Legislature(2019 - 2020)ADAMS ROOM 519

02/04/2020 01:30 PM FINANCE

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Audio Topic
01:33:03 PM Start
02:39:41 PM Department of Administration
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ FY21 Dept. Budget Overviews: TELECONFERENCED
- Dept. of Education & Early Development
- Dept. of Administration
                   HOUSE FINANCE COMMITTEE                                                                                      
                      February 4, 2020                                                                                          
                          1:33 p.m.                                                                                             
1:33:03 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:33 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                                                                                                                
ALSO PRESENT                                                                                                                  
Michael Johnson,  Commissioner, Department of  Education and                                                                    
Early  Development;  Neil  Steininger, Director,  Office  of                                                                    
Management  and  Budget,  Office   of  the  Governor;  Heidi                                                                    
Teshner, Director, Finance  and Support Services, Department                                                                    
of   Education  and   Early  Development;   Kelly  Tshibaka,                                                                    
Commissioner,  Department  of  Administration;  Brad  Ewing,                                                                    
Administrative    Services     Director,    Department    of                                                                    
Administration/Department of  Revenue, Office  of Management                                                                    
and Budget.                                                                                                                     
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 OVERVIEWS:                                                                                                         
     DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                              
     DEPARTMENT OF ADMINISTRATION                                                                                               
Co-Chair Foster reviewed the agenda for the meeting.                                                                            
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."                                                                                                        
1:33:57 PM                                                                                                                    
^DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                                
1:34:01 PM                                                                                                                    
MICHAEL JOHNSON, COMMISSIONER, DEPARTMENT OF EDUCATION AND                                                                      
EARLY DEVELOPMENT, introduced himself.                                                                                          
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE OF  THE GOVERNOR, shared  that until two  weeks prior                                                                    
he had  served as  the administrative services  director for                                                                    
the department.                                                                                                                 
1:34:56 PM                                                                                                                    
Commissioner  Johnson  provided  a  PowerPoint  presentation                                                                    
titled  "Department  of   Education  and  Early  Development                                                                    
(DEED): FY  2021 Budget  Overview House  Finance Committee,"                                                                    
dated  February   4,  2020  (copy   on  file).   He  briefly                                                                    
highlighted slides 2 and 3:                                                                                                     
     Our Mission                                                                                                                
          An  excellent education  for  every student  every                                                                    
     Our Vision                                                                                                                 
          All students  will succeed in their  education and                                                                    
          work,  shape worthwhile  and satisfying  lives for                                                                    
          themselves, exemplify the  best values of society,                                                                    
          and be  effective in  improving the  character and                                                                    
          quality of the world about  them.   Alaska Statute                                                                    
          DEED  exists  to provide  information,  resources,                                                                    
          and leadership  to support an  excellent education                                                                  
          for every student every day.                                                                                          
Commissioner Johnson moved on to discuss slide 4 titled                                                                         
 Alaska's Education Challenge. He read from the slide:                                                                          
     An excellent education for every student every day.                                                                        
     Cultivate Safety and Well-Being                                                                                            
          All  schools  will  be safe  and  nourish  student                                                                    
     Increase Student Success                                                                                                   
          Success   will   be  identified   using   multiple                                                                    
          measures as part of a rich and varied curriculum.                                                                     
     Support Responsible and Reflective Learners                                                                                
          Families, tribes, educators,  and communities will                                                                    
          provide relevant learning opportunities.                                                                              
1:36:48 PM                                                                                                                    
Commissioner Johnson turned to slide  5 titled  DEED FY 2021                                                                    
Operating  Budget:  Leadership.   He briefly  addressed  the                                                                    
department's organizational  structure that was  depicted on                                                                    
the slide.  He offered that  the department reported  to the                                                                    
State Board of Education.                                                                                                       
1:37:14 PM                                                                                                                    
HEIDI  TESHNER,  DIRECTOR,  FINANCE  AND  SUPPORT  SERVICES,                                                                    
DEPARTMENT  OF  EDUCATION  AND EARLY  DEVELOPMENT,  reviewed                                                                    
slide 6  titled  FY  2021 Operating Budget  Comparison.  She                                                                    
explained  that  the  chart and  graph  showed  the  overall                                                                    
snapshot of the departments   budget and broad categories of                                                                    
funding.  She pointed  to the  table  at the  bottom of  the                                                                    
slide that  showed the  approximate $15.4  million reduction                                                                    
from FY  19 through FY  21. She commented that  the one-time                                                                    
funding outside  of the  foundation formula  appropriated in                                                                    
FY 19 was  not included in the FY 21  budget. She listed the                                                                    
 Significant Items contained in the FY 21 budget:                                                                               
   • The foundation formula was fully funded with a Base                                                                        
     Student Allocation (BSA) of $5,930.                                                                                        
   • Additional federal authority for the Comprehensive                                                                         
     Literacy State Development Grant.                                                                                          
   • The Residential Schools Program added two new schools.                                                                     
   • The budget discontinued the Online With Libraries                                                                          
     Video Conference Network (OWL).                                                                                            
   • Outsourced Federal Family Education Loan Program                                                                           
     (FFELP) Loans.                                                                                                             
Ms. Teshner  expounded that  the literacy  grant was  a five                                                                    
year grant worth  about $25 million. She noted  that the two                                                                    
new  residential  schools  added  approximately  $9  hundred                                                                    
thousand in Unrestricted General Funds (UGF).                                                                                   
Co-Chair  Foster  asked  if  the  $30  million  in  one-time                                                                    
funding was  included in the  slide. Mr.  Steininger replied                                                                    
that  the funds  were not  included in  the slide.  Co-Chair                                                                    
Foster  asked why  the slide  did not  contain the  spending                                                                    
difference between the  FY 20 and FY 21  budget yet compared                                                                    
FY  19 to  FY 21.  He  assumed the  information was  readily                                                                    
available. Mr.  Steininger answered  in the  affirmative. He                                                                    
was uncertain why the slide did  not contain the FY 20 to FY                                                                    
21 comparison.                                                                                                                  
1:40:08 PM                                                                                                                    
Representative Sullivan-Leonard  referred to  the Department                                                                    
of Health  and Social  Services (DHSS) budget  presented the                                                                    
previous day. She noted the  budget included early education                                                                    
funding. She  asked whether the  funding originated  in DEED                                                                    
and was  transferred to DHSS. Commissioner  Johnson believed                                                                    
she  was referencing  the Parents  as Teachers  program. The                                                                    
program was not changed, it  was just moved. He deferred the                                                                    
answer to Ms. Teshner that was addressed in a later slide.                                                                      
Representative   Wool  asked   whether  Mt.   Edgecumbe  was                                                                    
considered a  residential school.  Ms. Teshner  replied that                                                                    
Mt. Edgecumbe  was a state  run residential school.  The two                                                                    
additional  residential schools  were administered  by their                                                                    
1:41:49 PM                                                                                                                    
Ms. Teshner  turned to slide  7 titled  FY 2021  Fund Source                                                                    
Breakdown by  Fund Category.  She highlighted  that the bulk                                                                    
of DEED  funding was UGF  mostly expended on  the foundation                                                                    
formula. She  pointed to the  agency operating  formula line                                                                    
on  the  upper table.  Included  in  the formula  line  were                                                                    
payments for  special schools,  youth in  detention, student                                                                    
transportation,  and residential  schools. She  relayed that                                                                    
the chart  also included duplicated funds  that helped track                                                                    
expenditures   assigned    to   two    different   budgetary                                                                    
categories.   The    Higher   Education    Investment   Fund                                                                    
represented the  majority of the  Other  Funds  category and                                                                    
was noted  under Designated General Funds  (DGF) funding the                                                                    
Alaska  Performance   Scholarship  awards  and   the  Alaska                                                                    
Education  Grants  that  were  administered  by  the  Alaska                                                                    
Commission on  Postsecondary Education (ACPE).  In addition,                                                                    
DGF was  used for School Broadband  Assistance (BAG) grants.                                                                    
She moved  to slide  8 titled   Department of  Education and                                                                    
Early  Development   Budget   and  reported   that  District                                                                    
Support represented 80 percent of  the entire budget at over                                                                    
$1.3  billion. The  entirety of  the department's  operation                                                                    
was accomplished through the  remaining 20 percent amounting                                                                    
to  approximately  $324  million.  She  indicated  that  the                                                                    
largest  division  in the  department  was  the Division  of                                                                    
Innovation  and  Education  Excellence  containing  most  of                                                                    
DEEDs   federal  programs. Child  Nutrition and  the  Alaska                                                                    
Commission  on  Postsecondary   Education  (ACPE)  were  the                                                                    
second   and  third   largest   budgetary  components.   She                                                                    
indicated  that  DEEDs   overall budget  totaled  over  $1.6                                                                    
Vice-Chair Ortiz  asked where school construction  and major                                                                    
maintenance fell in the department's  budget. He asked if it                                                                    
was  in  the capital  budget  and  whether there  was  money                                                                    
appropriated.  Ms.  Teshner  answered that  the  items  were                                                                    
