Legislature(2023 - 2024)ADAMS 519
03/01/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB268 || HB270 | |
| Overview: Fy 25 Budget by the Department of Labor and Workforce Development | |
| Overview: Fy 25 Budget by the Department of Commerce, Community, and Economic Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 268 | TELECONFERENCED | |
| += | HB 270 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 1, 2024
1:35 p.m.
1:35:42 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 Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Cathy Munoz, Commissioner-Designee, Department of Labor and
Workforce Development; Dan DeBartolo, Administrative
Service Director, Department of Labor and Workforce
Development; Julie Sande, Commissioner, Department of
Commerce, Community and Economic Development; Hannah Lager,
Administrative Services Director, Department of Commerce,
Community and Economic Development; Micaela Fowler, Deputy
Commissioner, Department of Commerce, Community and
Economic Development.
PRESENT VIA TELECONFERENCE
Duane Mayes, Director, Division of Vocational
Rehabilitation, Department of Labor and Workforce
Development; Cathy LeCompte, Director, Alaska Vocational
Technical Center, Department of Labor and Workforce
Development.
SUMMARY
HB 268 APPROP: OPERATING BUDGET; CAP; SUPP; AM
HB 268 was HEARD and HELD in committee for
further consideration.
HB 270 APPROP: MENTAL HEALTH BUDGET
HB 270 was HEARD and HELD in committee for
further consideration.
OVERVIEW: FY 25 BUDGET BY THE DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT
OVERVIEW: FY 25 BUDGET BY THE DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT
Co-Chair Johnson reviewed the meeting agenda.
HOUSE BILL NO. 268
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making capital appropriations; making
supplemental appropriations; making reappropriations;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
HOUSE BILL NO. 270
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:36:49 PM
^OVERVIEW: FY 25 BUDGET BY THE DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT
1:36:56 PM
CATHY MUNOZ, COMMISSIONER-DESIGNEE, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, provided opening remarks on slide 2
of a PowerPoint presentation "FY2025 Department Budget
Overview," dated March 1, 2024:
The Department of Labor and Workforce Development
assists Alaskans with training and employment,
promotes safe working conditions, and facilitates
income replacement for those injured on the job or for
those temporarily out of work. We deliver services
through seven divisions including 14 job centers in
locations in southern Southeast to the Arctic.
Workforce development is a key component of our
mission. In the past year the Alaska Workforce
Investment Board facilitated the distribution of state
and federal training resources to regional Technical
Vocational Education Program (TVEP) recipients, 35
State Training and Employment Program (STEP) grantees,
and 8 construction academies in partnership with
Alaska's regional training network.
Since assuming the duties of commissioner, I have
challenged the department's leadership to come up with
innovative ways to reach Alaskans to fill current
labor market vacancies, to expand training
opportunities, and to improve client business
processes. Highlights of the past year include
increased individual training support through our 14
job centers by expanding the eligibility for some of
our federal training programming that comes through
the job centers as well as the distribution of
multiyear funding that was put into the FY 23 budget
by the legislature and the governor. We also revived
the Office of Citizenship Assistance to assist legal
immigrants and refugees with training and employment.
Those services have been offered through the
commissioner's office and we're hoping to expand. With
the FY 25 budget we have a request to put three
positions in Anchorage that will have outreach around
the state to assist new citizens.
We also implemented the first in the nation, the
Alaska Occupational Safety and Health Diversionary
Program to allow financial penalty waivers on first
time citations for small businesses. We're
implementing a career guide project with the
Department of Education, which will place career
guides at three of our job centers in Ketchikan,
Bethel, and Fairbanks. The guides will work closely
with schools in those districts around career
awareness, FAFSA completion, pre-apprenticeship, and
other opportunities connected to industry. We're also
partnering with the Alaska Safety Alliance on a cross-
industry workforce plan, which is projected to be
completed by the end of March and will be presented to
the Alaska Workforce Investment Board and then to the
legislature and to the governor. Finally, we hosted an
industry led convening around workforce development
last October and the information that we gained
through that convening was feeding into the update of
the cross-industry workforce plan.
Commissioner Designee Munoz thanked the committee for the
opportunity to present to the committee. She introduced a
colleague who would review the Department of Labor and
Workforce Development (DLWD) budget.
1:40:46 PM
DAN DEBARTOLO, ADMINISTRATIVE SERVICE DIRECTOR, DEPARTMENT
OF LABOR AND WORKFORCE DEVELOPMENT, moved to slide 3 and
reviewed the department's organization and core services.
The department was healthy from a programmatic delivery
standpoint, but it was grappling with vacancies and more
frequent turnover of positions. Fortunately, the department
prided itself on a highly collaborative culture, which
helped to manage the issue and work on strategies to
improve recruitment and retention. The department had 680
permanent full-time positions, 43 permanent part-time, and
21 temporary positions. The slide showed the core service
portions of DLWD's mission with protecting workers
accounting for 15 percent of the budget, income replacement
accounting for 21 percent, leadership and support
accounting for 11 percent, and workforce development
accounting for 52 percent.
Mr. DeBartolo noted there were numerous DLWD staff
available online to answer questions throughout the
presentation.
1:42:24 PM
Mr. DeBartolo turned to slide 4 titled "FY2025 Operating
Budget Comparison." The department's proposed FY 25 budget
was $164,900,000. He detailed that just under $18 million
was interagency authority (IA) shown under the "other" fund
category reflected in yellow in the bar chart on the slide.
He highlighted that IA was duplicative authorization, which
allowed the department to spend funds from other sources.
The larger changes for FY 25 involved IA, which was
reflected in a 22 percent increase in other funds. He
reminded the committee that DLWD had the third lowest
allocation of unrestricted general funds (UGF), which meant
the department had lower flexibility with its UGF
allocations as they were tied to state spending
requirements, federal programs, designated program
receipts, and grant matching.
Mr. DeBartolo addressed reductions in designated general
funds (DGF) and UGF on the slide. He explained that the DGF
was tied to the decrement in available funds for the TVEP
program, which was set to sunset on June 30, 2024. He
explained that if the program was reauthorized there would
be a fiscal note to reestablish the funding for FY 25 and
beyond. The UGF reduction was not a cut to the department
but reflected an expiration of multiyear funds granted to
the department for FY 23 and FY 24 at a total of $7
million. The department had granted the funds through
numerous mechanisms throughout the department and intended
to have the funds fully expended by the end of FY 24. He
noted that proposed changes from FY 24 were summarized on
slides 11 and 12.
