Legislature(2017 - 2018)ADAMS ROOM 519
04/17/2018 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB185 | |
| SB105 | |
| SB92 | |
| HB119 | |
| HB409 | |
| SB105 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 224 | TELECONFERENCED | |
| + | SB 185 | TELECONFERENCED | |
| + | HB 119 | TELECONFERENCED | |
| + | HB 409 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 105 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 17, 2018
9:10 a.m.
9:10:05 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 9:10 a.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
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Senator Peter Micciche; Rachel Hanke, Staff, Senator Peter
Micciche; Lisa Skiles Parady, Executive Director, Alaska
Council of School Administrators; Mark Miller,
Superintendent, Juneau School District, Juneau; Matt Moser,
National Education Association-Alaska, Juneau; Kathy Lea,
Deputy Director and Chief Pension Officer, Division of
Retirement and Benefits, Department of Administration;
Senator David Wilson, Sponsor; Gary Zepp, Staff, Senator
David Wilson; Elizabeth Diamant, Staff, Representative Paul
Seaton; Rachel Hanke, Staff, Senator Peter Micciche; Gene
Therriault, Deputy Director, Statewide Energy Policy
Development, Alaska Energy Authority, Department of
Commerce, Community and Economic Development; Cathy
Schlingheyde, Staff, Representative Jonathan Kreiss-
Tomkins; Representative Jonathan Kreiss-Tomkins, Sponsor.
PRESENT VIA TELECONFERENCE
Jennifer Haldane, Director, Contract Administration, Labor
Relations And Benefits, Anchorage School District,
Anchorage; Scott McManus, Superintendent, Alaska Gateway
School District, Tok; Margaret Brodie, Director, Division
of Health Care Services, Department of Health and Social
Services; Marla Thompson, Director, Division of Motor
Vehicles, Department of Administration; John Springsteen,
Alaska Industrial Development and Export Authority,
Department of Commerce, Community and Economic Development;
Marla Thompson, Director, Division of Motor Vehicles,
Department of Administration; Elizabeth Ripley, CEO, Mat-Su
Health Foundation, Wasilla; Rick Calcote, Mental Health
Clinician, Division of Behavioral Health, Department of
Health and Social Services.
SUMMARY
HB 119 AIDEA:DIVIDEND TO STATE;INCOME;VALUATION
HB 119 was HEARD and HELD in committee for
further consideration.
HB 409 DMV ID CARDS & REGISTRATION FEES
CSHB 409(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one
previously published fiscal impact note: FN1
(ADM).
CSSB 92(FIN)am
VESSELS: REGISTRATION/TITLES; DERELICTS
HCS CSSB 92(FIN) was REPORTED out of committee
with a "no recommendation" recommendation and
with one new fiscal impact note from the
Department of Administration; one new fiscal
impact note from the Department of Natural
Resources for Fund Capitalization; and two
previously published zero notes: FN3 (DEC) and
FN4 (DNR).
CSSB 105(FIN)
MARITAL/FAMILY THERAPY LIC & MED SERVICES
CSSB 105(FIN) was HEARD and HELD in committee for
further consideration.
CSSB 185(EDC)
REEMPLOYMENT OF RETIRED TEACHERS & ADMIN
CSSB 185(EDC) was REPORTED out of committee with
a "do pass" recommendation and with one
previously published indeterminate fiscal note:
FN2 (ADM).
Co-Chair Foster reviewed the meeting agenda.
CS FOR SENATE BILL NO. 185(EDC)
"An Act relating to reemployment of persons who retire
under the teachers' retirement system."
9:11:04 AM
Co-Chair Foster noted that the bill was companion to HB 224
by Representative Jennifer Johnston.
SENATOR PETER MICCICHE, thanked the committee for hearing
the teacher retire/rehire bill. He spoke to the nationwide
shortage of teachers and educators. Historically Alaska had
relied on the recruitment of teachers from the Lower 48,
but the pool in the Lower 48 had shrunken, which had
exacerbated the teacher shortage in Alaska. He reported in
2015 there were 3.3 million teachers in the U.S.; 344,000
new teachers had graduated in 2017 and 531,000 teachers
left the profession. He shared that the turnover rate in
poverty schools was much higher; it was a nationwide
problem. He detailed that teacher job fairs in Alaska had
seen a steady decline in prospective teachers. In 2017
there had been only 211 registrants, 172 from in-state and
39 from out of state. He detailed that typically the
numbers were more balanced. He elaborated that 36 districts
had been represented. In 2018 the number of registrants had
dropped to 179 and only 31 were from out of state. In some
schools there were high school graduates supervising
certain classrooms.
Senator Micciche explained that the bill returned to the
retire/rehire provisions in place from 2001 to 2010. He
explained that to be eligible [for re-employment] a person
62 years of age or older had to be retired for 60 days and
a person younger than 62 had to be retired for six months.
There were no salary deductions, retirement and benefits
could still be received, there was no credited service, and
there was no hit to the Teachers' Retirement System (TRS)
system. He commented that the department would speak to the
fiscal note later in the meeting. The districts would
continue to pay the 12.56 percent TRS requirement. Benefits
and pay would depend on the bargaining unit, some would be
union represented and some would not. Sick leave was
required by current state law and there would be a 12-month
contract just like any other teacher. He detailed that from
2001 to 2010 there had been only 325 teachers rehired. The
average reemployment time had been 18.7 months and the
shortest had been 3 months. He specified the number equated
to 32 teachers on average per year. He believed the number
would be higher if the bill passed.
9:15:11 AM
Senator Micciche expounded that the bill would put Alaska
retired teachers on equal footing with retired teachers
from other states. Currently any retired teacher from
another state could be rehired in Alaska; however, Alaska
could not rehire its own retired teachers. He believed an
experienced teacher was better for the students until a
school could fill a position with a new full-time teacher.
Additionally, he believed there were mentorship
opportunities for younger teachers. The bill enabled
districts to take advantage of a lifetime of experience at
the same or lower cost of a new teacher until the position
could be filled with a recent graduate. He pointed to a
handout specifying that rural remote schools had the lowest
retention among principals and teachers (copy on file). He
detailed that urban schools included Juneau, Anchorage, and
Fairbanks; the urban/rural fringe included Palmer, Sitka,
Seward, Kenai; the rural hub category included places like
Bethel, Healy, and Unalaska; and the rural remote category
included places like Adak, Arctic Village, and Yakutat. The
rural remote schools only retained 61 percent of their
principals and 64 percent of their teachers in 2017 to
2018, whereas urban schools had retained 88 percent of
their principals and 80 percent of their teachers. He
reiterated there was a problem facing the state, which the
bill would help to manage temporarily with qualified
teachers.
9:17:17 AM
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, reviewed the
sectional analysis (copy on file):
Section 1
Adds new section to AS 14.20:
AS 14.20.136(a) allows school districts to rehire
educators that have retired under the defined benefit
plan or the defined contribution plan when;
AS 14.20.136(b)(1) the retired member certifies that
there was no prearrangement of reemployment made prior
to retirement;
AS 14.20.136(b)(2) the member has been retired at
least 60 days if they are 62 years of age or older or
six months if the member is younger than 62 years of
age;
AS 14.20.136(c) the school district has adopted a
rehire policy by resolution and has publicly
advertised the position for 10 business days and is
actively recruiting to fill the position with a person
other than a retired member.
AS 14.20.136(d) reemployment contracts may not exceed
12 consecutive months.
AS 14.20.136(e) the school district that hires a
retiree must provide the administrator with a copy of
the resolution and policy required by (e) as well as a
report stating the retiree's name, description of
circumstances, and actions taken to comply with the
policy. The school district is also required to make
contributions to AS 14.25.070.
AS 14.20.136(f) certain requirements of the section
don't apply to a rehire member that's eligible for
restoration of tenure rights.
Section 2
Allows retirees who are rehired, as permitted by
section 1, to continue to receive retirement benefits
during the period of reemployment unless they become
an active member.
Section 3
Makes retirees who are reemployed, as permitted by
section 1, ineligible to receive additional retirement
benefits based on their service and salary during the
period of reemployment.
Section 4
Clarifies that a member who is reemployed does not
become an active member, the member will continue to
receive retirement benefits, deductions under TRS will
not be made to their salary and reemployed educators
will not receive credited time for service during
reemployment. This section also ensures that a retired
and rehired teacher will be eligible to receive the
group health plan coverage that is provided to active
members employed by the school district if they so
choose.
Section 5
Inserts reference to section 1 which will require the
employer to make TRS contribution for reemployed
retirees at a rate of 12.56%.
Section 6
Applies the bill's provisions to contracts made on or
after the effective date.
9:19:31 AM
Co-Chair Foster listed individuals available for questions.
Representative Grenn asked why the tool had previously been
removed in 2010.
Senator Micciche replied that he could not answer the
question. He explained that as he had worked on the bill
someone had suggested using a short sunset window in order
to drive educators to find a long-term solution to the
shortage. He remarked that if educators elsewhere in the
U.S. could not solve the problem, he did not believe the
idea was realistic. He thought the situation was a frequent
challenge in the past. He spoke to the difficulty of
getting a piece of legislation passed. He did not know why
it sunset in the past. He thought they had probably
believed a solution should be achieved, but he did not know
that it was realistic. He believed the challenge was
frequent in Alaska depending on the status of the economy
and other issues.
LISA SKILES PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF
SCHOOL ADMINISTRATORS, responded that the school system had
missed that the law had sunset; they now needed it back.
Representative Wilson pointed to Section 2 of the
legislation that read "...continue to receive retirement
and benefits during the period of reemployment unless they
become an active member." She noted the language appeared
in two places in the bill. She wondered if a person could
be retired and receiving retirement and benefits and also
become an active member.
Senator Micciche replied that a person could always be
rehired and become an active member. He elaborated that a
retired person could decide they would no longer be retired
and go back to the profession of teaching. He stated that a
person could not be both. The bill would enable a person to
be a temporary teacher after retirement. He continued that
if a person decided to return to being an active member
they would come out of retirement and would no longer
receive their retirement benefits.
Representative Wilson observed that many teachers were not
coming out of retirement, otherwise the bill would not be
needed. She surmised that a retired teacher could decide to
come back [temporarily] under contract, while retaining
their benefits. She believed the benefit to the [TRS]
retirement plan was that 12.5 percent was put into the
system and no additional money would go to the retiree
because they were already in a plan.
Senator Micciche replied in the affirmative. He believed
people had not chosen to become active employees because
when people were ready to retire they were ready to retire.
He remarked that the bill would very likely bring a
significant savings for the state. He underscored that
people did not retire to go back to work. However,
sometimes a teacher retired and was amenable to coming back
for a temporary period. He believed there were many more
teachers in the queue in that scenario versus retired
teachers wanting to come back to work full-time.
9:24:44 AM
Representative Kawasaki referenced a one-page document from
the Division of Retirement and Benefits (copy on file) that
listed the Lower Kuskokwim School District as the employer
employing the largest number of individuals under the
retire/rehire program ["Retiree Rehire Program Experience
Summary 2001-2010 School Years (copy on file)]. He asked if
there were statistics available on other employers
particularly related to rural and remote Alaska.
Ms. Parady believed Representative Kawasaki was referring
to a summary of statistics in members' bill packets. The
document specified that the employer employing the largest
number of individuals under the retire/rehire program was
the Lower Kuskokwim School District. The information was
broken down by position. For example, there had been 149
teachers, 45 special education teachers, 18
superintendents. She explained it was possible to obtain
who used what by district if necessary. She remarked that
the program had been used more historically in rural areas,
the urban areas desperately needed it for specific
positions like special education. She believed every
district would use the tool provided under the bill if
possible.