typically in  the capital budget. The  governor's budget did                                                                    
not  include  any funding  for  the  items. She  added  that                                                                    
school debt  reimbursement was  funded through  Debt Service                                                                    
and was not included in the DEED budget.                                                                                        
1:45:20 PM                                                                                                                    
Vice-Chair Ortiz asked  if there would be  an opportunity to                                                                    
address  school  maintenance  at another  meeting.  Co-Chair                                                                    
Foster deferred  the answer to  the Capital  Budget co-chair                                                                    
[Rep. Johnston].                                                                                                                
1:45:51 PM                                                                                                                    
AT EASE                                                                                                                         
1:47:00 PM                                                                                                                    
Vice-Chair   Ortiz  asked   what   the   average  spend   on                                                                    
construction and  major maintenance had been  in past years.                                                                    
Ms. Teshner answered  that she did not  have the information                                                                    
with her. She offered to  follow up. She remembered that for                                                                    
a number of  years the cost had been around  $25 million but                                                                    
declined  over  recent  years. Vice-Chair  Ortiz  asked  for                                                                    
verification that currently nothing  was appropriated in the                                                                    
budget for  construction and major maintenance.  Ms. Teshner                                                                    
answered in the affirmative.                                                                                                    
Representative Knopp cited slide 6  showing the FY 19 and FY                                                                    
21 budget  comparison. He asked about  the one-time funding.                                                                    
He recounted that  in FY 19 the one-time  funding amount was                                                                    
$20  million  but  an additional  one-time  funding  in  the                                                                    
amount of $30  million was outstanding. He  asked whether he                                                                    
was correct. Ms. Teshner answered  in the affirmative adding                                                                    
that there  had been $20  million appropriated in FY  19 and                                                                    
the  department recently  received  the $30  million in  the                                                                    
current week.                                                                                                                   
Representative Knopp  asked if the $30  million was included                                                                    
in the  overview numbers. Mr.  Steininger answered  that the                                                                    
slide had been produced prior to the funding distribution.                                                                      
1:47:00 PM                                                                                                                    
Ms. Teshner followed up on  Vice-Chair Ortiz's question. She                                                                    
clarified that  the school debt  reimbursement funded  at 50                                                                    
percent   had  a   small  amount   of  funding   for  school                                                                    
construction  and  maintenance   included  in  the  Regional                                                                    
Education   Attendance  Area   (REAA)   category  that   was                                                                    
available to small municipal school districts and REAAs.                                                                        
Co-Chair  Foster  believed that  the  amount  was about  $19                                                                    
million and  was  tied  by formula to  the school  bond debt                                                                    
program,   which amounted  to nearly  $50 million.  He asked                                                                    
whether his recollection was  correct. Ms. Teshner responded                                                                    
in the affirmative.                                                                                                             
Representative Sullivan-Leonard asked  for information about                                                                    
how the  administration was looking at  reducing the budget.                                                                    
She highlighted  that the bulk  of the budget was  over $1.3                                                                    
billion  for K-12  district support.  She noted  that DEEDs                                                                     
budget was  the states  largest.  She wondered how  to bring                                                                    
the spending down to a  more sustainable level. Commissioner                                                                    
Johnson  answered  that  school districts  were  continually                                                                    
going through a  budget process and finding ways  to be more                                                                    
efficient.  He offered  that  the  districts understood  the                                                                    
state's budget pressure.  He added that one way  to make the                                                                    
system more  efficient was  to improve  reading proficiency.                                                                    
Students  with  reading  problems   after  the  third  grade                                                                    
required extra  supports and interventions that  became more                                                                    
expensive to the system.                                                                                                        
1:53:06 PM                                                                                                                    
Co-Chair  Johnston  asked   whether  efficiencies  would  be                                                                    
created as  districts began cooperating more  and exchanging                                                                    
their   centers of  excellence  with  each other  to improve                                                                    
outcomes  and  lower  costs. She  noted  the  importance  of                                                                    
examining how  the state was  funding education in  order to                                                                    
meet  future needs.  Commissioner  Johnson  answered in  the                                                                    
affirmative. He  relayed that the department  was looking at                                                                    
being  more efficient,  but  the budget  did  not include  a                                                                    
reduction  to  education   funding.  School  districts  were                                                                    
currently  sharing  services   for  things  like  vocational                                                                    
studies  and teaching.  Each year  brought more  examples of                                                                    
districts  working  to  increase efficiency  and  innovation                                                                    
that  delivered an  increased  quality  of instruction.  Co-                                                                    
Chair  Johnston remarked  that  at some  point  it would  be                                                                    
necessary  to  adjust the  current  formula  to meet  future                                                                    
needs   rather   than    maintaining   outdated   modes   of                                                                    
instruction.  Commissioner Johnson  agreed.  He stated  that                                                                    
any  time  changing the  formula  was  mentioned people  got                                                                    
nervous;  however,  the  current formula  was  developed  in                                                                    
1999.  He thought  it would  benefit students  if the  state                                                                    
improved  the  formula  that  included  innovative  ways  to                                                                    
deliver educational services.                                                                                                   
Co-Chair Foster spoke to keeping  the budget at a manageable                                                                    
level. He  identified the foundation  formula as  an element                                                                    
that was not something  the department currently had control                                                                    
over.  He  mentioned  the  650 decrease  in  the  number  of                                                                    
students  but  an increase  in  costs  due  to a  growth  in                                                                    
special needs students.                                                                                                         
1:57:07 PM                                                                                                                    
Commissioner  Johnson   confirmed  that  there   were  fewer                                                                    
students  in  the  state  but   a  significant  increase  in                                                                    
intensive  needs students  using 13  times the  Base Student                                                                    
Allocation (BSA), which offset  the potential savings of the                                                                    
reduction in overall students.                                                                                                  
Co-Chair Foster  thought that the  increase was  $15 million                                                                    
or  $19 million.  He asked  for  clarification. Ms.  Teshner                                                                    
answered  that the  difference in  basic projected  need was                                                                    
$19.7 million.                                                                                                                  
Representative Merrick asked what  qualified as an intensive                                                                    
student. Commissioner Johnson  answered that seven different                                                                    
categories  comprised  the  criteria   used  to  evaluate  a                                                                    
student  by an  Individual  Education Plan  (IEP) team  that                                                                    
included the teacher,  special education teacher, principal,                                                                    
and  parent; if  a student  met all  the criteria  they were                                                                    
identified as  an intensive student.  Representative Merrick                                                                    
asked if all  the intensive students were  calculated at the                                                                    
full  13 times  the BSA  regardless  of the  level of  need.                                                                    
Commissioner Johnson  answered in the affirmative  and noted                                                                    
that it was the way the model was currently set up.                                                                             
1:59:13 PM                                                                                                                    
Representative  Wool  asked  about  intensive  students.  He                                                                    
wondered  if the  classification had  existed for  some time                                                                    
and   whether  it   required  a    new  level   of  staffing                                                                    
requirements.  Commissioner Johnson  answered that the model                                                                    
had  been  in place   for  some  time.  The  seven  criteria                                                                    
included  things like  needing  assistance  with a  personal                                                                    
need or  transportation. He explained that  criteria did not                                                                    
necessarily mean an autistic student  would be identified as                                                                    
an  intensive   student.  However,   if  identified   as  an                                                                    
intensive student,  the student  received a staff  person to                                                                    
act as an  assistant. Representative Wool used  autism as an                                                                    
example and  noted the large  increase nationally.  He asked                                                                    
if  the  special  needs increase  was  more  recent  through                                                                    
increased  diagnosis and  an increased  awareness that  more                                                                    
intervention    and   resources    should   be    allocated.                                                                    
Commissioner  Johnson  answered  that the  department  could                                                                    
follow  up with  details  regarding the  increase. He  added                                                                    
that the department audited the  records and could share the                                                                    
data with the committee.                                                                                                        
2:02:00 PM                                                                                                                    
Vice-Chair Ortiz highlighted the  concern about pressures to                                                                    
drive  down costs  in education.  He  cited the  presenters'                                                                    
mention  of  the governor's  desire  to  attract and  retain                                                                    
teachers. He deduced that the  effort worked in the opposite                                                                    
direction  of the  goal to  drive  down costs.  Commissioner                                                                    
Johnson  answered that  one could  argue both  perspectives;                                                                    
that retaining  more teachers  was a  cost increase  or that                                                                    
retention was   more  cost effective.  He commented  that no                                                                    
one wanted to work in  ineffective schools. He observed that                                                                    
if the state wanted to  retain more teachers, providing more                                                                    
supports  was  necessary  to  create  an  environment  where                                                                    
people  wanted  to  work.  He   did  not  believe  providing                                                                    
supports required an increase in  funds; it ensured that the                                                                    
current funding was spent effectively.                                                                                          
