Legislature(2017 - 2018)HOUSE FINANCE 519

02/01/2018 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

Audio Topic
01:35:46 PM Start
01:36:37 PM HB321
01:57:59 PM HB287
01:58:32 PM Public Testimony
02:29:31 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 321 APPROP: SUPPLEMENTAL OP.; FUND; AMENDING TELECONFERENCED
Heard & Held
Presentation: Supplemental Budget by:
- Pat Pitney, Director, OMB, Office of the
Governor
- Neil Steininger, Chief Budget Analyst, OMB,
Office of the Governor
+ HB 176 GROUND EMER. MEDICAL TRANSPORT PAYMENTS TELECONFERENCED
<Bill Hearing Canceled>
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 287 APPROP: EDUCATION/STUDENT TRANSPORTATION TELECONFERENCED
Moved HB 287 Out of Committee
-- Public Testimony --
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 1, 2018                                                                                           
                         1:35 p.m.                                                                                              
                                                                                                                                
1:35:46 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:35 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 Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Tammie Wilson                                                                                                    
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Neil Steininger, Chief Budget  Analyst, Office of Management                                                                    
and Budget,  Office of the  Governor; Brian  Fechter, Policy                                                                    
Analyst,  Office of  Management  and Budget,  Office of  the                                                                    
Governor;   Mark  Miller,   Superintendent,  Juneau   School                                                                    
District, Juneau.                                                                                                               
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
David Boyle, Alaska Policy  Forum, Anchorage; Starr Marsett,                                                                    
Vice-President, Anchorage School  Board, Anchorage; Jennifer                                                                    
McNichol, President  Sitka School  Board, Sitka;  Mayor Bert                                                                    
Cottle,   City   of   Wasilla,   Wasilla;   John   Ringstad,                                                                    
Fairbanks North Star Borough School District, Fairbanks.                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 287    APPROP: EDUCATION/STUDENT TRANSPORTATION                                                                              
          HB 287 was REPORTED out of committee with a "do                                                                       
          pass" recommendation.                                                                                                 
                                                                                                                                
HB 321    APPROP: SUPPLEMENTAL OP.; FUND; AMENDING                                                                              
                                                                                                                                
          HB 321 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
Co-Chair Seaton reviewed the agenda for the day.                                                                                
                                                                                                                                
HOUSE BILL NO. 321                                                                                                            
                                                                                                                                
     "An  Act making  supplemental appropriations  and other                                                                    
     appropriations; making  an appropriation  to capitalize                                                                    
     a fund;  amending appropriations; and providing  for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:36:37 PM                                                                                                                    
                                                                                                                                
NEIL STEININGER, CHIEF BUDGET  ANALYST, OFFICE OF MANAGEMENT                                                                    
AND BUDGET,  OFFICE OF THE GOVERNOR,  introduced himself. He                                                                    
referred to two documents  distributed to committee members:                                                                    
"FY2018 Supplemental Summary"  and "FY2018 Supplemental Bill                                                                    
Spreadsheet"  (copy on  file).  He remarked  that the  total                                                                    
Supplemental  request was  $7,895.7 million  in Undesignated                                                                    
General Funds  (UGF) and  the all  funds total  was negative                                                                    
$5.5 million.                                                                                                                   
                                                                                                                                
1:37:54 PM                                                                                                                    
                                                                                                                                
Mr. Steininger moved to the  document; "FY 2018 Supplemental                                                                    
Spreadsheet" and explained  the items in the  bill. He began                                                                    
with page 1, the Operating Numbers Section, line 2:                                                                             
                                                                                                                                
     Line 2                                                                                                                     
     Department   of  Commerce,   Community,  and   Economic                                                                    
     Development                                                                                                                
     Banking and Securities Component                                                                                           
     Financial  Examiner  I/II   for  Alaska  Native  Claims                                                                    
     Settlement Act Filings and Support                                                                                         
     The  division  must   timely  process  ANCSA  corporate                                                                    
     filings and  respond to  complaints within  10 business                                                                    
     days.  Without this  position,  the  division would  be                                                                    
     forced  to reduce  resources  tasked with  examinations                                                                    
     and enforcement activities for other programs.                                                                             
     UGF $0.0 DGF $103.4                                                                                                        
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Representative   Guttenberg  asked   about  the   difference                                                                    
between  the current  supplemental  budget  request and  the                                                                    
similar  item in  the FY  19 operating  budget request.  Mr.                                                                    
Steininger stated that the  supplemental request allowed the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED) to hire the position in  FY 18. He reported that the                                                                    
volume  of  filings  had  dramatically  increased,  and  the                                                                    
position was necessary as soon as possible.                                                                                     
                                                                                                                                
