Legislature(2023 - 2024)ADAMS 519
02/01/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Fy 24 Supplemental Request | |
| HB81 | |
| HB148 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 81 | TELECONFERENCED | |
| + | HB 148 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 1, 2024
1:35 p.m.
1:35:54 PM
CALL TO ORDER
Co-Chair Johnson called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Mike Cronk
ALSO PRESENT
Lacy Sanders, Director, Office of Management and Budget;
Teri West, Administrative Services Director, Department of
Corrections; Dom Pannone, Administrative Services Director,
Department of Transportation and Public Facilities;
Representative George Rauscher, Sponsor; Ryan McKee, Staff,
Representative George Rauscher; Representative Justin
Ruffridge, Sponsor; Bud Sexton, Staff, Representative
Ruffridge; Sana Efird, Executive Director, Alaska
Commission on Postsecondary Education, Department of
Education and Early Development.
PRESENT VIA TELECONFERENCE
Norm McDonald, Deputy Director, Division of Forestry and
Fire Protection, Department of Natural Resources; Hannah
Lager, Administrative Services Director, Department of
Commerce, Community, and Economic Development; David
Dunlap, Vehicle Program Manager, Division of Motor
Vehicles, Department of Administration ; Gordon Williams,
Attorney, Ketchikan; Linda Hulbert, Self, Fairbanks;
Matthew Blattmachr, Peak Trust, Anchorage; Janelle Grenier,
Nikiski High School, Nikiski; Paul Layer, Vice President
for Academics, University of Alaska, Fairbanks.
SUMMARY
OVERVIEW: FY 24 SUPPLEMENTAL REQUEST
HB 81 VEHICLES/BOATS: TRANSFER ON DEATH TITLE
HB 81 was HEARD and HELD in committee for further
consideration.
HB 148 AK PERFORMANCE SCHOLARSHIP; ELIGIBILITY
HB 148 was HEARD and HELD in committee for
further consideration.
Co-Chair Johnson reviewed the meeting agenda.
^OVERVIEW: FY 24 SUPPLEMENTAL REQUEST
1:37:36 PM
LACY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
introduced the PowerPoint presentation "Overview of the
FY2024 Supplemental Budget" dated February 1, 2024 (copy on
file).
Co-Chair Johnson noted that Ms. Sanders would provide a
high-level overview of the budget.
Ms. Sanders continued on slide 2. The previous
supplementals were released on December 14, 2023, and the
new supplemental items were released on January 30, 2024.
Both supplementals were reflected in the chart on slide 2.
The items released on January 30 totaled $154 million in
unrestricted general funds (UGF) in the operating budget,
$1.8 million in designated general funds (DGF), $3.1
million in other receipts, and a reduction of $6 million in
federal receipts for a total of $153 million in the
operating budget. She would walk through the numbers in
more depth in later slides. The capital budget included
$400,000 in UGF, $8.9 million in DGF, and $41.6 million in
federal receipts for a total of $50.9 million. The grand
total for both capital items and operating items submitted
on January 30, 2024, was $203.9 million. The combined
totals of supplemental items released on January 30, 2024,
and on December 14, 2023, were as follows: $171.5 million
in UGF, $10.7 million in DGF, $3.1 million in other
receipts, and $38.4 million in federal funds for a combined
total of $223.7 million. She noted that the numbers listed
in the fiscal summary were slightly different due to
revised federal programs [known as Revised Program
Legislative (RPL)] approved by the legislature during the
interim. The surplus and deficit had been adjusted to
reflect the changes in the combined supplementals. For FY
24, the surplus continued to be positive at $355.7 million.
1:42:20 PM
Representative Hannan asked Ms. Sanders about the timeline
of RPLs in which the authorization stood. She asked Ms.
Sanders to explain the difference between the supplementals
and the RPLs that had already been authorized and were not
up for legislative approval due to a timelapse.
Ms. Sanders responded that the items were addressed in the
interim and had been approved to move forward based on a
meeting of Legislative Budget and Audit (LB&A).
Representative Hannan asked what the dollar amount of the
RPLs was and how it compared to the supplementals.
Ms. Sanders responded that of the $225.1 million reflected
on slide 2, the grand total of supplementals was $223.7
million and the RPLs comprised only about $2 million of the
total.
Representative Ortiz asked for confirmation that the
projected surplus of $355 million would still be in place
after the supplementals.
Ms. Sanders responded in the affirmative. She reminded the
committee that the legislature appropriated language in
2023 that provided for a surplus above a specific dollar
value that would be split between the Constitutional Budget
Reserve (CBR) and the energy relief payment. The
calculation was currently at about $220 million.
Representative Ortiz responded that he recently saw a
fiscal summary sheet that listed the state's surplus at
around $200 million. He wondered if the split was being
factored into the final figure.
Ms. Sanders replied that she was not sure what document
Representative Ortiz was referring to. The Office of
Management and Budget's (OMB) fiscal summary had not yet
incorporated a line for the $220 million because the total
was still subject to the price of oil. She suggested that
OMB could incorporate another line subtracting the $220
million.
Representative Ortiz asked if $220 million was the maximum
amount covered by the split. He asked if it would be the
complete $500 energy subsidy or would it be the projected
amount.