1:44:50 PM
Mr. DeBartolo moved to slide 5 titled "Commissioner and
Administrative Services." The commissioner's office and the
Administrative Services Division (ASD) covered leadership,
budget and finance, human resources, and facility and
procurement functions. Additionally, DWLD housed the Alaska
Labor Relations Agency (ALRA), the Alaska Workforce
Investment Board (AWIB), and the Resources Analysis Section
responsible for producing the monthly Trends publication
(available on the department's website).
Mr. DeBartolo shared that AWIB hosted an industry led
convening on workforce development in Anchorage in the
current year. In 2023, ALRA resolved seven unfair labor
practice cases. He noted that the three-person office put
substantial time into each of the cases. Additionally, the
department successfully applied for and received a state
apprenticeship expansion formula grant for building
stronger relationships between secondary schools,
employers, and apprenticeship opportunities.
Mr. DeBartolo pointed to the last bullet point on the slide
"Technology Services." The department was requesting
$608,000 in IA in FY 25 to stand up a technology services
component under the ASD. He explained that all of the
department information technology (IT) staff were located
inside the ASD; however, some of the positions were
scattered in the early days of the [Department of
Administration] Office of Information Technology's
initiatives. The department was receiving four of the five
help desk positions it had surrendered. Department
leadership agreed it was best to put all of the
department's IT services back under one component, making
it easier to manage from a financial management and
personnel standpoint. He noted the information was
summarized on slide 10.
1:47:15 PM
Mr. DeBartolo addressed the second to last bullet point on
slide 6 "Office of Citizenship Assistance." The Office of
Citizenship Assistance (OCA) was housed under the Office of
the Commissioner and was responsible for assisting legal
immigrants and refugee families with training and
employment. The office was originally codified in statute
in 2004 to provide employment information and support as
well as referrals to public and private resources to people
who legally reside in Alaska but were not U.S. citizens.
Since that time, OCA had received limited funding and had
been unutilized for over a decade. Approval of the funding
request would result in a new three-person component
located in the department's midtown job center in Anchorage
to serve Alaskans statewide. The $437,000 UGF request would
cover wages, supplies, publication materials, and outreach.
Co-Chair Johnson asked about some of the immigration to
Alaska. She stated her understanding Alaska had a number of
Ukrainian immigrants particularly in the Mat-Su Valley. She
asked if the department for a general idea of the number of
immigrants coming to Alaska in the past several years. She
wondered about any predictions for immigration to the state
in the future.
1:49:44 PM
Commissioner-Designee Munoz replied that the past year the
state had welcomed approximately 700 Ukrainians through a
sponsorship program. She relayed that just recently there
had been a federal announcement that asylees could get a
two-year extension to their legal time period.
Co-Chair Johnson asked how many immigrants the state may
have in coming years designated by a federal action.
Commissioner-Designee Munoz did not have the exact number
but it was a goal of the governor to welcome Ukrainian
citizens. She stated that many of the families coming to
Alaska brought skills. The OCA would assist individuals in
translating transcripts, helping them get settled, and
helping them with employment training. She would follow up
with the information.
Co-Chair Johnson did not believe the immigration number
stopped with 700 people the past year. She thought she
heard there were more individuals likely coming. She stated
that many of the individuals were relocating to the Mat-Su
Valley because they were relocating to places that already
had a community of individuals from their home country. She
thought there was great opportunity, but she was concerned
about strain on the state's services such as schools. She
wondered if there was some responsibility the federal
government may have or grants that needed to be pursued to
ensure people had the services they needed.
1:52:24 PM
Commissioner-Designee Munoz agreed it would be helpful for
the federal government to commit support to help
individuals get resettled and to be successful. She
reiterated her earlier statement that the individuals were
coming via sponsors and generally had a place to stay, were
eager to get to work, and many had technical and medical
skills. The department wanted to be ready and assistive as
individuals transitioned to Alaska.
Co-Chair Johnson suggested that if most of the resettlement
was happening in Mat-Su perhaps it would be a good location
for the office. She would like to see numbers showing where
individuals were being resettled to.
Commissioner-Designee Munoz would follow up with
information on where Ukrainians were settling. She knew a
lot of families were in the Delta region and other parts of
the state as well.
Representative Ortiz asked what contributing factors caused
the OCA to be underutilized in the past. He referenced the
request for three positions to be located in Anchorage and
asked if it was the best location for increased
utilization.
Commissioner-Designee Munoz responded that the department's
vision was to ensure a strong outreach component so that
individuals would be getting out to Southeast Alaska,
Delta, and Fairbanks. She relayed that DLWD was flexible in
looking at where the positions would be placed. The current
plan was to place the positions at the midtown job center
in Anchorage because it was the population center and most
of the individuals [immigrants and asylees] were coming
through Anchorage.
Representative Ortiz asked why the office had previously
been underutilized.
Commissioner-Designee Munoz replied that OCA had been
established in 2005. She explained that an individual in
Juneau, Rafael Castanos, had championed the effort and
believed strongly that a state office was needed to help
people resettle successfully in Alaska. The office had been
established in statute under the Office of the
Commissioner. She elaborated that the office got going for
about six months and fizzled out due to a lack of interest
in maintaining the work. She explained that there was now a
great need as there were many Ukrainians coming to Alaska.
She elaborated that as long as Alaska had been a state it
had welcomed people from around the world including many
Filipinos. She highlighted there were many Filipino
teachers in Alaska on J-1 visas. She relayed that DLWD saw
the office as an opportunity to help individuals integrate
and be successful.
1:56:47 PM
Representative Coulombe observed that the three new
positions would be funded with UGF. She saw that the
department identified three vacant positions from other
allocations for reclassification. She asked if the
department was funding the new positions with vacant
positions but asking for general funds.
Commissioner-Designee Munoz replied that the positions had
been vacant for a long period of time that DLWD identified
in the budget for reclassification.
Mr. DeBartolo added that the department had been going
through the exercise each year and recently the legislature
(the House in particular) showed an interest in positions
that had been vacant for a long period of time. When the
department knew it needed new positions it identified
existing positions that could be reclassified. The three
specific positions had been vacant for 24 months or
greater, two were 100 percent federally funded, and one was
largely UGF funded. He explained that the three positions
would be reclassed if the legislature was supportive, but
it would need general funds to pay for the salaries.
Representative Galvin referred to OCA and understood there
had been a focus on Ukrainian individuals. She remarked
that she had been hearing about a lot of needs for language
access to get into the workforce. She stated there had been
numerous individuals coming from Afghanistan, many African
countries, Polynesian countries, and the Philippines. She
highlighted that due to the skills of incoming individuals
there was an almost immediate opportunity in healthcare,
childcare, and various trades. She noted that Anchorage was
often the first hub for individuals and there seemed to be
a nucleus of individuals who would greatly appreciate
having the opportunity to get immediate access to jobs. She
supported the item in the budget. She referenced
individuals' associated language and the high need in
Anchorage. She mentioned peer leader navigators working
within the healthcare field in the refugee community
traveling around Alaska.