1:39:10 PM                                                                                                                    
                                                                                                                                
Mr. Steininger reviewed lines 3 and 4.                                                                                          
                                                                                                                                
     Line 3                                                                                                                     
     Department of Environmental Conservation                                                                                   
     Solid Waste Management                                                                                                     
     Increase Program Receipt Authority                                                                                         
     The  Solid Waste  Management  program  conducted a  fee                                                                    
     study  in FY2017.  Revised  fee  regulations have  gone                                                                    
     through public  notice, review,  and comment,  and were                                                                    
     enacted  effective  October  27, 2017.  The  Department                                                                    
     anticipates  revenue  from  the new  fees  will  exceed                                                                    
     general fund program receipt authority in FY2018.                                                                          
                                                                                                                                
     UGF $0.0 DGF $35.                                                                                                          
                                                                                                                                
     Line 4                                                                                                                     
     Department of Environmental Conservation                                                                                   
     Air Quality                                                                                                                
     Decrease Program Receipt Authority                                                                                         
     The Division  of Air Quality  expects to  under collect                                                                    
     general fund  program receipt  authority in  FY2018 due                                                                    
     to fluctuations  in the amount  of Title I  permit work                                                                    
     from year to year.                                                                                                         
                                                                                                                                
     UGF $0.0 DGF ($35.0)                                                                                                       
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr. Steininger turned to Line5.                                                                                                 
                                                                                                                                
     Line 5                                                                                                                     
     Department of Health and Social Services                                                                                   
     Front Line Social Workers                                                                                                  
     A  recent  amendment  to  the  section  of  the  Public                                                                    
     Assistance  Cost Allocation  Plan (PACAP)  covering the                                                                    
     Office  of   Children's  Services  (OCS)   changes  the                                                                    
     allocation  methodology  for   the  Front  Line  Social                                                                    
     Workers  component,   the  largest   personal  services                                                                    
     component  within  the  Office of  Children's  Services                                                                    
     budget. The estimated  increase is associated primarily                                                                    
     with  the  claiming for  the  Title  IV-E foster  care,                                                                    
     adoption, and guardianship programs.                                                                                       
                                                                                                                                
     UGF $0.0 DGF $0.0                                                                                                          
     Other Funds $0.0 Federal Funds $6,500.0                                                                                    
                                                                                                                                
Vice-Chair Gara asked whether  the transaction assumed state                                                                    
match money  was available. Mr.  Steininger wanted  to refer                                                                    
to the Department  of Health and Social  Services (DHSS). He                                                                    
understood  that the  transaction  reflected  an attempt  to                                                                    
increase the  amount of federal  dollars or the  "percent of                                                                    
the expenditures that were attributable  to federal money by                                                                    
the division."  Vice-Chair Gara did not  understand the link                                                                    
between  PACAP  and the  OCS.  Mr.  Steininger believed  the                                                                    
PACAP  covered  more  than  just   the  Division  of  Public                                                                    
Assistance. He deferred to DHSS for details.                                                                                    
                                                                                                                                
1:41:17 PM                                                                                                                    
                                                                                                                                
Mr. Steininger moved to Line 6.                                                                                                 
                                                                                                                                
     Line 6                                                                                                                     
     Department of Health and Social Services                                                                                   
     Foster Care Base Rate                                                                                                      
     Decline in Child Support Payment Collections                                                                               
     The Office  of Children's Services  expects significant                                                                    
     reductions in  collections of child support  and social                                                                    
     security payments.                                                                                                         
                                                                                                                                
