Legislature(2017 - 2018)HOUSE FINANCE 519
02/01/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB321 | |
| HB287 | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 321 | TELECONFERENCED | |
| + | HB 176 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 287 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
February 1, 2018
1:35 p.m.
1:35:46 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
MEMBERS ABSENT
Representative Tammie Wilson
ALSO PRESENT
Neil Steininger, Chief Budget Analyst, Office of Management
and Budget, Office of the Governor; Brian Fechter, Policy
Analyst, Office of Management and Budget, Office of the
Governor; Mark Miller, Superintendent, Juneau School
District, Juneau.
PRESENT VIA TELECONFERENCE
David Boyle, Alaska Policy Forum, Anchorage; Starr Marsett,
Vice-President, Anchorage School Board, Anchorage; Jennifer
McNichol, President Sitka School Board, Sitka; Mayor Bert
Cottle, City of Wasilla, Wasilla; John Ringstad,
Fairbanks North Star Borough School District, Fairbanks.
SUMMARY
HB 287 APPROP: EDUCATION/STUDENT TRANSPORTATION
HB 287 was REPORTED out of committee with a "do
pass" recommendation.
HB 321 APPROP: SUPPLEMENTAL OP.; FUND; AMENDING
HB 321 was HEARD and HELD in committee for
further consideration.
Co-Chair Seaton reviewed the agenda for the day.
HOUSE BILL NO. 321
"An Act making supplemental appropriations and other
appropriations; making an appropriation to capitalize
a fund; amending appropriations; and providing for an
effective date."
1:36:37 PM
NEIL STEININGER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT
AND BUDGET, OFFICE OF THE GOVERNOR, introduced himself. He
referred to two documents distributed to committee members:
"FY2018 Supplemental Summary" and "FY2018 Supplemental Bill
Spreadsheet" (copy on file). He remarked that the total
Supplemental request was $7,895.7 million in Undesignated
General Funds (UGF) and the all funds total was negative
$5.5 million.
1:37:54 PM
Mr. Steininger moved to the document; "FY 2018 Supplemental
Spreadsheet" and explained the items in the bill. He began
with page 1, the Operating Numbers Section, line 2:
Line 2
Department of Commerce, Community, and Economic
Development
Banking and Securities Component
Financial Examiner I/II for Alaska Native Claims
Settlement Act Filings and Support
The division must timely process ANCSA corporate
filings and respond to complaints within 10 business
days. Without this position, the division would be
forced to reduce resources tasked with examinations
and enforcement activities for other programs.
UGF $0.0 DGF $103.4
Other Funds $0.0 Federal Funds $0.0
Representative Guttenberg asked about the difference
between the current supplemental budget request and the
similar item in the FY 19 operating budget request. Mr.
Steininger stated that the supplemental request allowed the
Department of Commerce, Community and Economic Development
(DCCED) to hire the position in FY 18. He reported that the
volume of filings had dramatically increased, and the
position was necessary as soon as possible.
1:39:10 PM
Mr. Steininger reviewed lines 3 and 4.
Line 3
Department of Environmental Conservation
Solid Waste Management
Increase Program Receipt Authority
The Solid Waste Management program conducted a fee
study in FY2017. Revised fee regulations have gone
through public notice, review, and comment, and were
enacted effective October 27, 2017. The Department
anticipates revenue from the new fees will exceed
general fund program receipt authority in FY2018.
UGF $0.0 DGF $35.
Line 4
Department of Environmental Conservation
Air Quality
Decrease Program Receipt Authority
The Division of Air Quality expects to under collect
general fund program receipt authority in FY2018 due
to fluctuations in the amount of Title I permit work
from year to year.
UGF $0.0 DGF ($35.0)
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger turned to Line5.
Line 5
Department of Health and Social Services
Front Line Social Workers
A recent amendment to the section of the Public
Assistance Cost Allocation Plan (PACAP) covering the
Office of Children's Services (OCS) changes the
allocation methodology for the Front Line Social
Workers component, the largest personal services
component within the Office of Children's Services
budget. The estimated increase is associated primarily
with the claiming for the Title IV-E foster care,
adoption, and guardianship programs.