Representative Kawasaki noted that the law had been in
effect from 2001 to 2010. The committee had heard
repeatedly in testimony that the reason so many individuals
were retained in school districts, trooper ranks, and other
places was primarily related to the retirement system
currently in place. He asked Ms. Parady for comment.
Ms. Parady answered that Alaska was reflective of the
national shortage, but it was having greater struggles due
to its remoteness combined with its loss of
competitiveness. She noted that teachers had testified
throughout session that the state had lost ground with its
retirement system and wages for the cost of living in
Alaska. The state no longer drew [new teachers] from the
Lower 48 as it had in the past. She noted that many
recalled when there had been lines out the door to work in
Alaska, whereas, currently the state was down to less than
200 and the majority were rotating between districts - not
from the Lower 48.
9:27:46 AM
Senator Micciche elaborated that there were currently
shortages in some areas that had some of the most lucrative
defined benefit plans in the nation. He remarked that it
was largely a social issue - the primary reason teachers
were leaving was dissatisfaction. The social norms where
teachers had been revered by parents and students had
changed. He stressed the need to turn the situation around.
He believed it was a national problem and that teachers
were tired of being abused and not being valued. The non-
monetary problems seemed to be more pervasive than whether
there was a lucrative defined benefit plan in a district.
Representative Kawasaki remarked that one of the criticisms
he had heard about a retire/rehire program (e.g. for city
police and teachers) was rather than hiring new teachers it
was a way to keep individuals who had retired previously.
He had heard the issue was a negative aspect of the
program.
Ms. Parady countered that the districts were unable to fill
vacant positions. She underscored it was not a situation
where jobs were taken away from new teachers. The
legislation was designed to require school districts to
advertise and try to recruit a permanent teacher into the
position. If the position was not filled, districts could
hire a retired individual to fill the position. She
understood that it may be a concern in times when the
districts were able to attract teachers, but it was not
applicable in the current situation. Currently there were
many districts patch-working substitutes or para-educators.
She believed the students would be much better served if
districts had the ability to rehire retired teachers who
were familiar with the Alaska content and was a proven
resource for students. She concluded that patchworking
substitutes and others to teach the class or to put
additional load on teachers by double-hatting or merging
classes was not good for students.
9:30:41 AM
Vice-Chair Gara stated the bill was easy for him to support
for the reasons mentioned by Ms. Parady. He believed the
bill had passed the other body unanimously because people
with different views on education funding saw a common
ground with the legislation. He recalled testimony that
several years ago the job fairs had been filled with
individuals looking to move to Alaska, whereas, currently
the state was having difficulty attracting qualified
teachers to come to Alaska. He believed the bill helped
fill the gap.
Ms. Parady answered that Alaska was seeing a crisis that
was unparalleled to anything in the past. She characterized
the situation as the perfect storm. There were not enough
new teachers being produced nationally. She referenced
research out of Penn from 2015 reporting there were 3.3
million teachers in the U.S.; 343,000 new teachers had been
prepared that year, but over 500,000 teachers left the
profession. The deficit in the country's teacher pool was
exaggerated in Alaska because of its reliance on recruiting
teachers from the Lower 48. She emphasized that education
was hard; teachers were asked to do much more than in the
past. She believed there were many reasons for the severe
shortage. She asked members to think about the education
system as a business.
Ms. Parady explained that education was the largest
business in most of the state's communities. She equated
superintendents to business CEOs and stressed there had
been a 60 percent turnover rate over a four-year period.
Additionally, districts had a 26 percent principal turnover
rate. She referenced the handout provided by Senator
Micciche about teacher turnover. She elaborated that the
picture worsened with time in schools that needed the most
stability. The bill was not a silver bullet, but it was one
strategy to help fill vacancies. She communicated that
educators understood that the proposal of additional
strategies was needed, and she believed legislators would
be seeing more proposals in the coming years.
9:34:53 AM
Senator Micciche spoke about retirement and believed money
had much to do with the issue nationwide. He thought that
the legislature was considering early funding for education
because he and Co-Chair Seaton had attended a meeting with
educators and administrators in Seward earlier in the year.
He hoped the effort was successful. He believed flat
funding had a dramatic impact on teaching. He agreed it was
a discussion that needed to continue. There was struggle
for many reasons and the bill offered a simple solution to
part of the problem.
Vice-Chair Gara stated that more experienced teachers had a
stabilizing effect. He believed mentors worked in numerous
ways and that experienced teachers were also beneficial for
other teachers. He remarked on a separate effort to get
more mentors in the child protection system.
Representative Pruitt referred to financial impacts of the
bill. He asked if retired teachers would come back to work
at a new teacher salary or other.
Ms. Parady answered that it would depend based on the
school district. She explained that a teacher was not
locked into the salary they received at their previous
district. She explained that if a person had been a master
teacher at a higher level before retirement, the rehire
negotiation would be between the school district and the
retired individual. She guessed that depending how long a
position had been vacant, the more leverage the retired
individual would have. There was no locked in amount or
prescribed way an individual would come back to work. The
individual could only be hired after the district had tried
to fill the position in the normal process.
9:38:42 AM
Representative Pruitt pointed to Section 1(d) and observed
that contracted reemployment could not exceed more than 12
months. He asked for verification that the rehired teachers
would not fall under a normal bargaining contract where
they would move into [payroll] steps and tiers annually. He
surmised it would be a year-by-year discussion and
negotiation.
Ms. Parady answered that depending on the collective
bargaining agreement of the district and the definition of
teacher, the individual would or would not fall under that
category. She confirmed that the contracts were negotiated
year-by-year (as with every teacher) and a retired person
would only be able to contract for one year at a time or
less depending on the needs of the district.
Representative Pruitt noted that rehired teachers would be
eligible for insurance under the current plan. He thought
healthcare insurance would be secondary from the retirement
system.
Senator Micciche read from page 2, paragraph 3 of the
fiscal note [OMB Component Number 64]:
Current retired members covered under the AlaskaCare
Retiree Health Plan who return to employment under
this bill will generate a cost savings as their
retiree health insurance will become secondary to the
active insurance received upon reemployment...
Representative Pruitt wanted to understand the fiscal
impacts of the bill. He stated there was always cost
concern about double dipping when there were discussions
about retiree rehire in teaching or other systems. He
recognized the need had been established due to the lack of
teachers. He asked how to ensure people were comfortable
that the legislature was not providing an opportunity for
an individual to potentially benefit off the system. He
stated that double dipping had cost some communities
substantially.
Senator Micciche answered that the bill would implement
some things that had not been in place under the prior
program. He noted there had also been some Internal Revenue
Service (IRS) changes. He elaborated that the bill required
bona fide separation with no prearrangement allowed. He
detailed that prearrangement had some significant
consequences, which increased the likelihood that
retirement systems would not be impacted. He explained that
the fiscal note provided a set of facts. He detailed that
if 100 percent were rehired from the retired population
there would be a savings. He reported there would be a
fiscal impact if people retired to take advantage of the
program earlier. He stated that if 50 percent of the
participants were retired over three years there would be a
savings to the program, which he expected to be the case.
He found it highly unlikely someone would retire to go back
to work for the incremental increase they would receive
with the program.
Senator Micciche did not view the bill as a retirement
incentive. He anticipated the bill would result in savings.
The fiscal note was indeterminate because it covered a set
of facts specifying there would be a savings at certain
percentages of people already being retired it would be a
savings, whereas, there could be a cost with lower
percentages and "x" number of people retiring to take
advantage of the program. He thought the probability was
unrealistic [that a cost would result].
9:43:30 AM
Representative Pruitt thought it was appropriate to mention
the individuals would not be adding into their retirement
when doing the work. Individuals would step away from
retirement and would be coming in under typical one-year
contract. He underscored that individuals would not be
adding to the retirement system or increasing the future
retirement liability.
Senator Micciche replied he believed it was a disincentive
to add to the program. He stated that if the situation
became desperate enough he could see districts hiring back
retired teachers to reenter as regular employees and then
adding to their retirement benefits. The bill discouraged
that situation and would allow districts to hire retired
teachers temporarily while remaining on their regular
retirement and not adding to their benefits. He concluded
that hopefully a savings would result because the
individuals were retired and there would be a savings in
healthcare to the system. He stated that if a Tier I
teacher was brought back they would begin adding to their
benefits again. He saw the bill as discouraging additional
cost in the retirement system.
Co-Chair Seaton clarified that the bill was different than
the prior retirement incentive program that covered all
state employees who would retire and be rehired at the same
rate. It meant there had not been an upward mobility path
for lower level employees. He appreciated that the bill
required a teacher to be separated from the system for a
minimum of 60 days or 6 months [depending on the person's
age]. He also appreciated that Section 5 required districts
to continue to put the 12.5 percent of salary into the
retirement system. He believed it would keep the retirement
system whole and would solve the problem of not being able
to fill positions. He thought one of the reasons the past
program had gone away was it had been combined with other
state employees.
9:47:02 AM
Representative Guttenberg asked about attracting teachers.
He remarked on the nationwide teacher shortage. He asked if
Ms. Parady had thought about other ways to attract teachers
to Alaska.
Ms. Parady replied that educators were actively thinking
about ways to shift the terrain because the situation was
not healthy for students or anyone. She remarked that the
situation had been dwindling downward and it was necessary
to figure out how to stop the cycle and move forward. She
referenced the organization's joint position statement she
had previously provided to members; all its members focus
and vote on the positions. One of the organization's
highest priorities was preparing, attracting, and retaining
qualified educators. She continued it would include
innovative, alternative pathways to attract teaching. She
spoke to the need to create education career pathways for
current students. The organization was working with the
University - she referenced University President Jim
Johnson's goal of 90 percent by 2025, which the
organization was supportive of. Many different strategies
were being considered. She believed they would bring
additional ideas about ways to attract teachers to Alaska
in coming sessions. She listed the need for reciprocity
with other states allowing certification in one state to
transfer to another state. She referenced alternative
certification. For example, making it possible for an
engineer to teach math if they were willing. She shared
there were many strategies used in other states that
deserved consideration and possible implementation.
Representative Guttenberg shared that he had a friend who
had started a dog mushing magazine and a local hospital had
said it was the biggest recruiting tool it had ever had for
doctors. He recalled a doctor in Juneau telling him he had
been recruited to Alaska and his son had discovered hockey,
which kept them in Alaska. There were many things outside
the norm that anchored people to Alaska. He believed the
state had a significant amount to offer.
Representative Kawasaki noted that the last sentence of the
fiscal note specified a complete analysis by the plan
actuary, Conduent Human Resources Services would be
submitted with the fiscal note. He remarked that the
analysis was not included in members' bill packets.
9:51:03 AM
Senator Micciche replied that he would have copies made and
distributed to members.
Co-Chair Foster OPENED public testimony.
MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT,
JUNEAU, testified in support of the bill. He shared that he
had previously been a physics and chemistry teacher for 12
years. He provided details about his past career as a
teacher. He had a passion for teaching. He provided a
scenario where he decided to give up his job as
superintendent. He provided an option where he could choose
to work for ACE Hardware [he brought examples of items he
could teach people to use]; however, he would be forbidden
to return to teaching in Alaska if he worked part time. He
believed it was wrong. He stressed it was not a finance
issue, but a resource issue. He stated that whatever the
fiscal note was, it would be budget dust in comparison to
the overall state budget. Whether the bill passed or not,
no one looking at the budget in the next year would know
whether the bill passed. He detailed he and other
individuals at a time in their lives where they no longer
wanted a full-time job were the resource. He stated that
teaching came from the heart and soul. He believed great
teachers were born, not made. He wondered why a retired
teacher in Alaska had to move out of state if they wanted
to teach, yet a retired teacher from out of state could
teach in Alaska.
