Legislature(2019 - 2020)ADAMS ROOM 519

01/28/2020 01:30 PM FINANCE

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Audio Topic
01:36:26 PM Start
01:36:56 PM HB205 || HB206
01:37:57 PM Fy 21 Budget Overview: University of Alaska
03:05:40 PM Fy 21 Budget Overview: Department of Environmental Conservation
03:53:40 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 205 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
*+ HB 206 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ FY21 Dept. Budget Overviews: TELECONFERENCED
- University
- Dept. of Environmental Conservation
                  HOUSE FINANCE COMMITTEE                                                                                       
                      January 28, 2020                                                                                          
                         1:36 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:36:26 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Foster  called  the  House  Finance  Committee   meeting                                                              
to order at 1:36 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Jim   Johnsen,   President,   University   of   Alaska;   Michelle                                                              
Rizk,   Associate   Vice   President,   Statewide   Planning   and                                                              
Budget,   University   of  Alaska;  Jason   Brune,  Commissioner,                                                               
Department    of  Environmental    Conservation;    Ruth   Kostik,                                                              
Administrative      Services      Director,      Department     of                                                              
Environmental    Conservation,     Office   of   Management    and                                                              
Budget, Office of the Governor.                                                                                                 
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 205     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                 
                                                                                                                                
           HB 205 was HEARD and HELD in committee for                                                                           
           further consideration.                                                                                               
                                                                                                                                
HB 206     APPROP: MENTAL HEALTH BUDGET                                                                                         
                                                                                                                                
         HB 206 was HEARD and HELD in committee for                                                                             
           further consideration.                                                                                               
                                                                                                                                
FY 21 BUDGET OVERVIEW: UNIVERSITY OF ALASKA                                                                                     
                                                                                                                                
FY 21 BUDGET OVERVIEW: DEPARTMENT OF ENVIRONMENTAL                                                                              
CONSERVATION                                                                                                                    
                                                                                                                                
1:36:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster reviewed the agenda for the day. He                                                                             
introduced House Finance Committee staff.                                                                                       
                                                                                                                                
HOUSE BILL NO. 205                                                                                                            
                                                                                                                                
      "An  Act  making  appropriations   for  the  operating   and                                                              
      loan  program   expenses   of  state   government   and  for                                                              
      certain    programs;      capitalizing     funds;     making                                                              
      appropriations  under  art.  IX,  sec. 17(c),  Constitution                                                               
      of the  State of  Alaska,  from  the constitutional   budget                                                              
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
HOUSE BILL NO. 206                                                                                                            
                                                                                                                                
      "An  Act  making  appropriations   for  the  operating   and                                                              
      capital    expenses     of    the     state's    integrated                                                               
      comprehensive  mental  health  program;  and  providing  for                                                              
      an effective date."                                                                                                       
                                                                                                                                
1:37:57 PM                                                                                                                    
                                                                                                                                
^FY 21 BUDGET OVERVIEW: UNIVERSITY OF ALASKA                                                                                  
                                                                                                                                
1:37:57 PM                                                                                                                    
                                                                                                                                
JIM  JOHNSEN,   PRESIDENT,   UNIVERSITY  OF  ALASKA,   provided  a                                                              
PowerPoint    presentation    titled    "University    of   Alaska                                                              
Legislative   Update"  dated  January  28,  2020 (copy  on  file).                                                              
He began with slide 3, "Introduction":                                                                                          
                                                                                                                                
      State  funding  cuts  from   FY  2014  to  FY  2019and   the                                                              
      threat  of a  41 percent  cut  in  FY 2020have   challenged                                                               
      the  university's   ability  to  serve  its  constitutional                                                               
      mission for the people of Alaska.                                                                                         
                                                                                                                                
      Led by  the Board  of  Regents,  the  University  is  facing                                                              
      the  challenge,    committed   to  its  mission,   to  lower                                                              
      operating  expenses,   and  to investing   in  programs  and                                                              
      initiatives  that  serve  our  students  and  contribute  to                                                              
      Alaska's future by:                                                                                                       
                                                                                                                                
           ? Developing and diversifying our economy                                                                            
          ? Preparing Alaskans for jobs in Alaska                                                                               
           ? Conducting research to solve real problems and                                                                     
           create new opportunities                                                                                             
           ?    Increasing     educational     success     through                                                              
           enrollment and completion                                                                                            
                                                                                                                                
Mr.   Johnsen   relayed   that  the   impacts   of  the   previous                                                              
difficult   year  would  have   impacts  on  the  University   for                                                              
years  to come.  He  underscored  that  the  University  had  made                                                              
it through and was moving forward strongly.                                                                                     
                                                                                                                                
1:39:56 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen moved to slide 5, "Three-Part Mission":                                                                             
                                                                                                                                
      ?Education  Delivering  academic   instruction,  career  and                                                              
      technical training                                                                                                        
      ?Research  Advancing   innovation   and  discovery   through                                                              
      academic and scientific research                                                                                          
      ?Service    Sharing   knowledge    to    address    Alaska's                                                              
      community needs                                                                                                           
                                                                                                                                
Mr. Johnsen addressed slide 6, "Serving All Alaskans Three                                                                      
Universities - One System":                                                                                                     
                                                                                                                                
      ? 1 legal and financial entity                                                                                            
      ? 3 separately accredited universities                                                                                    
      ? 13 community campuses                                                                                                   
      ? 16,700 FTE Students, 24,900 total                                                                                       
      ? 92 percent of all Alaska higher education                                                                               
      ? Affordable: $7,200 (3rd most in US)                                                                                     
      ? Debt at graduation: 46 percent (2nd lowest)                                                                             
      ? Student's cost share: 28 percent (5th lowest)                                                                           
                                                                                                                                
                                                                                                                                
Vice-Chair Ortiz asked about the 46 percent debt at                                                                             
graduation.                                                                                                                     
                                                                                                                                
Mr.  Johnsen  replied   that  46  percent  of  the  graduates  had                                                              
some debt.                                                                                                                      
                                                                                                                                
Representative    Josephson    noted   that    even   though   the                                                              
achievements    were  great,   the   regents   repeatedly   raised                                                              
tuition.   He   remarked    that   there   was   a   belief   that                                                              
continuing   to raise  tuition  might  do  great  harm  to  the UA                                                              
system, because students would leave.                                                                                           
                                                                                                                                
Mr.  Johnsen   replied  it  was  a  bit  more  nuanced   than  the                                                              
scenario   provided.   He  believed   that   there  were   certain                                                              
students   from  certain  socioeconomic   backgrounds   that  were                                                              
studying   certain   subject   areas   that  were   very   tuition                                                              
sensitive.   He  remarked   that   there  were   other   students,                                                              
however  that   were  not  tuition  sensitive.   He  felt  that  a                                                              
successful    strategy    employed    by   public   and    private                                                              
universities   across  the  country  was  a high  tuition   - high                                                              
aid  strategy.  He  remarked  that  the research   indicated  that                                                              
even  if the  net  impact  to  the student   was the  same,  there                                                              
was  a positive  enrollment   benefit  if  the price  was  higher,                                                              
because   of  the  reputational   aspect   of  the  high   tuition                                                              
rate.                                                                                                                           
                                                                                                                                
1:44:36 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen addressed slide 7, "Strategic Goals":                                                                               
                                                                                                                                
      ? Contribute to Alaska's Economic Development                                                                             
           ?    Increase    STEM    graduates     and    invention                                                              
           disclosures                                                                                                          
                                                                                                                                
      ? Provide Alaska with a Skilled Workforce                                                                                 
           ? Increase UA's share of teacher hires and double                                                                    
           health professionals                                                                                                 
                                                                                                                                
      ? Grow our World Class Research                                                                                           
           ? Stay number 1 in Arctic Research and increase                                                                      
           research expenditures                                                                                                
                                                                                                                                
      ? Increase Degree Attainment                                                                                              
           ? Increase enrollment and completions                                                                                
                                                                                                                                
      ? Operate More Cost Effectively                                                                                           
           ? Decrease cost per completion and increase                                                                          
           completion rate                                                                                                      
                                                                                                                                
