission -  service. It was  uniquely focused on  Alaska. The                                                                    
Marine Advisory Program, for example,  focused on the unique                                                                    
qualities of Alaska  and the unique needs  that Alaskans had                                                                    
for higher education.                                                                                                           
                                                                                                                                
Mr.  Johnsen  detailed the  areas  in  which the  University                                                                    
served  Alaska  on  slide  4:  "Serving  All  Alaskans."  He                                                                    
suggested that  if the picture  on the slide  was transposed                                                                    
onto the Lower 48 states,  Alaska would touch two oceans and                                                                    
the  Ketchikan  Campus would  be  in  South Carolina.  There                                                                    
would be campuses  in Iowa, Oklahoma, and  South Dakota. The                                                                    
University  would also  have a  National Science  Foundation                                                                    
(NSF)  funded world  class research  facility in  Wisconsin,                                                                    
and it would have a  federally funded arctic research vessel                                                                    
operating  off  the  coast of  Montana.  He  emphasized  the                                                                    
breadth of  the University's mission covering  all of Alaska                                                                    
through  its three  universities; the  University of  Alaska                                                                    
Anchorage (UAA),  the University of Alaska  Fairbanks (UAF),                                                                    
and   the  University   of  Alaska   Southeast  (UAS).   The                                                                    
University  also  had  12  community  campuses  and  several                                                                    
learning   centers  across   the   state.   He  thought   it                                                                    
understated  the  University's  service to  Alaska  offering                                                                    
dozens of online academic programs as well.                                                                                     
                                                                                                                                
Mr.  Johnsen  turned  to  slide  5:  "Legal  Authority."  He                                                                    
provided a  brief history of Alaska's  university system. In                                                                    
1956 the  delegates to  the constitution  saw the  wisdom of                                                                    
including   UA   in   the  constitution.   The   territorial                                                                    
legislature in 1917 created  the Alaska Agricultural College                                                                    
and School of Mines renaming  it in 1935. The delegates knew                                                                    
that a strong higher  education system, a strong university,                                                                    
was  required for  statehood.  At  the time,  it  was a  top                                                                    
priority of state leaders. He  was hopeful it would remain a                                                                    
top  priority  for  leaders in  Alaska.  The  University  of                                                                    
Alaska  was separate  from  the  executive branch,  although                                                                    
subsect  to the  Executive  Budget Act  as  provided for  in                                                                    
various statutes.  Consequently, the University had  a Board                                                                    
of  Regents  appointed  by  the  Governor  and  a  president                                                                    
appointed  by  the  board.  The  board  and  president  were                                                                    
empowered constitutionally  and by statute to  operate UA on                                                                    
behalf of the state.                                                                                                            
                                                                                                                                
1:39:31 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen  moved to slide  6: "University of  Alaska Share                                                                    
of  Total  Agency  Operations  (GF  Only)."  He  pointed  to                                                                    
numbers from the FY 10  management plan where the University                                                                    
counted  for 15.35  percent of  total agency  operations. In                                                                    
FY 19, in terms of the  governor's adjusted budget, it would                                                                    
be 13.81 percent  - a decline of about 10  percent. He noted                                                                    
that general  funds only  included designated  general funds                                                                    
(DGF) in  addition to undesignated general  funds (UGF). The                                                                    
University's  focus was  primarily on  UGF. Included  in DGF                                                                    
were tuitions and other revenues  appropriated in DGF but in                                                                    
a different way than UGF.                                                                                                       
                                                                                                                                
Co-Chair Seaton  acknowledged the arrival  of Representative                                                                    
Pruitt to the meeting.                                                                                                          
                                                                                                                                
Mr. Johnsen  moved to  slide 7:  "University of  Alaska Line                                                                    
Items (All  Funds)." He indicated  the slide went  into more                                                                    
detail than the  previous slide. Over the  previous 10 years                                                                    
there  was   significant  declines  in   personal  services,                                                                    
roughly  $16  million  or  11  percent.  There  was  also  a                                                                    
significant  decline  in grants  and  benefits  of about  25                                                                    
percent.  There was  a 32  percent decrease  in travel.  The                                                                    
story of  funding decline was  made up in part  by increases                                                                    
in tuition rates charged to students.                                                                                           
                                                                                                                                
Representative  Neuman  asked   for  information  about  the                                                                    
original sources  of designated funds and  also other funds.                                                                    
He  wanted  to  see  how   much  had  come  from  charitable                                                                    
contributions.                                                                                                                  
                                                                                                                                
Co-Chair Seaton  reiterated that  members should  hold their                                                                    
questions  until the  end. Vice-Chair  Gara  had joined  the                                                                    
meeting.                                                                                                                        
                                                                                                                                
Mr.  Johnsen continued  to slide  8:  "University of  Alaska                                                                    
Appropriation (GF Only)." He reported  that the slide showed                                                                    
general  funds  (GF) only  for  the  previous 10  years.  It                                                                    
reflected an increase through FY 13  with a decline in FY 14                                                                    
and a  bump. There was  a considerable disinvestment  in the                                                                    
University  since FY  15. He  noted that  the year-over-year                                                                    
reduction in  UGF over the  period was $378 million  down to                                                                    
$317  million  reflecting  a cumulative  reduction  of  $145                                                                    
million.                                                                                                                        
                                                                                                                                
Mr.  Johnsen  moved  to  slide   9:  "University  of  Alaska                                                                    
Appropriation (All  Funds)." He  indicated the  slide showed                                                                    
the same  story and  pattern as seen  in the  previous slide                                                                    
reflecting a decline. The slope was negative.                                                                                   
                                                                                                                                
Mr.  Johnsen  advanced to  slide  10:  "Program Areas."  The                                                                    
University  organized  its  program  areas  by  the  primary                                                                    
mission  around  education,  research and  service  and  the                                                                    
amount  of  UGF,  DGF,  and  other  funds  going  into  each                                                                    
component of the mission. Also,  the chart showed the number                                                                    
of full-time and part-time  employees who directly supported                                                                    
the specific missions, the number  of credit hours produced,                                                                    
students  served, degrees  conveyed, invention  disclosures,                                                                    
and  members  of  the  public who  had  benefited  from  the                                                                    
University's  multiple   and  widespread   service  programs                                                                    
across  the state.  He highlighted  that some  of the  costs                                                                    
were recuperated  in the education area  through tuition and                                                                    
fees.  In the  area of  research, it  was federal  and other                                                                    
grant  dollars   leveraged  by  the  state's   general  fund                                                                    
investment. In terms of service,  the funds were recuperated                                                                    
in various fees. All three  activities were directly tied to                                                                    
the  University's mission  on behalf  of the  state. He  was                                                                    
proud of  the effectiveness of the  faculty, staff, students                                                                    
across  the university  system, especially  in light  of the                                                                    
significant  decrease of  investment in  the University  and                                                                    
consequently  the  reduction of  its  capacity  to meet  its                                                                    
mission for the state.                                                                                                          
                                                                                                                                
1:44:56 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen  scrolled to  slide 11:  "Building a  Culture of                                                                    
Education." The  University was trying  to create  a culture                                                                    
of  education in  Alaska.  By the  numbers,  it was  falling                                                                    
short.  Folks  at  the  University   believed  that  it  was                                                                    
critically  important to  use the  tremendous resources  and                                                                    
assets of the University of  Alaska to meet the state's very                                                                    
serious  challenges including  the highest  healthcare costs                                                                    
in the country,  the very high energy costs,  the high rates                                                                    
of crime, the  highest unemployment rates in  the state, and                                                                    
a very  narrow economic base.  He reported that it  had been                                                                    
shown in  state-after-state and nation-after-nation  that by                                                                    
increasing educational attainment,  life expectancy went up,                                                                    
and healthcare costs went down;  unemployment went down, and                                                                    
income  went   up;  incarceration   rates  went   down,  and                                                                    
recidivism went  down. It was  the University's  view, based                                                                    
on   its  mission,   that  higher   education  was   a  wise                                                                    
investment.                                                                                                                     
                                                                                                                                
Mr. Johnsen  advanced to slide 12:  "Strategic Pathways." He                                                                    
thought  everyone  was  aware   of  the  strategic  pathways                                                                    
process. The University tried to  answer the question of how                                                                    
to restructure itself in order  to meet the mission in light                                                                    
of  the  significant  budget  cuts.  He  reported  that  230                                                                    
faculty,  staff, and  students staffed  22 committees  going                                                                    
through the  university system from  A to Z.  They reviewed,                                                                    
came up  with options,  and made a  number of  very dramatic                                                                    
organizational changes in order  to make itself as effective                                                                    
as possible.                                                                                                                    
                                                                                                                                
Mr. Johnson  thought the  slide summarized  the University's                                                                    
statewide mission on behalf of  the state. He drew attention                                                                    
to  the  middle  of  the  slide which  focused  on  each  of                                                                    
Alaska's universities and their  unique contributions to the                                                                    
mission. He  emphasized the  word, "unique."  The University                                                                    
wanted to  take advantage of the  special characteristics of                                                                    
each of the  universities while trying to build  on what was                                                                    
common  about  them. The  slide  also  captured the  tension                                                                    
needed  for   the  University  to  manage   in  the  diverse                                                                    
university system between what  made sense to be distinctive                                                                    
at  each university  and what  made  sense to  be in  common                                                                    
across the university system.                                                                                                   
                                                                                                                                