Ms. Sanders responded that $500 was the current calculation
based on forecasted revenue for the year, which was why it
could change moving forward. She explained that the actual
revenue collected during the year would determine the exact
payout.
1:47:06 PM
Representative Stapp asked whether the veto amounts were
included in the surplus figure. He assumed that the over
$200 million in funding that was vetoed by the governor was
included in the number.
Ms. Sanders responded that the fiscal summary reflected
what was enacted into law after vetoes.
Representative Josephson asked Ms. Sanders about the $135
million that would remain if revenue remained the same. He
understood that SB 140 [education funding legislation
introduced in 2023] as written would elicit a fiscal note
of over $170 million. The state would be $35 million short
without considering any other bill's fiscal notes and the
state would need to draw from the CBR draw in order to fund
SB 140.
Ms. Sanders responded that the fiscal notes associated with
SB 140 were for FY 25 but slide 2 reflected FY 24. In order
to accomplish the outlined cost, a revenue source would be
required in FY 24.
Representative Josephson asked if the "rather small" $135
million surplus was the surplus for FY 24.
Ms. Sanders responded in the affirmative.
1:49:03 PM
Ms. Sanders continued on slide 3. The first portion of the
presentation was the operating supplemental request. She
would highlight the items in each agency's budget as she
went down the list. She stressed that it would not
encompass every item in the FY2024 Supplemental Bill
Summary document (copy on file), but she would be happy to
address other items in detail if it was the will of the
committee.
Ms. Sanders relayed that the Department of Administration
(DOA) had a fund source change of $525,000 of interagency
receipts to be replaced by general funds. In 2024, there
was a salary increase that was received for attorneys and
legal staff and other partially exempt positions. There was
no funding source that was made available; therefore, the
funds were replaced with general funds to pay for the
positions.
Ms. Sanders continued that the Department of Commerce,
Community, and Economic Development (DCCED) experienced an
increase of $50,000 for federal receipt authority to
address a continuation of the State Trade Expansion Program
(STEP) grant.
Ms. Sanders stated that the Department of Corrections (DOC)
would receive one of the largest increases. There were
several items that were combined for a total of $40
million. She summarized that DOC and OMB had collaborated
on a projection process to bring DOC in line with the
department's actual expenditures. There had been a history
within DOC of underfunding that had resulted in a cycle of
supplementals. The projection process would bring the
budget for FY 24 inline with the projections for the end of
FY 24 and the budget for FY 25 also reflected the same
amounts. There were costs associated with utilities, fuel,
institutional supplies, as well as overtime for
correctional officers. There was a fund source change of
approximately $8 million which could be seen as a decrease
in federal receipts. The decrease was due to a loss in
federal receipts from the decline in man-day billings
experienced by DOC as well as increases in expenses for the
community residential centers, pretrial services, and heath
care increases.
1:52:44 PM
Representative Stapp commented that he balked at the notion
that DOC had not been funded. He thought that DOC was the
department that had received the most increases since 2019.
He relayed that DOC's budget was 40 percent larger than it
was in 2019. He asked how many vacancies were there within
DOC and what happened to the salary savings if not spent on
overtime.
Ms. Sanders responded that there were a substantial number
of vacancies in DOC. The cost savings were used for
personal services. She relayed that there was an excessive
amount of personal services costs and there were letters of
agreement to incentivize and retain positions within DOC.
The hope was that by incentivizing recruitment and
retaining employees, there would be less of a need to fund
overtime in FY 25.
Representative Stapp asked how many billable overtime hours
there were and how many vacant positions there were within
DOC.
Ms. Sanders responded that she would follow up with the
information.
Co-Chair Johnson requested that the information be
distributed to the entire committee.
Representative Coulombe understood that the funding
increase for DOC was requested in order to reduce the need
for extensive supplementals in the future.
Ms. Sanders responded in the affirmative. The goal was for
the budget to reflect the operating needs of the
department. There were some things beyond the department's
control, but the aim was to project the costs as accurately
as possible.
Representative Coulombe replied that the increases seemed
to be for items that DOC would have known would be
necessary. She did not think there seemed to be many items
that would have been surprise costs. She recalled that the
proposed DOC budget was presently at about $450 million,
and she thought it would be prudent to also focus on
prevention. She asked if the goal was to ensure that big
supplementals would not continue.
Ms. Sanders responded in the affirmative and relayed that
the hope was to stabilize the budget and reduce the need
for substantial supplementals.
Co-Chair Johnson asked if Ms. Sanders remembered what the
DOC supplemental was in 2023.
Ms. Sanders responded that she did not know but could
follow up with the information.
Co-Chair Johnson recalled that the supplemental was $58
million in 2023 and it was $94 million in 2024. She
highlighted that the difference was considerable.
1:57:15 PM
Ms. Sanders continued on slide 3. The Department of
Education and Early Development (DEED) would receive an
increase related to the Mt. Edgecumbe High School (MEHS).
There were contracts for utility costs, management, and
food services that continued to increase as the contracts
were renegotiated. There were also salary adjustments that
were provided with interagency receipts and there was no
funding behind the funds to support the increases. The
department was requesting funding to replace interagency
receipts.