Mr.  Johnsen  emphasized   the Board  of  Regent's  focus   on the                                                              
five  priorities   outlined  on  the  slide.  He highlighted   the                                                              
last   item  and   relayed   that  cost-effectiveness     must  be                                                              
achieved.                                                                                                                       
                                                                                                                                
Representative   Merrick  asked   how  many  degree  programs  the                                                              
University offered.                                                                                                             
                                                                                                                                
Mr.  Johnsen  replied  approximately   400.  He noted  the  number                                                              
included  numerous   duplicated   programs.  He  would  follow  up                                                              
with the detail.                                                                                                                
                                                                                                                                
Mr.  Johnsen  noted that  there  would likely  be  about  20 fewer                                                              
if the board of regents approved the change in February.                                                                        
                                                                                                                                
Representative   Wool  asked  for  verification   there  had  been                                                              
more the previous year prior to the cuts.                                                                                       
                                                                                                                                
Mr.  Johnsen   replied   in  the  affirmative.   He   relayed  the                                                              
numbers   were  dynamic   and   he  would   follow  up   with  the                                                              
current programs.                                                                                                               
                                                                                                                                
Mr. Johnsen moved to slide 8, "Structure":                                                                                      
                                                                                                                                
      ?  One  legal,   constitutional,   and   financial   entity;                                                              
      three   separately    accredited    universities    with   a                                                              
      governing Board and system office                                                                                         
                                                                                                                                
           ?    Current    structure     is    the    result    of                                                              
           consolidation     of    11    separately    accredited                                                               
           community colleges in 1987                                                                                           
                                                                                                                                
           ?   That  2-year    effort   met  strong   resistance,                                                               
           spawned   legislation,  litigation,   arbitration   and                                                              
           a  voter  initiative?and    it  increased  integration                                                               
           and reduced cost                                                                                                     
                                                                                                                                
      ?  System   office    supports   Regents,    provides   cost                                                              
      effective    system     wide    services,     and    focuses                                                              
      universities on Alaska's statewide priorities                                                                             
                                                                                                                                
      ? Non-duplicated    system  functions  include   IT,  audit,                                                              
      labor  relations,   financial/tax   reporting,   government                                                               
      relations,  debt,   treasury,  payroll,   risk  management,                                                               
      general   counsel,    procurement,    and   health/benefits                                                               
      administration                                                                                                            
                                                                                                                                
      ? University   Foundation,   Land  Management   Office,  and                                                              
      Alaska Education Trust are largely self-funded                                                                            
                                                                                                                                
1:49:32 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen turned to slide 9, "Statewide Footprint":                                                                           
                                                                                                                                
      ? University is largest landlord in State Government                                                                      
                                                                                                                                
      ?  Are  there   assets   that   can  be   closed,   sold  or                                                              
      eliminated? YES!                                                                                                          
                                                                                                                                
Representative    Josephson   asked  for   the  definition   of  a                                                              
facility. He assumed the Hickel Library was a facility.                                                                         
                                                                                                                                
Mr.  Johnsen   replied  there  may  be  all  different   kinds  of                                                              
facilities:   facility   that  was  someone's   office  and  there                                                              
were  small   facilities   and  major   facilities   such  as  the                                                              
sports facility in Anchorage.                                                                                                   
                                                                                                                                
Representative    Josephson   stated   that  some   may   say  the                                                              
number of facilities was outrageous.                                                                                            
                                                                                                                                
Mr.   Johnsen   agreed.    He   mentioned    Signer's   Hall   and                                                              
Constitution Hall.                                                                                                              
                                                                                                                                
Mr.  Johnsen  addressed  significant  activity  on  slide  11. The                                                              
last  year  had been  hard  and he  believed  the  University  was                                                              
successfully   moving  forward  lead  by  the  Board  of  Regents.                                                              
The  University  had agreed  with  the  governor  on a three-year                                                               
compact  plan,  it  was still  challenging,   but  manageable.  He                                                              
continued to review a timeline:                                                                                                 
                                                                                                                                
      FY20 Legislature   includes   budget  intent   language  for                                                              
      Board to consider single accreditation                                                                                    
      Aug 13Board  of  Regents  signs  3-year  Compact   Agreement                                                              
      with Governor                                                                                                             
      Aug 20Board terminates Exigency Declaration                                                                               
      Sep  26NWCCU   expresses   concern   over   governance   and                                                              
      accreditation                                                                                                             
      Oct   7    Board    ceases    consideration     of    single                                                              
      accreditation  and  statewide  expedited   academic  program                                                              
      reviews                                                                                                                   
      Oct 18     Universities   begin   campus   level   expedited                                                              
      academic program reviews                                                                                                  
      Oct 30     Board responds to NWCCU concerns                                                                               
      Nov 1      NWCCU   confirms    UA   on   "right   path"   on                                                              
      governance and accreditation                                                                                              
      Nov 22     Board  responds   to  FY20   legislative   intent                                                              
      regarding single accreditation                                                                                            
      Dec 3      Board   transmits   report    to   Governor   and                                                              
      Legislature per Compact Agreement                                                                                         
      Dec 9      Board   initiates    policy   audit   clarifying                                                               
      roles and responsibilities                                                                                                
      Jan 17     Board  approves   2020   work  plan,   5  percent                                                              
      tuition   increase    for   2020,    including    $1.5M   of                                                              
      increased             financial aid                                                                                       
      Feb 20     Board  review  of  strategic   goals  and  status                                                              
      of policy review                                                                                                          
                                                                                                                                
1:55:07 PM                                                                                                                    
                                                                                                                                
Representative   Josephson  discussed   that  the  University  had                                                              
gone  through  a great  trauma  in the  preceding  year.  He noted                                                              
that  no   other  agency   had  faced   the  same  situation.   He                                                              
commended   Mr.  Johnsen  for  getting   the  University   through                                                              
the situation.                                                                                                                  
                                                                                                                                
Representative    Carpenter    expressed   frustration    on   Mr.                                                              
Johnsen's   statement  that  the  University   was  knocked  down.                                                              
He  thought  it  insinuated   that  somehow  the  University   was                                                              
mistreated.   He  stated  that  for  years  the  legislature   had                                                              
asked  the University   to cut  its  costs,  but it  had not  been                                                              
done.  He elaborated   that his  constituents  who  had lost  jobs                                                              
and  been   negatively   impacted  would   take  issue   with  the                                                              
insinuation that they had knocked the University down.                                                                          
                                                                                                                                
Mr.  Johnsen  respected   Representative   Carpenter's   view.  He                                                              
pointed  out  that there  had  been a number  of  step-downs  over                                                              
years.  The  University   had  over   1,700  employee  reductions                                                               
since  2014. The  University  had been  trimming  substantially.                                                                
                                                                                                                                
Representative    Sullivan-Leonard    thanked   Mr.  Johnsen   for                                                              
being   present.    She   asked    about   an    update   on   the                                                              
accreditation,   and   she  was  concerned   about  the   teaching                                                              
program   and   the  challenge   with   recruiting   teachers   in                                                              
Alaska.                                                                                                                         
                                                                                                                                
Mr.  Johnsen  replied  that  one  of  the  universities  had  lost                                                              
accreditation,    but   two  of   the   other   universities   had                                                              
stepped   in  to  help  students   complete  their   programs.  He                                                              
believed  it  was necessary   to look  at  how the  programs  were                                                              
funded and look at increasing teacher funding.                                                                                  
                                                                                                                                
2:00:36 PM                                                                                                                    
                                                                                                                                
Co-Chair  Johnston   asked  what  the  University   was  currently                                                              
paying for termination costs in the pension fund.                                                                               
                                                                                                                                
Mr.  Johnsen  would  follow  up  with  the  information  later  in                                                              
the day.                                                                                                                        
                                                                                                                                
Co-Chair   Johnston   thought   it  would   be  helpful   for  the                                                              
committee   to know  how  much  the  University   was  paying  for                                                              
termination   costs.  She  would  not  debate  how  to  frame  the                                                              
cuts  from the  previous  year,  but the  termination  costs  were                                                              
the  equation  used to  continue  to pay  the unfunded   liability                                                              
in  the  pension  funds.  She  believed  the  University  was  the                                                              
hardest  hit  because   it had  lost  so  many  employees  and  it                                                              
had  been   an  ongoing   process  of  cutting   employees   since                                                              
2015.                                                                                                                           
                                                                                                                                