1:47:46 PM                                                                                                                    
                                                                                                                                
Mr.  Johnsen   reported  that  the  Board   of  Regents  had                                                                    
developed  5  objectives  shown   on  slide  13:  "Strategic                                                                    
Objectives."  He explained  that in  looking forward  at the                                                                    
ways to  create a culture of  education in the state  and to                                                                    
meet the  state's needs for  higher education, the  Board of                                                                    
Regents adopted  five goals. They had  also adopted measures                                                                    
going  out 8  years  to 2025.  The  top priorities  included                                                                    
economic  development  on  behalf of  the  state,  workforce                                                                    
development,  research growth,  degree attainment,  and more                                                                    
cost-effective operations.                                                                                                      
                                                                                                                                
Mr. Johnsen  explained the goals  and measures on  slide 14:                                                                    
"UA  2018-2025 Goals  and Measures."  The  Board of  Regents                                                                    
adopted the goals  in November. He reported  that there were                                                                    
two  ways   in  which  the   goals  would  be   measured  in                                                                    
accomplishment going out  to 2025. In some  cases, the goals                                                                    
were   extremely  ambitious.   However,   he  believed   the                                                                    
University  had  to  set  ambitious  goals  given  the  huge                                                                    
education   gaps  in   Alaska   and   the  state's   serious                                                                    
challenges.   He  pointed   to   the  Science,   Technology,                                                                    
Engineering,  and Math  (STEM) graduates.  The STEM  program                                                                    
was  a  critical  component for  economic  development.  The                                                                    
University hoped  to increase the number  of STEM graduates.                                                                    
The   university   also    hoped   to   increase   invention                                                                    
disclosures,   a   standard   way  in   which   universities                                                                    
contribute to economic development.                                                                                             
                                                                                                                                
Mr.  Johnsen  addressed  workforce  development.  While  the                                                                    
University would continue to  focus on welders, accountants,                                                                    
engineers,   and  others,   the  Board   of  Regents   asked                                                                    
themselves, if they  were to focus on  only two occupational                                                                    
areas, what would be the  most impactful areas to the state.                                                                    
The  Board decided  that education  and healthcare  would be                                                                    
the most important areas of  focus. The University wanted to                                                                    
remain number one in the  nation. He relayed that a standard                                                                    
measure  for research  effectiveness  was expenditures.  The                                                                    
University wanted to  drive the number up  by increasing its                                                                    
competitiveness and by increasing  receipts from the federal                                                                    
government.  Much  attention  would  be  focused  on  health                                                                    
research.                                                                                                                       
                                                                                                                                
Mr.  Johnson  explained  that there  were  two  elements  to                                                                    
increasing   degree  attainment.   The  first   was  driving                                                                    
enrollment up from  29,171 to 45,000. He  elaborated that as                                                                    
a percentage of the state's  population, 45,000 would be the                                                                    
same percentage of the state's  population who were students                                                                    
at the University of Alaska  in 1975. Over the period since,                                                                    
the  state had  declined in  its percentage  of Alaskans  in                                                                    
higher education.  He opined  that it  was critical  for the                                                                    
state to drive  up the number. There were  other states with                                                                    
a higher  percentage: Oregon  was 7  percent. He  thought it                                                                    
was  reasonable to  be at  6 percent.  Increasing completion                                                                    
rates had been a tough issue for the University for years.                                                                      
                                                                                                                                
Mr.  Johnson  continued  that   in  addition  to  increasing                                                                    
enrollment, the  University wanted to increase  thru-put and                                                                    
the number  of people getting  degrees. A major  focus would                                                                    
include  not only  bachelorettes but  workforce credentials,                                                                    
endorsements,  and associates  degrees. He  relayed that  an                                                                    
element of  the University's budget  request was to  offer a                                                                    
25 percent  tuition discount in occupational  endorsements -                                                                    
short-term, highly  focused on high-demand  workforce areas.                                                                    
The idea was to provide  Alaskans the opportunity to move up                                                                    
quickly  through university  and community  campus training.                                                                    
Finally,  the Board  of Regents  set goals  to operate  more                                                                    
cost-effectively  and to  measure  increasing  its top  line                                                                    
faster than its bottom line over the period.                                                                                    
                                                                                                                                
1:51:47 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen  spoke of  the state trend  on slide  15: "State                                                                    
Operation Budget  Trends." The state operating  budget trend                                                                    
had been  decreasing for  the prior  4 years.  In FY  19 the                                                                    
governor's budget was at $317  million. The Board of Regents                                                                    
was  proposing  an  operating budget  of  $341  million  for                                                                    
FY 19.                                                                                                                          
                                                                                                                                
Mr. Johnsen advanced to slide  16: "FY 19 Operating Budget."                                                                    
He explained that the slide showed  a breakdown of the FY 19                                                                    
operating budget.  There was a significant  amount of detail                                                                    
which  he  imagined would  be  looked  at carefully  by  the                                                                    
finance subcommittee as the session  moved forward. He noted                                                                    
the delta  between FY 18  and FY  19, about $24  million. He                                                                    
indicated that  $9.7 million  was for  fixed-cost increases.                                                                    
Strategic investments  were at about $15  million. Specifics                                                                    
were listed underneath each of the strategic investments.                                                                       
                                                                                                                                
Mr. Johnsen  scrolled to slide 17:  "Workforce Reductions FY                                                                    
15 - FY  18." He reported that the  University had suspended                                                                    
or  discontinued about  50 academic  degree and  certificate                                                                    
programs.  The University  had 1200  fewer employees  than a                                                                    
few  years   previously.  He   indicated  that   36  percent                                                                    
statewide  administration had  been reduced.  He pointed  to                                                                    
the  percentage change  in personnel  head  count under  the                                                                    
heading "SW"  - a dramatic  change in any other  unit within                                                                    
the  University.  Staff had  taken  a  larger share  of  the                                                                    
reductions than  faculty over the period.  He clarified that                                                                    
the  position reductions  were not  all  layoffs. There  was                                                                    
attrition built into  the numbers. Many times,  if a faculty                                                                    
or staff  position became vacant  and the decision  was made                                                                    
not to fill  it, there would be one less  headcount and were                                                                    
included in the counts.                                                                                                         
                                                                                                                                
Mr. Johnsen discussed slide 18:  "Program Reductions FY 15 -                                                                    
FY 18."  The slide  showed examples of  some of  the program                                                                    
reductions taken. He  noted a few of  the strategic pathways                                                                    
implementations.  The   University  had  three   schools  of                                                                    
management with three deans  and three bureaucracies reduced                                                                    
to  two. The  University  was leveraging  its purchasing  so                                                                    
that it was  being coordinated across the  system as opposed                                                                    
to  being   done  individually   by  each   university.  The                                                                    
procurement   offices  were   lining  up   under  a   single                                                                    
leadership. A  similar structure  was being  implemented for                                                                    
grants  and  contracts  administration. The  University  was                                                                    
also streamlining and automating administrative processes.                                                                      
                                                                                                                                
Mr. Johnsen  informed the committee of  the consolidation or                                                                    
creation  of the  Alaska College  of Education.  Rather than                                                                    
three deans  and three schools of  education, the University                                                                    
was  consolidating  to  a  single  executive  dean  and  the                                                                    
faculty and  staff would continue at  the other universities                                                                    
ensuring  access  for  students  across  the  entire  state.                                                                    
However,  there  would  be much  enhanced  coordination  and                                                                    
alignment  of  teacher  education  programs  statewide.  The                                                                    
change was met positively by  the 54 superintendents who had                                                                    
been  calling for  much more  alignment of  the University's                                                                    
programs and standardization. It  was not an uncontroversial                                                                    
action taken by the Board of Regents.                                                                                           
                                                                                                                                
1:55:48 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen  had other legislative  priorities as  listed on                                                                    
slide  19: "Other  Legislative  Priorities." The  University                                                                    
had legislative priorities other  than the operating budget.                                                                    
He spoke  of the  $50 million  capital request  for deferred                                                                    
maintenance.  He mentioned  the education  tax credit  which                                                                    
would  expire   at  the  end   of  the  year.   He  believed                                                                    
legislation was  already in play to  continue the beneficial                                                                    
program linking business interests  in Alaska with interests                                                                    
of  the   University.  It  was  a   positive  investment  in                                                                    
workforce  development and  research  and other  connections                                                                    
between the University and employers.                                                                                           
                                                                                                                                
Mr. Johnsen  reported that  another priority  was protecting                                                                    
the  higher  education  fund  that  funded  two  scholarship                                                                    
programs, one  was a merit-based system  (Alaska Performance                                                                    
Scholarship), and  the other  was a  needs-based scholarship                                                                    
program   (Alaska  Education   Grant).  It   was  critically                                                                    
important for  the grants to  be funded. The  University had                                                                    
seen clear evidence  of the value of  the Alaska Performance                                                                    
Scholarship  in terms  of increasing  readiness of  students                                                                    
for university  studies. He noted  that Alaska  ranked among                                                                    
the  lowest in  the country  in the  availability of  needs-                                                                    
based grants.  It was  critical to  maintain the  funding to                                                                    
ensure   that  Alaskans,   no  matter   what  socio-economic                                                                    
backgrounds  they  come  from,  have  the  opportunities  to                                                                    
achieve through higher education.                                                                                               
                                                                                                                                