UGF $0.0 DGF $0.0
Other Funds $0.0 Federal Funds $6,500.0
Vice-Chair Gara asked whether the transaction assumed state
match money was available. Mr. Steininger wanted to refer
to the Department of Health and Social Services (DHSS). He
understood that the transaction reflected an attempt to
increase the amount of federal dollars or the "percent of
the expenditures that were attributable to federal money by
the division." Vice-Chair Gara did not understand the link
between PACAP and the OCS. Mr. Steininger believed the
PACAP covered more than just the Division of Public
Assistance. He deferred to DHSS for details.
1:41:17 PM
Mr. Steininger moved to Line 6.
Line 6
Department of Health and Social Services
Foster Care Base Rate
Decline in Child Support Payment Collections
The Office of Children's Services expects significant
reductions in collections of child support and social
security payments.
UGF $1,000.0 DGF $0.0
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger elaborated that OCS received child support
collected by the Department of Revenue (DOR) for children
in state custody. In recent years there had been a
significant decline in child support collections that
impacted the division. He noted that OCS was experiencing a
decrease in Social Security benefits from children in its
care.
Co-Chair Seaton recognized that Representative Ortiz joined
the meeting.
Representative Pruitt asked why child support collections
were declining. Mr. Steininger replied that through
discussions with the division and DOR he discovered that
many factors lead to the decline. He elucidated that
economic factors, unemployment, and the inability to
collect from Permanent Fund Dividend (PFD) garnishments
were issues related to the decrease.
1:43:40 PM
Mr. Steininger addressed Line 7.
Line 7
Department of Health and Social Services
Foster Care Special Need
FY2017 Special Need Payments Made in FY2018
At the close of FY2017 the Office of Children's
Services pushed payments for FY2017 obligations into
FY2018 in the amount of $2,895.7.
UGF $2,895.7 DGF $0.0
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger reported that at the end of FY 17 OCS had to
defer some payments to FY 18 due to a lack of funds. The
item would cover the payments that were pushed into FY 18
and prevent a "domino effect" of pushing payments into FY
19.
Representative Ortiz asked Mr. Steininger to define
"special needs." Mr. Steininger responded that special
needs for foster children would be clothing, medical care,
etc., and were above and beyond the base foster care
payments.
Vice-Chair Gara clarified that Mr. Steininger was not
talking about youth with special needs but foster children
needing things that were not included in the base rate. Mr.
Steininger responded affirmatively.
1:45:41 PM
Mr. Steininger continued to Page 2, line 8.
Line 8
Health and Social Services
Alaska Temporary Assistance Program
Temporary Assistance for Needy Families Maintenance of
Effort
The maintenance of effort (MOE) for the Temporary
Assistance for Needy Families (TANF) program, mandated
by the Federal Government, is primarily met by the
expenditures within ATAP. The state received
notification of penalty for failure to meet the MOE
obligation for federal fiscal year 2017.
UGF $2,000.0 DGF $0.0
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger reported that the item reflected a notice
from the federal government that certain criteria had not
been met for TANF (maintenance of effort).
Representative Guttenberg was under the impression that the
maintenance of effort was not specific to a single program
but applied across the board to other programs. He asked
for further clarification. Mr. Steininger replied that
there were several areas where the state could meet the
maintenance of effort but TANF was the primary program. He
explained that the department was attempting to find
alternative sources to meet the maintenance of effort and
some were not successful. He offered to provide detailed
information regarding the alternate sources. The alternate
sources needed to be approved through the Center for
Medicaid Services (CMS). Representative Guttenberg
commented that he suspected that a program cut of
approximately $2 million created the problem and wanted to
explore the issue.
Vice-Chair Gara asked whether the state was incurring a $2
million penalty to the federal government for not meeting
the maintenance of effort. Mr. Steininger knew that the
transaction avoided further penalty and would provide
further detail regarding the penalty later. Vice-Chair Gara
indicated that the department had warned the legislature in
2016 that the scenario could happen. He noted that the
"committee decided not to believe the department."
Mr. Steininger reviewed Line 9.
Line 9
Department of Revenue
APFC Investment Management Fees
Investment and Custody Fees
Unanticipated market performance or manager changes
could cause the actual amount of fees paid to exceed
projections. As a prudent course of action, $5,000.0
supplemental authority for the Investment Management
Fee allocation will ensure that APFC has sufficient
funds to meet our contractual obligations.