Representative      Carpenter      appreciated      seeing     the                                                              
information.   He noted  that constituents   in  his district  did                                                              
not have pensions due to working for the private sector.                                                                        
                                                                                                                                
Co-Chair  Johnston   understood.  She  thought  it  was  important                                                              
to  remember   the  importance  of  pensions   when  in  comes  to                                                              
employee retention.                                                                                                             
                                                                                                                                
Representative    Wool   asked   about   the  various   types   of                                                              
accreditation.                                                                                                                  
                                                                                                                                
Mr.  Johnsen   replied   there   were  basically   two   types  of                                                              
accreditation.   He  explained   that   there  was  institutional                                                               
accreditation.     The    federal    Department    of    Education                                                              
delegated   to  a number   of  regional  accrediting   bodies  the                                                              
responsibility   to ensure  quality  of  universities  across  the                                                              
country.   He  furthered  that  in  order   for  the  students  to                                                              
qualify  for  grants  and  loans,  the  university  must  have  an                                                              
institutional   accreditation.   He stated   that the  other  type                                                              
was  specialized  accreditation,   which   was program   specific.                                                              
Some  of  those  programs  were  statutorily   required,  such  as                                                              
nursing  and  teacher  education.   Others  were  simply  required                                                              
as a sign of high quality, such as engineering.                                                                                 
                                                                                                                                
Representative    Wool  surmised   that   there   were   different                                                              
accrediting entities.                                                                                                           
                                                                                                                                
Mr.  Johnsen  replied  in  the  affirmative.   He  explained  that                                                              
the  university  was accredited   by an  entity  that oversaw  the                                                              
region was the Pacific Northwest.                                                                                               
                                                                                                                                
2:07:26 PM                                                                                                                    
                                                                                                                                
Representative     Wool   wondered    whether    UA    was   still                                                              
accredited as an institution.                                                                                                   
                                                                                                                                
Mr.  Johnsen  replied  it  was  the  initial  licensure   programs                                                              
that   lost  accreditation,    other   programs   were   fine  and                                                              
maintained their accreditation.                                                                                                 
                                                                                                                                
Co-Chair Foster remarked that the meeting may go long.                                                                          
                                                                                                                                
Representative   Tilton  referenced   the  statement   on slide  6                                                              
about  three  universities  one  system,  and queried  the  intent                                                              
of the slide's representation.                                                                                                  
                                                                                                                                
Mr.  Johnsen  replied  there  was  nothing  intended   by the  way                                                              
the page had been written.                                                                                                      
                                                                                                                                
Representative     Tilton    queried    the    status    of    the                                                              
university's land grant deficit.                                                                                                
                                                                                                                                
Mr.  Johnsen  replied  that progress  was  being  made //  filling                                                              
the   University's   longtime   land   grant   deficit   of  3,600                                                              
acres.  He  explained  that  in order  to  enable  the conveyance                                                               
of the land, and land was included in the definition.                                                                           
                                                                                                                                
2:10:52 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen moved to slide 12, "3-Year Budget Compact":                                                                         
                                                                                                                                
      ? Agreement between Board and Governor Dunleavy                                                                           
      August 13                                                                                                                 
                                                                                                                                
      ? $70M (22 percent) reduction over 3-Yrs versus                                                                           
      single-year cut of $134M (41 percent)                                                                                     
                                                                                                                                
           ? FY20  $302M  (Down $25M  or 7.6 percent  from  FY19)                                                               
           ? FY21  $277M  (Down $25M  or 8.3 percent  from  FY20)                                                               
           ? FY22  $257M  (Down $20M  or 7.2 percent  from  FY21)                                                               
                                                                                                                                
      ? Best negotiated option for the University of Alaska                                                                     
                                                                                                                                
      ? Reduces cumulative 2020-2022 cut from $405M to $145M                                                                    
                                                                                                                                
      ? Requires a tremendous internal effort to meet                                                                           
      reduced funding levels                                                                                                    
                                                                                                                                
      ? Secured  Governor's   support  for  single  appropriation                                                               
      and   other    important    priorities:     AEG    and   APS                                                              
      scholarships,    WWAMI   medical   school    funding,   dual                                                              
      enrollment  and  land  grant   initiative  ?  UA  agreed  to                                                              
      cost savings and revenue enhancement initiatives                                                                          
                                                                                                                                
2:13:10 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Ortiz  asked  if  there  had been  a look  at  how the                                                              
University   would   look   after   completing    the  three-year                                                               
budget  cycle.   He  wondered  what  programs   would  be  reduced                                                              
and he asked about opportunity costs.                                                                                           
                                                                                                                                
Mr.   Johnsen   replied   it   was   the   precise   process   the                                                              
University   was   currently    undergoing.   The   board   had  a                                                              
meeting   in  early  June  to  accept   the  state's   budget  and                                                              
review   and  approve  continuation,    discontinuation,   or  the                                                              
reduction  of  programs.  The top  down  component  were  the five                                                              
goals he had mentioned [on slide 7].                                                                                            
                                                                                                                                
Vice-Chair Ortiz asked about the details of the process.                                                                        
                                                                                                                                
Mr.  Johnsen  would  be  happy  to  go  through  the  information                                                               
with Vice-Chair Ortiz.                                                                                                          
                                                                                                                                
2:15:11 PM                                                                                                                    
                                                                                                                                
Mr.   Johnsen    highlighted     a   bar    chart   showing    the                                                              
University's   funding  history  and projection  on  slide  13. He                                                              
noted   the  FY  20  funding   at  $302   million  and   the  $257                                                              
million  in  FY  22.  He moved  to  slide  14  and  discussed  the                                                              
funding  history  and  projection  by major  administrative   unit                                                              
(MAU).  The  system   budget  was  roughly   5.5  percent  of  the                                                              
total,   and   the   research   mission   carried    out   by  the                                                              
University was disproportionately undertaken at UAF.                                                                            
                                                                                                                                
Representative   Josephson   felt  that  the  slide  demonstrated                                                               
that there were significant reductions in recent years.                                                                         
                                                                                                                                
Mr.  Johnsen  replied  that  they  did  not know  what  the  slide                                                              
had a different view. He noted the reductions.                                                                                  
                                                                                                                                
Mr.  Johnsen  advanced  to  the  operating  revenue   by type  and                                                              
source  on  slide  15. The  slide  showed  two  pie  charts  - one                                                              
by revenue type and one by revenue source.                                                                                      
                                                                                                                                
Representative   Carpenter  asked  where  land  grant  funds  fell                                                              
in the chart.                                                                                                                   
                                                                                                                                
Mr. Johnsen would follow up.                                                                                                    
                                                                                                                                
2:19:35 PM                                                                                                                    
                                                                                                                                
Mr.  Johnsen  advanced  to  slide 16  showing  two  pie charts  on                                                              
operating expenditures by category.                                                                                             
                                                                                                                                
Representative   Wool   asked  about   the  research   aspect  and                                                              
return on the $158 million.                                                                                                     
                                                                                                                                
Mr.  Johnsen  answered  that  about  $25 million   in state  money                                                              
(unrestricted   general  funds)  went into  research.  That  money                                                              
generated the $158 million.                                                                                                     
                                                                                                                                
Vice-Chair   Ortiz   asked   what  went   into   spending   behind                                                              
institutional support.                                                                                                          
                                                                                                                                
MICHELLE  RIZK,  ASSOCIATE  VICE  PRESIDENT,  STATEWIDE   PLANNING                                                              
AND BUDGET, UNIVERSITY OF ALASKA, introduced herself.                                                                           
                                                                                                                                
Vice-Chair   Ortiz  assumed   that  academic   support   paid  for                                                              
salaries.   He  wanted   to  know  the  expenditures    that  were                                                              
included in institutional support.                                                                                              
                                                                                                                                
Ms.  Rizk  replied   that,  for  example,  the  statewide   system                                                              
office   that   supported   the   Board   of  Regents   would   be                                                              
considered   an   institutional   support   category,    so  there                                                              
would  be salaries  and benefits  similar  to  academic  support.                                                               
                                                                                                                                
Vice-Chair   Ortiz   wondered   whether   the  $122  million   for                                                              
institutional   support   was  primarily  intended   for  salaries                                                              
and benefits of administration.                                                                                                 
                                                                                                                                