Ms.  Teshner   examined  slide   9  titled    Department  of                                                                    
Education  and Early  Development Budget   containing a  pie                                                                    
chart that broke  out the department's budget  by line item.                                                                    
She shared  that 95 percent  of the departments   budget was                                                                    
comprised  of pass  through grants  to school  districts and                                                                    
other   educational  entities.   She   explained  that   the                                                                    
remaining 5 percent was spent  on the department's needs. On                                                                    
average  $5.8 million  in grants  was  distributed per  DEED                                                                    
employee  and for  every dollar  in operational  costs about                                                                    
$18.50 was dispersed to communities.                                                                                            
2:04:41 PM                                                                                                                    
Ms.  Teshner turned  to slide  10 titled   FY 2021  Budget -                                                                    
Notable Items in the K-12 Aid to School Districts:                                                                              
   • Foundation Program Fully Funded                                                                                            
        o BSA $5,930                                                                                                            
   • Public School   Trust   Fund   (PSTF)   Appropriation                                                                      
     Structural Change                                                                                                          
        o Percent of Market Value (POMV) draw from the PSTF                                                                     
          is now directly deposited into the Public                                                                             
          Education Fund.                                                                                                       
        o This provides more predictability for investment                                                                      
          management and potentially greater returns.                                                                           
        o Appears as a $21.5M decrement but is matched by                                                                       
          an appropriation in the language section of the                                                                       
          bill. No change to the funding level.                                                                                 
Ms. Teshner elaborated  that the change from  the numbers to                                                                    
language  section of  the Operating  Budget bill  helped the                                                                    
Department  of  Revenue  (DOR) better  manage  the  fund  by                                                                    
eliminating  the need  to manage  the cash  flow daily.  The                                                                    
funds would be deposited once  a year directly to the Public                                                                    
Education Fund, which allowed for greater returns.                                                                              
2:06:18 PM                                                                                                                    
Mr.  Steininger interjected  that structural  changes within                                                                    
the  way the  appropriations  were made  from  the fund  and                                                                    
simplifying  the cash  flow could  result in  better returns                                                                    
over time.  He delineated that currently  daily expenditures                                                                    
were  made  directly  from the  Public  School  Trust  Fund,                                                                    
managing  the fund  as  a checking  account.  The cash  flow                                                                    
model limited  DORs  ability to  manage the fund  versus the                                                                    
POMV  model  that  enabled  a   single  draw,  allowing  the                                                                    
department  to  predict the  draws   amount  and timing  and                                                                    
offer the  management flexibility that ideally  would result                                                                    
in better returns  over time. Although not  a guarantee, the                                                                    
additional flexibility could provide benefits.                                                                                  
Co-Chair Foster  surmised that  Mr. Steininger  described an                                                                    
accounting  change in  the process  to simplify  things that                                                                    
did not  require additional funds.  He described  the change                                                                    
as pretty innocuous.                                                                                                            
2:08:07 PM                                                                                                                    
Ms.  Teshner moved  to slide  11  titled "FY  2021 Budget  -                                                                    
Notable Items in the K-12 Support:                                                                                              
   • Residential Schools Program Component Name Change                                                                          
    o Better reflects the activities performed in this                                                                          
   • $900.2 UGF  Addition of Two New Residential Programs                                                                       
    o $330.2, 20-bed program in the North Slope Borough                                                                         
          School District approved by Department in Dec                                                                         
    o $570.0, 50-bed program in the Lower Yukon School                                                                          
          District approved by Department in Sept 2019.                                                                         
Co-Chair Foster  wondered whether  the programs  reflected a                                                                    
full   school  year   for  the   residential  programs.   He                                                                    
understood  that one  program  enabled a  student to  travel                                                                    
from  a  village  to Anchorage  for  an  eight-week  program                                                                    
versus a  residential school in  Galena that operated  for a                                                                    
full school  year. Ms. Teshner  replied in  the affirmative.                                                                    
She indicated that both  programs were considered  variable-                                                                    
term.   The  two  programs  offered  the  ability  for  more                                                                    
students to come  through and take advantage  of the classes                                                                    
the programs offered through variable terms.                                                                                    
Vice-Chair  Ortiz  was  supportive of  the  two  residential                                                                    
programs. He  noted that the  cost was a  $900,000 increment                                                                    
in a time when funds  dedicated to education was decreasing.                                                                    
He  asked  whether  the  funds   worked  mutually  with  the                                                                    
department's   overall  goal   and   the  Alaska   Education                                                                    
Challenge.  Commissioner Johnson  answered "Absolutely."  He                                                                    
reported that  the programs directly  related to  the second                                                                    
challenge  goal  of  providing  more  Career  and  Technical                                                                    
Education  (CTE) to  students.  In  addition, the  districts                                                                    
were exploring ways to offer  more opportunities to students                                                                    
within the existing structures.  He explained that the Lower                                                                    
Yukon School  District program was developed  and offered in                                                                    
conjunction   with  the   Anchorage   School  District   and                                                                    
benefitted  both districts  students. He  believed that  the                                                                    
program accomplished  the mission of the  department and the                                                                    
Alaska Education  Challenge to improve the  effectiveness of                                                                    
the system.                                                                                                                     
2:11:57 PM                                                                                                                    
Representative Wool  asked for  verification that  the items                                                                    
were for  programs and not  for brick and  mortar buildings.                                                                    
Commissioner Johnson  answered that the expenditure  did not                                                                    
fund  construction  of the  facilities.  The  money went  to                                                                    
districts to  provide education services, which  may involve                                                                    
facility maintenance.                                                                                                           
Representative  Wool asked  whether  the facilities  already                                                                    
existed.  Ms. Teshner  answered that  the increment  request                                                                    
helped pay for the residential  costs, not the facility. She                                                                    
noted  that   the  district  purchased  the   building  that                                                                    
previously was a hotel.                                                                                                         
Representative Josephson  asked if the  residential programs                                                                    
were competitive. Commissioner Johnson  was not aware of the                                                                    
admission  process.   Representative  Josephson  ascertained                                                                    
that  the programs  were not  designed to  operate like  Mt.                                                                    
Edgecumbe that  offered a  four-year high  school education.                                                                    
Commissioner    Johnson   agreed    with   the    statement.                                                                    
Representative  Josephson  wondered  what  the  program  was                                                                    
designed to do that had not been done ten years earlier.                                                                        
2:15:16 PM                                                                                                                    
Commissioner Johnson  replied that  he did  not characterize                                                                    
the  program as  addressing an  inadequacy. He  believed the                                                                    
program  represented   district  leaders   being  innovative                                                                    
within the context of the  geographic realities of the state                                                                    
and provided  robust CTE  opportunities. He  mentioned other                                                                    
examples such  as Northwestern  Alaska Career  and Technical                                                                    
Center (NACTEC)  [Nome] and  Star of  the North,  where even                                                                    
though some of  the students lived in  small communities the                                                                    
districts   provided  students   access   to  high   quality                                                                    
Co-Chair  Foster  related  that   in  his  district  it  was                                                                    
difficult  to have  a career  and technical  center in  each                                                                    
village. He  observed that the programs  granted students in                                                                    
small villages  an opportunity to  access the  education. He                                                                    
trusted that  educators had looked  at the models  to ensure                                                                    
the  residential programs  were beneficial  and offered  the                                                                    
village students more opportunities.                                                                                            
2:18:09 PM                                                                                                                    
Commissioner  Johnson   agreed  with  Co-Chair   Foster.  He                                                                    
detailed  that finding  enough qualified  teachers played  a                                                                    
role  in   turning  to  residential  models.   In  addition,                                                                    
specialized equipment was necessary  as well as partnerships                                                                    
with  industry   and  businesses.   He  noted   that  NACTEC                                                                    
represented  a great  partnership between  school districts,                                                                    
industry, the  state, and  federal government  that provided                                                                    
students with  opportunities they  would not  otherwise have                                                                    
access  to. The  Lower Yukon  School District  and Anchorage                                                                    
School District  were discussing adding  additional pathways                                                                    
in Anchorage in areas  like pre-law, benefitting students in                                                                    
both  rural  and urban  areas.  Co-Chair  Foster pointed  to                                                                    
Commissioner  Johnsons  remarks  regarding the  difficulties                                                                    
of providing CTE in small  rural communities. He shared that                                                                    
the  NACTEC  program  had heavy  machinery  simulators  that                                                                    
looked exactly like the control  panels on the machinery. He                                                                    
pointed out  the difficulty of  sending simulators  to rural                                                                    
communities,  which justified  rural students  travelling to                                                                    
Nome for educational opportunities.                                                                                             
Vice-Chair Ortiz  thought it sounded  like a  great program.                                                                    
He  asked  whether the  $900,000  was  a one-time  increment                                                                    
outside of  the BSA and if  it would recur in  the out years                                                                    
