Legislature(2005 - 2006)HOUSE FINANCE 519
04/26/2006 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB375 | |
| SB250 | |
| SB237 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 250 | TELECONFERENCED | |
| += | HB 375 | TELECONFERENCED | |
| += | HB 306 | TELECONFERENCED | |
| + | SB 237 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 26, 2006
8:55 a.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 8:55:18 AM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Beth Kerttula
ALSO PRESENT
Jacqueline Tupou, Staff, Representative Weyhrauch, Gary
Bader, Chief Investment Officer, Treasury Division,
Department of Revenue; Tom Maher, Staff, Senator Gene
Therriault, Pat Davidson, Legislative Auditor, Legislative
Audit Division; Barbara Mason, Executive Director, Council
on Domestic Violence and Sexual Assault; Susan Parks, Deputy
Attorney General, Criminal Division, Department of Law;
Chris Christensen, Staff Counsel, Alaska Court System
PRESENT VIA TELECONFERENCE
Jeff Johnson, Fairbanks; Nancy Scheetz-Freymiller,
Anchorage; Brenda Stanfill, Alaska Women's Center for Non-
Violence, Fairbanks
SUMMARY
HB 375 "An Act relating to the retirement benefit
liability account and appropriations from that
account; relating to deposits of certain income
earned on money received as a result of State v.
Amerada Hess, et al., 1JU-77-847 Civ. (Superior
Court, First Judicial District); and providing for
an effective date."
HB 375 was heard and HELD in Committee for further
consideration.
SB 250 "An Act extending the termination date of the
Council on Domestic Violence and Sexual Assault;
and eliminating statutory references to the
network on domestic violence and sexual assault."
HCSSB 250 (FIN) was REPORTED out of Committee with
a "no recommendation" and with two new Department
of Public Safety fiscal notes prepared by the
House Finance Committee.
CSSB 237(FIN)
"An Act relating to the compensation of justices
and judges, and to increasing the number of
superior court judges designated for the third and
fourth judicial districts; and providing for an
effective date."
CSSB 237 (FIN) was heard and HELD in Committee for
further consideration.
HB 306 "An Act making certain land available for
selection by the Matanuska-Susitna Borough."
HB 306 was scheduled but not heard.
8:57:02 AM
HOUSE BILL NO. 375
"An Act relating to the retirement benefit liability
account and appropriations from that account; relating
to deposits of certain income earned on money received
as a result of State v. Amerada Hess, et al., 1JU-77-
847 Civ. (Superior Court, First Judicial District); and
providing for an effective date."
Representative Hawker MOVED to ADOPT Amendment 2, labeled
24-LS1467\L, which would insert on page 3, line 13, the
words "85% of the employer's past service cost rate during
the fiscal year that precedes the distribution fiscal year
under (c) of this section by three fiscal years."
JACQUELINE TUPOU, STAFF, REPRESENTATIVE WEYHRAUCH, explained
that expediency is a key component of the bill. There is a
concern that all communities be treated fairly under this
legislation. Amendment 2 is a blanket amendment for all
communities regarding the formula previous to three years
ago.
8:59:20 AM
JEFF JOHNSON, FAIRBANKS, explained that on June 30, 2001,
the net pass on unfunded liability was approximately $11.3
million. On June 30, 2004, it was bumped up to $95 million.
It is predicted to go up by $15 million in 2005. There has
been a decline in the number of employees that participate
in PERS. He explained that the bill favors large employers,
not those with past service costs. He related a scenario
where the formula would equal zero for Fairbanks. He
proposed a way for the city to solve their debt problem by
transferring the $11 million from June 30, 2001, to a
separate account, which is funded from general state revenue
sources.
9:02:50 AM
Representative Kelly recalled when the utility in Fairbanks
was sold, Pat Cole questioned the impact of the sale on the
system. He asked Mr. Johnson if it was his understanding
that this situation would not happen.