Ms. Rizk answered in the affirmative.                                                                                           
                                                                                                                                
Representative   LeBon  asked about  the  pie charts  on  slide 16                                                              
related to athletics.                                                                                                           
                                                                                                                                
Mr.  Johnsen  replied  in  the  affirmative.   The  number  showed                                                              
all funds.                                                                                                                      
                                                                                                                                
Representative   LeBon  asked   how  much  of  the  $12.8  million                                                              
came from private sources, sponsors, and other.                                                                                 
                                                                                                                                
Ms. Rizk answered that they would follow up with specifics.                                                                     
                                                                                                                                
Representative   LeBon  believed   the  number  was  close  to  50                                                              
percent.   He  asked   how  much   private   sector  support   was                                                              
applied for the category.                                                                                                       
                                                                                                                                
Mr. Johnsen imagined it was a very small number.                                                                                
                                                                                                                                
Representative   LeBon  thought   the  draw  from  the University                                                               
was likely less than 1 percent.                                                                                                 
                                                                                                                                
2:26:09 PM                                                                                                                    
                                                                                                                                
Representative    Wool   wondered   whether   the   institutional                                                               
support category was for any non-academic staff.                                                                                
                                                                                                                                
Mr.  Johnsen  answered  that  there  were  administrative   people                                                              
throughout   the different   sections.  He  stated  that  all  the                                                              
people were included in the institutional support number.                                                                       
                                                                                                                                
Representative    Wool  wondered   whether   the  ticket   revenue                                                              
collected from athletic events was included in the chart.                                                                       
                                                                                                                                
Mr. Johnsen replied in the affirmative.                                                                                         
                                                                                                                                
Representative    Carpenter   addressed   institutional    support                                                              
overhead.   He  asked  what  percentage   of  the  item  would  be                                                              
cut.                                                                                                                            
                                                                                                                                
Mr.  Johnsen  replied  they  would  provide  more  information  in                                                              
the presentation on what had already occurred.                                                                                  
                                                                                                                                
Representative    Carpenter   wondered    whether   there   was  a                                                              
political ploy in the budget.                                                                                                   
                                                                                                                                
Mr.  Johnsen   answered   that  slide  14  showed   a  good  story                                                              
related to the question.                                                                                                        
                                                                                                                                
Ms.  Rizk added  that  each of  the universities   conducted  both                                                              
program and administrative reviews.                                                                                             
                                                                                                                                
Representative    Wool  recalled   the   number   of  programmers                                                               
required in the request.                                                                                                        
                                                                                                                                
Mr. Johnsen answered that the University had 8 and went                                                                         
down to 5. The last one had walked out the previous week.                                                                       
                                                                                                                                
Mr. Johnsen discussed slide 17, "Accreditation":                                                                                
                                                                                                                                
      ?   UA    universities    receive    their    institutional                                                               
      accreditation    from    the   Northwest    Commission    on                                                              
      Colleges and Universities (NWCCU)                                                                                         
                                                                                                                                
      ? Board   took  a  number  of  steps  in  consideration   of                                                              
      legislative  intent   to move  to  a  single  institutional                                                               
      accreditation                                                                                                             
                                                                                                                                
      ?  Board  directed   UA  president   to  develop   plan  for                                                              
      evaluating options                                                                                                        
                                                                                                                                
      ? Convened group of state leaders for advice                                                                              
                                                                                                                                
      ?  Held   workshops   across   the   system   and   provided                                                              
      opportunities  for  input  from  faculty,   staff,  students                                                              
      and the public                                                                                                            
                                                                                                                                
      ?  Conducted   extensive   public   opinion   survey   3,900                                                              
      participants                                                                                                              
           ? Even split between those favoring "uniqueness"                                                                     
           and those favoring "integration"                                                                                     
                                                                                                                                
      ? Established   working  group  to  engage  NWCCU  and  U.S.                                                              
      Dept. of Education on issues and timelines                                                                                
                                                                                                                                
      ? On  Oct   7,  after  full  consideration,    Board  ceased                                                              
      consideration   of   a  single   accreditation   until   UAF                                                              
      secures its NWCCU accreditation renewal in 2021                                                                           
                                                                                                                                
      ?   All    three    universities    (including     community                                                              
      campuses) are fully accredited                                                                                            
                                                                                                                                
Mr. Johnsen moved to slide 18, "Academic Program Reviews":                                                                      
                                                                                                                                
      ?Board  directed    UA  president   to   have  universities                                                               
      conduct academic program reviews                                                                                          
                                                                                                                                
      ?University reviews are underway                                                                                          
                                                                                                                                
      ?In    March     2020,     chancellors      will     provide                                                              
      recommendations   to  the president   regarding  reduction,                                                               
      consolidation or discontinuation of any programs                                                                          
                                                                                                                                
      ?Board   must   approve   any   program   changes   and   is                                                              
     expected to consider recommendations in June 2020                                                                          
                                                                                                                                
      ?Teach  out obligations   and  faculty  notice  periods  may                                                              
     mean financial savings are not achieved until FY22                                                                         
                                                                                                                                
Mr. Johnsen addressed budget impacts on slide 19, "Budget                                                                       
Impacts":                                                                                                                       
                                                                                                                                
      ?Student   support   and   administrative    services   have                                                              
      borne large share of $76M reduction over last 6 years                                                                     
                                                                                                                                
           ?    HR    and    procurement     restructuring     and                                                              
           integration                                                                                                          
               Headcount reductions due to attrition and                                                                        
           terminations ? KUAC Radio/TV Base Funding                                                                            
           Reduction                                                                                                            
           ? Fairbanks Administrative Services Building Sale                                                                    
           ? Chugach  Eagle  River Building  Lease  Non-Renewal                                                                 
           ?  Kenai   Peninsula   College   Residential    Housing                                                              
           Paused                                                                                                               
                                                                                                                                
      ?$45M    additional    reduction     over    FY21-22    will                                                              
      necessitate  significant  impacts  to academic  programs                                                                  
                                                                                                                                
      ?Universities   aggressively    working   to  achieve   FY20                                                              
      cuts  while   conducting    academic   and   administrative                                                               
      program reviews                                                                                                           
                                                                                                                                
Vice-Chair Ortiz asked about the pause in the Kenai                                                                             
Peninsula College (KPC) housing.                                                                                                
                                                                                                                                
2:35:37 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen replied there was declining participation and                                                                       
students, which was the impetus for that decision.                                                                              
                                                                                                                                
Representative LeBon asked for verification that the KCP                                                                        
housing project had been paused.                                                                                                
                                                                                                                                
Mr. Johnsen answered that the project had been completed,                                                                       
and were suspending residents in the facility.                                                                                  
                                                                                                                                
                                                                                                                                
Representative   Knopp  had  not  been  pleased   to  receive  the                                                              
call   about  the   pause  in   the  KPC,  but   understood   that                                                              
decision.    He  stressed  that  there  was  a quality   petroleum                                                              
program was at KPC.                                                                                                             
                                                                                                                                
Representative   Josephson  thought  of  tutoring  and counseling                                                               
when  the  graduation   rate  was  not   good,  and  he  asked  if                                                              
there was a correlation.                                                                                                        
                                                                                                                                
Mr.  Johnsen  answered  he did  not have  a specific  number,  but                                                              
there  was  a correlation.   He furthered   that if  students  did                                                              
not receive support, they did not continue.                                                                                     
                                                                                                                                
Representative   Tilton   references   slide  9  related   to  the                                                              
number    of   University    facilities.    She   asked   if   the                                                              
facilities were managed by the land office.                                                                                     
                                                                                                                                
Mr.   Johnsen   answered   that  the   facilities   were   usually                                                              
managed by the campuses.                                                                                                        
                                                                                                                                
Representative   Tilton  asked about  the  specifics  of  the land                                                              
management.                                                                                                                     
                                                                                                                                
Mr. Johnsen agreed to provide that information.                                                                                 
                                                                                                                                
2:39:55 PM                                                                                                                    
                                                                                                                                
Representative    Carpenter    stated   the   University    system                                                              
brought  the  housing,  and  he  stated  that  a  growing  economy                                                              
would  benefit   KPC.  He  reiterated  that  a  thriving   economy                                                              
would  hopefully  bring  demand  back  to  the campus,  and  bring                                                              
the building back online.                                                                                                       
                                                                                                                                