or flow out  of the BSA in the  future. Commissioner Johnson                                                                    
answered that when  a student was enrolled  in a residential                                                                    
school  additional funding  outside  the  BSA supported  the                                                                    
residential component.                                                                                                          
Ms.  Teshner  added that  the  $900,000  was a  base  budget                                                                    
increment that  recurred annually up  to the number  of beds                                                                    
budgeted.  The  students  in the  programs  came  from  home                                                                    
districts that would continue  to receive foundation formula                                                                    
Commissioner   Johnson   interjected   that   students   who                                                                    
participated in  these types  of programs  had a  20 percent                                                                    
higher graduation rate.                                                                                                         
2:21:53 PM                                                                                                                    
Representative  Wool   asked  for  clarification   that  the                                                                    
residential  programs used  state  school district  funding.                                                                    
Commissioner Johnson  replied in  the affirmative  and noted                                                                    
that  Mt.  Edgecumbe  High  School  was  operated  by  DEED.                                                                    
Representative  Wool  asked  if  the  department  considered                                                                    
operating  another  boarding  school.  Commissioner  Johnson                                                                    
replied that  he desired  20 more  NACTEC type  programs and                                                                    
reported that  ideas were discussed,  but it was  an expense                                                                    
that had to  be balanced with the current  model. He thought                                                                    
that the CTE programs and  early reading proficiency were an                                                                    
investment  in better  outcomes.  Representative Wool  asked                                                                    
whether the department was  considering more charter schools                                                                    
or  if  it was  a  district  decision. Commissioner  Johnson                                                                    
answered  that under  the current  statutes charter  schools                                                                    
were a district decision.                                                                                                       
Representative  LeBon recalled  his experience  as a  school                                                                    
board  member from  20 years  ago dealing  with high  school                                                                    
qualifying  exams. He  asked what  DEED did  to ensure  that                                                                    
graduating high school students were prepared.                                                                                  
2:25:05 PM                                                                                                                    
Commissioner     Johnson     asked    for     clarification.                                                                    
Representative  LeBon  recounted  that each  of  the  school                                                                    
districts  set its  own standards  for graduation.  However,                                                                    
the state had previously set  a higher bar through requiring                                                                    
passing  high   school  qualifying   exams.  He   asked  for                                                                    
verification that  the qualifying exams were  eliminated and                                                                    
wondered what  had replaced  the exam.  Commissioner Johnson                                                                    
answered  in the  affirmative and  stated  that nothing  had                                                                    
been implemented to replace  the exams. Representative LeBon                                                                    
asked what  was done  to ensure  students were  prepared  as                                                                    
graduating seniors.   Commissioner Johnson  wondered whether                                                                    
he  was  asking  if  he believed  the  states   high  school                                                                    
graduates   were   prepared    for   career   and   college.                                                                    
Representative LeBon  replied that  he wondered  whether the                                                                    
state  had  a say   regarding graduation preparedness  or if                                                                    
the responsibility  had been decentralized  and left  to the                                                                    
discretion of  the districts. Commissioner  Johnson answered                                                                    
that the  state repealed  the qualifying exam  and currently                                                                    
there  was   not  quality  control  measures   in  place  to                                                                    
determine  if graduates  from  different  districts met  the                                                                    
same   standards  for   graduation.  He   communicated  that                                                                    
discussions were  ongoing concerning  implementing universal                                                                    
assessments    for courses.  The  same  assessment would  be                                                                    
given  to  students  in all  districts.  He  indicated  that                                                                    
currently   the  department   administered   end  of   grade                                                                    
assessments through  ninth grade.  He favored end  of course                                                                    
assessments for high school as a quality control measure.                                                                       
2:28:01 PM                                                                                                                    
Representative Merrick  asked if there were  other state run                                                                    
schools besides  Mt. Edgecumbe  High School  and if  so, how                                                                    
many. Commissioner Johnson answered in the negative.                                                                            
Ms.  Teshner reviewed  slide 12  titled  FY  2020 -  NOTABLE                                                                    
ITEMS Division of Innovation and Education Excellence:                                                                          
   • Early Learning Programs Fully Funded                                                                                       
     o Parents as Teachers has been transferred to the                                                                          
          Department of Health and Social Services                                                                              
   • $3,945.9 Fed        Comprehensive    Literacy   State                                                                      
     Development Grant (FY21-25)                                                                                                
   • $(14,700.0) Fed  Federal Programs Grant Carry Forward                                                                      
     o Matched by an appropriation in language section                                                                          
          of the bill.                                                                                                          
        o No reduction in federal programs or award.                                                                            
      o Solves an issue causing difficulty in program                                                                           
          execution and grant disbursal.                                                                                        
Ms.  Teshner  elaborated  that  the  federal  title  program                                                                    
grants covered a period of  27 months, which allowed DEED to                                                                    
operate three grants  over one fiscal year and  was shown as                                                                    
a reduction in federal receipt  authority as proposed in the                                                                    
governors budget.                                                                                                               
2:29:56 PM                                                                                                                    
Ms. Teshner moved  to slide 13 related to  the Mt. Edgecumbe                                                                    
High School:                                                                                                                    
   • $650.0 DGF  Operational Cost of Mt. Edgecumbe Aquatic                                                                      
   • Program receipt authority to support operations of the                                                                     
     pool will be collected through public swims and                                                                            
     contracts with outside entities.                                                                                           
   • $4,639.1 fund change from  Public  School Trust  Fund                                                                      
     (PSTF) to UGF                                                                                                              
   • Transfers state support for MEHS  to UGF  rather than                                                                      
     making expenditures direct from the PSTF.                                                                                  
   • Managing fund for daily expenditures  is onerous  for                                                                      
     investment management. A structural change to the                                                                          
     appropriation increases predictability and potentially                                                                     
     increases returns.                                                                                                         
   • Increased UGF appropriation to MEHS offset by transfer                                                                     
     to Foundation Program.                                                                                                     
Co-Chair Foster  asked about the  receipt authority  for the                                                                    
Mt. Edgecumbe  Aquatic Center. He wondered  whether the item                                                                    
allowed the  school to  charge a fee  for the  activity. Ms.                                                                    
Teshner   replied  in   the  affirmative.   Co-Chair  Foster                                                                    
remembered that in the prior  budget the governor vetoed UGF                                                                    
that had been appropriated by  the legislature. He asked for                                                                    
the amount.  Ms. Teshner answered  that there had  been one-                                                                    
time  funds  of  $400  thousand   to  support  a  multi-year                                                                    
expenditure  for  the  operational   costs  of  the  aquatic                                                                    
center.  She  added that  the  governor  had vetoed  receipt                                                                    
authority from the current budget.  Co-Chair Foster asked if                                                                    
there was  any UGF in  the FY  21 budget for  Mt. Edgecumbe.                                                                    
Ms. Teshner replied  that there were no UGF funds  in the FY                                                                    
20 nor the  FY 21 budget to help with  the operations of the                                                                    
Mt. Edgecumbe  High School. Co-Chair  Foster noted  that the                                                                    
aquatic center was part of a bond package in 2012.                                                                              
2:32:20 PM                                                                                                                    
Representative Knopp asked what  the funding for the aquatic                                                                    
center  in  the Supplemental  Budget  was  for. Ms.  Teshner                                                                    
responded that was for the current years operation.                                                                             
Representative Knopp  inquired about the amount  of funding.                                                                    
Mr. Steininger added that the  supplemental budget would not                                                                    
be introduced until the following day.                                                                                          
Vice-Chair  Ortiz  asked  about the  $600  thousand  receipt                                                                    
authority  for the  pool.  He  asked how  much  of the  $600                                                                    
thousand  the  school  expected   to  collect.  Ms.  Teshner                                                                    
answered  that  pool  managers  estimated  that  about  $200                                                                    
thousand in receipts could be  collected to help pay for the                                                                    
pool,  leaving a  shortfall of  around $400,000.  The school                                                                    
was finding funds to help offset costs.                                                                                         
2:34:33 PM                                                                                                                    
Vice-Chair Ortiz  noted that the  supplemental had  not been                                                                    
officially  announced. He  wondered what  amount may  be put                                                                    
forward to  help offset operational  costs. Ms.  Teshner was                                                                    
unaware  of  the  amount.  She turned  to  slide  14  titled                                                                    
 Notable Items Libraries, Archives, and Museums:                                                                                
   • $100.0 DGF  Increase entry fee to State Museums to                                                                         
     Support Operational Costs                                                                                                  
        o $2 per ticket increase. Discounts for students                                                                        
          and seniors will be retained.                                                                                         
   • $(232.9) UGF   Discontinue OWL Video Conferencing                                                                          
       o System is underutilized despite promotional                                                                            
          efforts. 271 conferences occurred in FY2019 at a                                                                      
          cost of approximately $860.00 per call.                                                                               
     o System hardware is at end of life and requires                                                                           
          costly replacement.                                                                                                   
Ms.  Teshner  elaborated that  the  component  for OWL  that                                                                    