Mr.  Johnsen   spoke  of  the  importance   of  solving  the                                                                    
University's land  grant deficit.  It continued to  work the                                                                    
issue in  close cooperation  with the administration  and in                                                                    
collaboration  with  the   state's  federal  delegation  and                                                                    
federal agencies. He recalled  that only Delaware received a                                                                    
small land grant  than the University of  Alaska. He thought                                                                    
it would  be critically  important to diversify  its revenue                                                                    
sources  within  about  5  to 10  years.  He  concluded  his                                                                    
presentation and was happy to take questions.                                                                                   
                                                                                                                                
Co-Chair  Seaton   acknowledged  Representative   Grenn  and                                                                    
Representative Ortiz at the table.                                                                                              
                                                                                                                                
Co-Chair  Foster  referred to  slide  16.  He wondered  what                                                                    
comprised the bulk of the  $7 million for degree attainment.                                                                    
Next,  he  referred  to slide  19  regarding  extending  the                                                                    
education  tax credit.  He commented  that it  was a  simple                                                                    
concept  but  a  complicated   statute.  He  understood  the                                                                    
formula to be simple but asked what was complicated.                                                                            
                                                                                                                                
Mr.  Johnsen   responded  that   in  the   increased  degree                                                                    
attainment  the money  was primarily  for additional  online                                                                    
courses.  Alaska ranked  number one  in the  country in  the                                                                    
percentage  of  the  population with  some  college  and  no                                                                    
degree. Folks were not quitting  their jobs or leaving their                                                                    
families at  night to attend  classes. He asserted  that the                                                                    
University needed to step up  availability of online courses                                                                    
for  students. It  was the  University's intent  to increase                                                                    
its collaboration  with K-12 school districts.  He indicated                                                                    
dual enrollment  programs or concurrent  enrollment programs                                                                    
were incredibly affective in  preparing students for college                                                                    
and  work. An  example was  the middle  college high  school                                                                    
that the University operated in  conjunction with the Mat-Su                                                                    
School  District.  He  conveyed   that  75  percent  of  the                                                                    
completers  attended  a UA  campus  with  an average  of  30                                                                    
credit  hours  completed  requiring  zero  developmental  or                                                                    
remedial work  when they got  to a university.  In addition,                                                                    
the  University  wanted  to increase  scholarships  in  high                                                                    
demand areas.                                                                                                                   
                                                                                                                                
Mr. Johnsen  responded to  Co-Chair Foster's  question about                                                                    
the education tax  credit. It applied to  about 10 different                                                                    
tax credits. The  title was complex and the  language of the                                                                    
bill, as  a result of  the sheer number of  corporate income                                                                    
taxes it  applied to,  made it complex.  He agreed  that the                                                                    
concept was very simple.                                                                                                        
                                                                                                                                
2:00:43 PM                                                                                                                    
                                                                                                                                
Representative  Grenn  referred to  slide  17.  He asked  if                                                                    
there  was  a specific  number  of  teachers that  had  been                                                                    
reduced. He  asked if a  correlation could be made  with the                                                                    
discounted or  suspended programs  on slide 18.  Mr. Johnsen                                                                    
responded that  he could provide  the number for  him. There                                                                    
was  a  correlation  to some  extent  between  faculty  line                                                                    
reductions and  discontinued programs. The challenge  of the                                                                    
University  was its  obligations to  students to  teach them                                                                    
out. For  example, if the  University were to  discontinue a                                                                    
sociology  degree  or  a   resource  economics  degree,  the                                                                    
University had an  obligation to make sure  the students got                                                                    
the   courses  they   needed  to   complete  their   degree.                                                                    
Therefore,  it  could  not  turn   a  program  off,  leaving                                                                    
students  hanging.  There  was  a lag  in  terms  of  making                                                                    
reductions  to  faculty,  particularly tenured  faculty.  He                                                                    
noted that adjunct  faculty or term faculty were  hired on a                                                                    
year-to-year basis and tended to be reduced more quickly.                                                                       
                                                                                                                                
Representative Grenn indicated that he wanted the number.                                                                       
                                                                                                                                
Representative Guttenberg referred to  slide 16. He wondered                                                                    
about  the   funding  for   the  UAF   engineering  building                                                                    
operating costs.  He had assumed  that the amount  was built                                                                    
into its budget  base. He suggested closing  the building or                                                                    
taking  the  cut.  Mr.  Johnsen responded  that  it  was  an                                                                    
absolutely  critical building  for the  University's mission                                                                    
and he thought  it was appropriate for the state  to pay the                                                                    
operating  costs for  the facility.  If the  costs were  not                                                                    
funded, the  University would have  no other choice  than to                                                                    
continue   operating   the   facility  which   would   force                                                                    
reallocation  -  reductions  in  other  places  to  continue                                                                    
operating.  It  was  absolutely  mission  critical  for  the                                                                    
University   for  engineering   education  and   engineering                                                                    
research. The  Alaska Center for  Energy and Power,  a world                                                                    
class alternative  energy research organization,  was housed                                                                    
in  the facility.  The University  would be  forced to  make                                                                    
reductions in other places.                                                                                                     
                                                                                                                                
Representative  Thompson turned  to slide  7 and  asked what                                                                    
comprised the  miscellaneous category. Mr.  Johnsen deferred                                                                    
to Ms. Rizk.                                                                                                                    
                                                                                                                                
2:04:04 PM                                                                                                                    
                                                                                                                                
MICHELLE RIZK, ASSOCIATE  VICE PRESIDENT, STATEWIDE PLANNING                                                                    
AND  BUDGET,  UNIVERSITY  OF   ALASKA,  responded  that  the                                                                    
University   aligned  the   definition   with  the   state's                                                                    
definition: It  represented the University of  Alaska's debt                                                                    
service.                                                                                                                        
                                                                                                                                
Representative  Thompson asked  about  the  tax credits.  He                                                                    
wondered  how many  of the  tax credits  were used  to match                                                                    
federal grants. He queried whether the number was sizable.                                                                      
                                                                                                                                
Mr.  Johnsen replied  that typically  the large  expenditure                                                                    
was for scholarships. He indicated  that the fish processing                                                                    
industry had been a major  contributor to the University for                                                                    
workforce  and  research.  He  thought  it  had  provided  a                                                                    
tremendous  benefit to  fisheries  faculty and  oceanography                                                                    
faculty as they competed for funds at the national level.                                                                       
                                                                                                                                
Representative Pruitt  mentioned the land grant  deficit. He                                                                    
asked if  there was a  way for  the legislature to  Help. It                                                                    
had  previously  passed  a resolution  to  assist  with  the                                                                    
opening of Alaska National Wildlife  Refuge (ANWR). He asked                                                                    
if  a  resolution  from  the   legislature  would  help  the                                                                    
University.  He  was willing  to  help  with legislation  if                                                                    
necessary and  wondered if Mr.  Johnsen was willing  to work                                                                    
with him on a resolution.                                                                                                       
                                                                                                                                
Mr. Johnsen responded affirmatively.  The land grant deficit                                                                    
was more of  a federal issue given  the state constitution's                                                                    
prohibition on the  dedication of land to  the University as                                                                    
learned by a 2009 State  Supreme Court decision. He believed                                                                    
a  resolution by  the legislature  would be  helpful in  the                                                                    
University's push  to achieve satisfaction of  its long-time                                                                    
deficit.                                                                                                                        
                                                                                                                                
2:07:21 PM                                                                                                                    
                                                                                                                                
Representative  Neuman asked  about  research and  Alaskan's                                                                    
served on slide  10. He asked about  the University's policy                                                                    
regarding intellectual  property. He thought  the University                                                                    
could make a considerable  sum off the intellectual property                                                                    
of the  inventions coming out  of the institution.  He asked                                                                    
if the University  of Alaska owned the  patents. Mr. Johnsen                                                                    
replied positively and could  provide a revenue distribution                                                                    
schedule that was negotiated  into the collective bargaining                                                                    
agreement with the faculty union.                                                                                               
                                                                                                                                
Representative  Neuman  wanted   the  information.  He  also                                                                    
referred  to  slide  18  regarding  the  strategic  pathways                                                                    
implementations. He  noted the  first item  on the  list and                                                                    
thought   the  legislature   had  tried   to  persuade   the                                                                    
University to move into one  university system as opposed to                                                                    
the tree  systems currently in  place. He asked  Mr. Johnsen                                                                    
to explain his goals and how he intended to reach them.                                                                         
                                                                                                                                
Mr.  Johnsen   responded  that   there  were   very  serious                                                                    
institutional and  accreditation issues that  the University                                                                    
faced.   The   Northwest    Commission   on   Colleges   and                                                                    
Universities    down   in    Washington   accredited    UA's                                                                    
institutions rather than programs.  To move in the direction                                                                    
of  a reduction  would  take several  years  of effort.  The                                                                    
University   had   had   active   communication   with   the                                                                    
commission.  He had  engaged an  expert in  accreditation to                                                                    
study  the issue.  His view  and the  view of  the Board  of                                                                    
Regents  was  that it  would  be  a massive  distraction  to                                                                    
trying  to generate  enrollment and  meet the  needs of  the                                                                    
state.  Therefore,  instead  of   applying  resources  to  a                                                                    
regulatory  process  from  people outside  of  Alaska,  they                                                                    
decided to  focus on what  the University needed  to achieve                                                                    
given its three accreditations.                                                                                                 
                                                                                                                                