     UGF $1,000.0 DGF $0.0                                                                                                      
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr. Steininger  elaborated that  OCS received  child support                                                                    
collected by  the Department of  Revenue (DOR)  for children                                                                    
in  state  custody.  In  recent   years  there  had  been  a                                                                    
significant  decline  in   child  support  collections  that                                                                    
impacted the division. He noted  that OCS was experiencing a                                                                    
decrease in  Social Security benefits  from children  in its                                                                    
care.                                                                                                                           
                                                                                                                                
Co-Chair Seaton recognized  that Representative Ortiz joined                                                                    
the meeting.                                                                                                                    
Representative  Pruitt asked  why child  support collections                                                                    
were   declining.  Mr.   Steininger  replied   that  through                                                                    
discussions  with the  division and  DOR he  discovered that                                                                    
many  factors  lead  to  the  decline.  He  elucidated  that                                                                    
economic  factors,   unemployment,  and  the   inability  to                                                                    
collect  from  Permanent  Fund Dividend  (PFD)  garnishments                                                                    
were issues related to the decrease.                                                                                            
                                                                                                                                
1:43:40 PM                                                                                                                    
                                                                                                                                
Mr. Steininger addressed Line 7.                                                                                                
                                                                                                                                
     Line 7                                                                                                                     
     Department of Health and Social Services                                                                                   
     Foster Care Special Need                                                                                                   
     FY2017 Special Need Payments Made in FY2018                                                                                
     At the close of FY2017 the Office of Children's                                                                            
     Services pushed payments for FY2017 obligations into                                                                       
     FY2018 in the amount of $2,895.7.                                                                                          
                                                                                                                                
     UGF $2,895.7 DGF $0.0                                                                                                      
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr. Steininger reported that at the  end of FY 17 OCS had to                                                                    
defer some  payments to FY  18 due to  a lack of  funds. The                                                                    
item would  cover the payments  that were pushed into  FY 18                                                                    
and prevent  a "domino effect"  of pushing payments  into FY                                                                    
19.                                                                                                                             
                                                                                                                                
Representative   Ortiz  asked   Mr.  Steininger   to  define                                                                    
"special  needs."  Mr.  Steininger  responded  that  special                                                                    
needs for  foster children would be  clothing, medical care,                                                                    
etc.,  and  were  above  and beyond  the  base  foster  care                                                                    
payments.                                                                                                                       
                                                                                                                                
Vice-Chair  Gara  clarified  that  Mr.  Steininger  was  not                                                                    
talking about  youth with special needs  but foster children                                                                    
needing things that were not  included in the base rate. Mr.                                                                    
Steininger responded affirmatively.                                                                                             
                                                                                                                                
1:45:41 PM                                                                                                                    
                                                                                                                                
Mr. Steininger continued to Page 2, line 8.                                                                                     
                                                                                                                                
     Line 8                                                                                                                     
     Health and Social Services                                                                                                 
     Alaska Temporary Assistance Program                                                                                        
     Temporary Assistance for Needy Families Maintenance of                                                                     
     Effort                                                                                                                     
     The  maintenance  of  effort (MOE)  for  the  Temporary                                                                    
     Assistance for Needy  Families (TANF) program, mandated                                                                    
     by  the Federal  Government,  is primarily  met by  the                                                                    
     expenditures   within   ATAP.    The   state   received                                                                    
     notification  of penalty  for failure  to meet  the MOE                                                                    
     obligation for federal fiscal year 2017.                                                                                   
                                                                                                                                
     UGF $2,000.0 DGF $0.0                                                                                                      
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr.  Steininger reported  that the  item reflected  a notice                                                                    
from the  federal government that  certain criteria  had not                                                                    
been met for TANF (maintenance of effort).                                                                                      
                                                                                                                                
Representative Guttenberg was under  the impression that the                                                                    
maintenance of effort  was not specific to  a single program                                                                    
but applied  across the  board to  other programs.  He asked                                                                    
for  further  clarification.  Mr.  Steininger  replied  that                                                                    
there  were several  areas where  the state  could meet  the                                                                    
maintenance of effort  but TANF was the  primary program. He                                                                    
explained  that  the  department   was  attempting  to  find                                                                    
alternative sources  to meet the  maintenance of  effort and                                                                    
some  were not  successful. He  offered to  provide detailed                                                                    
information regarding  the alternate sources.  The alternate                                                                    
sources  needed  to  be  approved  through  the  Center  for                                                                    
Medicaid    Services   (CMS).    Representative   Guttenberg                                                                    
commented  that   he  suspected   that  a  program   cut  of                                                                    
approximately $2  million created the problem  and wanted to                                                                    
explore the issue.                                                                                                              
                                                                                                                                