UGF $0.0 DGF $0.0
Other Funds $5,000.0 Federal Funds $0.
1:49:36 PM
Mr. Steininger moved to the Language Section of the bill
beginning on line 18.
Line 18
Special Appropriations
Comprehensive Insurance Program
Payment from Premera to the Reinsurance Program
Adjustment to the state contribution to the calendar
year 2017 reinsurance program to reflect reimbursement
from Premera Blue Cross Blue Shield.
UGF $0.0 DGF ($25,000.0)
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger elaborated that in late November or early
December 2018, Premera refunded the state $25 million for
the Alaska Comprehensive Health Insurance (ACHIA). The $25
million reduction left a total balance of $30 million in
the program. He highlighted line 19:
Line 19
Fund Capitalization
Disaster Relief Fund
Disaster Relief Funding
This increase is needed due to the low balance of the
disaster relief fund and the estimated amount needed
for spring 2018 disasters. Sufficient general fund
authority of $2,000,000 currently exists in the FY2019
budget.
UGF $2,000.0 DGF $0.0
Other Funds $0.0 Federal Funds $0.0
Mr. Steininger relayed that the spreadsheet inadvertently
omitted two bargaining agreements included in the bill that
had been completed with no impact to the budget for the
University of Alaska system.
1:51:14 PM
Mr. Steininger discussed the ratification section beginning
on page 3, line 23. He reminded committee members that the
transactions were ratifications of prior year expenditures.
Ratifications
Line 23
Department of Health and Social Services
Pioneer Homes
FY2016, AR H001 Alaska Pioneer Homes
UGF $467,693.27
Mr. Steininger reported that the item represented a
shortfall in revenue. He moved to line 24.
Line 24
Department of Health and Social Services
Public Health
FY2016, AR H007 Public Health
UGF $1,350,310.26
Mr. Steininger indicated there had been a shortfall in
revenues. He turned to item 25.
Line 25
Department of Health and Social Services
Medicaid Services
FY2016, AR H012 Medicaid Services
UGF $8,715,670.72
Mr. Steininger indicated that while there was a shortfall
in receipts in 2016 the department had recouped the
revenue, but it was posted in FY 17.
Mr. Steininger moved to Line 26 and Line 27, which were
Capital Budget items.
Line 26
Department of Health and Social Services
Capital
FY2010, AR H264 Mental Health Housing
UGF $8,824.49
Line 27
Department of Health and Social Services
Capital
FY2011, AR H260 Mental Health Home Modification and
Upgrades to Retain Housing
UGF $7,355.06
1:53:01 PM
Mr. Steininger presented line 28, which was a capital item.
Line 28
Department of Health and Social Services
Capital
FY2016, AR HUBC Unbudgeted Capital RSA's
UGF $300,310.83
Mr. Steininger reported that the item represented a
shortfall in revenues.
Representative Thompson asked what RSA meant. Mr.
Steininger answered that RSAs were Reimbursable Services
Agreements that were contracts between state agencies for
providing services.
1:53:39 PM
Mr. Steininger concluded with line 29.
Line 29
Department of Public Safety
Bureau of Highway Patrol
AR 47863-13 Bureau of Highway Patrol Special Project
UGF $4,304,930.00
Representative Pruitt asked what the initial appropriation
was for line 29. He requested additional detail.
1:54:26 PM
BRIAN FECHTER, POLICY ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, explained that the federal
government denied certain expenditures for a grant that was
passed through the Department of Transportation and Public
Facilities (DOT) to the Department of Public Safety (DPS).
The money was only to be used for alcohol enforcement and
was used for other things.
Representative Pruitt asked if the department was aware of
the grant requirements and "knowingly jeopardized the
federal funding." Mr. Fechter responded that it was a
matter of interpreting the original grant agreement. He
deferred to the department for further detail.
Representative Pruitt requested an answer from the
department regarding a $4 million misinterpretation.
Co-Chair Seaton asked the chairman of the DPS subcommittee
to flush the details out during subcommittee meetings.
HB 321 was HEARD and HELD in committee for further
consideration.