Representative Josephson asked what the budget for MEHS was
relative to the $500,000 supplemental request.
Ms. Sanders would follow up with the information.
1:58:09 PM
AT EASE
1:59:00 PM
RECONVENED
Co-Chair Johnson noted that there was a representative from
DOC available to answer questions.
Co-Chair Edgmon thought it seemed appropriate to have
upfront conversations about the supplemental considering
how many agencies would be impacted. He asked DOC to detail
why the requested budget increase was so significant.
2:00:24 PM
TERI WEST, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT OF
CORRECTIONS, responded that the purpose of the DOC
supplemental request was to get the department to a place
where it could be considered "whole" and help reduce
supplemental requests in the future. There were increased
costs in many areas, but most significantly in the
department's contractual costs.
Representative Stapp commented that it seemed that there
were many structural problems within the department. Most
of the fee increases were contractual obligations and it
was difficult for him to understand why it was so
challenging for the department to assume the natural rates.
The department was required to look for more fee-for-
service options for health care, which made sense
considering inflationary pressure; however, there was no
reflection of the efforts in the department's FY 25 budget.
Since 2019, DOC was the most resourced department outside
of the Department of Public Safety (DPS) and it had the
largest supplemental requests every year. He asked what was
causing the repeated high supplemental requests.
Ms. West replied that the department had attempted to
implement processes in order to reduce its costs over the
last few years; however, the cost of living and cost of
goods and services had increased. Many of the increased
costs were unexpected, such as a 50 percent increase in one
of DOC's community residential centers. There were five
more residential center contracts that would be renewed in
2024 and DOC was uncertain what to expect. The contracts
would expire again in FY 31 and the department was making
every effort to anticipate the increases.
Representative Stapp understood the concept of fixed costs
increases. He asked why DOC was the only department with
massive increases when all departments had the same fixed
costs increases.
Ms. Sanders replied that OMB and DOC were working hard to
ensure that the budget and the reflected costs would
represent what the department was experiencing. She hoped
that the department would not experience significant
changes going forward.
2:05:03 PM
Representative Josephson noted that the public seemed to
want to repeal SB 91 and he was happy to oblige with HB 49
in 2019. He asked if there was any way to gauge the
contribution of the aforementioned legislation on the
increased costs.
Ms. Sanders responded that the population in the facilities
was not driving up the costs. She stressed that
inflationary cost pressures and contractual obligations
such as providing medical services were responsible for the
increased costs.
Co-Chair Edgmon remarked that the department was unique and
was largely funded by unrestricted general funds. The
department was responsible for housing, feeding, and
providing health care for thousands of inmates, and
populations fluctuated drastically and unexpectedly. He
commented that school districts were encountering the same
problems.
Representative Ortiz asked if it was possible for the
committee to get an answer to Representative Josephson's
earlier question as to how much of the requested
supplemental increase for DEED was due to MEHS.
Ms. Sanders responded that she could not do the mental math
on the record but would follow up with the information.
Representative Hannan asked if there was anyone from Ms.
Sanders' staff that could answer Representative Ortiz's
question in more detail.
Ms. Sanders did not think there was anyone who was prepared
to provide better information.
Representative Hannan noted that Ms. Sanders had described
the supplementals as the budget for MEHS. She explained
that she wanted to know the total budget request for MEHS.
2:08:48 PM
AT EASE
2:12:58 PM
RECONVENED
Co-Chair Johnson asked if DOC could finish its portion of
the presentation before moving on to MEHS. She asked if
there were any additional questions for DOC.
Representative Galvin asked for more details on how the
contractual costs and health care costs had increased. She
appreciated that DOC was a people-heavy department and it
made sense that costs would increase. She thought it would
be helpful to know the trajectory of costs.
Ms. Sanders would follow up with cost increase percentages.
Representative Stapp commented that he appreciated Ms.
Sanders' time and looked forward to hearing more from her.
Co-Chair Johnson asked about the fund transfers on slide 2.
She thought the fund transfers would decrease the surplus.
Ms. Sanders responded that the fund transfers were
considered non-additive and would not impact the surplus or
the deficit. The funds were not leaving the treasury but
required an appropriation in order to be moved.
Co-Chair Johnson asked if the energy relief payment was
taken into consideration in the final surplus number.
Ms. Sanders responded that the surplus would not take into
account the energy rebate or the transfer to the CBR. The
surplus would be determined at the end of session after all
revenue had been accounted for. The updated spring revenue
forecast could change the surplus amount; therefore, the
projected surplus was not yet published.
Co-Chair Johnson understood that the Legislative Finance
Division (LFD) had a different transfer amount and asked
why the figure was different.
Ms. Sanders responded that she understood that LFD was
recording the transfer to the CBR of $110 million. The OMB
fiscal summary did not reflect the CBR transfer.
Co-Chair Johnson asked if Representative Ortiz would like
to begin the conversation on MEHS.
2:17:55 PM
Representative Ortiz suggested that Representative
Josephson repeat his earlier question.