Representative Neuman  thought the  goal was  to consolidate                                                                    
to one  administrative cost for  the sake of  efficiency. He                                                                    
also  understood   that  another   large  problem   was  the                                                                    
transferring  of  credits.  Mr. Johnsen  responded  that  he                                                                    
could provide  information to confirm  that there was  not a                                                                    
problem   transferring   credits  between   the   University                                                                    
campuses.                                                                                                                       
                                                                                                                                
Vice-Chair  Gara asked  about the  focus on  increasing STEM                                                                    
graduates. He wanted  to make sure there was  no decrease on                                                                    
the  emphasis  on  liberal  arts  education.  He  asked  Mr.                                                                    
Johnsen  to speak  to the  subject.  Also, he  asked if  the                                                                    
decrease  in  funding  for  the  University  had  led  to  a                                                                    
decrease in grant  funding it had been able  to leverage. He                                                                    
referred  to slide  18 which  indicated that  the University                                                                    
discontinued the  GC clinical social work  practice program.                                                                    
He  asked Mr.  Johnsen to  explain the  program. He  did not                                                                    
know what "GC" meant. Mr. Johnsen  would have to get back to                                                                    
Vice-Chair Gara.                                                                                                                
                                                                                                                                
Vice-Chair Gara reported some discussion  by folks that were                                                                    
Children's Services Agency hires,  case workers who were not                                                                    
social work  graduates, about  a decrease  in the  number of                                                                    
social  work graduates.  He remarked  that a  decrease would                                                                    
not  be helpful.  Ms.  Rizk thought  GC  stood for  graduate                                                                    
certificate.                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  about a  line item  taking                                                                    
over a  seismic buoy-rey across  the Gulf of Alaska.  It was                                                                    
his understanding  that the federal government  was about to                                                                    
move it to another location in  the world. He thought it was                                                                    
valuable to keep it in the  gulf. He asked about its status.                                                                    
Mr.  Johnsen  would   be  happy  to  follow   up  with  that                                                                    
information.                                                                                                                    
                                                                                                                                
Co-Chair  Seaton indicated  there would  be more  details in                                                                    
the   finance   subcommittee   process.   He   thanked   the                                                                    
presenters.                                                                                                                     
                                                                                                                                
2:12:39 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:14:07 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^OVERVIEW: DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT                                                                      
                                                                                                                                
2:14:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton indicated  that members  should hold  their                                                                    
questions to the end.                                                                                                           
                                                                                                                                
GREG CASHEN,  ACTING COMMISSIONER,  DEPARTMENT OF  LABOR AND                                                                    
WORKFORCE  DEVELOPMENT, thanked  the  committee for  hearing                                                                    
the department's presentation.  He introduced the PowerPoint                                                                    
presentation: "FY2019 Department  Overview." He reviewed the                                                                    
department  mission  on  slide 2:  "Department  Mission  and                                                                    
Resources." The mission  of the department was  to provide a                                                                    
safe and legal working  conditions and advance opportunities                                                                    
for employment.  The department accomplished its  mission by                                                                    
protecting Alaskan workers  through statutory and regulatory                                                                    
consultation   and  enforcement,   developing  an   Alaska's                                                                    
workforce  for Alaska's  jobs,  and  income replacement  for                                                                    
injured, disabled,  and unemployed  workers. He  pointed out                                                                    
that the  slide included  links to the  department's mission                                                                    
and key  performance indicators,  the FY 19  budget details,                                                                    
and the  performance measures from  all of  the department's                                                                    
divisions. He turned the remainder  of the presentation over                                                                    
to Ms. Harbour.                                                                                                                 
                                                                                                                                
PALOMA   HARBOUR,  DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT OF  LABOR  AND WORKFORCE  DEVELOPMENT,                                                                    
would  walk  the committee  through  the  10-year look  back                                                                    
slides generated by the  Legislative Finance Division (LFD).                                                                    
She  highlighted  that  slide   3  showed  the  department's                                                                    
general fund  (GF) budget since  2009. She pointed  out that                                                                    
GF included unrestricted general  funds (UGF) and designated                                                                    
general  funds (DGF).  The slide  indicated  there had  been                                                                    
significant cuts  to the department's  state-funded programs                                                                    
since FY  15. She reported  that UGF for the  department had                                                                    
been reduced 38 percent over  the period. The department was                                                                    
$7.3 million below where it had been in FY 09.                                                                                  
                                                                                                                                
Ms. Harbour  moved to the  chart on slide 4:  "Department of                                                                    
Labor  and Workforce  Development Line  Items (All  Funds)."                                                                    
The chart  showed changes in  the department's  budget since                                                                    
FY  09 by  expenditure category.  The department's  personal                                                                    
services budget was almost at the  same level that it was in                                                                    
FY  09, yet  it had  224  fewer budgeted  positions. It  was                                                                    
because  position  costs  such  as wages  and  benefits  had                                                                    
increased over  the period. She  also noted  the significant                                                                    
reduction to  the department's grants and  benefits of $22.3                                                                    
million  partly   due  to  the  significant   state  funding                                                                    
reductions and partly due to federal and other declines.                                                                        
                                                                                                                                
Ms.  Harbour moved  to slide  5: "Appropriations  within the                                                                    
Department of  Labor and  Workforce Development  (GF Only)."                                                                    
She reported  that the chart  showed the department's  GF by                                                                    
division. The  slide could be  hard to follow because  in FY                                                                    
17  the   department  consolidated  2   divisions,  Business                                                                    
Partnerships  and Employment  Security,  into  1 division  -                                                                    
Employment and  Training Services. She highlighted  that the                                                                    
Commissioner's  Office  and Administrative  Services  budget                                                                    
for FY  19 was almost $1.9  million less than in  FY 09. The                                                                    
reduction was  due to  the department  focusing its  cuts on                                                                    
reducing  administrative   and  overhead  expenses   in  the                                                                    
department.  The  department  analyzed every  position  that                                                                    
became  vacant and  reviewed every  lease that  came up  for                                                                    
renewal. The  department had cut  UGF spending on  leases by                                                                    
$1.2 million since FY 15.                                                                                                       
                                                                                                                                
2:18:59 PM                                                                                                                    
                                                                                                                                
Ms.  Harbour moved  to slide  6: "Appropriations  within the                                                                    
Department of Labor and  Workforce Development (All Funds)."                                                                    
She indicated  that the  chart showed  a similar  picture to                                                                    
the  previous slide  but included  all  funds. The  division                                                                    
consolidation in FY  17 made the chart  difficult to follow.                                                                    
As noted on  the slide by LFD the  department's budget since                                                                    
FY 09 had decreased 15 percent  or $26.4 million. As she had                                                                    
stated  earlier   it  was  partly   due  to   state  funding                                                                    
reductions and also federal and other funding reductions.                                                                       
                                                                                                                                
Ms.  Harbour   continued  to  slide  7:   "Commissioner  and                                                                    
Administrative  Services."   As  requested,   the  following                                                                    
several   slides  reflected   the  department's   budget  by                                                                    
division   broken  down   by  component   or  program.   The                                                                    
department's rating  of importance to the  mission was based                                                                    
on  guidance provided  by the  co-chairs.  Critical meant  a                                                                    
program that was directly  meeting the department's mission.                                                                    
Important  meant a  program that  provided indirect  support                                                                    
that  would need  to be  reassigned if  the program  did not                                                                    
exist.  Status quo  meant a  program  that had  historically                                                                    
been  funded because  of statutory  requirements but  had no                                                                    
real  impact  on  the department's  mission  or  potentially                                                                    
hampered  the department's  functioning. The  department was                                                                    
not  given specific  guidance on  rating the  effectiveness.                                                                    
Therefore, the  department used  "high, moderate,  and low."                                                                    
Using  very   strict  criteria  for  determining   what  was                                                                    
constitutionally  required,  the  Office of  Management  and                                                                    
Budget (OMB)  determined that the commissioner's  office was                                                                    
the  only  thing  in  the   department  that  was  partially                                                                    
constitutionally required.                                                                                                      
                                                                                                                                
Ms. Harbour  scrolled to  slide 8:  "Worker's Compensation."                                                                    
She explained  the slide reflected  the programs  within the                                                                    
Worker's  Compensation Division.  While  the department  had                                                                    
rated  the   effectiveness  of  the   Worker's  Compensation                                                                    
Program as  "high" the department recognized  there was room                                                                    
for  improvement.   The  department  had  worked   with  the                                                                    
governor's office  on HB 79 [Omnibus  legislation introduced                                                                    
in  2017   regarding  Worker's  Compensation]  and   HB  303                                                                    
[Worker's  Compensation   legislation  introduced   in  2018                                                                    
regarding  the rehabilitation  and  reemployment of  injured                                                                    
employees]. The  Department had rated the  importance of the                                                                    
Second Injury  Fund as status  quo and its  effectiveness as                                                                    
moderate.   The  program   was  meant   to  facilitate   the                                                                    
reemployment of  injured or  disabled workers.  Although the                                                                    
program worked, many other states  had eliminated the Second                                                                    
Injury  Fund because  the American's  with Disabilities  Act                                                                    
largely   fulfilled   the   same  purpose   by   prohibiting                                                                    
discrimination  on the  basis of  disability. The  sunset of                                                                    
the fund  was included in  HB 79. The department  also rated                                                                    
the   importance  of   the  Worker's   Compensation  Appeals                                                                    
Commission as status  quo and its effectiveness  as low. The                                                                    
department had worked  with the governor to  introduce HB 69                                                                    
[Introduced  in  2017]  which  would  repeal  the  specialty                                                                    
commission and return the appeals to the courts.                                                                                
                                                                                                                                