Mr.   Johnsen   advanced   to  slide   20,  "Pushing   Continuous                                                               
Improvement":                                                                                                                   
                                                                                                                                
      ?Diversifying Revenue Sources                                                                                             
      ?Eliminating Low Demand and Duplicative Programs                                                                          
      ?Realigning and Simplifying Business Processes                                                                            
      ?Consolidating and Standardizing Administration                                                                           
      ?Reforming Program and Service Delivery                                                                                   
      ?Maximizing Return on Assets                                                                                              
      ?Reassessing Tuition and Fees                                                                                             
      ?Reducing  Facilities  Footprint                                                                                          
                                                                                                                                
Mr.  Johnsen  reviewed  a historical  enrollment   chart  on slide                                                              
22.  He noted  it  was not  the enrollment   story  he would  like                                                              
to  be   presenting.   He  pointed   out   that  there   was  high                                                              
unemployment   in Alaska  that  contributed  to  the decline.  The                                                              
university   was  looking  at  how  to  modernize   processes  and                                                              
the culture to make things more convenient to deal with.                                                                        
                                                                                                                                
Representative     Carpenter     stated    that    plumbers    and                                                              
electricians   were   not  traditional   degrees,   and   stressed                                                              
that  there  was  not  enough  skilled  labor  in  the  state.  He                                                              
thought   it  seemed  like  the  perfect   opportunity   to  shift                                                              
from  a  four-year  degree  to  a certificate   system.  He  hoped                                                              
it was part of the discussion going forward.                                                                                    
                                                                                                                                
Mr. Johnsen agreed.                                                                                                             
                                                                                                                                
2:46:51 PM                                                                                                                    
                                                                                                                                
Representative   Tilton  referenced  online  programs.  She  asked                                                              
about  the   current  percentage   of  the   University's   online                                                              
programs.   She  wondered  what  it  was  doing  to  increase  the                                                              
programs in the future.                                                                                                         
                                                                                                                                
Mr.  Johnsen   replied   that  he  did   not  have  the   specific                                                              
number.                                                                                                                         
                                                                                                                                
Co-Chair   Foster  offered   to  bring  the  University   back  at                                                              
another  time  if  necessary.  He  asked  members  to  hold  their                                                              
questions.                                                                                                                      
                                                                                                                                
Mr.  Johnsen  reviewed   a short  history   of tuition   increases                                                              
on   slide  23.   The   information   was   broken   out   between                                                              
graduate and undergraduate tuition.                                                                                             
                                                                                                                                
Mr.   Johnsen   turned   to   slide   24   and  showed   a   chart                                                              
highlighting   undergraduate    tuition   and  fees  compared   to                                                              
WICHE.                                                                                                                          
                                                                                                                                
Mr.  Johnsen   moved   to  slide  25  and   highlighted   a  chart                                                              
showing tuition - student FTE vs tuition/fee revenue.                                                                           
                                                                                                                                
2:51:51 PM                                                                                                                    
                                                                                                                                
Mr. Johnsen advanced to slide 26, "Key Data: Workforce":                                                                        
                                                                                                                                
     ?UA has 1,727 fewer employees than five years ago                                                                          
                                                                                                                                
      ?Since   FY14  total   workforce    has  been   reduced   21                                                              
      percent                                                                                                                   
                                                                                                                                
      ?MAPTS  and   K-12   Outreach   moved  from   statewide   to                                                              
      campus                                                                                                                    
                                                                                                                                
      ?Regular  employees  (leadership,   faculty  and staff)  are                                                              
      down  18   percent   and  temporary   employees    (adjunct,                                                              
      student and temp staff) down 24 percent                                                                                   
                                                                                                                                
      ?Reductions  have   been  achieved  through   a combination                                                               
      of attrition,   retirement,   ending  term  contracts,   and                                                              
      eliminating or leaving positions vacant                                                                                   
                                                                                                                                
Mr. Johnsen turned to slide 27, "Key Data Turnover":                                                                            
                                                                                                                                
      ? Overall   Average  Turnover   Rate  at  UA  from  FY15  to                                                              
      FY20 was 14.1 percent                                                                                                     
                                                                                                                                
      ? According   to the  Bureau  of  Labor  Statistics   (2019)                                                              
      annual  turnover  rate  across  all  industries   in the  US                                                              
      ranges between 15 percent and 19 percent                                                                                  
                                                                                                                                
      ? FY20  to  date,  we have  exceeded  FY19  in  turnover  of                                                              
      administrators   and  are  nearing   the  FY19   totals  for                                                              
      staff and faculty                                                                                                         
                                                                                                                                
Mr. Johnsen looked at slide 28, "Key Data: Voluntary                                                                            
Turnover":                                                                                                                      
                                                                                                                                
      ? Voluntary   turnover  includes   retirements,  departures                                                               
      for other  opportunities,   and  other  categories  such  as                                                              
      medical necessity                                                                                                         
                                                                                                                                
      ? The  overall  average  voluntary  turnover   rate  for all                                                              
      employees  in the  University  of  Alaska  System from  FY15                                                              
      to FY19 was 11.1 percent                                                                                                  
                                                                                                                                
      ? Comparable   Peer Institutions:   7  percent  Weber  State                                                              
      Univ and 9 percent West Florida Univ                                                                                      
                                                                                                                                
Mr. Johnsen moved to slide 30, "2020 Legislative                                                                                
Priorities":                                                                                                                    
                                                                                                                                
      ? Operating Budget                                                                                                        
      ? Year 2 compact funding - $277M                                                                                          
      ? Single appropriation structure                                                                                          
                                                                                                                                
      ? Capital Budget                                                                                                          
    ? $50M Deferred Maintenance (backlog exceeds $1.2B)                                                                         
      ? $2.5M Alaska Earthquake Center (USArray)                                                                                
                                                                                                                                
      ? Debt Service Relief                                                                                                     
     ? Significant fixed operating cost - $28M annually                                                                         
      ? Principal outstanding - $297M                                                                                           
                                                                                                                                
Mr. Johnsen addressed slide 31, "2020 Legislative                                                                               
Priorities":                                                                                                                    
                                                                                                                                
      ? Technical Vocational Education Program (TVEP)                                                                           
      ? Program expires this year (June 2020)                                                                                   
     ? Funded through payroll deductions $12.4M in FY20                                                                         
     ? Funds high-demand career and technical training                                                                          
      ? UA  receives  45  percent  of  program  dollars  $5.6M  in                                                              
      FY20                                                                                                                      
                                                                                                                                
      ? Dual Enrollment                                                                                                         
      ? Expansion of High School/College enrollment                                                                             
                                                                                                                                
        Alaska Higher Education Investment Fund                                                                                 
      ? Alaska Performance Scholarship Program: $12M                                                                            
        Alaska  Education   Grant:  $6M  ?  WWAMI  Medical  School                                                              
      Program $3M                                                                                                               
                                                                                                                                
Mr. Johnsen displayed slide 33, "Conclusion":                                                                                   
                                                                                                                                
      The University   of  Alaska  appreciates   your  support  as                                                              
      we move   forward,  committed  to  serving  our mission,  to                                                              
      lower   operating   expenses,    and   to  invest   in   the                                                              
      programs  and   initiatives   that  provide   opportunities                                                               
      for our students  and  contribute  to Alaska's  future  by:                                                               
                                                                                                                                
         ? Developing and diversifying our economy                                                                              
          ? Preparing Alaskans for jobs in Alaska                                                                               
           ? Conducting research to solve real problems and                                                                     
           create new opportunities                                                                                             
           ?    Increasing     educational     success     through                                                              
           enrollment and completion                                                                                            
                                                                                                                                
Co-Chair Foster asked about debt service relief on slide                                                                        
30. He noted the principal outstanding debt of roughly $297                                                                     
million.                                                                                                                        
                                                                                                                                
Mr.  Johnsen   replied   that   the  preference   was   the  first                                                              
scenario because of the recurring impact.                                                                                       
                                                                                                                                