Mr. Miller stressed that some of the state's most valuable
resources (veteran teachers) were being wasted. He
characterized the program under the bill as a win-win for
teachers and school districts. The bill meant districts
could stop rotating substitutes with no teacher training
through classrooms and would allow retired teachers to work
part-time. He believed committee members had become
legislators because they wanted to contribute. He shared
his favorite quote from Horace Mann "be ashamed to die
until you have won some victory for humanity." He believed
the bill would mean a win for humanity and the kids of
Alaska. He did not believe the fiscal note would hurt the
state and the bill would provide a powerful option for
education in Alaska.
9:57:00 AM
MATT MOSER, NATIONAL EDUCATION ASSOCIATION-ALASKA, JUNEAU,
testified in support of the bill. He read from a prepared
statement:
NEA-Alaska supports having a qualified educator in
front of every Alaska student at the beginning of the
school year. We believe this legislation is one tool
to help make that a reality.
NEA-Alaska is supportive of efforts to return our
veteran educators to the classroom.
NEA-Alaska's understanding is that Senate Bill 185
will not affect existing collective bargaining units
of certificated educators.
Collective Bargaining Agreements in districts that
cover all "certificated educators" would continue to
cover all "certificated educators", including retired-
rehired educators and that the terms and conditions of
employment would continue to be subject to collective
bargaining agreements with the exception of continued
employment.
NEA-Alaska believes this is a band aid for ensuring
that students have a certified educator in every
classroom. We strongly believe that the state
legislature and governor will need to take a hard look
at how to actually attract and retain quality
educators. We believe that will happen by returning
to a defined benefit, looking at salaries keeping up
with inflation, and strong mentorship and professional
development programs.
9:59:06 AM
JENNIFER HALDANE, DIRECTOR, CONTRACT ADMINISTRATION, LABOR
RELATIONS and BENEFITS, ANCHORAGE SCHOOL DISTRICT,
ANCHORAGE (via teleconference), spoke in favor of the bill
with a prepared statement on behalf of superintendent Deena
Bishop:
The district appreciates the opportunity to speak
today in support of SB 185. As has already been
discussed, teacher recruitment in Alaska is very
challenging. The Anchorage School District hires
approximately 250 teachers a year. We are always
recruiting for qualified applicants and we
consistently have vacancies, especially in hard to
fill areas such as special education, CTE, and some of
our language emersion programs. SB 185 provides an
opportunity to utilize experienced retired teachers to
fill gaps in these areas and our students benefit from
that added flexibility. We believe this legislation
would have a positive impact on school districts
across the state. Thanks for your time today.
10:00:22 AM
SCOTT MCMANUS, SUPERINTENDENT, ALASKA GATEWAY SCHOOL
DISTRICT, TOK (via teleconference), testified in support of
the bill. He read from a statement:
You've heard today over and over how recruitment of
teachers in today's environment is becoming more and
more difficult. When I was a kid in the village being
a teacher meant something and it meant doing something
that was respected. Both my mother and father were
teachers in Ambler where I grew up and it was
something that I aspired to be. When I was going to
college I went to an apprenticeship as a cement mason
at a local 867 there and that was 35 years ago; 35
years ago, a journeyman mason made $30 an hour, which
is more than a starting teacher makes today.
When I went to the job fair this year as the
superintendent, I went down there looking to hire five
teachers. There were 180 teachers at the job fair and
we were fortunate to be able to hire three of them.
For those of you who know my district, we're on the
road system, which gives us a little bit of an edge
over some school districts that aren't. I was pleased
with that outcome. I went down to the Portland job
fair and there were 22 school districts in the room
and less than 30 teachers looking for positions. I
only interviewed one person and didn't hire them. I
guess the point is that it's becoming more and more
difficult, as you've been hearing.
Teachers were leaving their jobs because they find
themselves in an unappreciated profession where they
don't think they're making a difference. They're beat
up by parents, they're beat up by politicians, they're
beat up by the press. They leave because it's one of
the lowest paying professions that require a college
degree, they leave because they don't feel they have
the support of the administration or the community,
they leave because they don't feel they are making a
difference. That is really the key. People want to do
something with their lives that has meaning, they want
to make a difference, they want to be a part of that
solution.
I did a project a few years ago for a post graduate
study and I surveyed 360 rural teachers in Alaska. I
was interested in a study about why teachers stayed.
It was really a profound learning experience. The
reason they stay and the reason they leave are the
same. Teachers stay where they feel like they're being
appreciated and where they're making a difference.
Teachers don't become teachers because they want to
get rich, they just want to make a good living, which
I think it's incumbent upon us socially that we do
that. They've got to feel like their lives have
meaning and if they're constantly getting beat up they
want to leave. The long-term solution to the teacher
shortage was like most things, it was really simple,
but it was very difficult to do. What we need to do is
effect social change that attracts quality teachers in
order to improve the public perception of schools and
in order to improve the quality of teachers we have to
change that perception. It was an egg/chicken
argument.
Personally, my feeling is that the long-term solution
- and I think this bill is a short-term, stop-gap
solution - but the long-term solution is counter-
intuitive. I think it needs to become more difficult
to become a teacher, not less. That's how you make it
mean something. There's a long waiting list of people
trying to get into military academies, there's no
shortage of people trying to get into ranger school or
getting into these special military schools, there's
no shortage of people trying to get into upper end,
elite ivy league schools because that means something
and they're willing to work really hard to do it. The
Finnish model of education really did that, they
closed a number of teacher preparation programs, made
it far more difficult to get in, as difficult to
become a teacher in Finland as it is to become a
doctor. I think we know what the end result of that
was. It wasn't because they pay them more, it's
because of their social status - they have some
meaning in their lives and because they're respected
by their community.
Mr. McManus concluded that the bill was a stop-gap
solution, but it would help. There were teachers in his
community he would hire if the bill passed.
Co-Chair Foster CLOSED public testimony.
10:05:46 AM
Vice-Chair Gara reviewed the indeterminate fiscal note from
the Department of Administration. He detailed that teachers
retiring after the bill's effective date may add some costs
and teachers retiring prior to the effective date would
save some costs. There was no way to know what mix of
teachers would utilize the system.
Representative Wilson asked about page 2 of the fiscal note
pertaining to the different percentages listed of teachers
rehired from the current retired population (100 percent,
67 percent, 50 percent, etcetera). She did not understand
why the information was shown for 200 and 400 rehired
retirees.
KATHY LEA, DEPUTY DIRECTOR AND CHIEF PENSION OFFICER,
DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF
ADMINISTRATION, answered the goal had been to look at a
band of numbers to demonstrate the potential impacts. She
detailed there had been 325 participants in the previous
program, but the department did not know whether more or
fewer individuals would participate in the new program.
Therefore, the department chose to show what would happen
if there were 200 participants and what would happen if
there were 400.
Representative Wilson asked about the 100 percent, 67
percent, 50 percent, and 33 percent [listed on the left of
page 2 of the fiscal note]. She asked if the information
indicated how a teacher retired with benefits or something
else.
Ms. Lea replied that the percentages represented the number
of retirees rehired under the program. She detailed that
there would be a savings to the retirement plans if 100
percent of the rehired teachers had been retired because of
the shift of cost from the retiree health plan to the
active health plan.
Representative Wilson asked for verification it had nothing
to do with how an individual retired, only the percentage
of retired individuals who would take advantage of the
bill. Ms. Lea answered in the affirmative.
Representative Kawasaki stated that when the first
retire/rehire program was done in 2001 the participants had
been in either Tier I or II. He wondered if Tier III,
implemented after 2004, had been taken into account.
Ms. Lea replied that the numbers in the fiscal note were
limited to the Defined Benefit (DB) population because once
a Defined Contribution (DC) employee could either leave
their contributions in the fund or take them out once they
retired. She explained the individuals were not accruing a
DB-type benefit; therefore, they could come back into
reemployment with no penalty.
10:10:02 AM
Representative Pruitt asked about a scenario where 50
percent of the people came back to the system. He was
trying to understand why there was a cost increase to the
retirement system for fewer people coming back in.
Ms. Lea answered that the information indicated that 50
percent were coming from the retired population and the
other 50 percent came from the active teacher population
who would retire and come into the program.
Representative Pruitt asked for verification the
information was split between retirement timeframes prior
to the bill and after the bill. He asked for the accuracy
of his explanation.
Ms. Lea answered in the affirmative. She detailed that the
chart looked at the utilization of the program between
individuals who were currently retired and individuals who
may come back in after retiring. She explained teachers
retiring after the program's effective date may retire
earlier than anticipated, which represented a cost.
Representative Pruitt surmised there was an expectation the
bill may encourage people to retire early, meaning there
would potentially be a cost to the system. He detailed that
a memo [Conduent memorandum addressed to Ms. Lea dated
March 19, 2018 (copy on file)] indicated that there was a
potential for people to retire sooner, meaning there would
be a cost to the system. He asked if he was understanding
the actuarial analysis correctly.
Ms. Lea answered that because the TRS DB plan was closed,
its value was based on its precise experience when the
valuations were done on what the future costs may be - in
order to not overstate the unfunded liability. Under the
current TRS system, most individuals retired within four
years past their normal retirement date - their benefit was
not 100 percent funded until that time. There was a table
used showing the likelihood a person would retire every
year after that person's normal retirement date. Anything
that may incentivize a person to retire on their retirement
date meant their benefit was not 100 percent funded at that
time, which was the reason for the cost.
10:13:32 AM
Representative Guttenberg surmised that if a person's
benefits were not 100 percent funded at a given point, they
would only receive the benefits they were eligible for at
that point. He provided a scenario where a person retired
at 18 years instead of 20 years and wondered if the
person's retirement benefit was diminished. He referenced
a retirement plan he had been a part of, where a person
received 90 percent or less if they retired early
(depending on how early they retired), similar to the
social security process.
Ms. Lea replied that Representative Guttenberg had
mentioned two different terms. She explained that early
retirement (before a person's normal retirement date) was a
reduced benefit. In the case of the bill, the information
looked at a person's age or service requirement (20 years).
History had shown that teachers generally may retire after
24 years or at age 64 instead of age 60. Anything that
incentivized teachers to retire earlier than the two
assumptions the actuary made in order to determine funding
for the plan, meant all of the funding was not there for
them. She clarified that it did not impact the member's
benefit. The member received the full benefit because they
reached normal retirement age. She explained that it meant
in the following valuation the state "on behalf" may be
affected. She elaborated that the employer contribution
could not be raised; therefore, the only place to get any
shortfall would be from state assistance. The memo provided
by the actuary and the department's fiscal note showed what
the affects on state assistance may be.
Representative Guttenberg surmised that for every year a
person did not retire they continued to pay benefits into
the retirement program, but their benefits did not
increase.
Ms. Lea clarified that an individual would earn additional
benefits as they continued to work.
Co-Chair Seaton MOVED to REPORT CSSB 185(EDC) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 185(EDC) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
indeterminate fiscal note: FN2 (ADM).
10:17:30 AM
AT EASE
10:18:22 AM
RECONVENED
CS FOR SENATE BILL NO. 105(FIN)
"An Act relating to the licensure of marital and
family therapists; relating to medical assistance for
marital and family therapy services; and providing for
an effective date."
10:18:40 AM
SENATOR DAVID WILSON, SPONSOR, introduced himself.