2:01:06 PM
Representative Hannan asked if there had been any analysis
of how many people the department could support to gainful
employment in a year.
Commissioner-Designee Munoz answered that every year the
department did a 10-year forecast targeting predicted jobs
in each sector of the economy. She asked if it was the
information Representative Hannan was referring to.
Representative Hannan referenced the number of 700
Ukrainians [coming to Alaska in the past year] mentioned by
Commissioner-Designee Munoz. She surmised that some of the
individuals were kids and not in the workforce. She
considered that if the state was moving 1,000 people
through the OCA and supporting them to achieve gainful
employment in Alaska at an average of $437 per head it was
a good investment. The department had not heard any sector
in the past two years had too many workers. She stated it
was difficult to speculate different skills, industry, and
demands; however, if 1,000 people were moved into gainful
employment it would be a chief investment into the state's
economy that was well worth it. She was excited to see the
outcome and highlighted the goal of DLWD to support people
into gainful employment. She noted there was a broad
diversity of needs people may have including basic
language, transcription, and licensure issues. She
supported the increment.
2:03:15 PM
Mr. DeBartolo turned to slide 6 titled "Workers'
Compensation." The mission of the Workers' Compensation
Division was to ensure the efficient, fair, and predictable
delivery of indemnity, medical, and vocational
rehabilitation benefits intended to enable workers to
return to work at a reasonable cost to employers. The
division was funded almost entirely with collected DGF. The
division was challenged by the impact of the division's
success on revenue collections. He explained that workers'
compensation operations were supported by revenue that was
generated by assessing a 2.5 percent fee against the
premiums paid by employers for workers' compensation
insurance. He elaborated that as DLWD worked to increase
worker safety, the premiums decline due to a decline in
risk. Consequently, program revenue also declined. He
pointed out that the division's special investigations unit
finalized a record 182 investigations with uninsured
employers the previous year. He detailed that 118 of the
cases were settled without litigation, and three were
resolved with a decision and order.
Mr. DeBartolo relayed that there were two proposed changes
associated with workers' compensation. First, there was a
$518,000 FY 24 supplemental request for the Workers'
Compensation Benefit Guarantee Fund. He noted that a
summary was located on slide 12, line 2. The fund collected
fines associated with uninsured employers and utilized the
funds to guarantee workers' compensation benefits for
injured workers. Through FY 21, the funds were historically
restored through the reverse sweep process; however, it was
no longer the case beginning in FY 22. Since then, there
had been several larger and more impactful claims against
the fund and new revenues had not been adequate to keep
pace. He noted that the failure to timely pay claims
carried a 25 percent penalty to the state with associated
interest.
Co-Chair Foster asked when the supplemental budget needed
to be passed. He asked for verification that the state was
already in the fine period.
Mr. DeBartolo responded that he did not believe the fine
period had commenced. He explained that the department was
anticipating payment claims in the current fiscal year
based on what was in pipeline. The department was currently
collecting revenue. He explained that if the department was
anticipating additional funds it could get by. Once the
department was unable to pay fines in cash, it could face
fines within 30 days.
Co-Chair Foster noted the supplemental would likely not be
complete until the end of session with the regular budget.
He thought it sounded like that timeframe was acceptable.
2:07:22 PM
Mr. DeBartolo reviewed the second change associated with
workers' compensation. The request was for $118,000 in
authority in the Workers' Safety Compensation
Administration Account in the FY 25 budget. The increment
was related to a salary study for workers' compensation
hearing officers. The study was completed several months
back and the Division of Personnel had approved the
increase to pay the individuals, most of whom had legal
degrees.
Mr. DeBartolo addressed the Division of Labor Standards and
Safety on slide 7. The division's mission was to create
safe and legal working conditions. Primary functions
included wage and hour investigations; mechanical
inspections of items such as elevators, boilers, and
electrical work; and occupational safety and health (OSH)
consultation and enforcement. The division relied primarily
on collected DGF revenue for operations with some federal
funds and UGF match making up most of the remaining budget.
He highlighted that wage and hour provided more than 4,679
volunteering appliance briefings to employers and collected
$153,000 in wages going to Alaskan workers. Additionally,
mechanical inspections conducted 6,748 boiler, elevator,
electrical, and plumbing inspection, reviewed and approved
7,174 third-party inspections, identified 1,075 code
violations, and conducted 827 on-site construction project
visits to ensure contractor licensing and certificate of
fitness compliance. He relayed that all of the work
resulted in 72 enforcement actions. Additionally, OSH
conducted 323 occupational safety and health consultation
visits and 338 enforcement inspections. He pointed out that
OSH provided training to 7,940 workers and customers on
occupational safety and health standards. There were no
proposed changes to their budget for FY 25.
2:09:53 PM
Mr. DeBartolo discussed the Division of Employment and
Training Services (DETS) on slide 8. The division worked
with business industry to build a trained and prepared
workforce by providing labor exchange, employment training
services, and unemployment insurance to Alaskans and
Alaskan businesses. He relayed that DETS was the largest in
the department with the majority of funding for operations
coming from the federal government. The majority of the
work fell into two categories: 1) workforce service and
development and 2) unemployment insurance. Since the
pandemic, the division had focused its efforts on meeting
or exceeding acceptable levels of performance in critical
areas such as first pay timeliness and eligibility
determination quality. Many had commented in the past on
how the work had declined during the pandemic, but it was
due to the share volume of the emergency programs the
department had to put in place and the massive spike in
applications received by the division.
Mr. DeBartolo highlighted that the DETS job centers had a
banner year for training. Through December 2023 the
department provided $5.1 million in training funds to
individuals seeking financial assistance. By comparison, in
December 2022, the department had provided $2.7 million in
training funds. The difference reflected an increase of 87
percent year-over-year. The department recently signed an
agreement with the U.S. Department of Defense (DOD) to
become a SkillBridge partner. The DOD program was an
opportunity for service members to gain invaluable civilian
work experience through industry training, apprenticeship,
or work experience during their last 180 days of service.
Representative Galvin asked about training services. She
was especially interested in vacancies in the education
field. She spoke about the deficit of teachers due to
departure from the job for other work and retirement. The
individuals included teachers, aides, and others. She asked
if there were any innovative or historical ways to grow the
workforce.
Commissioner-Designee Munoz replied that one innovative
project the department was working on was through the
apprenticeship program. The program was working with
Bristol Bay and the Yukon-Kuskokwim Delta. The areas were
interested in using apprenticeship partnered with DLWD as a
means to train young people in the communities. The
department provided support for technical instruction.