Mr. Johnson said that is correct. Had the Division of
Retirement closed out the MUS, which was treated as a
separate account at the time of the sale, there would not
have been a problem. He related that in 2001, the city owed
$11 million. He deemed it reasonable to have to pay back
that amount.
9:05:45 AM
Representative Weyhrauch stated that how this would work
depends on the administration, so he has tried to make the
language workable.
9:05:59 AM
GARY BADER, CHIEF INVESTMENT OFFICER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, explained that each year gains and
losses of the retirement plan are calculated. The loss, in
this case, is amortized over 25 years. The whole system
experienced losses since the year 2000, first, because of
changes in health care assumptions and experience in the
plan, secondly, because of investment returns, and thirdly,
because many of the assumptions were changed in terms of
estimating future costs. All PERS and TRS employers were
caught in these changes.
Fairbanks had additional impacts. They made changes based
on what they believed to be reliable information, and
reduced the number of their PERS employees. The rate
escalated to a 125 percent past service rate. The Alaska
Retirement Management (ARM) Board proposed to the House
Finance Committee that TRS receive 85 percent of the past
service cost rate. It used a different approach to explain
how the Committee might allocate funds to repay employers
under PERS. It proposed that no community would get more
than the average of all PERS employers taken together.
Mr. Bader shared that there is another approach, the one in
Amendment 2, which is similar to the TRS approach. The ARM
Board has several goals: that the systems be fully funded
within 30 years, that it not cause severe disruption to
public services, that the state should participate in the
solution, that accelerated contributions from employers
should be rewarded, that the state support should be
equitable, and that it should not attempt to subsidize
federally-funded positions. Amendment 2 is consistent with
those goals. It would take out the calculation based on
past service rate, less 5 percent or the average past
service rate, whichever is less, and replace it with 85
percent of the community's past service rate. This would
have an additional cost to the system, but would be
equitable. The distribution to Fairbanks would be closer to
$5 million more than the $1 million currently available.
9:10:37 AM
Co-Chair Meyer questioned the 85 percent figure.
Representative Kelly requested more time to look at the
amendment and to get a reaction from Fairbanks. Co-Chair
Meyer agreed.
9:11:25 AM
Representative Weyhrauch agreed with allowing more time. He
noted that people have to be comfortable with this policy
change.
Representative Hawker concurred, but said he is prepared to
vote yes on the amendment at the request of the sponsor. He
stated that the bill is a critical step toward getting rid
of the $7 billion unfunded liability. He pointed out that
there are many unresolved complications, but he suggested
that time is running out.
Representative Weyhrauch related that this is not a silver
bullet, but a way to deal with the problem. The bill could
be changed later on. He said the empirical analysis has to
end at some point. HB 375 does not require a huge
appropriation this year, but is putting policies in place.
Co-Chair Meyer said he is prepared to vote yes on Amendment
2, but would allow for Fairbanks' input.
Representative Weyhrauch asked for a vote.
Representative Holm agreed that the bill is a good vehicle
for the state to resolve the retirement past service cost
liability.
Representative Kelly said he would get Fairbanks' input
today.
9:16:02 AM
Representative Weyhrauch said the message has to be that the
burden is on [Fairbanks] because the legislature has done
its job.
Representative Stoltze WITHDREW his objection.
Representative Weyhrauch OBJECTED. He suggested that
Fairbanks examine the advice that they received in the past.
He WITHDREW his objection.
There being NO further OBJECTION, Amendment 2 was adopted.
HB 375 was heard and HELD in Committee for further
consideration.
9:18:04 AM
SENATE BILL NO. 250
"An Act extending the termination date of the Council
on Domestic Violence and Sexual Assault; and
eliminating statutory references to the network on
domestic violence and sexual assault."
Co-Chair Meyer noted that Version G was before the
committee.
TOM MAHER, STAFF, SENATOR GENE THERRIAULT, explained that
the bill deals with the termination date of the Council on
Domestic Violence and Sexual Assault.