GARY ZEPP, STAFF, SENATOR DAVID WILSON, provided a brief
bill summary. The bill provided expanded behavioral health
access to Alaskans. He shared there had been testimony from
therapists, emergency room (ER) doctors, school district
administrators, and federally qualified health centers in
Alaska. The bill would improve and streamline the training
for associates to become fully licensed marital and family
therapists to help provide expanded access to behavioral
health services. The bill was not being touted as a cost-
savings measure, but as a way to help Medicaid clients in
need of behavioral health services that were severely
lacking. However, there was great potential for cost-
savings if individuals could be diverted from emergency
rooms. He detailed that in 2016 the Mat-Su Memorial
Hospital had spent $43.8 million on ER services. He
detailed the costs had covered about 1,300 patients with an
average cost of $12,721 per person for one behavioral
health assessment. In a clinical setting the cost ranged
from $150 to $250.
Mr. Zepp referenced a 2017 document titled "Alaska Medicaid
Facts and Figures" published by the Department of Health
and Social Services (DHSS) (copy on file). He shared that
in 2016 Medicaid patients cost Alaska ER facilities $233
million and $245 million in 2017. He stressed the patients
were Medicaid clients the state was already paying for. He
explained if the individuals could be diverted from the ER
by expanding access and getting them into a clinical
setting there was a great potential for savings. He shared
there had been great support for the bill by various
healthcare providers and it had passed the other body
unanimously. He spoke to support by ER doctors, family
therapists, the state Board of Therapy, and the national
Board of Marital and Family Therapists. He noted DHSS had
provided a letter addressed to the committee providing more
detail on the bill [letter from the Division of Behavioral
Health Director Randall Burns dated April 13, 2018 (copy on
file)].
10:22:51 AM
Representative Wilson stated that the committee had
received a letter [from the Division of Health Care
Services Director Margaret Brodie dated April 19, 2018
(copy on file)] stating that the bill would expand
[Medicaid services] and that it would be necessary to ask
permission from the federal government to add the service.
She asked what the process entailed. Additionally, she
wondered about the process of going back to the federal
government to remove the service if the bill added a
substantial cost and no savings.
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES (via
teleconference), answered that the bill would require a
state plan amendment; it would be an update to the current
state plan. If anticipated savings did not come to
fruition, a new state plan amendment would be made to
remove the providers' ability to provide the services.
Representative Wilson stated that savings had been shown
for HB 25. She wondered why it was so difficult to estimate
potential savings under HB 105.
Mr. Brodie replied that it was difficult to project savings
for SB 105 because it was not possible to anticipate who
would be utilizing the services. She explained that with
other bills the department was able to look at individuals'
diagnoses and what procedures were being done in order to
identify who would be able to utilize the services.
Representative Wilson was concerned about the $1 million
fiscal note. She was hoping to get a better understanding
of potential savings because now the committee understood
the service would be added [to the list of Medicaid
services]. She stated the process was long and the state
did not know how easy it would be to remove the service if
the savings did not come to fruition. Given that Medicaid
was currently one of the biggest [cost] drivers, she
believed the committee should be concerned about adding
more services.
Co-Chair Foster noted the committee would break for floor
session.
CSSB 105 (FIN) was HEARD and HELD in committee for further
consideration. [Note: the bill was heard again beginning at
2:20 p.m.]
10:26:37 AM
RECESSED
12:52:29 PM
RECONVENED
Co-Chair Foster relayed that the committee has posed some
questions earlier on SB 105, which were being worked on. He
relayed the bill would be heard last on the agenda.
CS FOR SENATE BILL NO. 92(FIN) am
"An Act relating to abandoned and derelict vessels;
relating to the registration of vessels; relating to
certificates of title for vessels; relating to the
duties of the Department of Administration; relating
to the duties of the Department of Natural Resources;
establishing the derelict vessel prevention program;
establishing the derelict vessel prevention program
fund; relating to the authority of certain persons to
enforce laws relating to derelict vessels; and
providing for an effective date."
12:53:00 PM
Co-Chair Foster asked Co-Chair Seaton's staff to review the
changes in the committee substitute (CS).
12:53:30 PM
ELIZABETH DIAMENT, STAFF, REPRESENTATIVE PAUL SEATON,
highlighted the changes in the CS ["Explanation of Changes:
CSSB 92 (FIN)Version I.A to House Finance CS for CSSB92
(FIN) Version M (copy on file)]:
Section 7 (page 4, line 23)
Definition of Barge
In SB 92 Version I.A "barge" is defined as a "flat-
bottomed boat used for carrying freight that is either
nonmotorized and towed by another boat or motorized."
In the CS for CSSB92 (FIN) Version M the definition
has been changed to "barge" means a boat that is: (A)
motorized or nonmotorized, (B) designed to be towed,
and (C) used for carrying freight.
Note: The main difference reflected is the removal of
the flat-bottomed boat portion of the definition.
There was some concern that definition from CSSB 92
Version I.A could misinterpret a flat bottom skiff as
a barge.
Section 24 (page 14, line 30)
Instead of repealing Chapter 30. Article 03. Vessels
Abandoned on Business Premises of Persons Engaged in
Repair Business, the CS for CSSB92 (FIN) version M
keeps the article in statute and amends it to add
storage businesses, as well as extending the waiting
period for auctioning abandoned vessels from 5 days to
30 days.
Note: The change from 5 to 30 days was in the house
companion bill which did not repeal but amended the
section to be in line with the timeframe laid out in
other sections of the bill.
12:55:07 PM
Co-Chair Seaton MOVED to ADOPT proposed committee
substitute for CSSB 92(FIN)am, Work Draft 30-LS0481\M
(Bruce, 4/17/18). There being NO OBJECTION, it was so
ordered.
Representative Ortiz asked where he could find the language
pertaining to an exemption for boats up to 24 feet long.
Co-Chair Seaton directed attention to page 3, line 30.
Ms. Diament confirmed the language was on page 3, line 30,
subsection (f): "This section does not apply to an
undocumented boat that is 24 feet or less in length, unless
the owner of the boat chooses to apply..."
Representative Ortiz wondered if vehicles were currently
exempt from registering or titling in rural areas without
access to Division of Motor Vehicles (DMV) offices. If so,
he asked if the exemption was maintained for boats under
the legislation.
Ms. Diament deferred to the bill sponsor's staff.
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, replied that
she could follow up with the information after speaking
with DMV.
Co-Chair Seaton believed 24 foot boats were exempt in any
location. He stated that vessels operating on inland waters
were required to be registered.
12:58:29 PM
Representative Ortiz believed that current titling and
registration requirements for vehicles in outlying areas
were exempt. If there was an exemption for vehicles in
rural areas without access to DMV, he wondered if there was
an exemption for all boat owners.
Co-Chair Seaton believed if there was an exemption it was
not due to lack of access to DMV, but due to a lack of
access to roads with state maintenance. He believed there
was a registration exemption on vehicles not operated on
any public road.
Representative Ortiz asked for verification that Co-Chair
Seaton believed that the issue was not about lack of access
to DMV offices, but was related to being on the road
system.
Co-Chair Seaton added that registration with DMV could be
accessed via mail. He noted some areas may not have
internet, but there was phone and mail access.
Ms. Diament added that DMV would provide a written answer.
Representative Kawasaki stated that Section 4 dealt with
inadequate evidence of ownership. He stated a person was
supposed to obtain documentation to present to the
Department of Administration (DOA) as proof of ownership of
a boat. He asked if it was the same way people licensed and
registered their cars.
Ms. Hanke responded that DMV considered current boat
registration as proof of ownership, which was slightly
different than vehicles.
1:01:17 PM
Representative Kawasaki was concerned they could be getting
to a point where statute designated a person had ownership
of a boat, even though they may not have ownership. He
referenced Section 4(c)(2), which specified if it was
uncontested for three years following the issuance of the
"no title issued" registration that a person could become
the owner of record even though they may not have been the
owner of record. He asked if the issue had come up
previously.
Ms. Ranke responded that someone could currently go in to
DMV with a bar napkin as a bill of sale to get a
registration. After starting to issue the titles with a
sale and initial titling would use current registrations as
proof of ownership. She supposed it could be happening
currently.
1:02:37 PM
Representative Kawasaki referenced the exemption for
undocumented boats that were 24 feet or less. He wondered
how 24 feet had been chosen.
Ms. Hanke replied that she would have to get back to the
committee.
Representative Wilson thought a boat had to be larger than
24 feet and commercial.
Ms. Diament responded that the language Representative
Wilson was referencing was in the house companion bill HB
386, whereas, SB 92 only contained a length determination.
She explained boats that were 24 feet or less were exempt;
boats over 24 feet would require a title.
Representative Wilson asked how many 25-foot personal use
boats there were that would have to register. She thought
the problem pertained to commercial boats, not personal
boats. She wondered why the change had been made.
1:04:09 PM
Co-Chair Seaton responded that the 20-foot length was used
because it was considered fairly easy to dispose of. Boats
over 24 feet had built in fuel tanks and other things. He
stated there was generally a length and width ratio. He
continued it became a larger problem. The exemption used
[by the House version] had been for non-commercial so that
commercial vessels under 20 feet would still require a
title, but that had not been in the Senate bill. He
continued that the provisions considered what was a
reasonable amount. He asked his staff for number of boats
excluded pertaining to difference between 20 and 24 feet.
Ms. Diament relayed that there were about 9,100 boats
between 20 and 25 feet that were exempt.
Co-Chair Seaton explained the consideration was a balancing
act around what qualified as something that could be
abandoned, but would need to be taken care of by a
different mechanism; it was the reason for the length of 24
feet suggested by the Senate. He stated that the House
version of the bill had used 20 feet, but it had agreed
with the Senate.
Representative Wilson pointed out the 9,000 boats mentioned
by Ms. Diament pertained to boats between 20 and 25 feet,
not 20 and 24 feet. She asked if her understanding was
accurate.
Ms. Diament replied that the current language was 24 feet.
She stated the bill related to boats that were 20 feet and
under or 24 feet and under. She explained it would be under
25 feet.
Representative Wilson restated her question. She explained
that Ms. Diament had previously provided information about
the number of boats between 20 and 25 feet.
Ms. Diament corrected her previous testimony and clarified
that the [9,100] boats were between 20 and 24 feet.
1:06:23 PM
Vice-Chair Gara reviewed the four fiscal notes. There were
two zero fiscal notes from the Department of Natural
Resources and the Department of Environmental Conservation
(OMB Component Numbers 3002 and 3094 respectively). There
was one Department of Natural Resources fund capitalization
fiscal note for funds from fees generated under the
legislation - fees would generate roughly $58,600 beginning
in 2020 and would decline after registrations were
completed to $30,000 in 2022 and to $2,500 in 2023 and
2024. The last note was from the Department of
Administration (OMB Component Number 2348) DMV reflecting
fee generation of $65,000, declining to $50,000 in 2020.
The note reflected additional designated general fund (DGF)
revenues from fees beginning at $64,100 in 2019, increasing
to $108,600 in 2020 and 2021, $80,500 in 2022, $52,500 in
2023 and 2024. Undesignated general fund (UGF) revenues
were projected at $19,600 starting in 2020.
1:09:16 PM
Representative Wilson referred to page 2 of the Department
of Administration fiscal note (OMB Component Number 2348)
related to title and barge fees. The fiscal note specified
there were over 68,000 motorized boats registered in the
State of Alaska, of which 8,418 are 25 feet and over. It
also specified that a title fee of $20 for boats above 24
feet would generate approximately $168,360. She asked why
the language used 25 feet in one sentence and 24 feet in
the
MARLA THOMPSON, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION, (via teleconference), replied
the language was merely an error. The language should read
"25 feet and above."
Representative Wilson asked for verification that the
reference to 24 feet should be changed to 25.
Co-Chair Foster replied in the affirmative.
Representative Ortiz asked about the fiscal note OMB
Component Number 2348. He wondered if the fiscal note had
been changed since the boat exemption had changed from 20
feet to 24 feet. He believed there would be less revenue
with the inclusion of the exemption.