Under the specific scenario, the school district was the
partner. She believed it would be a great tool that could
be used throughout the state.
Representative Galvin asked about the goal related to the
number of teachers. She asked if the department would
consider working with more partners throughout the state.
Commissioner-Designee Munoz replied that the department
wanted to partner with other districts on the opportunity.
She did not have the number but would follow up.
Mr. DeBartolo continued to discuss slide 8 related to DETS.
There were two proposed changes for DETS in the FY 25
budget (both summarized on slide 11). First, the department
was requesting $2.4 million in interagency authority to
receive funds from the Department of Transportation and
Public Facilities (DOT). He explained that DOT received
federal funds for workforce training as part of the
Infrastructure Investment and Jobs Act (IIJA). He
elaborated that DOT would partner with DLWD's workforce
services component to grant funds to individuals through
the Alaska Job Center Network. The funding would cover
costs directly associated with training and supportive
services while in training. The partnership also allowed
DOT to take advantage of DLWD's well established
distribution network and directed federal training dollars
to Alaskans for high demand infrastructure jobs.
2:15:12 PM
Mr. DeBartolo addressed the second budget request
pertaining to DETS on slide 8. The $480,000 UGF request was
the department's only capital budget request for FY 25 and
would allow for a full analysis of the unemployment
insurance (UI) mainframe. The current mainframe was over 30
years old and used a program language called COBOL, which
was significantly outdated and there were a limited number
of programmers with expertise in the language. He explained
that the department wanted to do an analysis prior to
asking for significant funds for replacement of the entire
UI mainframe. The analysis would take inventory of
approximately 1,000 applications, document the
requirements, and receive an informed recommendation on the
path forward. The initial funds would be to craft a
recommendation.
Representative Tomaszewski stated that the request sounded
familiar, but he did not recall hearing about it in the
finance subcommittee. He asked if it had been a request the
previous year.
Mr. DeBartolo answered that the department did not request
the funds the previous year.
Representative Stapp believed Representative Tomaszewski
was thinking about the Department of Health (DOH) that had
run off COBOL for EIS [Extend Internet System]. He stated
that DOH had started AIRES with an initial fiscal note of
$700,000. He stressed that the program had used $70 million
in federal and state funding and still did not work. He
implored DLWD to pick a software system that was tested and
worked.
2:17:55 PM
Commissioner-Designee Munoz responded that the purpose of
the request was to ensure the department picked the right
program and infrastructure in order to avoid going down the
wrong path.
Representative Stapp asked the department to ensure the
system worked before the state paid for it.
Commissioner-Designee Munoz agreed to make sure the system
worked before the state paid for it.
Mr. DeBartolo discussed the Division of Vocational
Rehabilitation (DVR) on slide 9. He relayed that each year
the division helped hundreds of Alaskans with disabilities
prepare for, obtain, and keep good jobs. He elaborated that
if Alaskans with disabilities wanted to work or keep
working and they had a physical, intellectual, or mental
condition that made it difficult, they may be eligible for
the department's vocational rehabilitation program.
Additionally, the Mature Alaskans Seeking Skills Training
program (MASST) enabled Alaskans over 55 years old to
receive assistance seeking jobs or gain employment skills.
He highlighted that DVR was primarily funded by federal
dollars with the majority of state UGF representing
matching funds. He detailed that in FY 23, 1,951
individuals with disabilities received services, 1,782
individuals received information and referral services, and
292 individuals had exited the program as employed. The
average hourly wage for DVR clients was $18.66 for those
who exited the program in FY 23. Additionally, the
Disability Determination Services Section achieved 97.9
percent performance accuracy, which was best in the nation
for the second consecutive year. He noted the national
average was 94 percent.
Mr. DeBartolo addressed the department's one FY 25 funding
request for DVR (summarized as item 4 on slide 11). He
explained that the administration component within DVR was
funded through a federal indirect rate based on the number
of filled positions at a point in time. Due to a high
vacancy rate in client services and disability
determination sections, it was 24 percent and 37 percent,
respectively. Consequently, DVR had been unable to collect
$211,000 in federal indirect revenue in the past year and
the division had an estimated need of a one-time increment
of $97,000 in general funds for FY 25 to continue funding
its filled administrative positions. The department was
requesting a one-time increment with the anticipation of an
improved vacancy rate. The entire Disability Determination
Services Section was under a job classification review by
the DOA Division of Personnel, which DLWD believed would
result in some positions being classed appropriately. He
noted it should make filling the positions much easier.
Representative Coulombe stated her understanding that the
department could have gotten more federal funding but there
were not enough people [staff] to get the funding.
Mr. DeBartolo agreed. He explained that the federal formula
required the positions to be filled. From the federal
government's perspective if the positions were not filled
it meant the commensurate admin could go away. He
elaborated that there were only a handful of admin staff in
a division like DVR. There was still work to be done and
the department was trying to avoid laying people off.
2:22:10 PM
Representative Coulombe asked why it was not all paid for
with federal funding. She asked if there were parts of the
positions that could not be paid with federal funds.
Mr. DeBartolo answered that federal funding received for
client services and the other services within DVR required
a state match. He noted that the majority of the UGF shown
on slide 9 was matching funding.
Representative Coulombe asked for the total matching funds
required.
Mr. DeBartolo asked if Representative Coulombe was asking
for the percentage or dollar amount.
Representative Coulombe replied she was interested in the
dollar amount.
DUANE MAYES, DIRECTOR, DIVISION OF VOCATIONAL
REHABILITATION, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT (via teleconference), answered that the federal
award was about 79 percent [of the DVR funding] and
matching state funds were about 21 percent. He could follow
up with more information.
Mr. DeBartolo discussed the Alaska Vocational Technical
Center (AVTEC) budget on slide 10. The center was located
in Seward and was the only 24/7 facility within DLWD. The
center's mission was to deliver flexible, accessible, and
affordable workforce training that is responsive to the
dynamic needs of business and industry and served Alaska's
diverse communities. The center was funded through a
combination of tuition and fees, UGF, DGF, and TVEP. The
center's training was offered as a workplace simulation
model where students spent all day in training with most of
their time spent applying and practicing skills in shop as
if on the job. There were 90 and 180-day terms where
students received 600 to 1,200 hours of direct hands-on
training at half the cost and one-third the time of
traditional postsecondary institutions. Over 90 percent of
the students who came to AVTEC completed training and over
90 percent of those students were employed within 18
months. Only 6.7 percent of AVTEC students used student
loans with an average debt load of about $6,132 per
student.