Vice-Chair Gara asked  whether the state was  incurring a $2                                                                    
million penalty  to the federal  government for  not meeting                                                                    
the  maintenance of  effort. Mr.  Steininger  knew that  the                                                                    
transaction  avoided  further   penalty  and  would  provide                                                                    
further detail regarding the  penalty later. Vice-Chair Gara                                                                    
indicated that the department had  warned the legislature in                                                                    
2016  that the  scenario  could happen.  He  noted that  the                                                                    
"committee decided not to believe the department."                                                                              
                                                                                                                                
Mr. Steininger reviewed Line 9.                                                                                                 
                                                                                                                                
     Line 9                                                                                                                     
     Department of Revenue                                                                                                      
     APFC Investment Management Fees                                                                                            
     Investment and Custody Fees                                                                                                
     Unanticipated  market  performance or  manager  changes                                                                    
     could cause  the actual amount  of fees paid  to exceed                                                                    
     projections.   As a prudent course  of action, $5,000.0                                                                    
     supplemental  authority for  the Investment  Management                                                                    
     Fee  allocation will  ensure that  APFC has  sufficient                                                                    
     funds to meet our contractual obligations.                                                                                 
                                                                                                                                
     UGF $0.0 DGF $0.0                                                                                                          
     Other Funds $5,000.0 Federal Funds $0.                                                                                     
                                                                                                                                
1:49:36 PM                                                                                                                    
                                                                                                                                
Mr. Steininger  moved to  the Language  Section of  the bill                                                                    
beginning on line 18.                                                                                                           
                                                                                                                                
     Line 18                                                                                                                    
     Special Appropriations                                                                                                     
     Comprehensive Insurance Program                                                                                            
     Payment from Premera to the Reinsurance Program                                                                            
     Adjustment to  the state  contribution to  the calendar                                                                    
     year 2017 reinsurance  program to reflect reimbursement                                                                    
     from Premera Blue Cross Blue Shield.                                                                                       
                                                                                                                                
     UGF $0.0 DGF ($25,000.0)                                                                                                   
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr.  Steininger elaborated  that in  late November  or early                                                                    
December 2018,  Premera refunded  the state $25  million for                                                                    
the Alaska  Comprehensive Health Insurance (ACHIA).  The $25                                                                    
million reduction  left a  total balance  of $30  million in                                                                    
the program. He highlighted line 19:                                                                                            
                                                                                                                                
     Line 19                                                                                                                    
     Fund Capitalization                                                                                                        
     Disaster Relief Fund                                                                                                       
     Disaster Relief Funding                                                                                                    
     This increase is  needed due to the low  balance of the                                                                    
     disaster relief  fund and  the estimated  amount needed                                                                    
     for  spring  2018  disasters. Sufficient  general  fund                                                                    
     authority of $2,000,000 currently  exists in the FY2019                                                                    
     budget.                                                                                                                    
     UGF $2,000.0 DGF $0.0                                                                                                      
     Other Funds $0.0 Federal Funds $0.0                                                                                        
                                                                                                                                
Mr.  Steininger relayed  that the  spreadsheet inadvertently                                                                    
omitted two bargaining agreements  included in the bill that                                                                    
had  been completed  with no  impact to  the budget  for the                                                                    
University of Alaska system.                                                                                                    
                                                                                                                                
1:51:14 PM                                                                                                                    
                                                                                                                                
Mr. Steininger discussed  the ratification section beginning                                                                    
on page 3,  line 23. He reminded committee  members that the                                                                    
transactions were ratifications of prior year expenditures.                                                                     
                                                                                                                                
     Ratifications                                                                                                              
                                                                                                                                
     Line 23                                                                                                                    
     Department of Health and Social Services                                                                                   
     Pioneer Homes                                                                                                              
                                                                                                                                