1:56:53 PM
AT EASE
1:57:46 PM
RECONVENED
HOUSE BILL NO. 287
"An Act making appropriations for public education and
transportation of students; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
1:57:59 PM
Co-Chair Foster indicated that the committee heard the bill
twice previously and the prior meeting was held on January
30, 2018. He intended to move the bill out of committee.
Co-Chair Foster OPENED public testimony.
^PUBLIC TESTIMONY
1:58:32 PM
MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT,
JUNEAU, spoke in support of HB 287. He explained the
process of budgeting for the school district. He indicated
that the school district built its budget for the following
school year from January through March each year. If he did
not know the number for the budget, he had to guess, and
the guess must be conservative, or it could result in a
"catastrophic" situation. He believed that the situation
could be averted if a sustainable budget was adopted. He
related that the previous budgets were not completed in
time to work with the school district's budgeting cycle. He
was not sure the bill solved the overarching problem but
felt the bill was the right thing to do.
2:02:00 PM
DAVID BOYLE, ALASKA POLICY FORUM, ANCHORAGE, (via tele-
conference), spoke in opposition to HB 287. He argued that
the education budget should be included within the rest of
the operating budget. He argued that other departments like
the Department of Public Safety, Department of
Transportation and Public Facilities (DOT), and the
University of Alaska might "demand" that its budgets were
forward funded. He characterized the bill as "incentivizing
bad behavior." He understood that the budget had been
passed very late but felt that the district's budgets could
be managed. He stated that the education system was "not a
jobs program." He opined that the education system had been
funded with very "little accountability for increased
student achievement."
2:04:00 PM
AT EASE
2:04:50 PM
RECONVENED
Mr. Boyle continued that the Anchorage School District
transported 15,000 students but received funding for 47,000
thousand students. He suggested prioritizing transportation
costs. He noted that when the school district in Anchorage
distributed pink slips they were only given to teachers and
not to support staff. He argued for privatization of some
support services.
2:07:06 PM
STARR MARSETT, VICE-PRESIDENT, ANCHORAGE SCHOOL BOARD,
ANCHORAGE (via teleconference), spoke in favor of HB 287.
She indicated that the school district had issued
approximately 220 pink slips. She explained the time
consuming process of issuing pink slips. She spoke to the
difficulties of managing health insurance once pink slips
were issued and the many costs associated with issuing pink
slips. Teachers were at risk of losing their health
insurance if they were not reinstated by June 30th each
year. She also noted the loss of new hires and the
difficulty of recruitment because of the state's budget
process and how it impacted education spending. The school
district hired approximately 260 teachers each year due to
turnover and retirements. She indicated that reliable
funding would help avoid unintended costs and the stated
issues while also boosting student and teacher morale.
2:10:48 PM
JENNIFER MCNICHOL, PRESIDENT, SITKA SCHOOL BOARD, SITKA
(via teleconference), spoke in support of HB 287. She
thought that the legislation helped to solve the budgeting
issue for school districts. The budget was done "far too
late for district budgeting requirements." The bill would
assist in teacher retention, which was crucial. The school
district was in the process of initiating the Alaska
Education Challenge, Every Student Succeeds Act (ESSA) and
other projects and did not need budget uncertainty. She
suggested a default to flat funding education if the budget
deadline was missed. However, she hoped flat funding meant
hold harmless because flat funding would equal a decrease
in funding due to the rising costs of health care and
utilities. She remarked that the district's health
insurance increased 13 to 25 percent each year. She spoke
to Mr. Boyles testimony and countered that teachers made up
most of the districts staff and layoffs primarily affected
teachers. Many of the district's support staff worked under
long term contracts that were not able to be changed when a
budget passed. She did not think passing a timely budget
was "throwing money at a problem" as Mr. Boyle suggested.
The board's number one goal was to close achievement gaps.
She thanked the committee.
2:13:51 PM
MAYOR BERT COTTLE, CITY OF WASILLA, WASILLA (via
teleconference), spoke in support of HB 287. He noted that
he did not have a direct impact on the district's budget
but observed through experience that late funding affected
morale and retention. He believed that early funding helped
school districts and communities know what their budgets
would be. He asked the legislature to take care of the
education budget early in the session.