Co-Chair  Foster   asked  if  there  was  a specific   number  the                                                              
university was hoping for.                                                                                                      
                                                                                                                                
Mr.  Johnsen  replied   zero.  The  University   would  work  with                                                              
the legislature on the issue.                                                                                                   
                                                                                                                                
Representative    Josephson    asked    about   the   engineering                                                               
program credit hours.                                                                                                           
                                                                                                                                
Mr.  Johnsen  answered   that  it  was  a  challenge  but  also  a                                                              
tremendous   opportunity.   He  did  not  have  the  exact  credit                                                              
hours, but the number was high                                                                                                  
                                                                                                                                
3:00:52 PM                                                                                                                    
                                                                                                                                
Representative   Wool  asked  about  the  difference   in  instate                                                              
and  out  of  state  tuition.  He  asked  for  the  percentage  of                                                              
out of state students.                                                                                                          
                                                                                                                                
Mr.  Johnsen  answered  it  was  common  to charge   out of  state                                                              
tuition.  He  stated  that  roughly  10 percent  of  the  students                                                              
were  from  out  of state,  so  the  increment  was  significant.                                                               
One  of the  recruitment  initiatives  was  to step  out  of state                                                              
more aggressively.                                                                                                              
                                                                                                                                
Representative   Wool  stated   that  if  it  was  10  percent  of                                                              
students,  then  it  would  be  a  significant  tuition   revenue.                                                              
He felt  that  there may  be an  initiative  to  decrease  the out                                                              
of  state   tuition   if   the  recruitment    of  out   of  state                                                              
students was successful.                                                                                                        
                                                                                                                                
3:03:26 PM                                                                                                                    
                                                                                                                                
Representative   LeBon  had come  to  Alaska  for  school  and had                                                              
stayed  in  the state.  He  asked  what  the University   received                                                              
from  the  private   sector,  individuals,   and  businesses.   He                                                              
did  not  know  if there  was  a  way to  present  how  the  trend                                                              
lines had changed over the past 10 to 15 years.                                                                                 
                                                                                                                                
Mr.  Johnsen  would  be happy  to  provide  the  information.  The                                                              
University   had received   slightly  over  $100  million  in  the                                                              
past 10 to 15 years.                                                                                                            
                                                                                                                                
Co-Chair Foster thanked the University for their time.                                                                          
                                                                                                                                
^FY   21   BUDGET    OVERVIEW:   DEPARTMENT    OF   ENVIRONMENTAL                                                             
CONSERVATION                                                                                                                  
                                                                                                                                
3:05:40 PM                                                                                                                    
                                                                                                                                
JASON   BRUNE,   COMMISSIONER,    DEPARTMENT   OF   ENVIRONMENTAL                                                               
CONSERVATION,    provided   a  PowerPoint   presentation    titled                                                              
"Department   of  Environmental    Conservation:   House   Finance                                                              
Committee"  dated  January  28,  2020  (copy  on file).  He  began                                                              
on slide 2, "Our Values":                                                                                                       
                                                                                                                                
      We strive   to provide   excellent  Customer   Service  both                                                              
      inside   and  outside   of   the   organization   by   being                                                              
    professional, responsive, reliable, and respectful.                                                                         
                                                                                                                                
      We are  accountable   for  our  actions  and  stand  proudly                                                              
      behind    our   work,    as    individuals    and    as   an                                                              
      organization.                                                                                                             
                                                                                                                                
      We perform  to the  highest  moral  and ethical  standards,                                                               
      and  produce    transparent   and   consistent   regulatory                                                               
      actions to show our Integrity.                                                                                            
                                                                                                                                
      We support  and  encourage  collaboration   across  programs                                                              
      and  partners    to  meet   challenges   and   further   our                                                              
      collective mission.                                                                                                       
                                                                                                                                
      We  make  objective   decisions,   based   on  science   and                                                              
      facts.                                                                                                                    
                                                                                                                                
Commissioner   Brune  explained   the  main  areas  of  focus  for                                                              
the   department    including   air   quality;    water   quality;                                                              
environmental health; and spill prevention and response.                                                                        
                                                                                                                                
Commissioner Brune reviewed the operational chart briefly.                                                                      
                                                                                                                                
Ms.  Brown  relayed  that  the  ultimate   goal  was  to  maintain                                                              
strong   regulatory    agencies.    The   proposed    budget   was                                                              
effectively flat.                                                                                                               
                                                                                                                                
3:08:49 PM                                                                                                                    
                                                                                                                                
RUTH  KOSTIK,   ADMINISTRATIVE   SERVICES   DIRECTOR,  DEPARTMENT                                                               
OF  ENVIRONMENTAL    CONSERVATION,   OFFICE   OF  MANAGEMENT   AND                                                              
BUDGET,   OFFICE   OF  THE  GOVERNOR,   introduced   herself   and                                                              
indicated   that  the  chart  showed  the  proposed   budget.  She                                                              
identified the various colored areas.                                                                                           
                                                                                                                                
3:10:06 PM                                                                                                                    
                                                                                                                                
Ms.  Kostik looked  at  slide  7, "DEC  FY2021  Operating  Budget:                                                              
Significant Changes":                                                                                                           
                                                                                                                                
      Eliminate Dairy Program                                                                                                   
                                                                                                                                
      .notdef Governor proposed elimination in FY2020                                                                         
                                                                                                                                
      .notdef Legislature restored funding, replacing $15.0 to be                                                             
      paid by the industry                                                                                                      
                                                                                                                                
      .notdef Legislative intent for the Department to pursue fee                                                             
      schedule                                                                                                                  
                                                                                                                                
      .notdef Current permittees include 1 bovine dairy, 1 goat                                                               
      dairy, and 1 bottle manufacturer                                                                                          
                                                                                                                                
      .notdef Conversations with industry indicate any meaningful                                                             
      fees would not be economically feasible                                                                                   
                                                                                                                                
      .notdef Reduce $179.6 and 1 position                                                                                    
           .notdef $164.6 UGF                                                                                                 
           .notdef $15.0 statutory designated program receipts                                                                
                                                                                                                                
Co-Chair  Johnston  asked  about  the  program  as  it related  to                                                              
the federal government.                                                                                                         
                                                                                                                                
Ms.  Kostik  responded  that  the  program  was  required   by the                                                              
federal  government,  but  the  federal  government  did  not have                                                              
a federally run dairy program.                                                                                                  
                                                                                                                                
3:12:32 PM                                                                                                                    
                                                                                                                                
Representative   Knopp  expressed   being  perplexed   about  what                                                              
the  state   was  trying  to  do.  The   Kodiak  dairy   currently                                                              
employed  12  people.  He wondered  about  the reasoning   for the                                                              
closure.                                                                                                                        
                                                                                                                                
Commissioner   Brune   responded   that  the   question   remained                                                              
regarding   what  the  state   could  continue   to  pay  for.  He                                                              
stated  that the  plan was  still in  place to  close the  dairy.                                                               
                                                                                                                                
3:14:20 PM                                                                                                                    
                                                                                                                                
Representative    Knopp   offered    that   he   had   asked   the                                                              
subcommittee   about shifting  some  of  the funds.  He  suggested                                                              
having a conversation with the commissioner.                                                                                    
                                                                                                                                
Commissioner    Brune   responded   that   he  would   welcome   a                                                              
conversation regarding wastewater.                                                                                              
                                                                                                                                
3:15:55 PM                                                                                                                    
                                                                                                                                
Ms.  Kostik looked  at  slide  8, "DEC  FY2021  Operating  Budget:                                                              
Significant Changes":                                                                                                           
                                                                                                                                
      Reduce Commercial Shellfish Testing Subsidy                                                                               
                                                                                                                                
      .notdef Legislature fully subsidized required testing in                                                                
      FY2009                                                                                                                    
                                                                                                                                
      .notdef Commercial industry does not currently pay the                                                                  
      existing fee for analytic testing                                                                                         
           .notdef Industry does bear the cost to collect and ship                                                            
           samples                                                                                                              
                                                                                                                                
      .notdef Testing is required to participate in commercial                                                                
      shellfish markets                                                                                                         
                                                                                                                                
      .notdef Direct cost to State for shellfish testing is $457.7                                                            
                                                                                                                                
      .notdef Additional $269.0 to operate the permitting program                                                             
           .notdef Industry contributes roughly $56.7 in permit                                                               
           fees                                                                                                                 
                                                                                                                                