Representative Josephson thought he had learned the answer
to his question. He understood that the base budget for
MEHS was approximately $15 million, which was about a 3
percent increase. He explained that it was frustrating that
53 school districts did not get automatic increases built
into the districts' budgets and it was a constant struggle
to receive more funding.
2:19:15 PM
Ms. Sanders continued on slide 3. There was a request of $1
million in statutory designated program receipt authority
within the Department of Family and Community Services
(DFCS) due to the rising cost of pharmaceuticals at the
pioneer homes. The request was to ensure that the
department had sufficient funds for reimbursement purposes.
Ms. Sanders continued that there were several items within
the Department of Fish and Game (DFG) that brought about
statutory designated program receipt authority for various
projects such as kelp genetics research. The department was
requesting $35,000 for laboratory services and $610,000 in
Pittman-Robertson funds. The funding was not presently
sufficient to pay for the department's activities.
Ms. Sanders continued to the Department of Health (DOH).
The primary change within DOH was the request for $7.6
million in UGF for a Medicaid projection. On December 15,
2023, the department provided an updated projection and it
was not ready during the governor's budget process, which
was why it was part of the supplemental request. The
request would bring Medicaid services to the appropriate
match amount.
Representative Stapp remarked that in 2023, a Medicaid
economist told the legislature that it was underbudgeting
the FY 24 Medicaid costs by $15 million. He hoped that if a
Medicaid economist was employed by the state that the
economist would provide the legislature with accurate
Medicaid advice.
2:22:26 PM
Co-Chair Johnson understood that federal funding related to
the COVID-19 pandemic was coming to an end.
Representative Josephson noted that there was some concern
about the administration's position to not continue the
Summer Food Service (SFS) assistance program. He noticed
that the media had two explanations for the choice: the
focus had to be on the Supplemental Nutrition Assistance
Program (SNAP) backlog and the SFS program was cost
inefficient. He asked if the governor stood by the stance
to discontinue SFS.
Ms. Sanders responded that there was currently no funding
in the budget to address SFS.
Ms. Sanders continued on slide 4. She explained that there
were two changes within the Department of Labor and
Workforce Development (DLWD). There was a supplemental
request for the Workers' Compensation Benefits Guarantee
Fund (WCBGF), which provided payments to employees when
claims for injuries on the job were submitted. At the end
of FY 22, the fund balance was swept and there were
insufficient funds to pay for the claims in 2024, which
brought about the need for a supplemental request. In
addition, there was a $1.4 million request for the State
Training and Employment Program (STEP) because there were
insufficient funds for the grant payments required in
statute.
Ms. Sanders continued to the request from the Department of
Natural Resources (DNR), which was the largest item in the
budget. The request was for fire suppression preparedness
and fire suppression activity. There were updated
projections from DNR through the end of July of 2024. The
request provided the initial estimate in general funds
required for FY 24 fire season expenditures. Anticipated
invoices and obligations exceeded the base operating
unrestricted general fund appropriation of about $14
million. The FY 24 disaster declaration of $61 million
included the costs of prepositioning firefighting resources
to areas of high fire danger, fire suppression costs, and
importing aviation resources and vendor contracts for
wildfire incidents through August 30, 2023.
2:26:26 PM
NORM MCDONALD, DEPUTY DIRECTOR, FIRE PROTECTION, DIVISION
OF FORESTRY and FIRE PROTECTION, DEPARTMENT OF NATURAL
RESOURCES (via teleconference), explained that the 2023
fire season started out slowly but after the fiscal break
on July 1, 2023, there was a significant uptick in fire
activity. There were 150 new fires in the state at the end
of July and early August, four of which were in high-risk
areas and required a majority of the Division of Forestry
and Fire Protection (DOFFP) resources. As a result of the
fires, the division imported fire fighters from around the
state and country to support fire suppression efforts. The
cost breakouts were in three primary areas: importing fire
fighters, aviation costs, and logistical support and
contracting costs needed during times of emergency.
Representative Galvin asked Mr. McDonald whether future
emergencies were being considered. She asked if the
supplemental request would fund emergencies that had
already occurred or would the funds be allocated towards
supporting possible emergencies in the future.
Mr. McDonald responded that part of the funds were to
support the efforts the division made in the prior fire
season. The disaster declaration submitted in September
2023 was for $61 million and an additional $26 million was
allocated in January 2024 and captured the costs that were
not accounted for during the first wave of the disaster
declaration funds. He explained that $7 million of the $26
million was intended to help support the beginning of the
2024 fire season which was anticipated to begin around
April.
2:29:41 PM
Representative Hannan asked Mr. McDonald what percentage of
the firefighting crews were made up of firefighters from
outside the state.
Mr. McDonald responded that he would follow up with an
exact figure and offered assurance that the division was
working diligently to develop its workforce in Alaska. He
relayed that around 2018 and 2019, the division imported 35
percent to 46 percent of firefighters and the percentage
had grown to about 75 percent.
Representative Hannan stated that she did not need the
specifics and was satisfied with Mr. McDonald's response.
Co-Chair Johnson asked Mr. McDonald if there was an
unusually high number of fires in 2023.