9:23:08 AM
Mr. Maher related that in this sunset review, Legislative
Audit concluded that the Council on Domestic Violence and
Sexual Assault continues to serve a public need and is
operating in the public interest. He referred to page 7 of
the report.
Accordingly, and per the auditor recommendation, SB 250
originally contained an eight-year extension for the Council
from June 30, 2006 to June 30, 2014. This eight-year
extension was recommended, even with the auditor noting that
the Council had some outstanding audit issues concerning
coordination with other agencies. In absence of any other
information, the sponsor supports the auditor's
recommendation of eight years. The House State Affairs
version contains a two-year sunset extension.
Mr. Maher related that the sponsor, Senator Therriault,
would like the House Finance Committee to consider an
expansion of this date to at least a four-year extension to
2010. He strongly feels that now is the time to give the
Council and the relatively new Executive Director a vote of
confidence from the Legislature to go out and do their job.
Having a full sunset audit in just two years will serve to
disrupt Council activities and also impact the current
schedule of audits pending.
The audit, on page 9, also addressed some on-going
operational concerns that include staff turnover and the
failure of the Council to address two of its statutory
mandates regarding the working with Department of Education
and Early Development and school districts on curricula on
the cause, prevention, and treatment of domestic violence
and sexual assault, and coordinating with the Department of
Health and Social Services on the delivery of services to
victims of domestic violence by health care facilities and
other providers.
The audit request, dated April 25, to the Legislative Budget
and Audit Committee requires an 2008 update on these
outstanding audit issues - as mentioned in the House State
Affair's letter of intent - as well as an update on the
Council's Strategic Plan, including Missions and Measures.
Chairman Therriault agrees that this audit is an appropriate
tool to use to satisfy the concerns of the House State
Affairs Committee and the Legislature.
The sponsor respectively requests that the letter of intent
not be adopted since the audit request is moving forward.
Also, in the Sunset Audit, on page 11 - the Auditor
recommends that the Legislature amend the Council statutes
related to the appointment of Council members. The Council
is comprised of seven members, three public members
appointed by the Governor and the four statutory designated
department heads or their designees (Law, Education, Health
and Social Services, and Public Safety.
Current law requires the Network on Domestic Violence and
Sexual Assault (Network), a non-profit corporation, to
submit a list of recommended candidates to the Governor for
appointment when a vacancy occurs. Further, statutes
require that the Governor fill any unexpired term of a
Council member after consultation with the Network. This
language is passive, in that the Governor does not have to
choose from the Network list.
The Network annually receives a grant from the Council for a
legal advocacy project and the appearance of conflict exists
when a Council member reviews, evaluates, approves and
monitors a grant to the same nonprofit organization that may
have been responsible for recommending that individual be
appointed to the Council. SB 250, in its previous version,
contained language that removed both statutory references to
the Network. The House State Affairs Committee deleted this
language. Senator Therriault respectively asks the House
Finance Committee to consider reinstatement. The
legislative auditor can provide more detail about the
genesis of this apparent conflict, and why it was important
enough to address in this bill.
Mr. Maher concluded that there are two fiscal notes that
have been corrected. As funds for the Council are included
in the Governor's FY07 Operating Budget Request and adopted
in the House and Senate Operating Budget, there will be no
additional fiscal impact due to the extension of the
Council.
9:23:49 AM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, spoke to the sunset review last year that resulted
in two recommendations. One was that the council deal with
a statutory requirement to coordinate with the Department of
Education and with the Department of Health and Social
Services. There was also a recommendation from the prior
audit about the elimination of the Network from statute.
She related the history of the Network modification. The
Governor is able to appoint anyone to the council. The
audit suggested it would be helpful to eliminate any
appearance of conflict of interest.