Ms. Thomson responded that the fiscal note reflected the
change.
Co-Chair Seaton noted there had been a question about
numbering of documented vessels. He read from a response he
had received to the question: "states may require
documented vessels to be registered and to display the
state decal showing that they have complied with state
requirements." However, there was some dispute about
whether vessels could be renumbered. The bill specified the
same numbers would be used in titling as used in the
documentation. He noted that the Coast Guard was present
for questions. Apparently other states had the same
situation.
1:12:17 PM
Co-Chair Seaton MOVED to report HCS CSSB 92(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 92(FIN) was REPORTED out of committee with a "no
recommendation" recommendation and with one new fiscal
impact note from the Department of Administration; one new
fiscal impact note from the Department of Natural Resources
for Fund Capitalization; and two previously published zero
notes: FN3 (DEC) and FN4 (DNR).
1:12:57 PM
AT EASE
1:13:15 PM
RECONVENED
HOUSE BILL NO. 119
"An Act relating to the dividends from the Alaska
Industrial Development and Export Authority; relating
to the meaning of 'mark-to-market fair value,' 'net
income,' 'project or development,' and 'unrestricted
net income' for purposes of the Alaska Industrial
Development and Export Authority; and providing for an
effective date."
1:13:38 PM
GENE THERRIAULT, DEPUTY DIRECTOR, STATEWIDE ENERGY POLICY
DEVELOPMENT, ALASKA ENERGY AUTHORITY, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, explained
that some committee members who had been on the committee
in 2016 may recognize the legislation, given it had passed
the House Finance Committee with 10 "do pass" signatures
and had passed the House floor with 36 "yes" votes (other
members had been excused or absent). He shared that the
bill had not cleared the final hurdle in the Senate Rules
Committee. The legislation before the committee was
identical to the previously considered legislation. He
referred to page 2, lines 2 and 3 of the bill and explained
that when the Alaska Industrial Development and Export
Authority (AIDEA) dividend had been established, the
legislature had specified it wanted the dividend to be set
on the net income in AIDEA's audited financial statement.
The legislature had also realized that some things needed
to be excluded from the number (line 3 of the bill). The
existing statutory language made it clear that although it
was necessary to follow all the accounting rules in order
for AIDEA to receive its audited financial statement, the
legislature got to specify which number it wanted AIDEA to
use in the dividend calculation. Unfortunately, since the
dividend had been established, some new accounting rules
had kicked in that were bringing unnecessary gyrations to
the dividend. He explained that AIDEA would like to back
those out and base the dividend on true net income.
1:16:09 PM
Mr. Therriault provided a PowerPoint presentation titled
"Alaska's Development Finance Authority: HB 119 - Proposed
Language Changes to Modernize AIDEA's Dividend Statute"
(copy on file) beginning with slide 3. He explained the
bill aimed to fix two problems. The first related to mark
to market changes. There were numerous accounting rules
that required following "real transactions," issues that
generate revenue or real expense that impact that revenue.
Another accounting rule related to estimates and
allocations. For example, an asset depreciated over time
and its economic value eroded. The third accounting rule
pertained to mark to market adjustments for assets that had
fluctuation in their valuation. The mark to market
valuations brought the largest amount of volatility to the
AIDEA dividend calculation.
Mr. Therriault turned to slide 4 and addressed current
statutory language reading that AIDEA shall adopt a policy
for payment of a dividend, which was supposed to be set on
net income. Net income meant the change in net position in
the agency's audited financial statements on an annual
basis.
Mr. Therriault turned to slide 5 and addressed the mark to
market valuation issue that needed correction. He provided
a scenario where an asset's valuation fluctuated because of
market changes. He asked members to imagine they owned the
asset where a snapshot of the asset was taken and then to
pretend they sold the asset at a gain or loss at that
amount. Yet, in reality the asset had not been sold. He
explained it was the type of fluctuation AIDEA was
experiencing.
1:18:02 PM
Mr. Therriault moved to slides 7 and 8 showing an Internal
Revenue Service (IRS) 1040 tax form. He detailed that for
an individual the tax form would show income, perhaps a
dividend from a stock portfolio, income from a rental
property, and other. The example on slide 8 showed total
income of $109,000. He elaborated that income tax would be
based on the real $109,000 the individual had made as
income. However, slide 10 showed how the individual's tax
form would be impacted if the individual had to apply the
Governmental Accounting Standards Board (GASB) rules
including GASB 31 that had been in place for a number of
years and other more recent rules. Line 11 pertained to
GASB 31 - the booking of an unrealized gain or loss on
marketable securities. He expounded that GASB 31 had been
in place for the longest.
Mr. Therriault explained that AIDEA held its cash reserves
in marketable securities (e.g. T-bills and other). When the
stock market was booming, the market for T-bills was
suppressed. There had been a booming stock market in the
past couple years; therefore, AIDEA's cash reserves held in
T-bills were not worth as much. He noted that the T-bills
had not been sold and AIDEA had not suffered a loss. The
example showed that if the market was doing poorly and the
market for marketable securities was booming, AIDEA may
have a paper gain from GASB 31 and even though the asset
had not been sold, AIDEA would have to pretend like the
cash had been realized. He explained that it meant taxes
would have to be paid on money that had not really been
made.
Mr. Therriault pointed to line 16a on slide 10 pertaining
to a value adjustment from a 401k account invested in
stocks. He asked members to consider a situation where an
individual had to take a picture of the valuation on the
last calendar day of the year and pay taxes on gains that
had not been realized. He explained that it was the type of
thing GASB 68 was suggesting AIDEA had to do. He relayed
that AIDEA had to follow all the rules to receive its
audited financial statement. Additionally, AIDEA had to
follow GASB 72 and 75 that had kicked in or would kick in
soon. He returned to the personal tax example and explained
that previously the individual had $109,000 in income to
pay taxes on, but if they had to follow all the same GASB
rules and the economy was booming, it would increase the
individual's income up artificially to $169,000 and they
would have to pay taxes on money they did not receive.
1:21:32 PM
Mr. Therriault continued to slide 11 and explained that HB
119 would mean AIDEA would follow all the GASB rules in
order to get its audited financial statements, but it would
enable the agency to back out the paper adjustments and use
its true cash earnings in the dividend calculation. It
would mean the agency would be basing 25 to 50 percent of
its true cash with the state treasury on a yearly basis
instead of an artificially adjusted number.
Mr. Therriault advanced to a table on slide 12 showing
AIDEA's adjusted true net income since it began paying a
dividend [in 1991]. He pointed out that cash available to
pay a dividend fluctuated depending on the level of
activity AIDEA had. He pointed to a gold line on a table on
slide 13 showing that GASB 31 artificially spiked or
suppressed net income year-to-year, which brought
volatility to the AIDEA dividend calculation. He discussed
that three more GASB rules either had kicked in or would
kick in soon. The agency feared that if the rules were all
driven by the same dynamics in the economy, they would
start stacking up, meaning the swings would become more
pronounced. He continued it may be that from time to time
they offset each other - one may be artificially positive
and one may be artificially negative, but depending on what
was driving things (e.g. evaluation of real estate,
appreciation of stocks, and marketable securities) if they
were all in the same direction they could bring some
substantial swings to the AIDEA dividend calculation.
1:23:53 PM
Mr. Therriault addressed the second problem the bill would
address related to the dividend penalty, which happened
infrequently (slide 15). He referenced existing language
specifying that AIDEA was supposed to exclude certain
things. He explained that when the dividend had first been
created, AIDEA informed members of the legislature that if
it was supposed to pay 25 to 50 percent of its yearly net
income back to the state as a dividend on a yearly basis
and if the legislature gave an appropriation to work on a
specific project, the money was brought onto the AIDEA
books by showing an increase in the income. He continued
that if the language had not been adjusted at the time and
the legislature gave AIDEA $1,000 for a specific project,
at the end of the year AIDEA would have to write the
legislature a check back for half of the money. The
legislature at the time had determined the situation should
be avoided. The legislature had specified if AIDEA received
money for a specific project from the state General Fund by
appropriation or a federal source, the agency was directed
to disregard the money as positive debt to net income when
making its dividend calculation.
Mr. Therriault explained a scenario the legislature had not
anticipated. He provided a hypothetical scenario where the
legislature gave AIDEA $1 million to explore a project
including geotechnical and economic work, and a permitting
process. He elaborated that AIDEA turned some of the
dollars into work product. He continued that if the project
did not move forward, AIDEA would have to write the project
off its books. In order to write the project off, AIDEA
took the expenditures as a deduction to net income.
Previously, the legislature specified that if AIDEA
received money from an outside source, the agency was to
disregard it on the upside. Under the proposed legislation
if AIDEA ever had to write money off because a project was
not going forward, they did not want to artificially
suppress the dividend in the year the write-off was taken.
He stated that the write-offs happened infrequently, but
when they did, they artificially pulled the dividend down.
Mr. Therriault elaborated that the previous year when the
legislation had been proposed, AIDEA had advised the
legislature that because of a booming stock market, it
appeared there would be a paper loss in marketable
securities. He explained that the AIDEA dividend had been
suppressed by about $6.5 million in 2017 because AIDEA did
not have the ability to make mark to market adjustments.
The agency believed it should be sharing with the state
treasury out of its true cash on hand; AIDEA wanted to be
able to back out the paper adjustments and it would follow
all the rules to get its appropriately audited financial
statement, but it wanted to remove the unnecessary
volatility out of the dividend calculation.
1:27:25 PM
Co-Chair Foster referred to the example showing an
individual's 1040 individual income tax. He wondered why
GASB treated companies like AIDEA differently.
Mr. Therriault responded that GASB rules applied to all
corporations. After going through the financial meltdown
Congress and the governing board for accountants wanted to
make sure that if someone was going to invest in a
corporation, they did not want the corporation to be able
to hide liabilities or assets. He expounded that AIDEA
would continue to disclose all the information if the bill
passed. He explained the bill recognized that some of the
items were merely paper adjustments - an asset had not been
sold and AIDEA had not suffered a loss or gain; therefore,
AIDEA should not pay the dividend on money it did not earn
or suffer a loss on a loss that did not take place. For
corporations, particularly corporations where citizens
could invest, the accounting boards wanted to ensure
substantial transparency in the audited financial
statements.
1:29:09 PM
JOHN SPRINGSTEEN, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY, Department of Commerce, Community and Economic
Development (via teleconference), clarified that for
publicly traded corporations regulated by the Securities
Exchange Commission and other related entities there was an
equivalent set of accounting rules set by the Financial
Accounting Standards Board.
Co-Chair Foster surmised the primary reason for the GASB
rules was to increase transparency. He explained typically
a person used the 1040 IRS form to pay their taxes. He
noted that the example included an unrealized gain of
$25,000, but it did not mean the individual had to pay
taxes on the amount. He believed the information on the
form was not for tax purposes, but merely helping to
illustrate the situation AIDEA was facing. He surmised the
$25,000 was shown on the slide because AIDEA was trying to
increase transparency and let investors know it had
unrealized gains and losses.
Mr. Therriault responded affirmatively. The example was
meant to illustrate that if a person had to include the
gain in their tax calculation they would pay the federal
government a larger check. Comparatively, when AIDEA had to
book the gain it went into the dividend calculation; it did
not increase AIDEA's taxes, but it increased the dividend
AIDEA paid on money it did not actually make.
Co-Chair Foster stated his understanding that the GASB
requirement was for auditing and financial purposes, not
tax payment purposes. He believed the goal of the bill was
to fix the system to ensure an accurate dividend was paid,
which was not based on artificial paper.
Mr. Therriault agreed and explained the goal was for AIDEA
to pay the dividend on its true net income.