Mr. McDonald responded that it was a slow fire season as
far as acreage was concerned; however, that did not mean
that it was inexpensive. Some fires occurred in high risk
and remote areas and required a high resource investment
and others occurred in low risk. There were areas of the
state where fires were monitored but little action was
taken. The fires in 2023 covered a smaller area but
required a high resource investment.
2:33:07 PM
Representative Stapp thought there were too many variables
to adequately budget fire suppression. He noted that the
legislature did not budget up to the amount of its ten-year
average spend on firefighting. He asked Mr. McDonald if he
could discuss the methodology as to how the specific amount
for the supplemental request was derived.
Ms. Sanders responded that there were many factors that
played into fire suppression, and it was complex and
difficult to try to predict what resources would be needed.
She explained that it was also complex because most fire-
related disaster declarations were open over a substantial
amount of time. She was happy to engage in strategic
conversations to discuss ways to improve the process. She
shared that the ten-year history of the firefighting budget
was variable.
Representative Coulombe understood that there were some
elements that were difficult to estimate; however, she
recalled a conversation in 2023 about wildfire spending
allocation totaling $13 million. The state might not know
exactly what the spend would be, but it was known that the
spend would not be $13 million. She emphasized that she
wanted fire suppression to be funded in the budget at a
reasonable rate. She was frustrated because she thought
that the large supplemental could have been avoided if
there had been better planning. She was curious why the
funding for firefighters from outside of the state was
included in the supplemental and not in the original
budget. She noted that importing firefighters from around
the country was not a new phenomenon.
Mr. McDonald responded that it was not a new issue and it
was becoming a larger problem. The division had put a huge
emphasis on building workforce capacity and there were
budget requests to support a larger workforce. He thought
that the division was taking steps to mitigate the problem
and the number one thing that could be acted upon to reduce
fire costs was to increase preparedness in Alaska and keep
fires small. The state could experience significant savings
by utilizing Alaskan resources rather than outsourcing.
2:38:03 PM
Representative Hannan asked what was included in the DNR
budget for fire suppression.
Ms. Sanders responded that the fire suppression funds were
the same as the prior year and totaled about $13 million.
Co-Chair Johnson remarked that she would rather have a
supplemental than inflated costs. She thought supplemental
requests were positive because it allowed for increased
transparency in how funds were being used.
Ms. Sanders continued on slide 3 and explained that there
were additional supplemental requests for DPS. One of the
requests was for contractual agreements that were in place
for the Alaska State Troopers (AST) and Alaska Wildlife
Troopers (AWT) and the other request was funding for the
completion of a class study for the forensic scientist
class series. The department would need additional funds in
order to implement the changes proposed. The department
also needed additional funding for increased leasing and
utility costs for AWT housing. The combination of the
supplemental requests was about $2.2 million in general
funds.
Ms. Sanders relayed that the Department of Revenue (DOR)
was also requesting additional funding for a class study.
She explained that DOR's study was in the Division of
Personnel and Labor Relations and would fund a salary grade
alignment for the Child Support specialist job class and
impacted 107 positions. The total increase was just under
$600,000 and was divided between federal receipts and
general fund match. She noted that there were multiple
smaller items within DPS as well.
2:42:54 PM
Representative Josephson asked if the Child Support
specialist class was the first accomplished sub report.
Ms. Sanders responded that there were class studies
conducted constantly throughout the year. She asked for
clarification as to whether Representative Josephson was
referring to a salary study.
Representative Josephson responded in the affirmative.
Ms. Sanders responded that the salary study was separate.
The class study was separate from the salary study and was
looking at a multitude of positions across the state
comparing the salaries. The Child Support specialist class
study was one unique classification and was intended to
ensure that the pay for the position was fair.
Representative Josephson asked what the study would
portend. He understood that on some level, all of the class
studies were salary reports.
Ms. Sanders replied that she did not want to make an
assumption as to what the outcome of the salary study was.
She shared that her in her experience with the
classification studies, the department generally would
demonstrate difficulty in hiring and retaining positions
and the studies would compare the work that was completed
by one class to ensure that there was alignment with
comparable classes.
Representative Josephson commented that Anchorage had
experienced unprecedented winter weather over the past few
years that brought about emergency events. He thought that
$8 million in emergency funds were appropriated in 2023 and
should have covered the expenses. He wanted the Department
of Transportation and Public Facilities (DOT) to have the
resources but thought that the department already had the
resources. He was worried about the level of preparation
for winter weather.
Ms. Sanders deferred the question to DOT.
2:47:01 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, replied that over
the prior three years, DOT had requests appropriation for
extreme weather and catastrophic events. The appropriation
was roughly $7.6 million in 2023 and there was about $3
million remaining. The department had been changing the way
in which it addressed and approached the events as the
events became more intense and frequent.
Co-Chair Johnson added that DOT was scheduled to present on
extreme weather events to the House Finance Committee the
following day.
Representative Stapp referred to the $6 million DGF
appropriation for the Health Payment and Utilization
Database (HPUD). He asked where the $6 million in funding
came from and why the project was not completed in 2022 as
originally intended.
Ms. Sanders responded that the nature of capital projects
was that the projects occurred over an extended period of
time. She explained that it was a time-consuming process to
release contracts and begin the work.