      .notdef Replace $457.7    Commercial    Passenger     Vessel                                                            
      Environmental Compliance fees for testing                                                                                 
           .notdef $228.8 UGF                                                                                                 
           .notdef $228.9 general fund program receipt                                                                        
                                                                                                                                
Vice-Chair  Ortiz  asked  if  DEC had  talked  to  industry  about                                                              
the planned reduction in the shellfish testing subsidy.                                                                         
                                                                                                                                
Commissioner Brune answered in the affirmative.                                                                                 
                                                                                                                                
Vice-Chair   Ortiz  wondered   where  the   commercial   passenger                                                              
vessel funds would be spent.                                                                                                    
                                                                                                                                
Commissioner   Brune replied  that  the  request  would be  coming                                                              
later in session                                                                                                                
                                                                                                                                
Ms.  Kostik  noted  that  in  a  few slides   they  would  discuss                                                              
where  they  were replacing   the funds  within  the  Division  of                                                              
Water in the coming year.                                                                                                       
                                                                                                                                
Vice-Chair   Ortiz   stated   that  industry   did  not   pay  for                                                              
actual  testing,   but  they  would  have  to  pay  for  operating                                                              
costs.                                                                                                                          
                                                                                                                                
Commissioner Brune agreed.                                                                                                      
                                                                                                                                
Vice-Chair  Ortiz  asked  about  when the  department  had  spoken                                                              
to SARDFA, and the cost of the program.                                                                                         
                                                                                                                                
Ms. Kostik replied $228,000.                                                                                                    
                                                                                                                                
Vice-Chair   Ortiz  asked  if  industry   could  absorb  the  cost                                                              
and was it amenable to the change.                                                                                              
                                                                                                                                
Commissioner   Brune   replied  that   any  industry   that  would                                                              
have  increased   cost  was  not   enthusiastic.   He  stated  the                                                              
discussion  needed  to  occur and  he would  continue  to  examine                                                              
the issue.                                                                                                                      
                                                                                                                                
Vice-Chair   Ortiz   was  hearing   a  desire   to  increase   the                                                              
mariculture   industry  and  shellfish   production.   He  thought                                                              
there  was  an increase  demand  for  services  in  the state.  He                                                              
asked  how  the  reduction   played  into   the  overall  goal  of                                                              
trying to expand the economy.                                                                                                   
                                                                                                                                
Commissioner   Brune   answered  that   the  governor   wanted  to                                                              
expand   the  economy,    and  support   was   important   in  the                                                              
infancy  of  an  industry,   but  at  some  point,  it  needed  to                                                              
decrease  the  costs.  He stressed   that  the governor  was  very                                                              
interested in the growing the industry for the state                                                                            
                                                                                                                                
3:24:15 PM                                                                                                                    
                                                                                                                                
Vice-Chair    Ortiz    believed    it   was    the   department's                                                               
assessment   it  was  inappropriate    to  use  the   cruise  ship                                                              
passenger  vessel  fees  in this  way. He  asked  how long  it had                                                              
been taking place.                                                                                                              
                                                                                                                                
Ms.  Kostik replied  she  believed  it had  been  since either  FY                                                              
15 or FY 16.                                                                                                                    
                                                                                                                                
Commissioner    Brune   added   that   the   administration    was                                                              
interested   in  truth  in  budgeting,  and  believed   the  funds                                                              
should come from general funds.                                                                                                 
                                                                                                                                
3:25:39 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster  stated  his  understanding   that  the  proposal                                                              
would be to increase testing capacity and permits.                                                                              
                                                                                                                                
Ms.  Kostik  answered   that  in  FY 19  the  permitting   program                                                              
issued 292 permits.                                                                                                             
                                                                                                                                
Co-Chair  Foster   asked  how  many  had to  do  with  the  actual                                                              
testing.                                                                                                                        
                                                                                                                                
Ms.  Kostik answered   that in  FY 19 the  department  had  tested                                                              
596 samples.                                                                                                                    
                                                                                                                                
Co-Chair   Foster   requested   follow   up  on   the  number   of                                                              
entities.                                                                                                                       
                                                                                                                                
Representative    Wool    asked   for   verification    that   the                                                              
department   was  proposing  a  split,  and  assumed   the  tested                                                              
samples were paid by the business owner.                                                                                        
                                                                                                                                
Representative    Josephson    commented    that   the    Dunleavy                                                              
administration   benefited   from  the  legislature's   repeal  of                                                              
the oil and gas tax credits.                                                                                                    
                                                                                                                                
Vice-Chair   Ortiz  stressed  that  currently   the  program  used                                                              
CPV funds and did not currently a draw on UGF.                                                                                  
                                                                                                                                
Vice-Chair  Ortiz  thought  it  was not  appropriate  to  have the                                                              
cruise   ship  industry   pay  for  the   testing  necessary   for                                                              
another  industry.  He  asked  if the  cruise  ship  industry  had                                                              
complained about the issue.                                                                                                     
                                                                                                                                
Commissioner   Brune answered  in  the  negative.  He stressed  it                                                              
was a truth in budgeting issue.                                                                                                 
                                                                                                                                
3:30:41 PM                                                                                                                    
                                                                                                                                
Ms.  Kostik   advanced   to  slide   9,  "DEC   FY2021   Operating                                                              
Budget: Significant Changes":                                                                                                   
                                                                                                                                
      Reduce Prevention Account Expenditures                                                                                    
                                                                                                                                
      .notdef Prevention Account funded by                                                                                    
           .notdef $0.04 per barrel of crude oil                                                                              
           .notdef $0.0095 per gallon of refined fuel                                                                         
                                                                                                                                
      .notdef Fund projected to run a deficit as early as FY2024                                                              
                                                                                                                                
      .notdef Stop regulation of Class II facilities and reduced                                                              
      capacity in Training and Guidance unit, Contaminated                                                                      
      Sites, and administrative support                                                                                         
                                                                                                                                
      .notdef Reduce $1,019.1 and 7 positions                                                                                 
           .notdef $643.5 prevention account                                                                                  
           .notdef $375.6 federal receipts                                                                                    
                                                                                                                                
      .notdef Increase $375.0 oil/haz interagency receipts to                                                                 
      reflect average annual personal services charged to                                                                       
      emergency response account                                                                                                
                                                                                                                                
Co-Chair   Foster  asked   what  types  of  tank   farms  she  was                                                              
referring to. He asked if they were in small communities.                                                                       
                                                                                                                                
Ms. Kostik would have to follow up on the question.                                                                             
                                                                                                                                
Commissioner   Brune   added   they  were   tanks  that   did  not                                                              
require contingency plans.                                                                                                      
                                                                                                                                
Representative    Josephson   stated   that   the   Environmental                                                               
Protection  Agency's   budget  had been  slashed.   He asked  what                                                              
that  meant   - he  wondered   if  someone   from  the  EPA  would                                                              
inspect the tanks.                                                                                                              
                                                                                                                                
Ms.  Kostik would  have  to check  with  the program  to  see what                                                              
the  EPA would  do.  She  noted  the facilities   were relatively                                                               
low   risk.  They   had   identified   the  list   of  class   two                                                              
facilities.                                                                                                                     
                                                                                                                                
Representative   Josephson  noted  that  the  state  did not  have                                                              
primacy over the regulation.                                                                                                    
                                                                                                                                
Ms. Kostik affirmed.                                                                                                            
                                                                                                                                
Representative   Josephson  stated  his  concern  that  the  state                                                              
under  regulated.  He  recalled  the  9 mile  plume  and the  need                                                              
for  potable  water  in  North  Pole.   He would   like  assurance                                                              
that the change was acceptable.                                                                                                 
                                                                                                                                
Ms.  Kostik   clarified   that   DEC  had   been  regulating   and                                                              
providing  assistance.   She stressed  that  it  was misstated  on                                                              
the slide.                                                                                                                      
                                                                                                                                
Commissioner   Brune added  there  was  a consideration   of Flint                                                              
Hills.                                                                                                                          
                                                                                                                                