9:26:29 AM
NANCY SCHEET-FREYMILLER, ANCHORAGE, spoke as a previous
council member and previous executive director of the Abused
Woman's Program. She spoke in support of retaining language
that would preserve the Network because it would allow for
quality appointments. The Network is an association of
organizations in the communities and it has insight into
domestic violence and assault problems. She spoke in
support of the concept of having the Network included as
part of the Council in order to provide consistent, valuable
input.
9:29:18 AM
BRENDA STANFILL, ALASKA WOMEN'S CENTER FOR NON-VIOLENCE,
FAIRBANKS, reminded the committee that the Network is made
up of the 21-member programs from around the state. She
described how Network members are chosen. The Network
represents the community well. She opined that the process
is working. She asked for the language regarding the
Network to be kept in the bill. She suggested that the
three public members be more clearly defined.
9:32:45 AM
BARBARA MASON, EXECUTIVE DIRECTOR, COUNCIL ON DOMESTIC
VIOLENCE AND SEXUAL ASSAULT, explained that the Council
consists of seven members, four from state agencies and
three public members. She spoke highly of the Council. The
Council reviews reports at each quarterly meeting. She
described the follow-up procedure of reports. Each of the
members are very active, involved, and knowledgeable. The
recommendation of the sunset audit was that the Council is
meeting statutory requirements. The Council is working on
recommendations related to the Department of Health and
Social Services and the Department of Education. She
offered to provide more information on those issues. She
concluded that the Council supports extending the sunset
audit date.
9:36:08 AM
Co-Chair Meyer MOVED to ADOPT Conceptual Amendment 1, which
would change the date on page 1, line 6, from 2008 to 2010.
Representative Stoltze OBJECTED.
Co-Chair Meyer explained that the committee is working off
of the State Affairs CS. He suggested that there is a need
for more time, therefore the proposed extension until 2010.
Mr. Maher stated support for the amendment.
Ms. Davidson related that the funds were also looked at
under the federal compliance review. The recommendation for
an 8-year extension was made with other audit processes in
mind.
Representative Weyhrauch asked what the original sunset date
was. Mr. Maher replied that it was for 8 years, until 2014.
Representative Weyhrauch asked if that was changed in House
State Affairs Committee. Mr. Maher said yes.
9:39:24 AM
Representative Stoltze WITHDREW his objection. There being
NO further OBJECTION, Amendment 1 was adopted.
Co-Chair Meyer MOVED to ADOPT Amendment 2:
Page 1, line 2
After "Assault"
Insert "; and eliminative statutory references to the
network on domestic violence and sexual assault"
Page 1, Insert new section
Section 1. AS 18.66.020(a) is amended to read:
(a) The council consists of
(1) three persons appointed by the governor
[AFTER CONSULTATION WITH THE NETWORK ON
DOMESIC VIOLENCE AND SEXUAL ASSAULT, A
NONPROFIT CORPORATION; THE NETWORK ON
DOMESTIC VIOLENCE AND SEXUAL ASSAULT SHALL
SUBMIT A LIST TO THE GOVERNOR OF PERSONS
RECOMMENDED FOR APPOINTMENT];
(2) the commissioner of public safety or the
designee of the commissioner of public
safety;
(3) the commissioner of health and social
services or the designee of the commissioner
of health and social services;
(4) the commissioner of education and early
development or the designee of the
commissioner of education and early
development; and
(5) the attorney general or the designee of
the attorney general.
Page 2, Insert new section
Section 2. AS 18.66.020(b) is amended to read:
(b) The term of office of a member appointed under
(a)(1) of this section is two years. A member
appointed under (a)(1) of this section serves at the
pleasure of the governor and may not serve more than
two consecutive terms. A vacancy on the council shall
be filled for the unexpired term by appointment by the
governor [AFTER CONSULTATION WITH THE NETWORK ON
DOMESTIC VIOLENCE AND SEXUAL ASSAULT].
Renumber the remaining section accordingly.
Representative Joule OBJECTED.
Mr. Maher spoke in favor of Amendment 2. He noted that the
Network has done a great job and the bill is not trying to
lessen the Network's importance. The Committee issued this
recommendation after presenting a case, which analyzed
problems.