2:51:29 PM
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT(via
teleconference), responded that the HPUD had been
implemented in December of 2023. The initial $1.5 million
in funding was expended at the point of implementation and
there was a supplemental request because there was between
$1.3 million and $1.5 million in costs per year in ongoing
database maintenance and management. The capital
appropriation would continue supporting the database.
Representative Stapp understood that the database was
specifically the collection of Medicaid data, Medicare
data, and AlaskaCare data. He commented that the state had
access to all three data sets. He asked why it would take
two years to get data that the state could already access.
Ms. Lager responded that she would have to check with the
insurance director and follow up with the information.
Representative Stapp noted that the data was collected
under DOA and the Division of Insurance (DOI) was separate.
He understood that the goal was for DOA to provide the
AlaskaCare data to DOI. He asked why it took two years to
provide the information.
Ms. Lager responded that she would follow up.
2:54:02 PM
AT EASE
2:56:11 PM
RECONVENED
Representative Hannan understood that the classification
studies were initiated by a commissioner. She asked if her
understanding was correct.
Ms. Sanders responded that the work was done by a
combination of the government's office, OMB, and DOA.
Representative Hannan understood that if a legislator
thought that DOA should do a classification study on its
payroll clerks and thought that the clerks should receive a
higher pay and the pay range should be higher, a budget
item directing the study could be added or the study could
be initiated from the department.
Ms. Sanders responded that she would not focus on the
ranges and steps of various positions. The important
element in the classification studies was the description
of the work that was being completed.
Representative Hannan understood that a legislator could
suggest that a classification of payroll clerks should be
done but OMB could also make the suggestion.
Ms. Sanders responded in the affirmative.
Co-Chair Johnson announced that the supplemental would be
heard the following day.
2:58:57 PM
AT EASE
3:01:21 PM
RECONVENED
Co-Chair Foster began chairing the meeting.
HOUSE BILL NO. 81
"An Act relating to the transfer of a title on the
death of the owner; and providing for an effective
date."
3:02:33 PM
REPRESENTATIVE GEORGE RAUSCHER, SPONSOR, introduced HB 81.
He read the sponsor statement (copy on file):
The process of probate in the state of Alaska can take
anywhere from six months to several years, and can
cost family members and beneficiaries thousands,
potentially tens of thousands of dollars in legal and
filing fees. While the State Legislature has already
taken great strides to reduce the costs of probate,
there is still much room for improvement.
House Bill 81 continues in spirit with the Uniform
Real Property Transfer on Death Act (URPTDA), which
unanimously passed both the House and Senate in 2014.
URPTDA created the Transfer on Death (TOD) deed, which
allows for nonprobate transfers of real property. TOD
deeds allow Alaskans to select a beneficiary who will
receive the property at their passing and removes that
property from the process of probate.
In 2016, legislation similar to HB 81 was introduced
but the legislation failed to pass that session. HB81
is nearly identical, although it expands the concept
to apply both to vehicles and boats that are issued
titles through the state.
HB81 continues the ongoing effort to reduce the costs
of probate for Alaskans and creates a streamlined
service through the DMV through which they can
designate beneficiaries for both cars and boats
through a simple form. The TOD titles will be
available for all boats and vehicles for which the DMV
provides titles, which also includes some mobile
manufactured homes under AS 45.29.102(66). The program
will be self-sustaining through fees.
At no cost to the state, HB 81 will allow countless
Alaskans to pass down boats, vehicles, and some
manufactured homes to beneficiaries with more ease,
and will help simplify and streamline the potentially
complicated, costly, and painful process of probate
following the death of a loved one.
RYAN MCKEE, REPRESENTATIVE GEORGE RAUSCHER STAFF, noted
there were testifiers online available to answer questions.
Representative Galvin understood that the bill would come
at no cost to the state. She asked if the Division of Motor
Vehicles (DMV) could provide information on whether the
bill would require additional paperwork or that staff work
overtime hours. She liked the bill but wanted to ensure
that it was clear whether more support would be needed.
3:06:59 PM
DAVID DUNLAP, VEHICLE PROGRAM MANAGER, DIVISION OF MOTOR
VEHICLES, DEPARTMENT OF ADMINISTRATION (via
teleconference), responded that there was a small cost
associated with the programing changes that would be
required in order for the DMV to facilitate the process. He
emphasized that the bill would not be excessively
prohibitive for the public.
Representative Hannan relayed that she was supportive of
the bill. She asked if there was a way to add airplanes
into the transfer of ownership upon death in addition to
vehicles and boats.
Representative Rauscher responded that he would be
amendable to the addition of planes if Representative
Hannan were to suggest adding it.
Representative Hannan noted that the remainder of the bill
addressed transfer of ownership through an already
established process. She had been asked by constituents how
ownership of airplanes was tracked or whether it was
federally regulated. She did not want to derail the bill or
overinflate the cost. She asked Co-Chair Foster if he could
comment because she was aware that he owned a plane.
Co-Chair Foster replied that he had to register his plane
with the Federal Aviation Administration (FAA). The
question might require some additional research but he was
certain that the FAA would be involved.
Representative Hannan reiterated that she did not want to
derail the bill and thought it would cover more Alaskans.