Ms.  Harbour explained  the information  on slide  9: "Labor                                                                    
Standards  and  Safety."  She  conveyed  that  the  programs                                                                    
within the  department's Labor  and Standards  Division were                                                                    
critical to the department's  mission of protecting Alaska's                                                                    
workers  and  were  highly effective.  The  one  item  rated                                                                    
status  quo  within  the  division  was  the  Alaska  Safety                                                                    
Advisory   Council,  which,   according   to  statute,   was                                                                    
responsible  for  organizing  the governor's  annual  safety                                                                    
conference.    Members   of    the   council    took   their                                                                    
responsibilities  very seriously  and did  a great  job with                                                                    
the conference. In fact, they  brought in more money through                                                                    
sponsorships  than   necessary  to   cover  the   cost.  The                                                                    
department  ranked the  council's effectiveness  as moderate                                                                    
because it believed  the group could be  even more effective                                                                    
if  it  were  privatized.  The  council  was  interested  in                                                                    
privatization,  but more  worked  needed to  be done  before                                                                    
moving forward with the required legislation.                                                                                   
                                                                                                                                
Ms. Harbour  advanced to slide 10:  "Employment and Training                                                                    
Services."  She  conveyed  that   the  programs  within  the                                                                    
Employment and  Training Services Division were  critical to                                                                    
the   department's    mission   of    advancing   employment                                                                    
opportunities  for Alaskans  and  the  department's core  of                                                                    
providing  income  replacement  for  temporarily  unemployed                                                                    
workers.  The division  was relatively  new and  by far  the                                                                    
largest  in  the  department   because  it  represented  the                                                                    
consolidation  of  2 other  divisions  into  1. Through  the                                                                    
consolidation  the  department  was  able  to  eliminate  10                                                                    
positions,  reduce  UGF  spending  by  $300,000  and  reduce                                                                    
administrative  costs  which  put  more  funds  out  on  the                                                                    
streets to train Alaskans.                                                                                                      
                                                                                                                                
2:23:38 PM                                                                                                                    
                                                                                                                                
Ms. Harbour continued to slide  11: "Employment and Training                                                                    
Services   -   WD   Programs."  She   indicated   that   the                                                                    
department's   workforce   development  component   of   the                                                                    
Employment Training  and Services Division had  some ongoing                                                                    
annual programs  displayed on the  slide. The  programs were                                                                    
highly effective and critical  to achieving the department's                                                                    
mission. As  mentioned previously, there were  fewer ongoing                                                                    
programs than  there once was.  However, the  department had                                                                    
been  successful  in   seeking  one-time  competitive  grant                                                                    
opportunities  to help  try to  fill the  gap. In  fact, the                                                                    
department  currently had  competitive federal  grant awards                                                                    
to expand apprenticeship  to non-traditional industries such                                                                    
as  health  care, to  help  reduce  recidivism by  providing                                                                    
employment and training services  to inmates before release,                                                                    
and to provide  disabled youth with work  experience to help                                                                    
them  obtain and  maintain  employment.  The department  was                                                                    
using non-permanent  positions for  the temporary  grants to                                                                    
ensure  no further  state obligation  once  the grant  funds                                                                    
end. The  department hoped  to be  equally as  successful in                                                                    
the future as other grant opportunities arose.                                                                                  
                                                                                                                                
Ms. Harbour moved to  slide 12: "Vocational Rehabilitation."                                                                    
She    reported    that    the    department's    Vocational                                                                    
Rehabilitation Division  was focused on  delivering services                                                                    
to  disabled Alaskans.  The federal  and statutory  programs                                                                    
were  highly  effective  and critical  to  the  department's                                                                    
mission  of  advancing   employment  opportunities  for  all                                                                    
Alaskans   and  the   core  service   of  providing   income                                                                    
replacement  for  disabled  Alaskans.  She  highlighted  the                                                                    
department's  special project  component  meant for  special                                                                    
federal  grants that  enhanced the  services the  department                                                                    
provided through its client  services program. They included                                                                    
supported  employment  which  was allocated  to  individuals                                                                    
with  the  most  significant disabilities  and  an  assisted                                                                    
technology program  that helped  disabled Alaskans  test and                                                                    
identify technology  that could  assist them in  their daily                                                                    
lives and in seeking employment.                                                                                                
                                                                                                                                
Ms.   Harbour  explained   slide   13:  "Alaska   Vocational                                                                    
Technical  Center (AVTEC)."  She  continued  that AVTEC,  in                                                                    
Seward,  was   critical  to  the  department's   mission  of                                                                    
advancing  employment  opportunities  for  Alaskans.  Alaska                                                                    
Vocational  Technical Center  was highly  effective with  an                                                                    
average graduation  rate of 92  percent over the  previous 5                                                                    
years and an average of  90 percent placement rate for their                                                                    
graduates  in their  area  of training  within  a year.  The                                                                    
department's budget for  AVTEC included 2 changes  in FY 19.                                                                    
First was a  change of $250,000 UGF to $250,000  DGF. Due to                                                                    
AVTEC's   continued  efforts   to   raise  revenue   through                                                                    
increasing  partnerships  the  department  believed  that  5                                                                    
percent  of  AVETEC's UGF  could  be  replaced with  program                                                                    
receipt  authority  without negatively  impacting  services.                                                                    
The  second change  reflected a  DGF cut  of about  $173,000                                                                    
related to  the Technical  Vocational and  Education Program                                                                    
(TVEP). When overall employment  in Alaska declined, revenue                                                                    
to  the  TVEP  account  declined. She  explained  that  TVEP                                                                    
funding reductions were necessary to avoid a shortfall.                                                                         
                                                                                                                                
Ms.  Harbour  explained   slide  14:  "Department  Five-Year                                                                    
Health  Care Trends."  AS requested  by  the committee,  the                                                                    
slide  showed the  department's health  care costs  over the                                                                    
prior  5 years  compared  to the  department's total  budget                                                                    
during the same  period. While total health  care costs were                                                                    
down,   the  percentage   that  they   represented  of   the                                                                    
department's budget had increased.  It was worth noting that                                                                    
the  department's position  counts  were down  significantly                                                                    
over the period.  If they were not, the  department would be                                                                    
paying  much more  in health  care costs.  In order  to help                                                                    
drive down  health care costs, the  department was committed                                                                    
to doing more  to promote vitamin D and  overall health with                                                                    
its  employees.  She  spoke  of  the  department  hosting  a                                                                    
wellness event in  the previous week in  its conference room                                                                    
over  the   lunch  hour.  It   provided  employees   with  a                                                                    
convenient  opportunity to  talk with  a health  coach about                                                                    
how  they  might  improve   their  personal  wellbeing.  She                                                                    
concluded the presentation and thanked the committee.                                                                           
                                                                                                                                
Co-Chair Foster asked  how many job centers  had been closed                                                                    
in  the prior  few years  and their  locations. Ms.  Harbour                                                                    
responded that there were 4  job centers closed in Kotzebue,                                                                    
Utqiagvik, Seward, and Eagle River.                                                                                             
                                                                                                                                
2:28:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster  asked if  there  had  been discussions  of                                                                    
closing any other  job centers. Ms. Harbour  replied that as                                                                    
she had  indicated, the department looked  at every position                                                                    
that  became  vacant  and  every  lease  that  came  up  for                                                                    
renewal. She noted that if  a position were to become vacant                                                                    
due to  retirement or  attrition at any  of the  smaller job                                                                    
centers the department might consider closing them.                                                                             
                                                                                                                                
Representative  Ortiz  noted  that Ms.  Harbour  had  talked                                                                    
about an overall 22 percent cut  in funding since FY 15. Ms.                                                                    
Harbour replied that  the overall reduction since  FY 15 was                                                                    
38 percent UGF.                                                                                                                 
                                                                                                                                
Representative  Ortiz asked  her  to summarize  some of  the                                                                    
opportunity  costs   resulting  from  the   reductions.  Ms.                                                                    
Harbour  reported that  the majority  of the  reductions had                                                                    
been in  state funded workforce development  grant programs.                                                                    
The department had cut the  Alaska Youth First Program which                                                                    
provided  career experience  and training  opportunities for                                                                    
youth.  The department  also cut  the  Career and  Technical                                                                    
Education  Grant  Program  that  helped  provide  grants  to                                                                    
school  districts for  career and  technical education.  The                                                                    
department cut  the Oil and  Gas Training Program  which was                                                                    
trying to develop  an Alaska workforce for oil  and gas. She                                                                    
indicated  that the  construction academies  were funded  at                                                                    
about half of their previous levels.                                                                                            
                                                                                                                                
Representative  Ortiz asked  how an  average person  came to                                                                    
attend AVTEC. He wondered where  clients were coming from to                                                                    
attend AVTEC. Ms. Harbour did  not have all of the pertinent                                                                    
information with her.  She was aware that  AVETEC had served                                                                    
students from  over 100  Alaskan communities.  Many students                                                                    
were from rural Alaska. There  were 2 programs recently that                                                                    
brought students  to AVTEC  to see  if there  were continued                                                                    
training opportunities  available. Excel Alaska was  a group                                                                    
that  brought 60  students  to AVTEC  to  get some  training                                                                    
experience to  see what  life would be  like on  campus. The                                                                    
majority of  the students came  from the Kenai  area because                                                                    
of AVTEC's location.                                                                                                            
                                                                                                                                