     FY2016, AR H001 Alaska Pioneer Homes                                                                                       
     UGF $467,693.27                                                                                                            
                                                                                                                                
Mr.  Steininger   reported  that  the  item   represented  a                                                                    
shortfall in revenue. He moved to line 24.                                                                                      
                                                                                                                                
     Line 24                                                                                                                    
     Department of Health and Social Services                                                                                   
     Public Health                                                                                                              
     FY2016, AR H007 Public Health                                                                                              
                                                                                                                                
     UGF $1,350,310.26                                                                                                          
                                                                                                                                
Mr.  Steininger  indicated there  had  been  a shortfall  in                                                                    
revenues. He turned to item 25.                                                                                                 
                                                                                                                                
     Line 25                                                                                                                    
     Department of Health and Social Services                                                                                   
     Medicaid Services                                                                                                          
     FY2016, AR H012 Medicaid Services                                                                                          
                                                                                                                                
     UGF $8,715,670.72                                                                                                          
                                                                                                                                
Mr. Steininger  indicated that while  there was  a shortfall                                                                    
in  receipts  in  2016  the   department  had  recouped  the                                                                    
revenue, but it was posted in FY 17.                                                                                            
                                                                                                                                
Mr.  Steininger moved  to Line  26 and  Line 27,  which were                                                                    
Capital Budget items.                                                                                                           
                                                                                                                                
     Line 26                                                                                                                    
     Department of Health and Social Services                                                                                   
     Capital                                                                                                                    
     FY2010, AR H264 Mental Health Housing                                                                                      
                                                                                                                                
     UGF $8,824.49                                                                                                              
                                                                                                                                
     Line 27                                                                                                                    
     Department of Health and Social Services                                                                                   
     Capital                                                                                                                    
     FY2011, AR H260 Mental Health Home Modification and                                                                        
     Upgrades to Retain Housing                                                                                                 
                                                                                                                                
     UGF $7,355.06                                                                                                              
                                                                                                                                
1:53:01 PM                                                                                                                    
                                                                                                                                
Mr. Steininger presented line 28, which was a capital item.                                                                     
                                                                                                                                
     Line 28                                                                                                                    
     Department of Health and Social Services                                                                                   
     Capital                                                                                                                    
     FY2016, AR HUBC Unbudgeted Capital RSA's                                                                                   
                                                                                                                                
     UGF $300,310.83                                                                                                            
                                                                                                                                
Mr. Steininger reported that the item represented a                                                                             
shortfall in revenues.                                                                                                          
                                                                                                                                
Representative   Thompson   asked   what  RSA   meant.   Mr.                                                                    
Steininger  answered that  RSAs  were Reimbursable  Services                                                                    
Agreements that  were contracts  between state  agencies for                                                                    
providing services.                                                                                                             
                                                                                                                                
1:53:39 PM                                                                                                                    
                                                                                                                                
Mr. Steininger concluded with line 29.                                                                                          
                                                                                                                                
     Line 29                                                                                                                    
     Department of Public Safety                                                                                                
     Bureau of Highway Patrol                                                                                                   
     AR 47863-13 Bureau of Highway Patrol  Special Project                                                                      
                                                                                                                                
     UGF $4,304,930.00                                                                                                          
                                                                                                                                
Representative Pruitt asked what the initial appropriation                                                                      
was for line 29. He requested additional detail.                                                                                
                                                                                                                                
1:54:26 PM                                                                                                                    
BRIAN  FECHTER, POLICY  ANALYST,  OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET, OFFICE  OF THE GOVERNOR, explained  that the federal                                                                    
government denied certain expenditures  for a grant that was                                                                    
passed through  the Department of Transportation  and Public                                                                    
Facilities (DOT)  to the Department of  Public Safety (DPS).                                                                    
The money  was only to  be used for alcohol  enforcement and                                                                    
was used for other things.                                                                                                      
                                                                                                                                
Representative Pruitt  asked if the department  was aware of                                                                    
the  grant  requirements   and  "knowingly  jeopardized  the                                                                    
federal  funding."  Mr.  Fechter  responded that  it  was  a                                                                    
matter  of interpreting  the  original  grant agreement.  He                                                                    
deferred   to    the   department   for    further   detail.                                                                    
Representative   Pruitt  requested   an   answer  from   the                                                                    
department regarding a $4 million misinterpretation.                                                                            
                                                                                                                                