She noted that the only issue she had heard about relating
to the bill was the potentiality for airplanes to be
included.
Co-Chair Foster OPENED public testimony. He detailed the
way in which written testimony could be submitted to the
committee.
3:11:21 PM
GORDON WILLIAMS, ATTORNEY, KETCHIKAN (via teleconference),
testified that he was an attorney and a member of ATEP
[Alaska Trust of Estate Professionals] and his practice
focused on probate, estate planning, wills and trusts, and
trusts administration. Probate received a bad reputation
which he thought was unfortunate because the probate
process in Alaska was done online. He thought the bad press
on probate was mostly unwarranted. The probate on the
transfer of death title was a good process which with he
was intimately familiar. He was familiar with Colorado law
and relayed that Alaska law had safeguards that did not
exist in Colorado. In Alaska, people were required to go to
the DMV and obtain a new title with the beneficiaries on
board. There would also be a fee charge for the new title
which meant that there would be incoming revenue. The
fiscal note might not have taken into consideration the
fees collected. He noted that the transfer of death deed
took into account issues that occurred in probate. He
thought the bill would help expediate the transfer process.
Co-Chair Foster understood that Mr. Willams was a member of
"ATEP" and he asked what it was.
Mr. Williams responded that ATEP stood for Alaska Trust of
Estate Professionals, which was a troop of professionals
responsible for reviewing law. He thought that the
legislature had consulted with ATEP in the past.
3:16:01 PM
LINDA HULBERT, SELF, FAIRBANKS (via teleconference),
testified that she had been an agent for New York Life
Insurance Company for 35 years and she thought the bill
would be favorable for a vast number of Alaskans. She
explained that everyone needed to make a plan regarding
asset ownership. When a vehicle or boat was only in a
deceased individual's name, it was not possible to ensure
the vehicle or boat. She thought the bill would be an
important tool to help Alaskans make a plan and keep costs
down. She urged support for the bill.
3:18:46 PM
MATTHEW BLATTMACHR, PEAK TRUST, ANCHORAGE (via
teleconference), agreed with the comments made by Ms.
Hulbert and Mr. Williams. He added that the bill would
create more efficiencies within the Alaska Court System.
The probate process in Alaska was deficient in comparison
to many other states and the bill would help modernize the
process. The bill would also help allow more vehicles and
boats to pass through direct assignment rather than
involving the courts. He thought that the cost savings to
the courts would be more substantial than any costs
associated with implementing the bill.
Representative Hannan asked Mr. Blattmachr to describe the
process of transferring ownership of an airplane upon the
death of the owner.
Mr. Blattmachr responded that the transfer would be
federally regulated and not managed at the state level. He
did not think the bill would successfully change the
process. He understood that it would be helpful to include
airplanes in the bill, but he did not think federal
regulations would allow for any changes.
Representative Hannan asked if trusts for airplane owners
were generally established as a separate entity.
Mr. Blattmachr replied that airplanes were an important
asset for many Alaskans. He explained that airplanes were
not typically held in trusts for the majority of trusts he
administered.
Co-Chair Foster thought that it sounded like an act of the
U.S. Congress.
Representative Rauscher noted that he especially
appreciated the testimony from Mr. Williams because he made
the point that the majority of title transfers would help
pay for the process due to fee collection.
3:23:26 PM
Co-Chair Foster CLOSED public testimony.
HB 81 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 148
"An Act relating to the Alaska performance scholarship
program."
3:24:35 PM
REPRESENTATIVE JUSTIN RUFFRIDGE, SPONSOR, introduced
himself and relayed that he appreciated the committee's
time.
Co-Chair Johnson MOVED to ADOPT the proposed committee
substitute for HB 148, Work Draft 33-LS0624/U
(Marx/Bergerud, 1/30/24).
Co-Chair Foster OBJECTED for discussion.
Representative Ruffridge indicated that his staff would go
through the summary of changes in the committee substitute
(CS).
BUD SEXTON, STAFF, REPRESENTATIVE JUSTIN RUFFRIDGE,
reviewed the summary of changes (copy on file). The first
change was related to a new subsection within Section 2 of
the bill which would alter notification timelines. The
subsection ensured that students would receive information
about the Alaska Performance Scholarship (APS) program
earlier in high school, which could positively influence
students' decisions to attend a postsecondary institution
in Alaska. He continued that Section 4 and Section 7 were
related and would ensure that high schools that did not
award grades on a four-point or five-point scale would be
able to participate in the APS award program.
Co-Chair Foster OPENED public testimony.
3:28:37 PM
JANELLE GRENIER, NIKISKI HIGH SCHOOL, NIKISKI (via
teleconference), testified in support of the bill. She
relayed that Alaska needed nurses, teachers, accountants,
biologists, firefighters, and many other professions that
required secondary education. She thought that HB 148 would
help support students. She told kids at Nikiski High School
that APS was one of the best opportunities available. She
did not think there were many scholarships available and it
was increasingly hard for students to receive loans, and
parents often had to cosign. She relayed that 20 of the 40
high school seniors with whom she worked were at a 3.0
grade point average (GPA). Only one student had qualified
for the highest level of the SATs. She argued that in order
to do well on the SATs, students needed to have a solid
background in math. There needed to be incentives for
students to go to school in Alaska in order for there to be
a qualified workforce in the state. She added that it was
often difficult to access the SAT for students in rural
areas. College was expensive in Alaska and she had found
cheaper options for her students outside of the state. Many
of her students wanted to go to college in Alaska but could
not afford it.