Co-Chair  Seaton mentioned  that  there  were also  self-pay                                                                    
students that graduated from AVTEC.                                                                                             
                                                                                                                                
2:32:31 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt asked  about the  funding for  AVETEC                                                                    
and   its   receipt   authority.  He   asked   for   further                                                                    
clarification of the $250,00 she  had mentioned. Ms. Harbour                                                                    
responded  that  the  amount   was  receipt  authority  from                                                                    
student  tuition  and  fee  revenue  and  contract  training                                                                    
revenue.                                                                                                                        
                                                                                                                                
Representative Thompson  asked about  the AVTEC  program and                                                                    
other  programs within  the University  with vocational  and                                                                    
technical training  such as the nursing  program within each                                                                    
entity. He  wondered about  other competitive  programs. Ms.                                                                    
Harbour replied  that the University  of Alaska had  cut the                                                                    
Allied Health Program  at AVTEC 2 years  prior. In reviewing                                                                    
AVTEC's  programs, the  department made  sure there  were no                                                                    
other alternatives or duplications.                                                                                             
                                                                                                                                
Representative Grenn  asked about enrollment  and reductions                                                                    
to AVTEC.  He asked Mr.  Harbour to send more  details prior                                                                    
to the  subcommittee process. Ms. Harbour  would provide the                                                                    
information.                                                                                                                    
                                                                                                                                
Representative   Neuman   thought   the   presentation   was                                                                    
interesting. He asked about  unfilled positions. Ms. Harbour                                                                    
answered  there  was  a difference  between  the  number  of                                                                    
budgeted positions  and the number  of filled  positions. As                                                                    
she had noted  on the slide, the number  of filled positions                                                                    
changed constantly. The department  made hires every day and                                                                    
received resignations  every day. The data  contained in the                                                                    
slide was as  of December 15, 2017. It reflected  a point in                                                                    
time. The  department had been  asked to provide  the number                                                                    
of positions  within the department.  It was normal  to have                                                                    
vacancy  within  a  department  which  was  the  reason  OMB                                                                    
required  that departments  had a  vacancy factor  that they                                                                    
unfunded.                                                                                                                       
                                                                                                                                
Representative  Neuman interjected  that  it  seemed like  a                                                                    
high  number of  unfilled  positions. He  asked about  funds                                                                    
being  moved from  UGF  to  DGF suggesting  that  it was  an                                                                    
accounting  practice  that  made   funds  less  visible.  He                                                                    
wondered why it had been done.                                                                                                  
                                                                                                                                
2:36:59 PM                                                                                                                    
                                                                                                                                
Ms. Harbour  replied that it  was different types  of money.                                                                    
If AVTEC generated  the money, it was coded  as general fund                                                                    
program receipts  and was automatically called  a designated                                                                    
general  fund. By  AVTEC supporting  itself, the  designated                                                                    
money was used  rather than UGF to support it.  It was still                                                                    
in the budget and the department reported on it.                                                                                
                                                                                                                                
Co-Chair Seaton  clarified that it  was the  proposed budget                                                                    
and fund  sources by the  department. The  legislature would                                                                    
either   approve  or   not  approve   it.   He  noted   that                                                                    
Representative  Neuman had  not  been on  the committee  the                                                                    
previous week  when it had  heard about vacancy  factors. He                                                                    
would  pass the  information along.  He also  commented that                                                                    
the only  way to  control healthcare was  to have  a healthy                                                                    
workforce. He  spoke to the  reduction in costs.  He thanked                                                                    
the department for its presentation.                                                                                            
                                                                                                                                
2:39:26 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:40:53 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^OVERVIEW:   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                  
FACILITIES                                                                                                                    
                                                                                                                                
2:40:59 PM                                                                                                                    
                                                                                                                                
MARK LUIKEN, COMMISSIONER,  DEPARTMENT OF TRANSPORTATION AND                                                                    
PUBLIC  FACILITIES,   provided  a   PowerPoint  presentation                                                                    
titled  "Alaska  Department  of  Transportation  and  Public                                                                    
Facilities  Department  Overview"  dated  January  29,  2018                                                                    
(copy  on  file).  He  began   on  slide  2:  Department  of                                                                    
Transportation  and  Public  Facilities  Core  Services  and                                                                    
Sources."  The  department's  mission  was  to  keep  Alaska                                                                    
moving  through  service   and  infrastructure.  Per  Alaska                                                                    
Statute 44.42  the Department  of Transportation  and Public                                                                    
Facilities  (DOT) was  responsible  for planning,  research,                                                                    
design,  construction,  operation,  and  protection  of  all                                                                    
state transportation systems and  many public facilities. It                                                                    
was achieved through the department's  core services and its                                                                    
strategic approach known as results-based alignment.                                                                            
                                                                                                                                
Commissioner Luiken continued  that the department preserved                                                                    
Alaska's infrastructure by  performing duties which included                                                                    
projects  and  activities  that extended  the  life  of  the                                                                    
state's existing  infrastructure. Infrastructure  repair and                                                                    
bridge  preservation  were   two  examples.  The  department                                                                    
operated  and  supported  safe  and  efficient  movement  on                                                                    
existing structure.  Snow and  ice management  and operating                                                                    
certificated  airports  were   two  examples.  Modernization                                                                    
improved  infrastructure  to   meet  current  standards  and                                                                    
capacity which the department did through product delivery.                                                                     
                                                                                                                                
Commissioner  Luiken relayed  that  the department  provided                                                                    
services  to   move  people  and   goods  on   the  existing                                                                    
infrastructure. Operating  ferries and operating  the Alaska                                                                    
airport  system were  two examples.  Results-based alignment                                                                    
was the service  delivery frame work the  department used to                                                                    
measure   the  contribution   of  services   the  department                                                                    
delivered in  support of  its mission.  He pointed  out that                                                                    
there were additional links provided on the slide.                                                                              
                                                                                                                                
2:43:13 PM                                                                                                                    
                                                                                                                                
AMANDA  HOLLAND, ACTING  DEPUTY COMMISSIONER,  DEPARTMENT OF                                                                    
TRANSPORTATION  AND  PUBLIC  FACILITIES,  relayed  that  the                                                                    
following  4 slides  showed the  budget  charts prepared  by                                                                    
LFD.                                                                                                                            
                                                                                                                                
Ms.   Holland   scrolled   to  slide   3:   "Department   of                                                                    
Transportation and  Public Facilities Share of  Total Agency                                                                    
Operations  (GF Only)."  The chart  provided a  10-year look                                                                    
back of the  department's UGF and DGF  funding. She reported                                                                    
for the  FY 19 governor's  proposed budget  the department's                                                                    
UGF equaled  $177.9 million and  DGF totaled  $97.9 million.                                                                    
The numbers were close to FY 09 levels.                                                                                         
                                                                                                                                
Ms.   Holland   turned   to    slide   4:   "Department   of                                                                    
Transportation  and   Public  Facilities  Line   Items  (All                                                                    
Funds)." She pointed out that  the chart showed all funds by                                                                    
line item. She noted the  commodities and travel lines which                                                                    
were below FY  09 levels. She highlighted that in  FY 19 the                                                                    
services  line  increased  due to  personal  services  being                                                                    
transferred  to the  services line  to fund  shared services                                                                    
reimbursable  service agreements.  The  agreements were  for                                                                    
Shared  Services  of  Alaska,   the  Office  of  Information                                                                    
Technology, and the Division of Facility Services.                                                                              
                                                                                                                                
Ms.  Holland moved  to  slide 5:  "Department  of Labor  and                                                                    
Workforce Development  Appropriations (GF Only)."  The slide                                                                    
showed  general  funds  only  including  UGF  and  DGF  fund                                                                    
sources. Highways,  aviation, and facilities and  the Alaska                                                                    
Marine   Highway  System   made   up  94   percent  of   the                                                                    
department's GF  operating budget. It meant  that 94 percent                                                                    
of  the  general  fund  operating  budget  went  to  serving                                                                    
Alaskans directly.  In the FY 19  governor's proposed budget                                                                    
all  of the  department's general  fund appropriations  were                                                                    
below the FY 09 level.                                                                                                          
                                                                                                                                
Ms.  Holland moved  to  slide 6:  "Department  of Labor  and                                                                    
Workforce  Development  Appropriations   (All  Funds)."  She                                                                    
reported  that when  looking  at  all funds  for  the FY  19                                                                    
governor's   proposed   budget,  Highways,   Aviation,   and                                                                    
Facilities had  the largest share  of the  operating budget.                                                                    
The results delivery unit included  $4.2 for the Division of                                                                    
Facilities Services,  a new  division added  for FY  19. The                                                                    
statewide public facilities  component was consolidated from                                                                    
another  appropriation  into  the new  division  which  also                                                                    
included the regional facilities components.                                                                                    
                                                                                                                                
Ms.  Holland  advanced  to   slide  7:  "Administration  and                                                                    
Support  RDU."   She  reported  that  the   slide  showed  a                                                                    
breakdown  of the  department by  results delivery  unit. It                                                                    
was  broken  down  by  fund   category  and  the  number  of                                                                    
positions  in  the  third  and  fourth  columns.  The  three                                                                    
furthest  right columns  showed  constitution, federal,  and                                                                    
statutory requirements.  The rating of importance  column in                                                                    
the middle  reflected the  department's rating  as critical,                                                                    
important, beneficial,  or status quo. She  pointed out that                                                                    
the  administration   and  support  results   delivery  unit                                                                    
included  several types  of  services including  measurement                                                                    
standards,   commercial   vehicle   enforcement,   statewide                                                                    
aviation, program  development, and statewide  planning. She                                                                    
and the commissioner would address  a couple of the columns,                                                                    
specifically the  number of Alaskans  served and  the rating                                                                    
of effectiveness.                                                                                                               
                                                                                                                                