Co-Chair Seaton  asked the chairman of  the DPS subcommittee                                                                    
to flush the details out during subcommittee meetings.                                                                          
                                                                                                                                
HB  321  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
1:56:53 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:57:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 287                                                                                                            
                                                                                                                                
     "An Act making appropriations  for public education and                                                                    
     transportation   of  students;   making  appropriations                                                                    
     under art.  IX, sec.  17(c), Constitution of  the State                                                                    
     of  Alaska,  from  the  constitutional  budget  reserve                                                                    
     fund; and providing for an effective date."                                                                                
                                                                                                                                
1:57:59 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster indicated that the  committee heard the bill                                                                    
twice previously and  the prior meeting was  held on January                                                                    
30, 2018. He intended to move the bill out of committee.                                                                        
                                                                                                                                
Co-Chair Foster OPENED public testimony.                                                                                        
                                                                                                                                
^PUBLIC TESTIMONY                                                                                                             
                                                                                                                                
1:58:32 PM                                                                                                                    
                                                                                                                                
MARK   MILLER,  SUPERINTENDENT,   JUNEAU  SCHOOL   DISTRICT,                                                                    
JUNEAU,  spoke  in  support  of HB  287.  He  explained  the                                                                    
process of  budgeting for the school  district. He indicated                                                                    
that the school district built  its budget for the following                                                                    
school year from January through  March each year. If he did                                                                    
not know  the number for  the budget,  he had to  guess, and                                                                    
the  guess must  be conservative,  or it  could result  in a                                                                    
"catastrophic"  situation. He  believed  that the  situation                                                                    
could be  averted if  a sustainable  budget was  adopted. He                                                                    
related  that the  previous budgets  were  not completed  in                                                                    
time to work with the  school district's budgeting cycle. He                                                                    
was not  sure the  bill solved  the overarching  problem but                                                                    
felt the bill was the right thing to do.                                                                                        
                                                                                                                                
2:02:00 PM                                                                                                                    
                                                                                                                                
DAVID BOYLE, ALASKA POLICY FORUM,  ANCHORAGE,   (via   tele-                                                                    
conference), spoke in  opposition to HB 287.  He argued that                                                                    
the education budget  should be included within  the rest of                                                                    
the operating budget. He argued  that other departments like                                                                    
the   Department    of   Public   Safety,    Department   of                                                                    
Transportation   and  Public   Facilities  (DOT),   and  the                                                                    
University of  Alaska might "demand"  that its  budgets were                                                                    
forward funded. He characterized  the bill as "incentivizing                                                                    
bad  behavior."  He  understood that  the  budget  had  been                                                                    
passed very late but felt  that the district's budgets could                                                                    
be managed. He  stated that the education system  was "not a                                                                    
jobs program." He opined that  the education system had been                                                                    
funded  with  very   "little  accountability  for  increased                                                                    
student achievement."                                                                                                           
                                                                                                                                
2:04:00 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:04:50 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr.  Boyle  continued  that the  Anchorage  School  District                                                                    
transported 15,000 students but  received funding for 47,000                                                                    
thousand students. He  suggested prioritizing transportation                                                                    
costs. He noted  that when the school  district in Anchorage                                                                    
distributed pink slips they were  only given to teachers and                                                                    
not to  support staff. He  argued for privatization  of some                                                                    
support services.                                                                                                               
                                                                                                                                
2:07:06 PM                                                                                                                    
                                                                                                                                
STARR  MARSETT,  VICE-PRESIDENT,   ANCHORAGE  SCHOOL  BOARD,                                                                    
ANCHORAGE (via  teleconference), spoke  in favor of  HB 287.                                                                    
She   indicated  that   the  school   district  had   issued                                                                    
approximately  220  pink  slips.   She  explained  the  time                                                                    
consuming process  of issuing pink  slips. She spoke  to the                                                                    
difficulties of  managing health  insurance once  pink slips                                                                    
were issued and the many  costs associated with issuing pink                                                                    
slips.  Teachers  were  at  risk   of  losing  their  health                                                                    
insurance  if they  were not  reinstated by  June 30th  each                                                                    
year.  She  also  noted  the  loss  of  new  hires  and  the                                                                    
difficulty  of recruitment  because  of  the state's  budget                                                                    
process and  how it impacted education  spending. The school                                                                    
district hired  approximately 260 teachers each  year due to                                                                    
turnover  and  retirements.   She  indicated  that  reliable                                                                    
funding  would help  avoid unintended  costs and  the stated                                                                    
issues while also boosting student and teacher morale.                                                                          
                                                                                                                                