subsidized  internet  would  continue. The  decrease  merely                                                                    
ended the videoconference portion of the program.                                                                               
Vice-Chair Ortiz asked whether  there had been an assessment                                                                    
about whether communities would  have access to alternatives                                                                    
that allowed a form of videoconference to continue.                                                                             
2:37:17 PM                                                                                                                    
Commissioner  Johnson  replied  that   staff  at  the  state                                                                    
library  had  done  an  assessment.  He  detailed  that  the                                                                    
average  amount of  megabits  (Mbps)  required for  internet                                                                    
alternatives was  1.5 Mbps  for both   download  and upload.                                                                    
All  libraries   were  able  to   supply  the   amount.  The                                                                    
department  concluded  that  any   library    with  OWL  had                                                                    
internet adequate to support other available options.                                                                           
Ms.  Teshner highlighted  slide 15  titled  FY  2021 NOTABLE                                                                    
ITEMS Alaska Commission on Postsecondary Education (ACPE):                                                                      
   • $(586.3) Other  Outsource Servicing of Some Student                                                                        
      o The Alaska Student Loan Corporation's Federal                                                                           
          Family Education Loan Program loans will be                                                                           
          outsourced to a new servicer - the Pennsylvania                                                                       
          Higher Education Assistance Agency.                                                                                   
   • $50.8 DGF  WWAMI Medical Program Obligation                                                                                
        o Increase in the contractual obligation to                                                                             
          participate in the WWAMI (Washington, Wyoming,                                                                        
          Alaska, Montana, and Idaho) medical program.                                                                          
Representative  Merrick  asked  for   the  number  of  state                                                                    
museums and  whether they were  all subsidized.  Ms. Teshner                                                                    
responded  that the  state operated  two museums:  The State                                                                    
Library,  Archives, and  Museum  in Juneau  and the  Sheldon                                                                    
Jackson Museum  in Sitka.  She added  that both  museums had                                                                    
General Fund  (GF) program  receipt authority  for admission                                                                    
^DEPARTMENT OF ADMINISTRATION                                                                                                 
2:39:41 PM                                                                                                                    
KELLY TSHIBAKA, COMMISSIONER,  DEPARTMENT OF ADMINISTRATION,                                                                    
provided  a PowerPoint  presentation  titled "Department  of                                                                    
Administration:  FY  2021  Budget   Overview  to  the  House                                                                    
Finance Committee,"  dated February 4, 2020  (copy on file).                                                                    
She began  with an  organizational chart  on slide  2 titled                                                                    
 Dept.  of Administration  FY 21  Operating Budget:  Mission                                                                    
and Organization.   The left  side of  the chart  showed the                                                                    
divisions  that  served  state agencies.  The  right  showed                                                                    
agencies  serving  the  public.   She  delineated  that  the                                                                    
mission   of   the    department   provided   for    mission                                                                    
dissonance.   The mission  only   covered services  to state                                                                    
agencies via  statute. She  noted that  DOAs  vision  was to                                                                    
 champion  improvement   in  the  State's   performance  and                                                                    
results.  She pointed to two  divisions which the department                                                                    
was  consolidating.  The  Division of  Personnel  and  Labor                                                                    
Relations  were  being  consolidated across  the  state.  In                                                                    
addition,  the  Office  of Information  Technology  and  the                                                                    
Division of  Shared Services of  Alaska would merge  to form                                                                    
Alaska Administrative  Productivity and  Excellence (AAPEX).                                                                    
She reported  that the action achieved  three  unprecedented                                                                    
goals;  cost  savings, consolidated  services,  and customer                                                                    
satisfaction.  The department  completed  an assessment  and                                                                    
benchmarking of  the two divisions. She  discovered that DOA                                                                    
had partially  implemented shared services across  the state                                                                    
and  had  success  with  travel,  leasing,  and  centralized                                                                    
printing  but   needed  more   work  on   accounts  payable,                                                                    
collections, and  procurement. She  noted that in  the prior                                                                    
year,  the  department took  33  days  to process  a  travel                                                                    
reimbursement and  currently lowered  the number to  4 days.                                                                    
She  reported  that  in  the  previous  year  each  accounts                                                                    
payable staff  processed 3,604 invoices  and in  the current                                                                    
year processed  4,649 invoices. In addition,  the cycle time                                                                    
to process and approve a payment  took 9.5 days in the prior                                                                    
year and was reduced to 4.6 days currently.                                                                                     
Commissioner  Tshibaka continued  with a  discussion of  the                                                                    
Division of  Information Technology.  She reported  that 700                                                                    
positions were  budgeted for Information Technology  (IT) in                                                                    
the state and  only 42 percent resided in  DOA. However, 100                                                                    
percent   of  the   performance   was   expected  from   the                                                                    
department. She informed members  that most of the remaining                                                                    
48 percent  of IT  positions would be  moved to  DOA, except                                                                    
for positions  related to  business applications.  The state                                                                    
had a 20 percent vacancy rate  in IT. The total statewide IT                                                                    
spend was unclear and estimated at $240 million.                                                                                
2:45:31 PM                                                                                                                    
Vice-Chair Ortiz asked the commissioner  to elaborate on why                                                                    
the state had a 20 percent vacancy rate in the IT division.                                                                     
Commissioner  Tshibaka responded  that  it was  historically                                                                    
challenging  to   fill  IT  position   in  the   state.  The                                                                    
department   was  hopping   to   incentivize  potential   IT                                                                    
candidates by offering job  flexibility and positive working                                                                    
environments since the state could  not compete with private                                                                    
sector salaries.  Vice-Chair Ortiz asked what  the main goal                                                                    
of  the  consolidation  of  Personnel  and  Labor  Relations                                                                    
services  was and  how it  related to  overall effectiveness                                                                    
and   goodwill.   Commissioner   Tshibaka   specified   that                                                                    
consolidation  of  Human  Resources (HR)  was  required  via                                                                    
administrative order  that defined  the function as  a joint                                                                    
shared service.  The agency divisions would  be centralized,                                                                    
and services would be  standardized. Differing functions led                                                                    
to numerous inefficiencies and led  to operating at a  basic                                                                    
level.     She    characterized   the    consolidation    as                                                                    
 transformational rather  than transactional.   She intended                                                                    
to  maintain the   relational aspect  of  HR  but  systemize                                                                    
operations.  She  delineated  that rather  than   customize                                                                     
operations for each agency, DOA  could offer HR managers the                                                                    
opportunity to engage in   higher performing functions  like                                                                    
actively recruiting top talent. Her  goal was to  mature the                                                                    
entire  HR  organization   while maintaining   the  personal                                                                    
touch that DOR had with departmental HR managers.                                                                               
2:49:13 PM                                                                                                                    
Representative Knopp  acknowledged that the  IT efficiencies                                                                    
was  a  priority  of  the   commissioner.  He  asked  for  a                                                                    
completion  timeline. He  wondered  whether  the 20  percent                                                                    
vacancy  rate  was  proportional   to  DOAs   vacancy  rate.                                                                    
Commissioner  Tshibaka replied  that  the  timeline for  the                                                                    
completion  of  AAPEX  was November  2020.  The  20  percent                                                                    
vacancy  rate  was  standard  across  all  departments.  She                                                                    
continued  with her  discussion of  slide 2.  She elaborated                                                                    
that   the  state   currently   had   over  1,700   business                                                                    
applications  with a  high  number  of custom  applications:                                                                    
over 900. She  emphasized that a lot of IT  time was devoted                                                                    
to maintaining  the applications.  Similarly, the  state had                                                                    
77 development  platforms versus  approximately 24  in other                                                                    
states.  In addition,  there were  over 6,000  databases the                                                                    
state  paid for.  She indicated  that  the state  had 37  IT                                                                    
processes, and  all were  below average.   She reported that                                                                    
the department was  in  stage 2  of  the assessment process;                                                                    
finding  solutions  to  the  findings  and  began  stage  3;                                                                    
implementing the fixes.                                                                                                         
2:52:33 PM                                                                                                                    
Commissioner  Tshibaka continued  with the  services to  the                                                                    
public. She reported that the  staff positions in Juneau for                                                                    
the  Violent  Crimes  Compensation  Board  (VCCB)  would  be                                                                    
transitioned  to   the  Department   of  Public   Safety  in                                                                    
Anchorage  towards  the   end  of  the  fiscal   year  in  a                                                                    
 sequential manner.  She indicated  that the Public Defender                                                                    
Agency (PDA)  received a 5.2  percent budget increase  in FY                                                                    
20 that  included 10  new positions  [PCNs]. She  noted that                                                                    
the agency  was working  hard to fill  the 31  vacancies and                                                                    
had hired 15  positions. She was working with  the agency to                                                                    
fill the  remaining positions. The  focus was  on increasing                                                                    
money  for  travel   and  paying  bar  dues   to  help  with                                                                    
recruitment  and retention.  The  agency  was examining  its                                                                    
operations in  order to optimize  its budget request  in the                                                                    
following year.                                                                                                                 
2:54:32 PM                                                                                                                    
Commissioner  Tshibaka  continued  to  review  the  services                                                                    
provided to the public on slide  2. She reported that in the                                                                    
area of  Public Communications Services, the  department was                                                                    
funding   the   satellite   infrastructure   for   emergency                                                                    
Representative  Josephson asked  if  the administration  had                                                                    