Mr. DeBartolo pointed out AVTEC highlights for FY 23. He
relayed that over 100 high school students participated in
the introduction to nautical skills class. He elaborated
that a partnership with Trident Seafoods offered customized
training for their facilities and maintenance employees.
Additionally, AVTEC completed a process to establish a
federally registered apprenticeship in information
technology, which was the first and only one in the state.
Capacity had been increased at AVTEC's welding facility
because it was one of the center's most high-demand
programs. He informed the committee that AVTEC had no
budget proposals for FY 25.
Co-Chair Foster considered that the TVEP program was set to
sunset and asked how much of AVTEC's budget came from TVEP.
Commissioner-Designee Munoz replied that it was about 17
percent of the allocation or $2.7 million to AVTEC.
Co-Chair Foster asked for verification that it was 17
percent of the TVEP allocation. He asked if the number was
included in the $5.3 million in UGF funding or in the [$3.7
million in] DGF funding [shown on slide 10].
Mr. DeBartolo replied that it was included.
2:26:49 PM
Mr. DeBartolo noted that slides 11 and 12 were reference
slides for the proposed operating and capital budget
changes he had discussed throughout the presentation. He
addressed one remaining item shown on slide 12 that he had
not yet discussed. Funding for the department's STEP
program was competitively granted through the Alaska
Workforce Investment Board. The calculations for available
revenue were redone multiple times per year. The slide
included a request for additional authority in the FY 24
supplemental to distribute additional funds to grantees to
use for training. The slide also showed a request to
increase the total available allocation for FY 25. He noted
that the applications for FY 25 would be coming in soon.
Co-Chair Foster looked at the ~$1.6 million increment for
STEP in FY 25. He asked how much the total STEP grants were
in FY 23.
Commissioner-Designee Munoz answered that the total was
approximately $7 million per year. She explained that $6
million went to the competitive grant process and about $1
million went to the job centers for individual training and
support.
Representative Coulombe thanked the department for the
AVTEC tour the past summer. She described AVTEC as an
amazing facility. She asked about the department's funding
increases to facilities maintenance. She noted that every
department that maintained a facility was looking for some
increase. She remarked that the governor's request was
about $15 million for AVTEC. She asked for the number of
students in AVTEC and the capacity.
Commissioner-Designee Munoz answered that the number was
much greater than the number of students on site because
AVTEC did outreach training to employers to design employer
specific trainings. She thought the number was close to
1,000. She deferred the question to the AVTEC director for
more detail.
2:29:45 PM
CATHY LECOMPTE, DIRECTOR, ALASKA VOCATIONAL TEHCNICAL
CENTER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT (via
teleconference), answered that between the Alaska Maritime
Training Center and the nine accredited programs, AVTEC
served over 1,200 students annually.
Representative Coulombe asked how many of the students were
physically on the AVTEC campus or staying in Seward.
Ms. LeCompte replied that the students all stayed in Seward
in the AVTEC dormitories, ate in the cafeterias, and lived
on campus. Training for the maritime center ranged from one
day to 12 weeks. The accredited programs ranged from four
to eight months.
Co-Chair Foster thanked the department for the
presentation.
2:31:19 PM
AT EASE
2:32:34 PM
RECONVENED
^OVERVIEW: FY 25 BUDGET BY THE DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT
2:32:44 PM
JULIE SANDE, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, was honored to be
present to represent the Department of Commerce, Community
and Economic Development. She described the department as
the "little engine that could" and explained that DCCED was
small but had many things under its purview. She introduced
colleagues at the table. She provided a PowerPoint
presentation titled "Department Overview: FY2025 Budget,"
dated March 1, 2024 (copy on file). She reviewed the
department's mission on slide 2 to promote a healthy
economy, strong communities, and to protect consumers
through the department's seven core divisions and eight
corporate agencies. She turned to the department structure
on slide 3. The grey boxes reflected the core divisions
including Administrative Services, the Alaska Broadband
Office, Banking and Securities, Community and Regional
Affairs, Corporations, Businesses and Professional
Licensing, Investments, and Insurance. She noted that the
department had taken on the Broadband Office two years
back. The teal boxes reflected the corporate agencies under
the department including the Alaska Energy Authority (AEA),
Alaska Industrial Development and Export Authority (AIDEA),
Alaska Gasline Development Corporation (AGDC), Alaska Oil
and Gas Conservation Commission (AOGCC), Alaska Seafood
Marketing Institute (ASMI), Alcohol and Marijuana Control
Office (AMCO), the Regulatory Commission of Alaska (RCA),
and the Alaska Railroad Corporation. She noted the Alaska
Railroad Corporation fell outside the Executive Budget Act.
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, reviewed
the FY 25 governor budget on slide 4. She pointed to the
bar chart in the upper right portion of the slide and
highlighted that DCCED had been home to a number of
different special appropriations over the years. She
remarked that sometimes when looking back at prior year
actuals or activity there were some items in the budget
that meant the comparisons were not apples to apples. The
department received $185 million in federal authority,
which was primarily passed through to local communities.
Additionally, the department received seafood processors
grants it issued over that past year that caused a one-time
bump in the department's budget. She pointed to the yellow
portion of a pie chart in the upper left of the slide
reflecting designated general funds (DGF). The bulk of the
department's budget was funded from receipts collections
and licensing fees collected from the industries regulated
by the department. She elaborated that people had to pay to
be licensed and the department used the funds to pay for
the operations. She pointed to the small blue segment
reflecting undesignated general funds (UGF). She noted that
DCCED was the smallest consumer of UGF in the state.
2:37:32 PM
Ms. Lager provided a historical budget lookback from FY 17
to FY 25 on slide 5. She highlighted that the department's
UGF spending was down from where it had been in FY 17 and
more dramatically down from where it had been 10 to 15
years back. She briefly pointed to a swoop chart titled
"FY2025 Operating UGF by Department" on slide 6 showing
that DCCED was the smallest consumer of UGF in the state.
She turned to slide 7 "Fund Sources and Divisions by
Department." She believed when focusing just on the UGF it
missed some of the complexity in the department. The
department was small and efficient, but it was also home to
the highest number of funding sources of any state agency
as well as the highest number of divisions. The department
housed 15 agencies in addition to other special
appropriations; the department was small, but complicated.
Ms. Lager highlighted that the department only spent just
over $10 million and it had collected and deposited over
$100 million in FY 23. She relayed that the department
generated revenue, the bulk of which was insurance premium
taxes in addition to some other small slices that were
deposited into the general fund each year.