2:10:48 PM                                                                                                                    
                                                                                                                                
JENNIFER MCNICHOL, PRESIDENT, SITKA   SCHOOL  BOARD,   SITKA                                                                    
(via  teleconference),  spoke  in  support of  HB  287.  She                                                                    
thought that  the legislation helped to  solve the budgeting                                                                    
issue for  school districts.  The budget  was done  "far too                                                                    
late for  district budgeting  requirements." The  bill would                                                                    
assist in  teacher retention, which was  crucial. The school                                                                    
district  was  in  the  process  of  initiating  the  Alaska                                                                    
Education Challenge,  Every Student Succeeds Act  (ESSA) and                                                                    
other  projects and  did not  need  budget uncertainty.  She                                                                    
suggested a default to flat  funding education if the budget                                                                    
deadline was  missed. However, she hoped  flat funding meant                                                                    
hold harmless  because flat funding  would equal  a decrease                                                                    
in  funding due  to  the  rising costs  of  health care  and                                                                    
utilities.   She  remarked   that   the  district's   health                                                                    
insurance increased  13 to 25  percent each year.  She spoke                                                                    
to Mr. Boyles testimony and  countered that teachers made up                                                                    
most of  the districts staff and  layoffs primarily affected                                                                    
teachers. Many of the district's  support staff worked under                                                                    
long term contracts that were not  able to be changed when a                                                                    
budget passed.  She did  not think  passing a  timely budget                                                                    
was "throwing  money at a  problem" as Mr.  Boyle suggested.                                                                    
The board's number  one goal was to  close achievement gaps.                                                                    
She thanked the committee.                                                                                                      
                                                                                                                                
2:13:51 PM                                                                                                                    
                                                                                                                                
MAYOR BERT COTTLE,  CITY    OF    WASILLA,   WASILLA    (via                                                                    
teleconference), spoke in  support of HB 287.  He noted that                                                                    
he did  not have  a direct impact  on the  district's budget                                                                    
but observed  through experience that late  funding affected                                                                    
morale and retention. He believed  that early funding helped                                                                    
school  districts and  communities know  what their  budgets                                                                    
would  be. He  asked the  legislature  to take  care of  the                                                                    
education budget early in the session.                                                                                          
                                                                                                                                
Co-Chair Seaton asked when the  school district was required                                                                    
to submit  its budget to  the municipality or if  the budget                                                                    
was submitted directly to the  borough. Mr. Cottle responded                                                                    
that the district's budget went directly to the borough.                                                                        
                                                                                                                                
2:15:40 PM                                                                                                                    
                                                                                                                                
JOHN   RINGSTAD,  FAIRBANKS   NORTH   STAR  BOROUGH   SCHOOL                                                                    
DISTRICT, FAIRBANKS (via teleconference),  spoke in favor of                                                                    
the legislation. He related that  the prior late funding was                                                                    
problematic for all school districts.  He thought that early                                                                    
funding  focused  the  process  on  educating  children.  He                                                                    
talked about the process that  was required when funding was                                                                    
in  question  each  year.  He  thought  more  focus  on  the                                                                    
classroom  was the  goal instead  of developing  contingency                                                                    
budgets,  which increased  administrative  costs instead  of                                                                    
leaving  more  money  for  the  classroom.  He  stated  that                                                                    
anything to  move the budgeting process  efficiently forward                                                                    
would be helpful. He thanked the committee.                                                                                     
                                                                                                                                
2:17:59 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony.                                                                                        
                                                                                                                                