Co-Chair Foster OPENED and CLOSED public testimony.
1:32:36 PM
AT EASE
1:32:56 PM
RECONVENED
Co-Chair Foster indicated there may be some amendments to
the bill. He asked that amendments be submitted by
Wednesday, April 18, 2018 at 5:00 p.m.
HB 119 was HEARD and HELD in committee for further
consideration.
1:33:55 PM
AT EASE
1:36:42 PM
RECONVENED
HOUSE BILL NO. 409
"An Act relating to identification cards; relating to
vehicle registration fee rates; relating to changes of
address; relating to driver's license fees; and
relating to financial responsibility for motor
vehicles."
1:36:57 PM
CATHY SCHLINGHEYDE, STAFF, REPRESENTATIVE KREISS-TOMKINS,
explained that the bill was a House State Affairs Committee
bill derived from a combination of recommendations from the
Department of Administration finance subcommittee,
Legislative Finance Division's indirect expenditure
reports, and some statutory clean up ideas submitted by the
Division of Motor Vehicles (DMV). She reviewed the
sectional analysis (copy on file):
Section 1: This section standardizes the age for
senior citizen fee waivers by changing the age for a
senior citizen identification card from 60 to 65.
Ms. Schlingheyde detailed that currently the vehicle
registration waiver went into effect when someone turned
65. However, the qualifying age for the senior citizen
identification card fee waiver was 60. The bill would
standardize the qualifying age to 65 for both.
Section 2: This section allows a person to authorize
the Division of Motor Vehicles (DMV) to update their
address based on the United States Postal Service
(USPS) database.
Ms. Schlingheyde elaborated that currently if a person
updated their address at the post office without notifying
DMV, the agency had to send mail to the wrong address, wait
for the mail to bounce back, and then seek out the correct
address. She explained the process cost money and was
inefficient.
Section 3: This section removes the vehicle
registration fee exemption for amateur radio
operators.
Section 4: This section raises the vehicle
registration fee for municipalities to the standard
$100, and raises the vehicle registration fee for
charitable organizations to $50.
Section 5: This section sets the fee for DMV Knowledge
Tests at $5 and raises the fee for DMV Road Tests from
$15 to $25.
Ms. Schlingheyde elaborated that Section 5 would generate
revenue and reduce the no-show rate.
Section 6: This section raises the threshold for
requiring deposit of security to DMV from $501 to
$2,000 to align with the standard for the Department
of Transportation (DOT).
Section 7: This section raises the threshold for
requiring a peace officer to provide written
notification about the requirements in the Motor
Vehicle Safety Responsibility Act from $501 to $2,000.
Section 8: This section raises the threshold for
accepting release from liability executed by a parent
or legal guardian on behalf of a minor from $501 to
$2,000.
Section 9: This section raises the threshold for
requiring proof of financial responsibility after a
traffic offense from $501 to $2,000.
Section 10: This section raises the threshold for
requiring proof of financial responsibility after an
accident from $501 to $2,000.
Ms. Schlingheyde expounded that Sections 6 through 10
increased the reporting thresholds for various accidents
and crashes. Currently the thresholds were $501 at the DMV
and $2,000 at the Department of Transportation and Public
Facilities (DOT). The bill would standardize the threshold
at the DOT rate of $2,000; the DMV number had not been
updated for inflation for 33 years.
Section 11: This section requires proof of financial
responsibility after a license is suspended for
failure to pay a judgement be maintained for three
years, rather than the existing lifetime provision.
The section also changes the requirement to hold proof
of financial responsibility after judgement
satisfaction only if the failure to pay was due to
driving while uninsured.
Ms. Schlingheyde addressed SR-22 insurance, a type
insurance required after certain vehicle accidents.
Insurance companies were required to submit SR-22 forms to
notify DMV if a person's insurance lapsed. The section
required SR-22 insurance for a lifetime if a person failed
to pay a judgement within 30 days. The bill changed the SR-
22 requirement for failure to pay within 30 days to 3 years
and it would only kick in if the person was driving while
uninsured.
Section 12: This section allows for a second payment
plan in installments for people facing license
suspension based on outstanding financial judgements.
Section 13: This section raises the threshold for
showing proof of motor vehicle liability insurance
from $501 to $2,000.
Section 14: This section removes the requirement to
update DMV with address changes if the person has
given permission for DMV to update addresses from the
USPS database.
Ms. Schlingheyde elaborated that Section 14 was statutory
cleanup for the post office update. She explained that if a
person allowed DMV to update their address based off the
post office, they did not have to notify DMV.
1:40:27 PM
Representative Kawasaki referred to Sections 6 through 10
and 13 dealing with the inflationary adjustment. He asked
what happened in cases where a vehicle was worth less than
$2,000.
Ms. Schlingheyde responded that the judgement would still
have to be paid. The threshold had to be reported to DMV
and DOT for certain accidents, but it would not negate the
requirement for an insurance company or an individual to
compensate for damages.
Representative Kawasaki referred to Section 3, which
removed an exemption for amateur radio operators. He shared
that he had an amateur radio operator in his district. He
wondered why the bill would remove the exemption. He asked
if the reasoning was because the exemption was infrequently
used.
Ms. Schlingheyde indicated there were only 44 people in the
state who currently had the exemption.
Representative Kawasaki asked Ms. Schlingheyde to review
Sections 11 and 12. He believed he liked the sections and
wondered how they had been brought into the bill that dealt
mostly with adjustments and indirect expenditures.
Ms. Schlingheyde responded that both sections had been
recommended by DMV. She elaborated that DMV had worked with
many individuals who had issues with the SR-22. She added
that DMV was available for questions. Currently the
insurance was required for five years in the case of a DUI
and for a lifetime after four DUIs. The section required
SR-22 insurance for a lifetime if a person failed to pay a
judgement within 30 days, which was disproportionate to the
rest of the statute. The bill would bring it in line with
the penalty for driving while uninsured or on a suspended
license.
1:42:31 PM
Representative Kawasaki referenced Section 4 dealing with
vehicle registration fees for municipalities and charitable
organizations. He asked for verification that like the
state, currently municipalities were exempt from
registration fees.
Ms. Schlingheyde responded that municipalities currently
paid a $10 registration fee, which was a 90 percent
discount.
Representative Kawasaki asked what charitable organizations
currently paid. Ms. Schlingheyde responded that the
registration fee for charitable organizations was also $10.
Representative Tilton asked whether the post office
database provision in Section 1 was optional for
individuals.
Ms. Schlingheyde confirmed is was optional for individuals
and was only based on permanent address changes. A
temporary forwarding of mail would not affect a person's
registration at DMV.
Representative Pruitt asked for verification Section 1
would apply to any mail correspondence with DMV including
license and registration renewal. He shared that at one
point DMV had sent his registration renewal to his old
address.
Ms. Schlingheyde responded in the affirmative.
1:44:22 PM
Representative Pruitt referred to Sections 6 through 10 and
13 that would increase the threshold [for requiring deposit
of security to DMV] from $501 to $2,000. He noted that it
was difficult to determine the distinction between $500 and
$2,000 damage on a vehicle. He recalled a situation where a
police officer had specified that damage to a car did not
appear to be over $500; however, the damage had been over
$5,000. He had been fortunate that insurance companies had
managed the situation. He asked how to determine whether to
contact a police officer to have them participate. He
continued that having a police officer document that an
accident took place and what occurred could be a huge asset
to an individual dealing with damage to a vehicle. He asked
how individuals should deal with accidents when trying to
figure out how to manage going forward.
Ms. Schlingheyde responded that the sections in the bill
did not address the issue of calling the police, but
whether they had to file certain forms with DMV after the
accident. Individuals would have time to assess what the
damage level was. She deferred to DMV for any additional
information.
1:46:18 PM
Co-Chair Foster indicated the committee had been joined by
the bill sponsor.
REPRESENTATIVE JONATHAN KREISS-THOMKINS, SPONSOR, thanked
the committee for hearing the bill.
Representative Pruitt referenced Section 7 that would
increase the threshold for requiring a peace officer to
provide written notification about the requirements in the
Motor Vehicle Safety Responsibility Act from $501 to
$2,000. He stated while it was related to the suspension of
an operator's license or driving privileges, it involved a
police officer assessing what the damage was. He stated
that currently officers could look at the side of caution
because $500 was a small amount, but $2,000 was four times
that amount. He was concerned about putting an individual
in a position where they did not have an officer present to
provide credible assistance and determine the damage value
that may be needed in a judicial proceeding later.
Co-Chair Foster indicated that DMV was available online.
Ms. Schlingheyde noted that they did assess $2,000 worth of
damage currently for reports to DOT. Currently two
thresholds were reported on - $500 to DMV and $2,000 to
DOT. The bill would change the reporting requirement to one
threshold amount.
1:49:28 PM
Representative Pruitt spoke to the requirement of a police
officer to assist a person who had been in an accident.
With the higher threshold he believed police officers would
be less likely to assist and more likely to give a card out
because it was difficult to tell how much damage had been
done. He believed officers could err on the side of caution
when it did not appear significant damage had been done. He
stated that with the higher threshold more damage could be
done, and it would be easier for an officer to merely hand
a card out as opposed to writing a report. He stated a
report by a police officer could assist an individual and
operate as a credible witness later on. He asked how the
threshold would be administered, how a police officer would
deal with the reporting, and how the change would impact
people involved in an accident.
MARLA THOMPSON, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION (via teleconference), spoke
about the goal of updating the discrepancy between
reporting a person's insurance to DMV for everything at and
above $501 and reporting an accident and insurance on the
DOT form. The goal was to only have one threshold.
Representative Pruitt wondered if the small tweaks did not
necessitate an individual to have something put on their
record if the damage was less than $2,000.
Ms. Thompson agreed. Previously, if a person was in an
accident and damage was over $500 they were supposed to
report the accident to DMV and provide proof of insurance.
The bill would clean up the thresholds; if a person was in
an accident they would fill out the DOT report, which
included their insurance information - the bill would
eliminate confusion by cutting out extra requirements that
people did not know they were supposed to do.
1:52:54 PM
Co-Chair Foster stated his understanding that currently if
an accident involved damages exceeding $500, an individual
was required to submit a form to DMV online. He asked for
detail about the DOT report requirement.
Ms. Thompson responded that the DOT report was a crash
report that individuals were required to fill out (the
report was often filled out by police officers at the crash
site). The report also included the individual's insurance
information.
Co-Chair Foster summarized that under the legislation if a
person had a crash they did not have to submit a report to
DMV if they believed damages were under $2,000. However, if
the person believed the damages exceeded $2,000 they
contacted a police officer. He asked for clarification.
Ms. Thompson responded that $2,000 was a substantial number
and most of the time the police would fill out the report;
if the officer did not fill out the report, they tell the
individual what to fill out. The report included a person's
insurance information, meaning they only had to fill out
one report, which was shared with DOT.
Vice-Chair Gara stated that in 2017 there had been a bill
on Real ID; in the later stages of the bill the license fee
had been increased substantially in his view. He recalled
the fee was significantly higher than the cost of
administering the license. He asked Ms. Thompson if she
remembered the proposed license fee and the fee that had
ultimately been adopted. He wondered what fee level (in the
current legislation) would be cost neutral.
Ms. Thompson reported that the fee was $20, which had been
changed in the end. She believed DMV's original request had
been $10 and then $5. The cost neutral amount was
approximately $5.
1:55:48 PM
Vice-Chair Gara asked for verification that the $20 was in
addition to the regular driver's license. Ms. Thompson
replied in the affirmative.
Vice-Chair Gara asked for the total Real ID license cost.
Ms. Thompson answered that a regular driver's license was
$20, and a Real ID was $15.