Representative Joule WITHDREW his objection.
Representative Weyhrauch OBJECTED for discussion purposes.
He asked what the length of the term of office is now. Ms.
Davidson replied that Section 2 (b) is the other part that
is required when the Governor consults the Network. Now the
Governor would not have to consult with the Network.
Representative Weyhrauch noted that the amendment deals with
the term of office. Mr. Maher clarified that the term of
office is not being changed. A statutory reference is being
removed.
9:42:54 AM
Representative Stoltze agreed with the intent of Amendment
2, especially Public Safety's involvement. Mr. Maher
replied that Public Safety would still be involved.
Representative Weyhrauch said he was concerned that the
amendment removes the action between the Council and
Governor. He MAINTAINED his OBJECTION to adopting Amendment
2.
Co-Chair Meyer said his understanding that the Network is
still allowed to provide recommendations to the Governor.
A roll call vote was taken on the motion.
IN FAVOR: Kelly, Stoltze, Foster, Meyer
OPPOSED: Moses, Weyhrauch, Holm, Joule
Amendment 2 FAILED 4-4.
Amendment 3 was not taken up because it was dependent on
Amendment 2 passing.
9:46:26 AM
Representative Foster MOVED to REPORT SB 250, as amended,
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HCSSB 250 (FIN) was REPORTED out of Committee with a "no
recommendation" and with two new Department of Public Safety
fiscal notes prepared by the House Finance Committee.
9:48:16 AM
CS FOR SENATE BILL NO. 237(FIN)
"An Act relating to the compensation of justices and
judges, and to increasing the number of superior court
judges designated for the third and fourth judicial
districts; and providing for an effective date."
SUSAN PARKS, DEPUTY ATTORNEY GENERAL, CRIMINAL DIVISION,
DEPARTMENT OF LAW, spoke in support of CSSB 237 (FIN). She
described the impetus behind the bill, a concern with how
long it was taking to get cases to trial. In Anchorage a
homicide case typically takes two to three years to get to
trial. There was a strong feeling among district attorneys
that there were not enough resources available to get cases
to trail. It was agreed to work together to give the system
what it needed to improve.
Ms. Parks related that the original bill proposed four new
Superior Court Judges around the state. The current version
of the bill would add six more judges. Felony referrals
around the state are up 64 percent in the last 10 years.
Caseloads are up, there has been an increase in prosecutors,
and police resources, and more crimes have been created.
Cases have become more complex and victims' rights have
impacted cases, which slows down the system and takes up
more resources. These additional judges are needed because
the system is not working efficiently.
9:52:11 AM
Ms. Parks noted that Palmer is the number one priority. The
number of cases there increased from 595 felony referrals in
2002, to 869 in 2005. Anchorage currently has 28 pending
murder trials. Kenai is another area in need of more
support. Fairbanks has seen an increase in crime. She
urged support for the bill.
9:53:57 AM
Representative Holm asked about the 50 percent increase in
the amount of money earmarked for judges, from $9,200 to
$13,000 per month.
CHRIS CHRISTENSEN, STAFF COUNSEL, ALASKA COURT SYSTEM,
observed that there are more police officers so more
perpetrators are caught and brought to justice. In the past
the ACS has been frugal in their requests for new judges.
Now the Department of Law feels the need to request this
increase.
9:56:04 AM
Mr. Christensen addressed the issue of the judicial pay
raise. Judges are appointed and elected and that has caused
some salary issues. Up until 1990, salaries matched those
of federal judges. Since 1990, those salaries have dropped
42 percent. Today, Alaskan judges' salaries are 47th out of
48 states and they make substantially less than a
commissioner.
9:59:00 AM
SB 237 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 306
"An Act making certain land available for selection by
the Matanuska-Susitna Borough."
HB 306 was scheduled but not heard.
ADJOURNMENT
The meeting was adjourned at 9:58 AM.
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