Co-Chair Seaton asked when the school district was required
to submit its budget to the municipality or if the budget
was submitted directly to the borough. Mr. Cottle responded
that the district's budget went directly to the borough.
2:15:40 PM
JOHN RINGSTAD, FAIRBANKS NORTH STAR BOROUGH SCHOOL
DISTRICT, FAIRBANKS (via teleconference), spoke in favor of
the legislation. He related that the prior late funding was
problematic for all school districts. He thought that early
funding focused the process on educating children. He
talked about the process that was required when funding was
in question each year. He thought more focus on the
classroom was the goal instead of developing contingency
budgets, which increased administrative costs instead of
leaving more money for the classroom. He stated that
anything to move the budgeting process efficiently forward
would be helpful. He thanked the committee.
2:17:59 PM
Co-Chair Foster CLOSED Public Testimony.
Representative Pruitt reported that every year he had been
in the legislature he heard concerns about properly funding
education even when it was forward funded. He argued that
the bill was unnecessary, and it implied that the
legislature would not get its job done in 90 days. He
thought that most members of the legislature and the
governor were aligned with the numbers in the education
budget. He contended that the bill was overcapitalizing and
withdrawing $800 million out of the Constitutional Budget
Reserve (CBR) was needless. However, he would support
moving the bill from committee even though he objected to
the budgetary process in the bill. He felt that a vote
against the bill would be portrayed as though he was
against children and teachers. He relayed his wholehearted
support of teachers. He reiterated that the real discussion
was about a budgetary process. He contended that children
and teachers were being "weaponized" in and argument over a
budgetary process. The bill did not fully fund education
for the following year; only key pieces were being funded
as they related to education in the bill. He opined that
the issue was about a process and how the legislature
pieced things together.
2:22:02 PM
Vice-Chair Gara spoke to the point of why early funding
mattered. He indicated that when pink slips were issued
teachers and parents took it seriously. The result was the
loss of great teachers. He hoped that bipartisan support
existed for early funding education to avoid sending out
pink slips. He noted that the prior few year's late
budgeting threatened troopers, teachers, and other vital
state professionals' jobs, which contributed to retention
issues.
Co-Chair Seaton clarified that the purpose of the bill was
to make the education system more efficient. He reiterated
the testimony he heard of the effects of late budgeting on
the school districts. He thought the bill needed a
cooperative effort. He deemed it was much more efficient to
take money from the CBR because it earned significantly
less than the Earnings Reserve Account (ERA). He offered
that there would be no point to draw from the ERA instead
of a fund that earned less. He thought the bill was
promoting efficiency on several levels, would help with the
retention of teachers, and morale issues. He hoped the
legislators would agree to fund education early. He
encouraged members to vote the bill out of committee.
2:26:45 PM
Vice-Chair Gara MOVED to report HB 287 out of Committee
with individual recommendations.
2:27:18 PM
AT EASE
2:27:48 PM
RECONVENED
Vice-Chair Gara WITHDREW his motion.
Vice-Chair Gara MOVED to report HB 287 out of Committee
with individual recommendations. There being NO OBJECTION,
it was so ordered.
HB 287 was REPORTED out of committee with a "do pass"
recommendation.
Co-Chair Foster reviewed the schedule for the following
day.
ADJOURNMENT
2:29:31 PM
The meeting was adjourned at 2:29 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 321 FY2018_Supplemental_Spreadsheet_2-1-18.pdf |
HFIN 2/1/2018 1:30:00 PM |
HB 321 |
| HB 321 FY2018_Supplemental_Backup_2-1-2018.pdf |
HFIN 2/1/2018 1:30:00 PM |
HB 321 |
| FY2018_Supplemental_Summary_1-29-18.pdf |
HFIN 2/1/2018 1:30:00 PM |
HB 321 |
| DHSS Review WDR-HB176-2-6-18.pdf |
HFIN 2/1/2018 1:30:00 PM |
HB 176 |
| HB 321 OMB Response HFIN Meeting 2.1.18.pdf |
HFIN 2/1/2018 1:30:00 PM |
HB 321 |
| HB 321 FY2018 Supplemental UNAC & FFU.PDF |
HFIN 2/1/2018 1:30:00 PM |
HB 321 |