3:33:35 PM
PAUL LAYER, VICE PRESIDENT FOR ACADEMICS, UNIVERSITY OF
ALASKA, FAIRBANKS (via teleconference), was calling in
support of the changes to the bill in the CS. He thought
the changes helped students in Alaska, particularly through
the increased accessibility of APS. The university would be
able to put together more competitive aid packages to help
keep more students in Alaska. The changed testing
requirements would increase testing eligibility and allow
for more scholarship packages to be offered to more
students. He thought that the current APS process worked
for the state and students, but the changes in the CS would
make it more accessible and help keep more students in the
state. He relayed that less than 25 percent of students
leaving the state for college would return to Alaska after
completing schooling, but more than 90 percent of APS
recipients stayed in Alaska after graduation.
3:35:38 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster WITHDREW the OBJECTION to the adoption of
the work draft for HB 148.
There being NO further OBJECTION, Work Draft 33-LS0624/U
was ADOPTED.
Representative Josephson asked about lines 20 through 23 on
page 2 of the bill, which would delete a portion of the law
stating that APS was for in-state students. The law
currently required that a student be in good academic
standing and study at a post-secondary institution in the
state to qualify for APS. He asked why Representative
Ruffridge disliked the portion of the law that he proposed
to delete.
Representative Ruffridge responded that much of the
language was only removed from the current placement within
the law and it was moved to a different section.
Representative Galvin referred to page 4, lines 10 through
20 of the committee substitute. She asked how the award
level amounts were determined as the amount did not seem to
be proportionate. She also wondered if there was
consideration of the cost of tuition at the time the award
program was initiated and if inflation had been considered.
Representative Ruffridge responded that the intent of the
bill was to drive an incentive for performance. He relayed
that the step-up provisions were in place to ensure that
students would continue to strive for the highest possible
performance award amount. He added that rising tuition
costs were the impotence to raising scholarship costs in
general.
3:40:13 PM
SENA EFFIRD, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, responded to Representative Galvin that she
understood that the dollar amounts for the awards were
proportionate. She referred to a PowerPoint presentation
"House Education Committee Bill HB 148" dated January 26,
2024 (copy on file) and moved to slide 9 to show the cost
of attendance changes from 2010 through 2023. The APS
increase of 47 percent aimed to mitigate the increases in
cost of attendance. She reiterated that about 96 percent of
APS recipients attended a university campus. The intention
was to arrive at a dollar amount that would keep the
scholarship as level as possible. If a student was in a
post-secondary program and reached the continuing
eligibility GPA, the student would have the ability to step
up to a higher level of the scholarship.
Representative Galvin asked if there was consideration of
the current students through a survey to determine whether
there was a trigger-point to encourage more students to
participate.
Representative Ruffridge responded that the Alaska
Commission on Postsecondary Education (ACPE) report (copy
on file) highlighted the issue of students choosing to
leave Alaska. He thought APS was not being utilized at its
highest level. There was more information from students
inside the report. Vocational and technical education
students were currently ineligible for APS, but the bill
proposed to change the eligibility requirements.
Ms. Effird responded that all of the anecdotal responses
received by DEED were included in the ACPE report. The
department generally did not hear from students that there
was a specific dollar amount that would keep students in
the state, but students reported there were many barriers
to becoming eligible for APS. The testing requirement had
been a particular barrier to rural students because
students were required to take the test in person with
qualified proctors. The APCE report showed that the
department waived the testing requirement from 2020 through
2021 during the COVID-19 pandemic and the eligibility
numbers jumped dramatically. Unfortunately, the usage of
APS did not experience a similar increase because students
were not going to secondary education school due to the
pandemic.
3:45:55 PM
Co-Chair Foster explained how to submit written testimony
for the bill.
Co-Chair Foster WITHDREW the OBJECTION. There being no
further objection, Work Draft 33-LS0624/U was ADOPTED.
HB 148 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the following day's
meeting.
ADJOURNMENT
3:47:51 PM
The meeting was adjourned at 3:47 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 148 APS_OutcomesReport_2024 1.27.24.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB 148 CS WorkDraft v.U 013024.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB 148 Support_Redacted as of 1.29.24.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB 148APS_At-A-Glance_2024 1.27.24.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB 148 presentation - updated 1-26-2024.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB0148 Summary of Changes 1.29.24 CS.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| HB148 CS Sponsor Statement 1.27.24.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 148 |
| 02.01.24 OMB House Finance FY2024 Supplemental Budget Overview.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 299 |
| OMB FY2024 Supplemental Bill Summary Spreadsheet - 1.30.2024 HFIN.pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 299 |
| HFIN OMB Supplemental Budget Follow-up to 02.01.24 Hearing 02.23.24 .pdf |
HFIN 2/1/2024 1:30:00 PM |
HB 299 |