Commissioner  Luiken  indicated  that   they  had  left  the                                                                    
numbers of Alaskans served column  blank. He claimed that it                                                                    
was a  challenge to measure  the number  quantitatively. The                                                                    
state's    transportation    infrastructure   directly    or                                                                    
indirectly  impacted every  Alaskan  every  day. The  system                                                                    
worked  all the  time providing  connectivity and  access to                                                                    
drivers,   pilots,  and   passengers   in   a  direct   way.                                                                    
Indirectly, the system facilitated  delivering goods such as                                                                    
food and  medicine, or services such  as emergency response.                                                                    
They had  chosen an effective rating  because the department                                                                    
was  currently meeting  the  department's mission.  Results-                                                                    
based alignment performance  data confirmed the department's                                                                    
effectiveness rating.                                                                                                           
                                                                                                                                
2:47:37 PM                                                                                                                    
                                                                                                                                
Ms.  Holland moved  to slide  8:  "Design, Engineering,  and                                                                    
Construction; State Equipment  Fleet; Highways, Aviation and                                                                    
Facilities  International Airports  RDU; and  Marine Highway                                                                    
System  RDUs."   The  unit   was  responsible   for  design,                                                                    
engineering,  and  oversight  of the  capital  program.  The                                                                    
capital  program  included  roads, bridges,  and  runways  -                                                                    
horizontal  construction.  The  state's  infrastructure  had                                                                    
been developed  to address unique  needs of Alaskans  on the                                                                    
move.  She reported  that only  2 percent  of Alaska's  land                                                                    
area  was  accessible by  road,  and  82 percent  of  Alaska                                                                    
communities were not connected to the road system.                                                                              
                                                                                                                                
Ms.  Holland  continued  that   the  state  equipment  fleet                                                                    
results delivery unit procured,  maintained, and disposed of                                                                    
vehicles, equipment  and their attachments which  were owned                                                                    
and operated  by the executive branch,  Legislative Affairs,                                                                    
and the  court system. It  was a shared  service responsible                                                                    
for  approximately  7,129  pieces of  state  equipment,  and                                                                    
vehicles.  She explained  that the  highways, aviation,  and                                                                    
facilities   unit  was   responsible   for  the   operation,                                                                    
maintenance,   safeguard,  and   control   of  the   state's                                                                    
infrastructure  system of  highways, airports,  harbors, and                                                                    
public  facilities.  She  noted   that  the  three  regional                                                                    
components had been  combined into one line  for design, one                                                                    
for construction, and one for highways and aviation.                                                                            
                                                                                                                                
Commissioner Luiken turned to  slide 9: "Safety and Health."                                                                    
He remarked that  safety was at the  forefront of everything                                                                    
the department did. Enhancing  and further strengthening the                                                                    
department's  safety culture  was part  of the  department's                                                                    
strategic plan and  included a focus on  health, safety, and                                                                    
environment.  Safety  of  the traveling  public  was  a  top                                                                    
priority. He  explained that  in addition,  the department's                                                                    
employees were  its most valuable asset.  The department was                                                                    
working to  reduce incidents of  injuries for  the traveling                                                                    
public as  well as its  employees. At DOT everyone  was seen                                                                    
as  a  safety leader.  An  important  aspect of  safety  was                                                                    
employee  health.  In  the department  employees  encouraged                                                                    
each other to walk during  breaks and lunch. It hosted AETNA                                                                    
wellness  functions  and  posted  monthly  health  wellness-                                                                    
related newsletters at various  facilities. He noted that on                                                                    
his  Commissioner's  Corner  webpage he  offered  Vitamin  D                                                                    
awareness  and education.  The Department  of Transportation                                                                    
and  Public   Facilities'  budgeted  healthcare   costs  had                                                                    
decreased  by   $2.5  million  in  the   previous  6  years.                                                                    
Healthcare costs had remained steady  as a percentage of the                                                                    
department's total  operating budget over the  prior 6 years                                                                    
-  between 8  percent and  8.5 percent.  The percentage  was                                                                    
lower than the FY 18 statewide average of about 35 percent.                                                                     
                                                                                                                                
Commissioner  Luiken  concluded  that DOT  was  an  economic                                                                    
driver   for  Alaska.   The  overall   economic  impact   of                                                                    
transportation included access,  connectivity, and mobility.                                                                    
Transportation was  essential for economic activity  to take                                                                    
place  in   Alaskan  communities.  The   infrastructure  DOT                                                                    
designed,  constructed,  operated,   and  preserved  allowed                                                                    
Alaskans  to  live  and thrive  in  their  communities.  The                                                                    
Department  of  Transportation  and  Public  Facilities  was                                                                    
absolutely necessary  for the  economic health  and vitality                                                                    
of  Alaska.  He  thanked  the  committee  and  made  himself                                                                    
available for questions.                                                                                                        
                                                                                                                                
2:51:07 PM                                                                                                                    
                                                                                                                                
Representative  Thompson  referred to  slides  7  and 8.  He                                                                    
noted there  were several "other" funding  sources. He asked                                                                    
how  much  of  "Other"  funding  was  federal  funding.  Ms.                                                                    
Holland responded that "other" was  comprised of a number of                                                                    
different  fund   sources.  it   included  such   things  as                                                                    
interagency   receipts,   international  airport   receipts,                                                                    
capital  improvement program  receipts, the  Whittier Tunnel                                                                    
receipts, Alaska Liquified Natural  Gas (AKLNG) and aviation                                                                    
fuel  tax  receipts,  rural   airport  receipts,  and  rural                                                                    
airport interagency  receipts. The  "Other" column  was made                                                                    
up of  about 11 different  fund sources. One of  the sources                                                                    
was the department's capital improvement program receipts.                                                                      
                                                                                                                                
Representative  Thompson asked  if it  was federal  funding.                                                                    
Ms.  Holland  replied  that  in  the  operating  budget  the                                                                    
department  had  very  little direct  federal  funding.  She                                                                    
explained  that the  department had  its capital  budget and                                                                    
employees who were compensated  through the operating budget                                                                    
who could  charge to  a capital project  which was  what the                                                                    
capital improvement program receipts allowed.                                                                                   
                                                                                                                                
Representative   Thompson  asked   about  the   department's                                                                    
engineering  and  design  services  and  whether  they  were                                                                    
charged to  federal projects. Ms. Holland  responded that he                                                                    
was correct that  several of them were a direct  charge to a                                                                    
capital project. In the operating  budget the department had                                                                    
to have authority to charge to those projects.                                                                                  
                                                                                                                                
Representative Grenn referred to  the funding decrease noted                                                                    
on  slide  6 for  the  design  and engineering  construction                                                                    
funding.  He wondered  if the  reduction  had to  do with  a                                                                    
reduction in the capital budget.  Ms. Holland responded that                                                                    
as  the  department  had looked  for  efficiencies  and  had                                                                    
reduced  UGF in  the design,  engineering, and  construction                                                                    
component  wherever possible.  It showed  a decrease  in the                                                                    
area.  Positions  had  also been  deleted  within  the  unit                                                                    
reducing the budget overall.                                                                                                    
                                                                                                                                
Co-Chair Seaton referred  to slides 7 and 8.  He asked about                                                                    
DGF,  other  funding,  and  hollow  authority.  Ms.  Holland                                                                    
reported  having taken  a look  at unrealized  authority and                                                                    
reported  that the  department was  eliminating some  of the                                                                    
authority  in FY  19.  However, most  of  the authority  was                                                                    
realized.                                                                                                                       
                                                                                                                                
2:55:01 PM                                                                                                                    
                                                                                                                                
Representative Ortiz  asked about  funding being  reduced to                                                                    
FY 09  levels. He wondered  about the overall impact  of the                                                                    
department  being  able  to  meet  its  goals  to  preserve,                                                                    
operate,  modernize, and  provide.  He asked  if there  were                                                                    
specific  areas  that  were falling  short  due  to  reduced                                                                    
funding. Ms. Holland brought up  the example of highways and                                                                    
aviation  in  terms  of   preservation  and  operation.  The                                                                    
department needed to  care for its road system.  Most of the                                                                    
state's  road  system  was funded  with  federal  funds.  In                                                                    
accepting the  funds, the state was  responsible for keeping                                                                    
its roads in  good repair. An example over  the previous few                                                                    
years was the reduction in  the quality of traffic signs. If                                                                    
the signs were shot up,  they were not immediately replaced.                                                                    
The department  had a conditions rating  applied to Alaska's                                                                    
roads and surfaces  ranging from "A" to  "F". The department                                                                    
tried to maintain at least  a "B" rating. The department had                                                                    
seen some of  the ratings slip over the prior  few years for                                                                    
surfaces, culverts,  and potholes. It had  been difficult to                                                                    
meet the department standards recently.                                                                                         
                                                                                                                                
Representative  Ortiz  asked if  she  would  agree that  the                                                                    
preservation of  Alaska's transportation  infrastructure was                                                                    
beginning  to  suffer.  Ms.  Holland  replied  that  he  was                                                                    
correct.  The  department  was  starting  to  see  a  faster                                                                    
deterioration of its infrastructure.                                                                                            
                                                                                                                                