seen  a  net outmigration   of state employees  from Juneau.                                                                    
Commissioner  Tshibaka answered  that for  most of  the year                                                                    
outmigration remained  flat but ballooned  to 20 at  the end                                                                    
of the year.                                                                                                                    
Representative  Josephson  recounted  that the  Division  of                                                                    
Motor  Vehicles  (DMV)  had moved  from  the  Department  of                                                                    
Public  Safety  (DPS) to  DOA  and  wondered when  the  move                                                                    
happened.  Commissioner Tshibaka  was unable  to answer  the                                                                    
Co-Chair Johnston remembered the DMV was under DOA for a                                                                        
long time since the former Knowles administration.                                                                              
2:56:30 PM                                                                                                                    
Commissioner Tshibaka moved to slide 3 titled Dept. of                                                                          
Administration FY 21 Operating Budget: DOA Strategic Plan                                                                       
and addressed the department's goals.                                                                                           
   DOA GOALS and OBJECTIVES                                                                                                     
     • Provide Excellent Products and Services                                                                                  
             Recruit, develop, retain, and deploy right talent                                                                  
             Improve quality, efficiency, and timeliness of DOA                                                                 
             products and services                                                                                              
             Increase stakeholder awareness of and satisfaction                                                                 
             with DOA products and services                                                                                     
     • Promote SOA Efficiency and Cost Savings                                                                                  
          Gain efficiencies for the State through new or                                                                        
          improved programs or processes                                                                                        
          Implement processes and programs to achieve cost                                                                      
          Improve timeliness, quality, and results of SOA                                                                       
     • Pursue Innovations and Initiatives                                                                                       
          Offer proactive contributions to the SOA                                                                              
          Develop and implement innovations to advance the                                                                      
          mission of DOA or other SOA departments and                                                                           
          Increase SOA IT proficiency, tools, and capacity                                                                      
Commissioner Tshibaka reviewed slide 4 titled Dept. of                                                                          
Administration FY 21 Operating Budget: Department Summary                                                                       
      -$14.9M (-4%)and -34 positions (-2%) from FY20 to                                                                         
      FY21 proposals focus on investing in strategic                                                                            
      priorities, efficiencies, and structural changes                                                                          
     DOA FY21 Budget Proposals                                                                                                
     • Increment to cover attorney bar dues with the Alaska                                                                     
        State Bar Association                                                                                                   
     • Classification Section revitalization plan: +2 PCNs                                                                      
     • Delete vacant OIT PCNs: -11 PCNs                                                                                         
     • Increase capacity in OPA to cover rural and conflict                                                                     
        cases, absorb increase workload due to SSA changes:                                                                     
        +10 PCNs                                                                                                                
     • Increment in OPA to help fill Public Guardian PCNs                                                                       
     • Increments for  PDA  and  OPA   travel  to  address                                                                      
        workload throughout the state, avoid contracting out                                                                    
        cases at considerable expense, and minimize delays                                                                      
        in case disposition                                                                                                     
     • Automate  employee   onboarding   system   (capital                                                                      
     • Delete HR/DOPLR PCNs: -7 PCNs                                                                                            
     • Automate performance  evaluation   system  (capital                                                                      
     • Deferred maintenance, renovation, repair, and equip.                                                                     
        (capital project)                                                                                                       
     • Software for Shared Services of  Alaska initiatives                                                                      
        (capital project)                                                                                                       
     • Electronic timekeeping (capital project)                                                                                 
     • Upgrade the State's  Enterprise  Resource  Planning                                                                      
        (ERP) software, IRIS (capital project)                                                                                  
     • Upgrade to cloud  servers  and  replace  retirement                                                                      
        system servers (capital project)                                                                                        
     • Upgrade service management  systems  and  ticketing                                                                      
        systems (capital project)                                                                                               
Commissioner Tshibaka  elaborated on  slide 4.  She believed                                                                    
that the departments  goals and objectives were  tied to the                                                                    
budget  proposals   that  should   promote  and   advance  a                                                                    
strategic plan. She briefly  described each budget proposal.                                                                    
She  spoke to  updating  the states   procurement system  by                                                                    
making    procurement   information    centralized,   easily                                                                    
accessible, and transparent  eliminating duplicate purchases                                                                    
thus, creating savings.                                                                                                         
3:02:57 PM                                                                                                                    
Representative  Carpenter   asked  about  the   ERP  upgrade                                                                    
solution  and wondered  whether it  was  all  encompassing.                                                                     
Commissioner Tshibaka  replied that the  Integrated Resource                                                                    
Information System (IRIS) upgrade  was not adequate to cover                                                                    
all the  upgrades listed. She reported  that procuring other                                                                    
vendors was necessary to accomplish the objectives.                                                                             
Commissioner  Tshibaka turned  to slide  5 titled   Dept. of                                                                    
Administration FY  21 Operating  Budget: What DOA  is Like.                                                                     
The  slide portrayed  a brick  wall with  the names  of each                                                                    
state agency on the bricks,  depicting her metaphor that DOA                                                                    
was  the mortar  that held  the state  together through  the                                                                    
following six objectives" listed on the slide:                                                                                  
     COST SAVINGS                                                                                                               
3:05:27 PM                                                                                                                    
BRAD EWING, ADMINISTRATIVE  SERVICES DIRECTOR, DEPARTMENT OF                                                                    
ADMINISTRATION/DEPARTMENT OF  REVENUE, OFFICE  OF MANAGEMENT                                                                    
AND   BUDGET,   addressed   slide   6   titled    Dept.   of                                                                    
Administration FY 21 Operating Budget: Budget Comparison:                                                                       
   • Total: -$14.9M (-4%)and -34 positions (-2%) from FY 20                                                                     
     to FY 21                                                                                                                   
   • UGF: -$3.7M (-5%), DGF: -$2.0M (-7%), Other: -$6.3M (-                                                                     
     2%), Federal: -$2.9M (-72%) from FY20 to FY21                                                                              
   FY21 Gov. Proposed: Significant Changes                                                                                      
           Efficiency gains: 1,264 PCNs in FY 20, 1,230                                                                         
           PCNs in FY 21                                                                                                        
      Reduce budget and PCNs in OIT, SSOA, and DOPLR                                                                            
           +$1.6M for Office of Public Advocacy: +10 PCNs,                                                                      
           public guardians, and travel                                                                                         
      Classification Section revitalization plan (+2                                                                            
           Bar dues for licensed Alaska Bar attorneys                                                                           
           Org. structure changes                                                                                               
           Alaska Oil & Gas Conservation Commission to                                                                          
           DCCED (Administrative Order #307)                                                                                    
           Alaska Land Mobile Radio and SATS to DMVA                                                                            
      Continue planning, onboarding, and investments                                                                            
           to support consolidation efforts                                                                                     
            Administrative Order 284 (OIT)                                                                                      
            Administrative Order 304 (Procurement)                                                                              
            Administrative Order 305 (HR)                                                                                       
Mr. Ewing pointed to the left  side of the slide that showed                                                                    
a chart  depicting the FY  2019 and FY 2020  Management Plan                                                                    
and the FY 2021 Governor's  Proposed Budget. He reminded the                                                                    
committee  that the  management  plan  was the  departments                                                                     
spending plan developed from  each years  authorized budget.                                                                    
He noted  the increase  from FY  19 to  FY 20  and indicated                                                                    
that  a significant  portion  of the  increase  was for  the                                                                    
Office    of   Information    Technology   (OIT)    due   to                                                                    
administrative order  284 related  to OIT  consolidation. He                                                                    
explained  that  the  increase  reflected  the  transfer  of                                                                    
authority  from other  departments  to DOA  and  was not  an                                                                    
actual increase in  the states  budget. He  reported that as                                                                    
part  of the  crime bill  [HB 49 Crimes;  Sentencing; Drugs;                                                                    
Theft; Reports  - Chapter  4 FSSLA  19 07/08/2019]  in 2019,                                                                    
both  the  PDA received  a  $1.3  million increase  and  the                                                                    
Office  of Public  Advocacy (OPA)  received a  $700 thousand                                                                    
increment.   He   mentioned    that   other   organizational                                                                    
structural  changes   occurred.  The  Alaska  Oil   and  Gas                                                                    
Conservation  Commission was  transferred to  the Department                                                                    
of Commerce,  Community and Economic Development  as part of                                                                    
Administrative Order  307 and the  Alaska Land  Mobile Radio                                                                    
was transferred  to the Department of  Military and Veterans                                                                    
3:08:16 PM                                                                                                                    
Co-Chair  Foster  asked  how   many  of  the  34  eliminated                                                                    
positions  were  vacant and  how  many  were transfers.  Mr.                                                                    
Ewing  answered  that  one  position   was  filled  and  the                                                                    
remainder  were vacant.  He added  that some  transfers from                                                                    
Alaska  Land   Mobile  Radio  System  (ALMR)   occurred.  He                                                                    
reported that DOA was deleting  11 vacant positions from OIT                                                                    
and 6 from the Division of Personnel and Labor Relations.                                                                       
Representative  Wool asked  about  the transfer  of ALMR  to                                                                    
DMVA. He  had heard  from fire  department chiefs  that DMVA                                                                    
did  not  use  the  ALMAR  system  and  questioned  why  the                                                                    
transfer was  to DMVA  rather than DPS;  an agency  that did                                                                    