Ms. Lager began reviewing budget changes for DCCED's core
divisions on slide 10 starting with the commissioner's
office. The department received a $50,000 federal award for
FY 24. The slide showed a request of $50,000 in state
matching funds for the FY 24 supplemental and $50,000 for
the FY 25 budget. The department was also requesting two
positions at a salary range 8 and 10 to create educational
opportunities for students to work at the department and
learn how to get into state government. The goal was also
to create a pipeline to bring people into DCCED.
2:40:20 PM
Ms. Lager turned to slide 11 and reviewed budget changes
for the Division of Administrative Services. The department
was adding one accountant position in FY 25. She explained
that DCCED had taken on a number of new programs over the
past several years including AOGCC in FY 19, multiple
steams of federal and non-federal COVID-19 funding, and
broadband funding. The position would help manage the
funds.
Ms. Lager moved to slide 12 and discussed the Alaska
Broadband Office budget. The purpose of the office was to
ensure there was broadband access for all Alaskans. The
office was currently undertaking planning activities. She
elaborated that the office was making certain the state had
good maps showing served, unserved, and underserved areas.
The office was working with partners to plan for incoming
funding, setting up grant programs, and receiving feedback
on the process to ensure it was not missing any pieces and
that the planned projects were responsive to community
needs. In FY 25, large federal capital budget dollars
exceeding $1 billion would flow into the department for
grants to the Broadband Equity Access Deployment (BEAD)
program and the Digital Equity Program. The projects would
go into implementation and the department anticipated the
first deployments to be complete as soon as FY 28.
Representative Galvin observed the large amount of work
done by the department. She asked if the anticipated
completion in FY 28 was because the funds were not yet
coming in or because it took that long for the particular
project in terms of scope.
Ms. Lager anticipated the first grants going out in fall of
2024. She stated it took some time and the projects would
primarily be capital projects to extend broadband
infrastructure out. The projects would need to correspond
with construction seasons and parts and supplies ordered.
2:42:31 PM
Ms. Lager turned to slide 13 and continued to discuss the
broadband office. She remarked that there were many
different pots of federal funding for broadband coming into
Alaska. She highlighted the yellow box shown at the top of
the slide reflecting funding coming through DCCED. The
Broadband Equity Access Deployment included slightly over
$1 billion in federal funding coming to DCCED. The Digital
Equity Program could bring up to $15 million. Additionally,
the department had received a small Economic Development
Administration statewide planning grant a couple of years
back that was funding some planning activities that federal
funds did not cover. The department also had Coronavirus
Capital Projects funds, which were previously appropriated
to the Office of Management and Budget (OMB) and were
passing through DCCED for grant administration. She noted
there were federal funds coming in for many other entities.
The link at the bottom of the slide included additional
information for other federal funding available for
broadband.
2:43:35 PM
Ms. Lager advanced to slide 14 and continued to discuss the
broadband office FY 25 budget. The funds were primarily
from capital improvement project receipts because the
broadband appropriations were capital in nature and the
department was running operating activity from the capital
projects. The first two items were technical and reflected
a continuation of prior-year funding. The department was
also adding a project coordinator and contractual support.
She stressed the funding amounts were substantial and there
were numerous milestones and projects. The position would
help the department track and report on the funding
appropriately. The budget included funding for broadband
mapping and program support under a reimbursable services
agreement (RSA) to the Division of Community and Regional
Affairs (DCRA). She explained that the broadband office was
small and only housed five positions without a lot of
capacity to learn mapping. The mapping staff under DCRA
would take on the responsibility. She looked at the last
two items on the slide for permit coordination in other
departments and right-of-way permit coordinators. She
explained that both were working with other permitting
agencies to fund likely up to six positions in other
agencies. She detailed that some would go the Department of
Transportation and Public Facilities (DOT) and some would
go to the Department of Natural Resources (DNR). She stated
that depending on the projects moving forward it may look
like DCCED needed permitting support from the Department of
Fish and Game (DFG) or the Department of Environmental
Conservation (DEC). The idea was to plan ahead to support
planning activities.
Representative Coulombe referenced federal funding sources
Ms. Lager had discussed on slide 13. She asked how much the
department had received for broadband in FY 24.
Ms. Lager answered that funds received through FY 24
related to the initial BEAD planning grant. She explained
that the federal grant provided the state with $5 million
over a multiyear period and the department was on year two
of the funding to support planning activities. The bulk of
the BEAD funding would come in FY 25.
Representative Coulombe asked if she was referring to FY
25.
Ms. Lager replied affirmatively.
2:46:11 PM
Ms. Lager discussed the Division of Banking and Securities
budget on slide 15. She noted there were no significant
budget changes in the division for FY 25. The division was
important to the department and provided an essential
service to the state's economy ensuring there were safe,
functioning banks, and helping to protect consumers from
financial harm. Over the past year the division had been
working on a large prosecution Tycoon Trading Co. that
impacted over 140 Alaskans who experienced $26 million in
losses. The actions taken through the division were
impactful for individuals in addition to the work it did to
support the framework of the economy. The division also
regulated some of the more unique financial tools including
mobile payment apps (e.g., Venmo and PayPal) and
cryptocurrency.
Representative Tomaszewski asked how the department knew
the number of people buying cryptocurrency. He remarked
that it was on a secure ledger.
Ms. Lager responded that she did not have the exact answer
of how it was done. The Division of Banking and Securities
worked closely with national organizations tracking
cryptocurrency on a larger level. She would follow up with
more detail.
Co-Chair Foster thought it was likely a very conservative
number. For example, Coinbase did a lot of its required tax
stuff. He did not know that Alaska had access to the IRS
documentation.
Commissioner Anderson responded that Director Robert
Schmidt would follow up with a thorough response to the
committee.
2:48:15 PM
Representative Hannan looked at slide 15 and asked what the
one state-chartered credit union was.
Ms. Lager believed it was Credit Union One, but she would
follow up to confirm.
Ms. Lager addressed the DCRA budget on slide 16. The
division focused on maintaining strong communities and
healthy economies. She stated it was necessary to have
functioning communities for the economy to work. The slide
listed a number of different programs under the division.
She highlighted a QR code which directed users to the
community database, which included digital data on
communities such as local leadership, population, and more.
2:49:25 PM
Ms. Lager moved to slide 17 and continued to discuss DCRA.
The division ran a $1.2 billion grant portfolio annually.