Representative   Josephson   had  been  happy   to  see  that.  He                                                              
noted  that  the  previous   SPAR  director  had  concerns   about                                                              
using SPAR funds.                                                                                                               
                                                                                                                                
Commissioner   Brune  understood  the  concern,  and  stated  that                                                              
the  goal was  to reach  $50 million  in  case a  spill  occurred,                                                              
especially  if  there  was  not a  responsible  party.  There  was                                                              
He  noted  that  a  situation  in  Wrangell   had  no responsible                                                               
party and the state would not see the funds again.                                                                              
                                                                                                                                
3:39:03 PM                                                                                                                    
                                                                                                                                
Representative    Wool  referenced   the   $0.04  per   barrel  of                                                              
crude   oil  and  $0.0095   per   gallon   of  refined   oil,  and                                                              
queried the link to hydrocarbons.                                                                                               
                                                                                                                                
Commissioner    Brune    answered    it   was   not    linked   to                                                              
hydrocarbons.                                                                                                                   
                                                                                                                                
Representative   Wool asked  if  it was  called a  spill -  it had                                                              
been  intentionally    dumped  and   the  impact  had   only  been                                                              
identified after the fact.                                                                                                      
                                                                                                                                
Commissioner   Brune answered  it  was a  great point  and  he was                                                              
trying  to grasp  the  issue. He  stated  it was  classified  as a                                                              
spill,  and  they would  develop  a  plan  to remediate  and  make                                                              
drinking water safe.                                                                                                            
                                                                                                                                
Ms.  Kostik added  that  the statutory   language  talked  about a                                                              
release and not necessarily a spill.                                                                                            
                                                                                                                                
Representative   Wool  asked  if  there  was  discussion  about  a                                                              
state limit for use of pfas.                                                                                                    
                                                                                                                                
Commissioner   Brune  agreed.  He was  happy  to  further  discuss                                                              
the issue later on.                                                                                                             
                                                                                                                                
Representative   Wool  referred  to  the 70  parts  per  trillion,                                                              
which  was the  EPA lifetime   exposure.  He wondered  whether  it                                                              
was only an additive of the toxic elements.                                                                                     
                                                                                                                                
Commissioner Brune answered that the department continued                                                                       
to examine, but the focus was currently on the two                                                                              
individual compounds.                                                                                                           
                                                                                                                                
Ms. Kostik continued to discuss slide 9.                                                                                        
                                                                                                                                
3:45:41 PM                                                                                                                    
                                                                                                                                
Commissioner Brune added that it was important to determine                                                                     
the programs that did not need legislative appropriation to                                                                     
access the funds for emergencies.                                                                                               
                                                                                                                                
Ms. Kostik turned to slide 10, "DEC FY2021 Operating                                                                            
Budget: Significant Changes":                                                                                                   
                                                                                                                                
      Regulate Wastewater in Port Communities                                                                                   
                                                                                                                                
      .notdef 1.2 million cruise ship passengers in 2019                                                                      
                                                                                                                                
      .notdef Increased daily load in the summer has significant                                                              
      impacts on systems                                                                                                        
                                                                                                                                
      .notdef Replace $454.6 UGF with Commercial Passenger Vessel                                                             
      Environmental Compliance fees                                                                                             
                                                                                                                                
3:46:44 PM                                                                                                                    
                                                                                                                                
Ms. Kostik advanced to slide 11, "DEC FY2021 Operating                                                                          
Budget: Significant Changes":                                                                                                   
                                                                                                                                
      Transfer Monitoring of Cruise Ship Air Emissions                                                                          
                                                                                                                                
      .notdef Moves enforcement from Division of Water to Division                                                            
      of Air Quality                                                                                                            
                                                                                                                                
      .notdef Activities include                                                                                              
           .notdef Opacity readings                                                                                           
           .notdef Ambient air monitoring                                                                                     
           .notdef Complaint response                                                                                         
                                                                                                                                
      .notdef Transfer $312.6   Commercial     Passenger    Vessel                                                            
      Environmental Compliance fees and 1 position                                                                              
                                                                                                                                
      .notdef No increase to costs .notdef No change in services                                                            
                                                                                                                                
Vice-Chair  Ortiz  asked  about  the monitoring   that took  place                                                              
for cruise ship air emissions in port communities.                                                                              
                                                                                                                                
Ms.  Kostik  answered  that  there  was an  opacity  reading  that                                                              
was  based  on  the  emissions  coming   from  the  smokestack  of                                                              
cruise  ships.  she  remarked  that  the color  was  important  to                                                              
determine the level of pollutants in the emissions.                                                                             
                                                                                                                                
Vice-Chair  Ortiz  surmised   an individual   within  DEC  did the                                                              
review.                                                                                                                         
                                                                                                                                
Ms. Kostik believed so and she would follow up.                                                                                 
                                                                                                                                
Commissioner    Brune    answered    there    was   an    approved                                                              
methodology for the program.                                                                                                    
                                                                                                                                
Vice-Chair   Ortiz  asked  if  the  test  happened  every  time  a                                                              
cruise ship came into a port.                                                                                                   
                                                                                                                                
Commissioner   Brune  would   follow  up.  He  did  not  know  the                                                              
frequency of testing.                                                                                                           
                                                                                                                                
3:49:24 PM                                                                                                                    
                                                                                                                                
Ms.  Kostik moved  to  slide 12,  "DEC  FY2021  Operating  Budget:                                                              
Significant Changes":                                                                                                           
                                                                                                                                
      Increase Inspections for Alaska Pollutant Discharge                                                                       
      Elimination Systems (APDES) Program                                                                                       
                                                                                                                                
      .notdef Primacy over portion of Clean Water Act                                                                         
                                                                                                                                
      .notdef Permits all major industries in Alaska                                                                          
                                                                                                                                
      .notdef Alaska received failing grade in recent EPA review                                                              
      due to staffing deficiencies                                                                                              
                                                                                                                                
      .notdef EPA conducting inspections on DEC's behalf                                                                      
                                                                                                                                
      .notdef RPL approved in December added $430.0 Fed to fund 4                                                             
      new positions in FY2020                                                                                                   
                                                                                                                                
  .notdef Increase $573.0 Fed and positions funded in RPL                                                                     
           .notdef Increased inspections by DEC staff                                                                         
           .notdef Improve program performance                                                                                
                                                                                                                                
3:50:28 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Ortiz  would  have  questions  on  the  Ocean  Ranger                                                              
slide. He held the last slide for a later time.                                                                                 
                                                                                                                                
Commissioner   Brune  offered  to meet  with  individuals   on the                                                              
committee                                                                                                                       
                                                                                                                                
Representative   LeBon  thanked  the commissioner   for  traveling                                                              
to Fairbanks   and the  Chamber  of Commerce  on  the air  quality                                                              
challenge that had existed for a number of years.                                                                               
                                                                                                                                
3:52:29 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:53:12 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HB   205  was   HEARD   and  HELD   in   committee   for   further                                                              
consideration.                                                                                                                  
                                                                                                                                
HB   206  was   HEARD   and  HELD   in   committee   for   further                                                              
consideration.                                                                                                                  
                                                                                                                                
Vice-Chair   Ortiz  reviewed   the  meeting   for  the   following                                                              
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
3:53:40 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:53 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
01.28.2020 HFC Department Overview.pdf HFIN 1/28/2020 1:30:00 PM
DEC Overview HFIN
2019 08 13 UA-SOA-Compact.pdf HFIN 1/28/2020 1:30:00 PM
UA Document re:Overview HFIN
2019 11 22 Buretta to Ms. Sanders Response to the Legislative Intent Language.pdf HFIN 1/28/2020 1:30:00 PM
UA Document re:Overview HFIN
2019 09 13 Gov Dunleavy AK Delegation Land Grand Ltr.pdf HFIN 1/28/2020 1:30:00 PM
UA Document re:Overview HFIN
2019 12 03 Buretta to Gov Dunleavy_FY20 Compact Report.pdf HFIN 1/28/2020 1:30:00 PM
UA Document re:Overview HFIN
2020 01 28 UA House Finance Committee Final.pdf HFIN 1/28/2020 1:30:00 PM
UA Overview - HFIN
02.05.2020 - DEC Response to HFC 01.28.2020 Questions.pdf HFIN 1/28/2020 1:30:00 PM
DEC Overview Response