use the  radio system. He  asked what the  mission alignment                                                                    
to  DMVA was.  Commissioner Tshibaka  answered that  DOA had                                                                    
discussions  with both  departments  to  determine the  best                                                                    
place to transfer the system.  She elaborated that since the                                                                    
system was  used for statewide  emergencies, it  was decided                                                                    
to place it with DMVA to maintain and operate the system.                                                                       
3:10:08 PM                                                                                                                    
Mr. Ewing  examined slide 7 titled   Dept. of Administration                                                                    
FY 21 Operating Budget: Funding Sources:                                                                                        
      DOA Budget: 19% UGF, 7% DGF, 74% Other Funds, < 1%                                                                        
      DOA Fund Sources: 59% duplicated fund sources                                                                             
Mr. Ewing  reviewed other fund  sources in  the department's                                                                    
budget. He reported that since  DOA was a support agency for                                                                    
other  departments much  of the  74 percent  of other  funds                                                                    
were interagency receipts. He pointed  to a table at the top                                                                    
of  the  slide  and  noted the  department  had  no  formula                                                                    
funding with  most of the funding  considered duplicated. He                                                                    
explained  that interagency  receipts were  an example  of a                                                                    
duplicated fund source.                                                                                                         
3:11:17 PM                                                                                                                    
Mr. Ewing turned to slide  8 titled  Dept. of Administration                                                                    
FY 21 Operating Budget: Department Summary:                                                                                     
      Total: -$14.9M (-4%)and -34 positions (-2%) from FY                                                                       
      20  to FY 21                                                                                                              
      UGF: -$3.7M (-5%), DGF: -$2.0M (-7%), Other: -$6.3M                                                                       
      (-2%), Federal: -$2.9M (-72%) from FY 20 to FY 21                                                                         
Mr. Ewing  pointed to the  slides  bar graph showing  a fund                                                                    
source  comparison  on  the  left   and  position  count  by                                                                    
location on  the right. He  noted that DOAs   employees were                                                                    
close  to evenly  distributed between  Anchorage and  Juneau                                                                    
with 71  positions in Fairbanks  and 144 positions  in other                                                                    
parts of the state in the areas of IT, PDA, OPA, and DMV.                                                                       
3:12:20 PM                                                                                                                    
Mr.   Ewing   advanced  to   slide   9   titled   Dept.   of                                                                    
Administration  FY21   Operating  Budget:  Appropriation|RDU                                                                    
      Six of DOA's 10 appropriations (result delivery                                                                           
      units) have budgets > $1M                                                                                                 
      Of these six (below), Legal and Advocacy Services                                                                         
      (OPA|PDA) is the only one predominantly funded by UGF                                                                     
Mr.   Ewing  delineated   that  Centralized   Administrative                                                                    
Services had a  budget of roughly $14  million, the Division                                                                    
of Finance  had a budget totaling  approximately $13 million                                                                    
and the Division of Retirement  and Benefits  budget was $55                                                                    
million. He  addressed the  bar graph  on the  slide showing                                                                    
the department's  budget by  appropriation. He  related that                                                                    
Centralized  Administrative  Services was  primarily  funded                                                                    
through   other funds   and its  budget remained  relatively                                                                    
flat  between FY  20  and  FY 21.  He  reported that  Shared                                                                    
Services of Alaska had a two  percent decrease from FY 20 to                                                                    
FY 21 and was predominately  funded  by interagency receipt.                                                                    
The  Office   of  Information  Technology   budget  declined                                                                    
between  FY  20  and  FY  21,  primarily  due  to  the  ALMR                                                                    
transfer.  However, $3  million was  reduced in  IT services                                                                    
representing  a 4  percent reduction.  He communicated  that                                                                    
the  Division   of  Risk  Management's  budget   was  almost                                                                    
entirely static at $40.8 million.  He noted that OPA and PDA                                                                    
were primarily  funded through  UGF and  showed a  3 percent                                                                    
increase amounting to $1.8 million  between FY 20 and FY 21.                                                                    
The increase  was on  top of  an increase  in the  past year                                                                    
related to the crime bill.  He commented that DMV was funded                                                                    
through program  receipts and increased one  percent between                                                                    
FY 20 and FY 21.                                                                                                                
Representative Carpenter  asked about  the backlog  of cases                                                                    
in  PDA.  He was  informed  that  PDA was   overworked   and                                                                    
wondered  whether  the  funding was  sufficient  to  resolve                                                                    
cases  before reaching  trial  therefore,  saving the  state                                                                    
Commissioner  Tshibaka answered  that  the  reasons for  the                                                                    
backlog  was  complex and  not  simply  a matter  of  vacant                                                                    
positions. She spoke to the  significant challenges with the                                                                    
historical vacancy  rate of 8  to 23 percent  and recruiting                                                                    
issues.  Public defender  agencies  in the  Lower 48  states                                                                    
offer higher salaries than in  Alaska. She communicated that                                                                    
public  defender   jobs  were  considered    pipeline  jobs                                                                     
preparing  recently graduated  attorneys  to  move into  law                                                                    
firms.  However, the  entire justice  system contributed  to                                                                    
the  backlog. She  informed the  committee that  the average                                                                    
PDA caseload  was 145 cases  per attorney in the  prior year                                                                    
and  over 160  in  the current  year.  The maximum  caseload                                                                    
standards  set  by  the American  Bar  Association  was  one                                                                    
attorney  per 150  felonies or  400  misdemeanors per  year,                                                                    
with a mixed average of 275.  She qualified that many of the                                                                    
states   PDAs   had  administrative duties  in  addition  to                                                                    
their  legal duties.  The agency  review  discovered that  a                                                                    
better  balance  between  support staff  and  attorneys  was                                                                    
necessary.  The department  was  examining  how to  expedite                                                                    
caseloads.  She believed  that  indigent  Alaskans would  be                                                                    
best  served   by  PDAs  and  not   by  private  contracting                                                                    
3:20:20 PM                                                                                                                    
Mr. Ewing highlighted slides 10  and 11. Slide 10 was titled                                                                    
 Dept.   of   Administration   FY   21   Operating   Budget:                                                                    
Centralized Admin. Services:                                                                                                    
      -$43.1 (0%) and -4 positions (-1%) from FY 20 to FY                                                                       
     ?Delete vacant positions and authority to realize                                                                          
Mr.  Ewing briefly  highlighted  slide 11  titled  Dept.  of                                                                    
Administration FY  21 Operating  Budget: Changes from  FY 21                                                                    
Adjusted Base    which contained  a chart related  to budget                                                                    
changes for Centralized  Administrative Services. He pointed                                                                    
to  the increment  for the  classification  section for  two                                                                    
additional positions and  the proposed strategic investments                                                                    
within  the  Division of  Retirement  and  Benefits of  $300                                                                    
hundred thousand  for actuarial services and  pension system                                                                    
audits. He concluded that the  net effect of the changes was                                                                    
a static budget  ($43 thousand decrease) and  a reduction of                                                                    
4 positions.                                                                                                                    
3:21:57 PM                                                                                                                    
Mr.   Ewing   reviewed   slide    12   titled:    Dept.   of                                                                    
Administration FY  21 Operating  Budget: Shared  Services of                                                                    
Alaska (SSOA):                                                                                                                  
      -$1,732.5 (-2%) and +2 positions (+2%) from FY 20 to                                                                      
      FY 21                                                                                                                     
     ?Reduce authority to align with anticipated revenue                                                                        
      and expenditures                                                                                                          
Mr.  Ewing indicated  that due  to  the consolidations,  the                                                                    
SSOA  budget  decreased  by $1.6  million  and  deleted  two                                                                    
accounting  technician positions  for  a  decrement of  $220                                                                    
thousand.   He  moved   to  slide   13   titled   Dept.   of                                                                    
Administration   FY   21   Operating   Budget:   Office   of                                                                    
Information Technology:                                                                                                         
   -$2,831.1 (-4%) and -14 positions (-6%) from FY 20 to                                                                        
      FY 21                                                                                                                     
     ?Delete long-term vacant positions and authority to                                                                        
      realize consolidation efficiencies                                                                                        
Mr. Ewing disclosed that IT  staff were found throughout the                                                                    
state for  a total  of 238  positions. He  briefly discussed                                                                    
slide  14 titled   Dept. of  Administration FY  21 Operating                                                                    
Budget: Changes  from FY  21 Adjusted  Base.  He  pointed to                                                                    
the $1.6  million decrement associated with  the deletion of                                                                    
11 positions  and the $1.5 million  decrease associated with                                                                    
deleting contract authority to realize contract savings.                                                                        
3:23:51 PM                                                                                                                    
Mr.   Ewing  advanced   to  slide   15   titled  "Dept.   of                                                                    
Administration FY 21 Operating Budget: Risk Management:                                                                         
     ?+$5.2 (0%) from FY20 to FY21                                                                                              
     ?No changes in position count from FY 20 to FY 21                                                                          
Mr.  Ewing reported  that six  positions  were budgeted  for                                                                    
risk  management. He  turned to  slide 16  titled "Dept.  of                                                                    
Administration FY  21 Operating  Budget: Legal  and Advocacy                                                                    
     ?+$1,797.8 (+3%) and +9 positions (+3%) from FY 20 to                                                                      
      FY 21                                                                                                                     
  ?Add positions and authority to support rural defense,                                                                        
   existing units, and changes in Social Security Admin.                                                                        
Mr.  Ewing  briefly  addressed slide  17  titled  "Dept.  of                                                                    
Administration FY  21 Operating  Budget: Changes from  FY 21                                                                    
Adjusted  Base:He    recapped  that  the  request added  ten                                                                    
positions  to increase  inhouse capacity.  He highlighted  a                                                                    