The FY 24 supplemental included $3 million for grants to
food banks and food pantries across Alaska. The base
operating budget included a $400,000 grant to Alaska Legal
Services (the same amount from the general fund as the
previous year) and a $296,000 grant to Alaska Legal
Services Corporation from the Civil Legal Services Fund
based on a formula for prior year civil collections by the
Alaska Court System. She highlighted a $185,000 general
fund increment for the Alaska Marine Safety Education
Association. She noted the increment was a slight reduction
from FY 24. She elaborated that DCCED was switching the
grant over to be based on the amount of prior year
collections. The funding source would be general funds in
FY 25 and the following year the department would have
prior year collections to appropriate and the source would
switch back to boat receipts. The department wanted to make
the amount predictable for grantees; it had varied over the
years and the grantee had to wait until near the end of the
year when the department knew how much it received to
finalize the grant.
Ms. Lager continued to review the DCRA budget on slide 17.
She highlighted a grant to Life Alaska Donor Services
funded by the Anatomical Gift Awareness Fund in the same
amount as FY 24. The last increment was [$185,000] general
funds for the Kuskokwim Ice Road at the same amount as in
FY 24.
2:51:05 PM
Co-Chair Foster asked about the $3 million supplemental
increment for the food banks. He asked if the food had
already been purchased and distributed and the department
was backfilling for funds that were used elsewhere.
Ms. Lager answered that it was a new grant program for the
current fiscal year. She agreed it would be a tight
timeline. The grant would go to organizations to fund their
opportunities. The department was still working on grant
program requirements. She thought it was a fair point made
by Co-Chair Foster that there would not be a lot of time
for entities to purchase new food, and funding may need to
be retroactive for those agencies.
Representative Stapp stated that the previous year the food
bank funding had been through DFG and included something
like four RSAs where the funds ended up in the Department
of Health (DOH) commissioner's office prior to
distribution. He asked if the FY 24 supplemental funds
going through DCCED would include three RSAs where agencies
took funding off the top prior to going to food banks.
Alternatively, he asked if the funding would go to DCCED
for direct distribution to food banks.
Ms. Lager answered that the funds would come to DCCED for
direct distribution to food banks. The grants section was a
small team with ten grant administrators and one grants
administration manager. She stressed that the grants
section was very good at the job and there was no
administrative fee.
Representative Stapp thanked the department. He asked why
the FY 25 food bank money was in the DOH budget and not
under DCCED. He did not expect an answer.
Representative Coulombe asked where the grants were going
specifically.
Ms. Lager answered that the department was designing the
grant program to be as far reaching as possible for food
banks and food pantries. The grants may include small
organizations that had not traditionally received grants
such as a small pantry in a church. The department wanted
to ensure funds were available to organizations providing
food to their communities.
Representative Coulombe asked for verification that the
grant would be going from DCCED in the form of money, not
food.
Ms. Lager agreed.
Ms. Lager finished with slide 17. She highlighted a QR code
on the slide that directed users to the grants dashboard
showing grants and their financial status by community,
organization, and year.
2:54:03 PM
Ms. Lager turned to slide 18 and continued to review
changes in the DCRA budget. She briefly mentioned changes
she had previously discussed pertaining to Civil Legal
Services and the Alaska Marine Safety Education
Association. The department was adding two program
coordinators to work with federal disaster recovery grants.
The division was responsible for administering disaster
recovery grants for the state including the Community
Development Block Grant disaster recoveries. The department
had received two of the large awards both exceeding $30
million for earthquake relief and Typhoon Merbok
activities. The department was adding the program
coordinators recognizing it needed the appropriate staff to
ensure funds were going out timely. The slide included a
new research analyst position for broadband support to be
paid for by the broadband office. The blue portion of the
table at the bottom of the slide pertained to fund
capitalizations that related to DCRA. The first increment
indicated moving funding out of the general fund to
capitalize the Civil Legal Services Fund. The last line
showed the capitalization of the Community Assistance Fund
with $30 million as a combination of Power Cost
Equalization (PCE) endowment funds and general funds.
Co-Chair Foster asked if it brought the Community
Assistance Fund back up to the standard $90 million or if
the balance would be $60 million.
Ms. Lager answered that the capitalization would occur in
FY 25, meaning it would impact the FY 26 distribution
because of the way the statutory calculation worked. She
did not know what the precise fund balance would be, but it
would allow for a $20 million distribution in FY 25 and a
distribution of approximately $23 million in FY 26.
Co-Chair Foster asked the department to follow up with what
the fund balance would be. He explained that the standard
would be $90 million to get the full amount out [to
communities].
Representative Stapp recalled that under statute one-third
of the fund was distributed, which would mean $30 million.
He surmised it [the fund] would not be capitalized.
Co-Chair Foster calculated that one-third of $60 million
was $20 million. He asked the department to double check.
Ms. Lager agreed to follow up with the information.
2:56:31 PM
Ms. Lager moved to slide 19 and finished reviewing changes
in the DCRA budget. The slide showed the supplemental funds
for food pantries and an FY 25 increment for natural hazard
planning assistance. The department heard from the Alaska
Native Tribal Health Consortium (ANTHC) that it received a
federal award it would like to partner on with DCCED. The
award would pass through DCCED to fund one position over a
three-year term to help communities document, assess, and
build awareness of natural hazards. There were a number of
different federal grants communities could qualify for that
required the information as part of the application packet.
Co-Chair Foster returned to the topic of the Community
Assistance Fund. He believed that when the fund was short
funded, the rural communities had the highest funding
priority. He asked how the formula worked. Specifically, if
the fund was at $60 million, he wondered which communities
may not get part of the community assistance. He assumed it
would be Anchorage and Fairbanks first. He requested follow
up information.
Ms. Lager replied that the department would follow up with
the information. She noted that the Community Assistance
Fund calculation was based on two general categories. There
was a base payment that went to communities in addition to
a per capita payment. She stated that $20 million was
roughly the mark where smaller communities began to be
impacted a bit more.
Ms. Lager turned to slide 20 titled "Serve Alaska." Serve
Alaska was located under DCRA and the budget FY 25 included
one change to increase its federal receipt authority for
extended federal grants. The entity received a number of
different federal grants to promote volunteerism in the
state that ran on alternative fiscal years - some were
calendar years - and were multiyear awards. The department
had been unable to fully encumber the awards or make some
of the payments and issue some of the grants because it did
not have the budget authority in the past.
Ms. Lager moved to the budget for CBPL on slide 21. She
noted it was one of the department's larger divisions by
position number and program volume.
Representative Coulombe asked about Serve Alaska on slide
20. She thought it sounded like it was a federal program,
but the budget included $236,000 UGF. She noted the program
was tasked with promoting volunteerism. She asked what that
meant and how the money was spent.
Ms. Lager answered that it was a federal program with a
small amount of matching funds. The Serve Alaska program
promoted volunteerism in a variety of ways including
managing the AmeriCorps program for the state by bringing
in volunteers and passing the federal funding through to
pay for the volunteers in order for organizations to get
volunteers for free. The program also had the Serve Alaska
Commission, which was a 30 or so person commission aimed at
guiding activity and focus on different types of
volunteerism and volunteer promotion that would be most
impactful for the state.