Representative  Ortiz  asked  about the  chart  that  showed                                                                    
funding  for the  different divisions  which had  all either                                                                    
flattened  out or  declined.  He wondered  how  much of  the                                                                    
design,  engineering,  and  construction budget  applied  to                                                                    
aviation and  the Alaska Marine  Highway. Ms.  Holland asked                                                                    
Representative    Ortiz    to    clarify    his    question.                                                                    
Representative Ortiz  asked for clarification as  to how the                                                                    
design,  engineering,  and  construction was  spent  in  the                                                                    
areas of highways  and AMHS. Ms. Holland  responded that the                                                                    
majority  of the  funding for  the design,  engineering, and                                                                    
construction  group was  focused on  surface transportation,                                                                    
the  state's roads  and highways.  The  department had  some                                                                    
capital funding  that went to  AMHS for  vessel construction                                                                    
and overhaul.                                                                                                                   
                                                                                                                                
Representative  Pruitt asked  about maintaining  the state's                                                                    
infrastructure.  He noted  the appropriation  request for  a                                                                    
commuter service  from Anchorage to the  Valley. He wondered                                                                    
where the  request came  from. He  wondered why  funding had                                                                    
gone to something that had  not been requested. Commissioner                                                                    
Luiken  responded that  the initiative  was  brought to  the                                                                    
governor's  attention by  the mayors  of  Anchorage and  the                                                                    
valley. There was  a proposal to look at the  viability of a                                                                    
pilot  project. There  was a  request for  a repeal  and re-                                                                    
appropriation of  the money that  was identified.  A portion                                                                    
of the  money was from  the Knik Arm Crossing.  He clarified                                                                    
that  it  was  capital   funding  rather  than  preservation                                                                    
funding.                                                                                                                        
                                                                                                                                
3:01:08 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt   suggested  that   the  Commissioner                                                                    
should  have  notified the  legislature.  He  asked why  the                                                                    
legislature  was  not notified  prior  to  a press  release.                                                                    
Commissioner Luiken did  not have a good  answer. He thought                                                                    
the department  could do  a better  job of  communicating in                                                                    
the future.                                                                                                                     
                                                                                                                                
Representative   Tilton   brought    up   the   subject   of                                                                    
maintenance. She understood that  the department was doing a                                                                    
comprehensive review  of the  state's public  facilities and                                                                    
leased buildings  to determine whether  it was worth  it for                                                                    
the  state  to own  certain  facilities.  She asked  him  to                                                                    
elaborate on the study and  when the legislature might see a                                                                    
report on the subject.  Commissioner Luiken replied that the                                                                    
department  was   getting  ready   to  conduct   a  facility                                                                    
inventory which was  a part of an effort by  the Division of                                                                    
Facilities  Service. The  department was  also conducting  a                                                                    
facility condition  inventory to  establish a  baseline. The                                                                    
inventory would capture the condition  and square footage of                                                                    
each of  the facilities owned  by the state.  The department                                                                    
would  also be  looking at  opportunities for  consolidation                                                                    
and the potential  to sell some of the  facilities. He noted                                                                    
that  it  was an  ongoing  process,  as  the state  owned  a                                                                    
significant amount of property.                                                                                                 
                                                                                                                                
Representative Ortiz  thought funding for the  AMHS had been                                                                    
reduced by  about $38  million since FY  13. He  thought the                                                                    
reduction manifested in terms of  weeks of service. He asked                                                                    
for specific examples  of who received less  service than in                                                                    
FY 13.  Commissioner Luiken  would have to  get back  to him                                                                    
with specific  examples. He  emphasized that  the department                                                                    
had tried to  minimize the impact to any  one community. One                                                                    
of  the  goals  of  the department  was  to  avoid  stopping                                                                    
service to any of the  33 Alaskan communities AMHS currently                                                                    
served, despite funding reductions.                                                                                             
                                                                                                                                
3:05:09 PM                                                                                                                    
                                                                                                                                
Representative  Ortiz appreciated  that  the division  would                                                                    
not stop  service to  any of  the communities.  He suspected                                                                    
reductions would  mean significantly reduced service  to all                                                                    
of  the communities  that AMHS  served. He  asked if  he was                                                                    
accurate. Commissioner Luiken replied  that he could confirm                                                                    
that there was less service  to Alaskan communities in terms                                                                    
of frequency.                                                                                                                   
                                                                                                                                
Representative  Guttenberg referred  to slides  7 and  8. He                                                                    
pointed to  the three  highest percent  of cost  through fee                                                                    
items. He asked about  statewide aviation, the international                                                                    
airport, and  the state's  fleet. He  thought the  fleet was                                                                    
100 percent funded. He asked  the commissioner to talk about                                                                    
the   other  two   items   and   Alaska's  rural   airports.                                                                    
Commissioner  Luiken began  with  the international  airport                                                                    
system, which  he confirmed was  100 percent  funded through                                                                    
rates and fees collected at  the two airports. They were 100                                                                    
percent funded  by users. There  were 32  signatory carriers                                                                    
that  participated   and  any   other  carriers   using  the                                                                    
international airport system.                                                                                                   
                                                                                                                                
Ms.  Holland  responded that  the  majority  of funding  for                                                                    
statewide   aviation  came   through   leasing.  The   state                                                                    
collected money  from concessionaires leasing  property from                                                                    
the  department, which  was the  reason for  the 87  percent                                                                    
listed under "percent of cost through fees" on the chart.                                                                       
                                                                                                                                
Co-Chair Seaton  asked what  line and  page Ms.  Holland was                                                                    
referring to. Ms. Holland  responded that statewide aviation                                                                    
was on slide 7 on the third line up from the bottom.                                                                            
                                                                                                                                
Representative  Guttenberg  asked  how much  the  department                                                                    
paid  for internet  service. Ms.  Holland did  not have  the                                                                    
number  with  her  but   could  provide  it.  Representative                                                                    
Guttenberg  asked  her  to break  down  the  information  by                                                                    
region.                                                                                                                         
                                                                                                                                
3:08:23 PM                                                                                                                    
                                                                                                                                
Representative Neuman mentioned a  review done regarding the                                                                    
Anchorage  International Airport  and  the  ability for  the                                                                    
facility to generate revenue. He  was hoping to get a report                                                                    
of   the   review.   There    had   been   some   high-level                                                                    
recommendations on  square footage  that could  be utilized.                                                                    
He asked for the information.                                                                                                   
                                                                                                                                
Co-Chair  Seaton  asked  the commissioner  if  there  was  a                                                                    
report  available. Commissioner  Luiken  supposed there  was                                                                    
probably a  report but  did not have  it with  him. Co-Chair                                                                    
Seaton  requested that  the information  be provided  to his                                                                    
office.                                                                                                                         
                                                                                                                                
Representative  Neuman asked  who owned  the large  railroad                                                                    
building  in  the  middle  of  the  Anchorage  International                                                                    
Airport.  He thought  the building  was referred  to as  the                                                                    
Sheffield  Building. He  asked if  it was  an asset  of DOT.                                                                    
Commissioner  Luiken  responded that  it  was  owned by  the                                                                    
Alaska Railroad Corporation.  Representative Neuman asked if                                                                    
DOT received monies from the  railroad in terms of the value                                                                    
of  the  property.  He  commented  that  there  was  a  huge                                                                    
building  sitting  in  the  middle   of  the  airport  doing                                                                    
nothing. He wondered why the building was not being used.                                                                       
                                                                                                                                
Co-Chair Seaton  thought his question needed  to be directed                                                                    
to  the   Railroad  Corporation.  Commissioner   Luiken  was                                                                    
willing to gather the answer. He  thought it might be a good                                                                    
discussion to have with the railroad.                                                                                           
                                                                                                                                
Co-Chair  Seaton   appreciated  the   information  presented                                                                    
regarding   health    and   safety.   He    indicated   that                                                                    
commissioners  were the  employers and  responsible for  the                                                                    
health  of  their  employees and  their  dependents  through                                                                    
their  employment.  He  commented that  whatever  the  state                                                                    
could  do to  reduce health  care costs,  avoiding avoidable                                                                    
health care circumstances such as  diseases, was helpful. He                                                                    
thanked the  commissioner for  including the  information in                                                                    
his presentation.  He reviewed the agenda  for the following                                                                    
morning.                                                                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:13:01 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:13 p.m.                                                                                          

Document Name Date/Time Subjects
2018 01 29 UA FY19 HFC Overview.pdf HFIN 1/29/2018 1:30:00 PM
HFIN - UA Budget Overview
HFIN DOLWD Overview 1-29-2018 Final-adj.pdf HFIN 1/29/2018 1:30:00 PM
HFIN - DLWD Budget Overview
Final HFC DOTPF Overview - 29 Jan 2018 revised.pdf HFIN 1/29/2018 1:30:00 PM
HFIN - DOT Budget Overview
HFIN 1-29-2018 DOLWD Overview Notes.pdf HFIN 1/29/2018 1:30:00 PM
DLWD Budget Overview Notes
DOLWD Overview to HFIN 1-29-18 Follow-up Letter.pdf HFIN 1/29/2018 1:30:00 PM
Log 17 Response to HFIN Committee Questions 01.29.2018.pdf HFIN 1/29/2018 1:30:00 PM
DOT Response Qs HFIN overview
AMHS FY13 - FY17 Port Calls by Port.pdf HFIN 1/29/2018 1:30:00 PM
DOT Response Qs HFIN overview