Representative Pruitt  reported that every year  he had been                                                                    
in the legislature he heard  concerns about properly funding                                                                    
education even  when it was  forward funded. He  argued that                                                                    
the  bill   was  unnecessary,   and  it  implied   that  the                                                                    
legislature  would not  get  its  job done  in  90 days.  He                                                                    
thought  that  most  members  of  the  legislature  and  the                                                                    
governor  were aligned  with the  numbers  in the  education                                                                    
budget. He contended that the  bill was overcapitalizing and                                                                    
withdrawing $800  million out  of the  Constitutional Budget                                                                    
Reserve  (CBR)  was  needless.  However,  he  would  support                                                                    
moving the  bill from committee  even though he  objected to                                                                    
the  budgetary process  in the  bill.  He felt  that a  vote                                                                    
against  the  bill  would  be portrayed  as  though  he  was                                                                    
against children  and teachers. He relayed  his wholehearted                                                                    
support of teachers. He reiterated  that the real discussion                                                                    
was about  a budgetary  process. He contended  that children                                                                    
and teachers were being "weaponized"  in and argument over a                                                                    
budgetary  process. The  bill did  not fully  fund education                                                                    
for the  following year; only  key pieces were  being funded                                                                    
as they  related to  education in the  bill. He  opined that                                                                    
the  issue  was about  a  process  and how  the  legislature                                                                    
pieced things together.                                                                                                         
                                                                                                                                
2:22:02 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara spoke  to the  point of  why early  funding                                                                    
mattered.  He indicated  that when  pink  slips were  issued                                                                    
teachers and parents  took it seriously. The  result was the                                                                    
loss  of great  teachers. He  hoped that  bipartisan support                                                                    
existed  for early  funding education  to avoid  sending out                                                                    
pink  slips.  He  noted  that  the  prior  few  year's  late                                                                    
budgeting  threatened troopers,  teachers,  and other  vital                                                                    
state  professionals' jobs,  which contributed  to retention                                                                    
issues.                                                                                                                         
                                                                                                                                
Co-Chair Seaton clarified  that the purpose of  the bill was                                                                    
to make  the education system more  efficient. He reiterated                                                                    
the testimony he  heard of the effects of  late budgeting on                                                                    
the  school   districts.  He  thought  the   bill  needed  a                                                                    
cooperative effort. He deemed it  was much more efficient to                                                                    
take  money from  the CBR  because  it earned  significantly                                                                    
less  than the  Earnings Reserve  Account (ERA).  He offered                                                                    
that there  would be no point  to draw from the  ERA instead                                                                    
of  a  fund  that  earned  less. He  thought  the  bill  was                                                                    
promoting efficiency on several  levels, would help with the                                                                    
retention  of  teachers, and  morale  issues.  He hoped  the                                                                    
legislators  would   agree  to  fund  education   early.  He                                                                    
encouraged members to vote the bill out of committee.                                                                           
                                                                                                                                
2:26:45 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara MOVED  to report  HB 287  out of  Committee                                                                    
with individual recommendations.                                                                                                
                                                                                                                                
2:27:18 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:27:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Gara WITHDREW his motion.                                                                                            
Vice-Chair Gara MOVED to report HB 287 out of Committee                                                                         
with individual recommendations. There being NO OBJECTION,                                                                      
it was so ordered.                                                                                                              
                                                                                                                                
HB 287 was REPORTED out of committee with a "do pass"                                                                           
recommendation.                                                                                                                 
                                                                                                                                
Co-Chair Foster reviewed the schedule for the following                                                                         
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:29:31 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:29 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 321 FY2018_Supplemental_Spreadsheet_2-1-18.pdf HFIN 2/1/2018 1:30:00 PM
HB 321
HB 321 FY2018_Supplemental_Backup_2-1-2018.pdf HFIN 2/1/2018 1:30:00 PM
HB 321
FY2018_Supplemental_Summary_1-29-18.pdf HFIN 2/1/2018 1:30:00 PM
HB 321
DHSS Review WDR-HB176-2-6-18.pdf HFIN 2/1/2018 1:30:00 PM
HB 176
HB 321 OMB Response HFIN Meeting 2.1.18.pdf HFIN 2/1/2018 1:30:00 PM
HB 321
HB 321 FY2018 Supplemental UNAC & FFU.PDF HFIN 2/1/2018 1:30:00 PM
HB 321