Vice-Chair Gara asked for verification that the Real ID
license cost $40. Ms. Thompson responded that the cost was
$40, but the extension had increased from 5 years to 8
years.
Representative Wilson stated that several years back a bill
contained a provision allowing people to pay an additional
$25 for vehicles older than eight years, meaning the owner
did not have to buy another registration until the car was
sold. She asked if the sponsor would be amenable to the
deletion of AS 28.10.155, which would remove the exemption.
Representative Kreiss-Tompkins responded that he had
reviewed the indirect expenditure report. He stated that it
was a substantial indirect expenditure and he had been let
down to find that the anticipated cost of the expenditure
had not yet been calculated by the Legislative Finance
Division. He recalled when the exemption had been passed
and he would be amenable to the change, which he believed
created further reduction of indirect expenditures.
1:57:53 PM
Representative Wilson explained that the exemption had been
automatic for individuals in an unorganized area, whereas
organized areas had to vote on the exemption. Anchorage did
not take the exemption because it utilized a different tax
on vehicles. She noted that Fairbanks took the exemption;
she did not have detail on other locations. Part of the
reason the exemption had been passed was because the state
had money and DMV was making more money than it needed. She
did not believe the state was in the same position any
longer. She thought it was time to remove the exemption.
She reasoned her 10-year-old car probably wore on the road
as much as 3-year-old vehicles.
Representative Kawasaki asked Ms. Thompson for the
approximate vehicle registration costs.
Ms. Thompson answered that she would follow up with the
information. She detailed that the rates had not been
increased recently. There were things like $15 for a road
test that DMV was trying to increase to $25 to cover costs.
Representative Kawasaki noted Section 4 of the bill would
raise registration rates from $10 to $50 for a vehicle
owned by a charitable organization and from $10 to $100 for
vehicles owned by municipalities. He wondered if the state
would suddenly be making money rather than breaking even.
He understood it was difficult to suss out the total cost
because of the various work done by the agency. He was
trying to come up with a reasonable amount.
Ms. Thompson replied that in the fiscal note showed the
registration changes with the difference in municipalities
and charities separately.
2:00:38 PM
Representative Guttenberg asked if the division had a way
to parse out how long it took when individuals got a
vehicle registration or a license, had difficulty getting
registration, or did not have sufficient information. He
was interested in how long each of the items took
separately and where the cost drivers resided. He provided
various examples of different things individuals came to
DMV for.
Ms. Thompson answered that she tracked the wait and
transaction times across the state. The average transaction
time was about seven minutes.
Representative Guttenberg stated that when he went to DMV
he observed that some people were having significant
difficulty. He stated that he typically had basic and
simple business to conduct; however, he did not think seven
minutes was the average time it took when he went in to
renew something. He wondered about the time it took for
someone with an out-of-state license to get an Alaska
license in comparison to other items.
Ms. Thompson replied that she could probably come up with
some averages on registration and driver's licenses. She
did not know whether she could parse down to the level
Representative Guttenberg was looking for, but she offered
to come up with some figures.
Representative Guttenberg clarified that he did not need
the figures, but was trying to determine how easy it was
for DMV to come up with the data.
2:04:04 PM
Representative Kreiss-Tompkins followed up on an earlier
question by Representative Wilson. He explained when the
initial authorizing legislation that created the permanent
vehicle registration passed it had not contained a
provision from an earlier version that gave blanket
statewide applicability in the fiscal note where the cost
had been estimated at $20 million per year. The exemption
had been tightened up since that time. He noted it could be
a little complicated to eliminate the exemption because
permanent vehicle registration was at a higher rate than
normal vehicle registration. He thought there may need to
be an accommodation or transition incorporated if the
permanent vehicle registration was eliminated.
Representative Wilson explained that the permanent vehicle
registration cost the typical two-year fee plus an
additional $25. She explained that individuals with the
exemption would have to be grandfathered in. She explained
[the removal of the exemption] would stop the bleeding and
bring in a portion of the $20 million. She reported she
would work with the sponsor on an amendment but would not
hold the bill up in committee.
Co-Chair Foster OPENED and CLOSED public testimony.
2:06:52 PM
Representative Kawasaki MOVED to ADOPT conceptual Amendment
1 on page 2, line 22. The amendment would maintain the
current $10 vehicle registration fee for charitable
organizations instead of the proposed $50 fee.
Representative Wilson OBJECTED. She asked about the impact
and queried the number of charitable organization licenses.
Co-Chair Seaton pointed to the third paragraph on page 2 of
the fiscal note that specified there were 2,657 vehicles
registered to charitable organizations. The new $50 fee
would generate an additional $106,280. Due to the two-year
registration cycle the additional yearly revenue for FY 19
and FY 20 would be $53,140.
Representative Wilson did not believe $25 per year [$50 for
two years] was drastic. She remarked that the bill did not
increase the fee as high as it could have (to $100).
2:08:52 PM
Representative Kawasaki noted there had been discussion the
previous day about the public, private, and nonprofit
sectors. He stated the nonprofit sector worked closely with
Alaska's public sector. He elaborated that the nonprofit
sector thrived and fell based on the state's economy. He
reasoned nonprofits provided more services. At a time where
the public sector was trying to find money, the nonprofit
sector was also trying to scrape by. He reported the senior
center in his district that ran the Meals on Wheels program
probably took advantage of the $10 registration. He did not
believe $40 would break the bank for the nonprofits, but it
did not seem right to add to their burdens. He supported
deferring their burdens longer.
Representative Grenn provided some context as the
Department of Administration finance subcommittee chair.
The Legislative Finance Division indirect expenditure
report noted that the discount had started in 1978. When
the discount was first offered only a few hundred vehicles
were eligible, compared to the current number of close to
6,000.
Representative Wilson MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Guttenberg, Kawasaki, Foster
OPPOSED: Thompson, Tilton, Wilson, Gara, Grenn, Ortiz,
Pruitt, Seaton
The MOTION to adopt conceptual Amendment 1 FAILED (3/8).
2:11:28 PM
AT EASE
2:13:10 PM
RECONVENED
Representative Wilson MOVED to ADOPT conceptual Amendment
2:
Delete 8-year-old car exemption in Sec. 28.10.155.
Permanent motor vehicle registration.
Except for anyone who already has a permanent
registration and the permanent registration expires
when the owner transfers or assigns the owner's title
or interest in the vehicle.
Co-Chair Seaton OBJECTED for discussion.
Representative Wilson explained that the amendment would
remove the 8-year-old car permanent registration exemption
under AS 28.10.155. She explained that currently someone
could pay a fee plus $25, which exempted their vehicle
[from another registration fee] until they sold the
vehicle. She elaborated that when the vehicle was sold the
new owner had to reregister and pay the fee.
Co-Chair Seaton asked for verification that when a new
owner purchased a car that had previously been under the
exemption, they would pay the regular registration fee.
Representative Wilson replied in the affirmative. There
would no longer be an exemption; therefore, individuals
would pay a two-year registration fee like everyone else.
Co-Chair Seaton WITHDREW his OBJECTION.
Representative Thompson OBJECTED. He stated that a person
over the age of 65 could get a permanent vehicle
registration. He asked for verification the exemption
addressed by the amendment was separate.
Representative Wilson answered that Representative Thompson
was referencing a different statute. She clarified that
individuals over the age of 65 were allowed a permanent
vehicle registration for one vehicle.
Representative Thompson WITHDREW his OBJECTION.
There being NO further OBJECTION, Conceptual Amendment 2
was ADOPTED.
2:15:49 PM
Representative Kawasaki stated that he had planned to offer
a separate conceptual amendment dealing with
municipalities. He detailed that the fee for municipalities
would increase from $10 to $100. He remarked that the
legislature had done numerous things in the past couple of
years to harm municipal governments, including school bond
debt reimbursement, reduced revenue sharing, reduced
capital budget, and reduced education. He thought the
increased fee would add an additional burden to
municipalities at a time when they were having trouble
making ends meet. He appreciated the bill and would not be
offering the amendment.
2:16:21 PM
Vice-Chair Gara reviewed the previously published fiscal
impact note from the Department of Administration, DMV.
There was no cost. The change in revenue was $815,300 per
year starting in FY 19. He believed an updated fiscal note
would follow.
Co-Chair Seaton MOVED to report CSHB 409(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 409(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN1 (ADM).
2:17:37 PM
AT EASE
2:20:25 PM
RECONVENED
CS FOR SENATE BILL NO. 105(FIN)
"An Act relating to the licensure of marital and
family therapists; relating to medical assistance for
marital and family therapy services; and providing for
an effective date."
2:20:33 PM
Co-Chair Foster noted the committee had heard the bill
earlier in the meeting.
Co-Chair Seaton mentioned his earlier question about
whether the bill would require a plan amendment.
Co-Chair Foster remarked that the bill sponsor had asked to
hear from Elizabeth Ripley with the Mat-Su Health
Foundation.
ELIZABETH RIPLEY, CEO, MAT-SU HEALTH FOUNDATION, WASILLA
(via teleconference), spoke in support of the bill. She
read from prepared remarks:
The foundation shares ownership in Mat-Su Regional
Medical Center and invests its profits back into the
community to improve the health and wellness of Mat-Su
residents. The Mat-Su Health Foundation fully supports
SB 105 because it will help our citizens access
behavioral health treatment services through marriage
and family therapists to get care early before their
problems escalate to a crisis stage. In the
foundation's 2013 Mat-Su community health needs
assessment, Mat-Su residents told us their top five
health issues were all related to mental health and
substance abuse. They asked us for a coordinated
system of care that makes treatment for behavioral
health more readily accessible. Instead, the way our
system currently works, Mat-Su Regional Medical Center
is the number one portal in Mat-Su for people
suffering from a behavioral health problem.
In 2016 alone, 1,196 patients with a behavioral health
diagnosis, 46 percent of which were on Medicaid, went
to the Mat-Su Regional emergency department (ED).
These patients had a total of 3,227 visits and their
charges totaled $14 million, not counting an
additional cost of $1.6 million estimated for law
enforcement, 911 dispatch, and transportation. If we
can intervene early with a system where all residents
can get timely access to a behavioral health provider
we can save pain, suffering, and money. By example, an
individual session for Medicaid is $75, while an
average charge for a behavioral health ED visit is
$4,370. Granted an individual needs more than one
visit early on to prevent a crisis, but even if you
paid for ten visits at $750 you would be saving
$3,600. The prevalence of mental health and substance
abuse problems and crises is increasing in the Mat-Su
and statewide. The average annual growth rate for
visits in our ED by patients with a behavioral health
diagnosis grew 20 percent from 2015 to 2017 due to the
opioid epidemic and lack of treatment access.
Additionally, from 2014 to 2017 the number of
behavioral health assessments required for patients in
crisis in our ED grew from 349 to more than 1,000 -
all in a hospital that does not currently provide
behavioral healthcare.
This legislation could bring the appropriate level of
care to people who need help when a problem first
starts instead of after it develops into a crisis. The
Mat-Su Health Foundation is actively doing its part to
build a complete behavioral health continuum of care
that's fully staffed with caring professionals. We
offer scholarships to train new behavioral health
providers and invest to help our nonprofits provide
badly needed services. We are financing care
coordination projects to keep people out of the ED and
institutional care and work to advocate for smart
policy like SB 105. We hope you will move this timely
and important legislation forward. Thank you.
2:24:54 PM
Co-Chair Foster invited the sponsor and staff to the
testimony table.
SENATOR DAVID WILSON, SPONSOR, introduced himself.
GARY ZEPP, STAFF, SENATOR DAVID WILSON, noted that Director
Margaret Brodie with the Division of Health Care Services
could provide an answer to Co-Chair Seaton's earlier
question about whether the legislation would require a
change in the state Medicaid plan.