$250,000  increment   request  for  the  Office   of  Public                                                                    
Advocacy for  authority to fill  and retain  public guardian                                                                    
positions. He  noted that the  request was in addition  to a                                                                    
$2 million increment  in the prior years   budget related to                                                                    
the crime bill.                                                                                                                 
3:25:04 PM                                                                                                                    
Mr. Ewing reviewed slide 18  titled "Dept. of Administration                                                                    
FY 21 Operating Budget: Motor Vehicles:                                                                                         
     ?+$88.3 (+1%) from FY 20 to FY 21                                                                                          
     ?No changes in position count from FY 20 to FY 21                                                                          
He  commented that  the appropriation  for  the Division  of                                                                    
Motor  Vehicles (DMV)  increased  by one  percent and  there                                                                    
were no change  records from the FY 21 adjusted  base to the                                                                    
governor's  proposed  budget.   He  examined  the  following                                                                    
summary slides. Slide 19 titled   Dept. of Administration FY                                                                    
21 Budget: Changes from FY 21 Adj. Base to FY 21 Gov:                                                                           
     Operating Budget: DOA's 35 components (allocations)                                                                        
      8 components with proposed changes from FY21 Adj.                                                                         
      Base to FY21 Gov., summarized in tables above                                                                             
      4components transferred out of agency: AOGCC,                                                                             
      ALMR/SATS, VCCB (Discussed on Slide 6)                                                                                    
      3 components are not funded: Public Broadcasting                                                                          
      Commission/Radio/T.V. (Discussed on Slide 6)                                                                              
      20 components with no changes > $10.0 from FY 21                                                                          
      Adjusted Base to FY 21 Gov.                                                                                               
           Centralized    Admin.    Services:   Office    of                                                                    
          Administrative Hearings, DOA Leases, Office of                                                                        
          Centralized   Human    Resources,   Health   Plans                                                                    
          Administration, Labor Agreements Miscellaneous                                                                        
           SSOA: Statewide Contracting and Property, Print                                                                      
           Services, Leases, Lease Admin., Facilities,                                                                          
           Facilities Admin., Non-PBF Facilities                                                                                
           Administration State Facilities Rent                                                                                 
           Satellite Infrastructure                                                                                             
           Risk Management                                                                                                      
           Alaska Public Offices Commission                                                                                     
           Division of Motor Vehicles                                                                                           
3:26:24 PM                                                                                                                    
Mr.  Ewing concluded  the presentation  on slide  20 showing                                                                    
capital  proposals and  recent administrative  orders titled                                                                    
 Dept.  of Administration  FY 21  Budget: Capital  Proposals                                                                    
and Recent Admin. Orders:                                                                                                       
     Capital Projects                                                                                                           
           $320.0 UGF Automated Performance Evaluations and                                                                     
           Onboarding System                                                                                                    
          ?$1,000.0 UGF Electronic Timekeeping                                                                                  
       ?$7,100.0 UGF Integrated Resource Information                                                                            
           System Upgrade                                                                                                       
          ?$230.4 Other Retirement System Server                                                                                
       ?$5,946.0 Other Public Building Fund Deferred                                                                            
      ?$1,800.0 UGF Software for the Shared Services                                                                            
          ?$1,250.0 UGF OIT Upgrade to Cloud Servers                                                                            
      ?$1,000.0 UGF Uniform Ticketing System/Service                                                                            
           Management System Upgrade                                                                                            
     Administrative Orders                                                                                                      
           Administrative Order No. 284: Reorganizing                                                                           
       Telecommunication and IT Services within the                                                                             
           Executive Branch                                                                                                     
           Administrative Order No. 304: Establish                                                                              
           Statewide Procurement Consolidation                                                                                  
           Administrative Order No. 305: Establish                                                                              
           Statewide Human Resources Consolidation                                                                              
           Administrative Order No. 307: Transferring the                                                                       
        Alaska Oil and Gas Conservation Commission                                                                              
Representative  Carpenter asked  for verification  that most                                                                    
of  the  systems  that  would   be  upgraded  were  for  the                                                                    
department's  use. Commissioner  Tshibaka  replied that  the                                                                    
systems were used statewide.                                                                                                    
Vice-Chair Ortiz became acting chair of the meeting.                                                                            
Representative  Merrick  asked  whether the  department  was                                                                    
addressing the  problems with  rural residents  applying for                                                                    
REAL   ID.   Commissioner   Tshibaka   answered   that   DOA                                                                    
established a  REAL ID pilot program  currently operating in                                                                    
rural communities  where a  point of  contact  validated the                                                                    
paperwork.  The  program  was piloted  in  New  Stuyahok,  a                                                                    
village near  Dillingham. The department issued  REAL IDs to                                                                    
80  residents.   However,  the  department   experienced  an                                                                    
unforeseen  challenge. She  elaborated that  the camera  was                                                                    
intricate because of  the digital specification requirements                                                                    
for  the   IDs   biometric   identifiers.  The   camera  was                                                                    
optimized  for  the  atmospherics   in  a  room  and  needed                                                                    
adjustments  in every  new environment.  A  high-level   DMV                                                                    
supervisor  had  to travel  to  recalibrate  the camera  for                                                                    
every picture. The department had  five more locations lined                                                                    
up   for  the   pilot  program   and  would   reassess  upon                                                                    
completion.   She  wanted   to   avoid   setting  up   false                                                                    
expectations. The department was  trying to educate Alaskans                                                                    
that  a  REAL ID  was  not  needed  to  travel by  air.  She                                                                    
reported that  there were 15 other  forms of identification,                                                                    
including a  passport, permanent  resident card,  a maritime                                                                    
card,  a   tribal  card,  military   card,  etc.   that  was                                                                    
sufficient for air travel on  October 1, 2020. She discussed                                                                    
the  rigorous  application  process   for  a  REAL  ID  that                                                                    
required  a  passport or  birth  certificate,  two forms  of                                                                    
proof of  residency, a social  security card,  the  special                                                                     
photo  taken  and  other  documents  like  name  change  and                                                                    
divorce decrees. She  believed that obtaining a  REAL ID was                                                                    
a high hurdle for Alaskans to achieve.                                                                                          
3:32:54 PM                                                                                                                    
Commissioner Tshibaka continued that  DMV in rural areas was                                                                    
educating  rural  Alaskans  about the  identification  other                                                                    
than   REAL  ID   that  was   acceptable  for   air  travel.                                                                    
Representative   Merrick  asked   if   the  department   was                                                                    
anticipating the  need for additional funding  pertaining to                                                                    
the REAL ID. Commissioner Tshibaka replied in the negative.                                                                     
Vice-Chair  Ortiz  asked about  the  third  bullet point  on                                                                    
slide 19  related to three  components not  funded including                                                                    
the Public  Broadcasting Commission/Radio/TV. He  noted that                                                                    
the slide mentioned the item  had been discussed on slide 6.                                                                    
He asked  if he  had missed  something in  the presentation.                                                                    
Mr.  Ewing  answered that  slides  5  and  6 did  include  a                                                                    
discussion regarding the issue.                                                                                                 
Vice-Chair  Ortiz  spoke  to   concern  he  heard  from  his                                                                    
constituents  about the  lack of  state  support for  public                                                                    
radio. He  felt that  the concern was  widespread throughout                                                                    
rural  Alaska.   He  asked  the  commissioner   whether  she                                                                    
believed   that   public    broadcasting   fit   under   the                                                                    
jurisdiction  of   the  department.   Commissioner  Tshibaka                                                                    
responded  that  public  broadcasting was  still  under  the                                                                    
department's    jurisdiction.   The    Public   Broadcasting                                                                    
Commission  was   administratively  supported  by   DOA  and                                                                    
operated under  statute AS.44. The commissions   duties were                                                                    
to  meet and  apply  for federal  grants.  Despite the  $2.7                                                                    
million   eliminated  from   public  broadcasting   and  the                                                                    
matching grants  in the prior  year there would still  be 83                                                                    
percent  of the  public  broadcasting  funds available.  The                                                                    
commission  could continue  to apply  for federal,  private,                                                                    
and public  funds to make  up for  the 17 percent  loss. She                                                                    
noted  that  the commission  did  not  meet in  the  current                                                                    
fiscal year.                                                                                                                    
3:36:52 PM                                                                                                                    
Vice-Chair Ortiz asked if the  commission had the support of                                                                    
the  administration   to  continue  to   meet.  Commissioner                                                                    
Tshibaka replied  that the department  was willing  to serve                                                                    
as  their  support   staff,  but  they  had   not  met.  She                                                                    
communicated that previously  the Alaska Public Broadcasting                                                                    
Corporation acted as  the commissions administrative support                                                                    
HB  205  was  HEARD  and   HELD  in  committee  for  further                                                                    
HB  206  was  HEARD  and   HELD  in  committee  for  further                                                                    
Vice-Chair  Ortiz thanked  the presenters.  He reviewed  the                                                                    
schedule for the following day.                                                                                                 
3:37:57 PM                                                                                                                    
The meeting was adjourned at 3:37 p.m.                                                                                          

Document Name Date/Time Subjects
HFIN DOA Overview 2020 02 04 .pdf HFIN 2/4/2020 1:30:00 PM
2.4.2020 HFC DEED Budget Overview.pdf HFIN 2/4/2020 1:30:00 PM