Co-Chair Foster intended to take questions for Ms. Ripley
first.
Co-Chair Seaton presumed a large portion of individuals
coming into the Mat-Su hospital were there for drug abuse
reasons. He asked if marital and family therapists were
licensed to treat opioid and other drug abuse. He asked if
it would open a treatment avenue for the health foundation.
Ms. Ripley shared her understanding that the primary focus
of marital and family therapists was mental health.
Frequently, mental health and substance abuse cooccurred.
It was necessary to treat the underlying cause leading
someone to self-medicate. She believed marital and family
therapists would have the ability to address the mental
health component vital to addressing substance abuse.
Co-Chair Seaton asked if marital and family therapists were
licensed to treat mental health.
Ms. Ripley replied, "that's my understanding."
2:27:33 PM
Mr. Zepp noted that Ms. Brodie could answer Co-Chair
Seaton's question from earlier in the day regarding the
state Medicaid plan.
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, replied
there was no cost to do a state plan amendment for the
addition or deletion of a service. The department had staff
to ensure the state complied with the state plan at all
times.
Co-Chair Seaton asked how difficult it would be to delete a
service if the bill did not accomplish what was intended.
Ms. Brodie answered that the process was easy; the
Department of Health and Social Services (DHSS) would write
a new state plan and submit it to the Centers for Medicare
and Medicaid Services (CMS).
Representative Wilson asked when the state had last deleted
a service from its Medicaid plan. Ms. Brodie responded that
she would have to follow up with an answer.
Representative Wilson stated the legislature had asked the
question frequently and had always been told proof of need
for the deletion of a service and what kind of a negative
impact it would have on individuals using the service would
have to be provided. She was amazed to hear that it would
be easy to remove something from the plan because it had
not been the understanding since she had been on the
committee. She asked if marital and family therapists were
currently able to do anything in the behavioral health
realm and to bill Medicaid if they were working under a
clinic.
Ms. Brodie answered in the affirmative. She elaborated that
the services could be billed to Medicaid if provided in a
clinic or the service could be provided anywhere if the
therapist was serving a duly eligible Medicare and Medicaid
recipient.
Representative Wilson asked for verification that if a
therapist was already able to bill Medicare and a client
also had Medicaid, the therapist could bill
Medicare/Medicaid even though they were not part of a
clinic.
Ms. Brodie agreed. She added that the state would pick up
the copayment.
Representative Wilson asked for verification that the bill
only pertained to therapists with an independent practice
and clients with Medicaid but not Medicare.
2:30:57 PM
Ms. Brodie responded in the affirmative pertaining to the
recipient. The provider would also have to be enrolled in
Medicare.
Representative Wilson referenced the fiscal note that
specified there were 100 licensed marital and family
therapists in Alaska. She wondered if there was a database
showing the number of independent therapists who may want
to take Medicaid patients.
Ms. Brodie deferred to the DHSS Division of Behavioral
Health.
Representative Guttenberg surmised that the reason for the
bill was not to expand the services provided by marital and
family therapists, but to expand the group of individuals
receiving the benefits the therapists had to offer. He
referenced the fiscal note that extrapolated the
anticipated number of individuals who would use the service
and what the cost would be. He wondered if there was a way
to estimate what the cost avoidance would be. He looked at
the 633 estimated recipients and considered what the cost
would be for the individuals to go to the emergency room.
He explained that in the future it would be helpful to look
back and know what the savings had been. He wondered if the
avoidance cost could be reflected in the fiscal note.
Ms. Brodie replied that she could do a calculation, but it
would not be 100 percent accurate. She could take all of
the emergency room visits and could extrapolate the number
of individuals who had received a diagnosis for a
behavioral health disorder. However, not all providers were
comfortable giving that type of diagnosis; therefore, the
figure would be off some.
Representative Guttenberg stated that in the future it
would be helpful to look back to see what the avoidance
cost had been in the five years since the passage of the
bill.
Co-Chair Seaton asked if Representative Guttenberg was
suggesting including a requirement for a report to the
legislature in the bill.
Representative Guttenberg thought it would be a good idea
in order to know in the future what avoidance costs had
come from the legislation. He hoped the department was
looking at avoidance costs to understand other places the
state needed to expand or contract services.
2:34:50 PM
Mr. Zepp believed the state was on the verge of what
Representative Guttenberg was asking for through a separate
bill (SB 74) and the federal 1115 Medicaid waiver the state
had recently submitted. The waiver was just upon the
shortage of behavioral healthcare and trying to manipulate
the system to demonstrate a project and redefine behavioral
healthcare and address the shortages throughout the state.
He believed the components were addressed in the 130-page
document submitted to the federal government by DHSS.
Co-Chair Seaton was trying to determine if the legislature
would be getting information back on the effectiveness of
expanding a service. He asked if the reporting requirement
needed to be more specific than a generalized report on
behavioral health. He wondered if the department could
provide the requested information in a report if the
legislation passed.
Ms. Brodie replied that the report would need to be
specialized because it could get lost in the other
activities the department was undertaking with waivers and
Medicaid reform. She relayed that the report was definitely
something DHSS could provide; if the department knew a
report was due it could compile the data beforehand.
Representative Wilson pointed to research in members'
packets from the Division of Behavioral Health that
mentioned an existing report. She believed the report could
help the legislature contemplate what should be included in
another report. She stated the legislature should be
concerned that in 2016 as a result of Medicaid expansion,
statewide payments to behavioral health providers was
$8,641,000, while in 2017 expansion brought in $25,173,825
to providers statewide. She stated the number was far
beyond $25 million. She thought it was necessary to be very
specific when determining what the report would include.
She wondered if Representative Guttenberg was talking about
only marital and family therapists or behavioral grants
throughout the state. She remarked there had been
significant discussion in the committee on where the money
was going and whether the state was seeing any return for
its money in terms of opioid and other issues related to
behavioral health. She added that the problem was
increasing as was the cost.
2:38:02 PM
Representative Wilson mentioned a document regarding a
Medicaid expansion legislative research grant (copy not on
file). She stated the document specified the DHSS was in
the process of developing a reporting tool that would
enable the legislature to get the type of information
[Representative Guttenberg was requesting]. She asked if
the tool had been finished.
RICK CALCOTE, MENTAL HEALTH CLINICIAN, DIVISION OF
BEHAVIORAL HEALTH, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, ANCHORAGE (via teleconference), replied that he
did not have the information; the tool was being developed
elsewhere in the department.
Representative Wilson was uncertain who to talk to because
the report she was referencing anticipated the tool would
be operational by early 2018. She wanted to know whether
the tool had been developed and what information the state
had. She thought the tool could help determine how much
money would be diverted. She believed the bill needed more
work.
Vice-Chair Gara understood the need to expand the group of
people providing mental health services. He asked if adding
marital family services would add marital counseling as a
covered service.
Senator Wilson answered that marital and family therapists
were licensed to provide myriad services. He provided
examples including psychotherapy, group psychotherapy, and
substance abuse counseling dealing with family dynamic. He
clarified that it did not have to be limited to a family
unit, but included whatever the therapist was licensed to
do. He continued that marital and family therapists went
through similar schooling to social workers, and licensed
professional counselors. Marital and family therapists went
through the same licensure requirements through their board
and could provide the scope of services throughout. He
stated it was more than family counseling. He explained
that like a car mechanic that could treat more than one
limited issue on a car, marital and family therapists were
licensed professionals who were able to provide myriad
services. He believed Director Randall Burns with the
Division of Behavioral Health had addressed the issue in
his letter [to the committee co-chairs dated April 13, 2018
(copy on file)]. He reiterated that the services marital
and family therapists could provide were expansive.
2:41:54 PM
Co-Chair Seaton was concerned that getting a big report on
behavioral health services across the state would lose the
essence of whether expanding services for marital and
family therapists helped the system and decreased the
amount of behavioral health services provided in emergency
rooms. He was trying to determine whether requesting a
report in the four-year timeframe would provide the
information on give the information to determine whether
the system had improved and what the cost had been. He
thought looking at the overall system would lose the detail
about what was needed pertaining to the topic.
Ms. Brodie responded that after the bill's effective date
there should be one full fiscal year before the report was
required. She believed going out four or five years would
be too long. She explained there were a high number of
Medicaid reform initiatives underway; therefore, she
recommended tracking the information from the beginning in
order to receive actuals in the report. The savings would
show up in healthcare services Medicaid, not behavioral
health Medicaid. The savings would also show up in the
Department of Corrections, law enforcement, and the Office
of Children's Services. She did not know whether those
agencies would have the ability to track the information,
but Medicaid would.
Representative Wilson stated that the bill only included
marital and family therapists working independently. She
asked if there was a way to track only the individuals
under the bill.
Ms. Brodie answered there would be a way to track the
individuals through the bill because it would require
building specialized business rules into the Medicaid
Management Information System (MMIS). She detailed DHSS
could use the same rules to track who was paid under the
bill.
2:45:34 PM
Representative Wilson asked how many states had tried to
take extras out of their plan and had been denied.
Ms. Brodie did not know any states that had been denied.
There were states that had lengthy discussions with CMS and
had been required to prove access. However, other states
were far ahead of Alaska in behavioral health issues and
already had the infrastructure.
Representative Wilson requested information on the criteria
required to remove any extra services.
Vice-Chair Gara stated that he had first been told the
purpose of the bill had was to allow marital and family
therapists to provide behavioral health services. More
recently he had been asked if the bill would cover marital
counseling through Medicaid. He asked if the intent of the
bill was limited to allowing marital and family therapists
to provide direct behavioral health services or to expand
the services provided through Medicaid.
Senator Wilson confirmed the original intent of the bill
was to allow therapists not practicing in a community
behavioral health clinic the ability to bill Medicaid
through the optional service. The bill would allow a new
provider type to be added to the list of licensed providers
that could bill Medicaid, just like a licensed clinical
social worker could bill for marital and family counseling
through group therapy. Other non-marriage family therapists
could bill for the same services that those providers bill
for as well.
2:48:51 PM
Co-Chair Seaton asked whether January 2020 would be the
appropriate report deadline if the bill passed with its
current effective date.
Ms. Brodie thought it would be better to line the due date
up with the department's other Medicaid reports due at the
end of November.
Co-Chair Seaton asked for the year. Ms. Brodie replied
2020.
Co-Chair Seaton asked for verification that the following
was an adequate parameter for DHSS to design the data
collection: a report to the legislature on the
effectiveness and the cost-effectiveness of providing the
services allowed under the bill by the authorized providers
and the impact on diversion of services provided in more
costly settings.
Ms. Brodie replied in the affirmative.
Representative Wilson communicated she had a forthcoming
amendment.
2:51:06 PM
AT EASE
2:51:39 PM
RECONVENED
Co-Chair Foster stated there would be forthcoming
amendment. He set a deadline of 5:00 p.m. the following
day.
Senator Wilson relayed that the bill had been brought
forward to address behavioral health shortages in the
state. He emphasized there was an extensive line [for
behavioral health services] and he encouraged committee
members to reach out to their communities to learn how long
it took for someone to get scheduled for an integrative
behavioral health assessment. He stated the wait ranged
from several weeks to one month depending on what a person
needed to be seen for. He noted that residential substance
abuse treatment facilities had long waitlists. The bill
would help open a second door for individuals to access and
lessen the burden of Alaskans seeking mental health
services. He thanked the committee for hearing the bill.
Vice-Chair Gara thanked Senator Wilson for his patience.
CSSB 105(FIN) was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
day. He recessed the meeting to a call of the chair [note:
meeting never reconvened].
ADJOURNMENT
2:54:18 PM
The meeting was adjourned at 2:54 p.m.