3:00:14 PM
Representative Coulombe asked if the program paid
volunteers to come to Alaska. She asked for verification
that volunteers worked for free.
Ms. Lager answered that there was federal funding that
provided stipends to volunteers, which made it affordable
for individuals. She elaborated that AmeriCorps volunteers
were placed in a wide variety of programs. She highlighted
work in youth robotic programs and in the Department of Law
done by volunteers.
Representative Coulombe asked if AmeriCorps accounted for
the bulk of the funding. She asked if there were other
organizations giving stipends to volunteers.
Ms. Lager answered that the majority of the funding for the
program came from the federal Center for National and
Community Services. She believed the bulk was the
AmeriCorps program. She would follow up with a list of all
of the grantees.
3:01:08 PM
Ms. Lager continued with the CBPL budget on slide 21. The
division housed 45 programs. She believed the division
touched almost every Alaskan; it included business
licensing, professional licenses, midwives, morticians,
etcetera. She highlighted that the number of professional
licensees had increased every year. The number had
increased by 64 percent in ten years, which was pretty
remarkable growth.
Representative Galvin received a lot of questions and
suggestions about the area in her office. For example, the
length of time individuals had been waiting for some
licenses more than others. She had recently met with
someone from the department who helped to explain the
situation, but she was interested in having the information
on the record. She stated there had been substantial buzz
in the Capitol Building pertaining to licensing and
concerns about the wait times.
Commissioner Sande replied it was a priority of the
governor's when she took the position three years back. She
had learned that legislators were unified in their
frustration over licensing times and that they were all
hearing about it from their constituents. It had been her
job to look at what was broken and to work with the team on
determining the easiest fixes first. She shared that she
was lucky to have support from the governor and legislature
and she believed every one of the legislators meant it when
they asked how they could help. She hoped that the
decreased number of outraged phone calls legislators
received was an indicator of the progress made by the
department. She relayed that one of the first things she
had done was ask the individuals on the team how they would
solve the problems. Staff had provided input on ways to
reduce the duplication of efforts, increase efficiency, and
improve antiquated systems.
Commissioner Sande relayed the governor had offered an
administrative order to help with some of the issues
immediately. There were also longer fixes. She believed
some of the improvements witnessed were remarkable,
particularly with nursing, considering the level of
vacancies on the department's team in the past. She stated
that it had been a perfect storm post-COVID. One of the
first things the department did was take a look at the
volume and there had been a 62.4 percent increase in the
number of licenses issued over ten years. She estimated
that during that time, the number of staff had only
increased by about 7 percent. Additionally, there had been
numerous vacancies post-COVID. She characterized the
situation as a "death spiral" that had occurred within the
division. Additionally, frustrated business owners needing
employees and individuals trying to get to work had been
calling DCCED. She stated it had been heartbreaking for the
DCCED team who put their hearts into the work they were
doing, but as people were leaving it was getting more and
more difficult to retain. She was proud of the work done by
CBPL Director Sylvan Robb. She highlighted that the wait
for a nursing license had reduced from 13 to 5 weeks, which
was an incredible improvement. The department still
believed five weeks was too long and it was working to get
the number down further. The department had been advocating
for the nurse licensure compact because without adding
additional staff the department could move personnel
focused on licensing nurses over to other professions such
as contractors. The department had taken a look at the easy
fixes it could make and it had communicated with
legislators and the governor on other things that may be
needed.
3:06:33 PM
Representative Galvin believed that a 7 percent increase
sounded like a low price to pay. She stated that if the
department needed more money to reduce the five-week wait
it would be money well spent. She thanked the department
for its efforts and for the improvements. She communicated
that legislators were available to help.
Representative Josephson was surprised not to see larger
general fund request due to the governor's executive orders
to move things in-house. He asked for an explanation.
Ms. Lager answered that there were statements of costs the
department could provide that were related to the executive
orders. She explained that they were a bit different
mechanism and not quite a piece of legislation and did not
have a traditional fiscal note. The statement of cost was
not currently included in the budget. She stated the impact
was fairly small and she would follow up with the
information.
Representative Josephson asked for the cost estimate.
Ms. Lager estimated it was less than $150,000 for the
division. She noted the amount was fairly small and
pertained mostly to technical items.
Representative Hannan asked if the three executive orders
related to licensure boards came at the request of the
department after its analysis about how to address
licensure delays.
Commissioner Sande asked Representative Hannan to rephrase
the question.
Representative Hannan clarified her question.
Commissioner Sande answered, "It is complex, but
absolutely." She shared that when she started the job, she
thought it was as simple as understanding the problem,
identifying a solution, and walking away; however, some
pieces of the delays were not directly tied to things she
could necessarily touch in the department. She explained
that in some cases where boards and commissions worked
directly with licensing, delays could occur because the
board had an insufficient number of members, or it was not
meeting regularly, or it failed to meet quorum. Under that
circumstance she was unable to go to a staff member to
solve the problem. She explained that the disconnect had
been new information for her. Her understanding of the
executive orders was the goal to gain efficiencies and
reduce wait times wherever possible.
3:10:46 PM
Representative Hannan remarked that three professional
licensing boards were proposed to be eliminated by
executive orders. She had heard from constituencies and had
had conversations with DCCED staff. She stated her
understanding that one of the boards had been unable to
make quorum sporadically (the Board of Barbers and
Hairdressers), but the other two consistently met and made
quorum. She was pushing back on the commissioner's
statement that the boards were unable to meet. She wanted
to know why those communities, boards, and professional
license groups were not involved in any of the discussion
on how to problem solve and why the executive orders had
been a surprise to them. She felt that Commissioner Sande
had been open in communicating with legislators in
meetings. One of the largest concerns she had heard from
the groups impacted by the executive orders was that they
had learned about the executive orders the day they were
announced. She heard the commissioner saying that when she
took the mission on there was a disconnect where some of
the people involved were not allowed to participate in how
to problem solve a problem the commissioner thought was
obvious and legislators had expressed uniformity around.
Commissioner Sande appreciated the comments and that
Representative Hannan was pushing back. She shared that she
had not been directly involved in the executive order
process; she had been involved in the conversations and she
understood the intent behind them. She believed there was
valid concern when individuals who were directly part of a
process did not have an opportunity to weigh in in advance
and the department had heard some of the frustration. She
underscored that the department was appreciative of every
board member willing to serve on behalf of Alaskans. She
personally served on 16 boards and actively on 8 of them.
She relayed that she sat next to board members up to
several times a week and she was regularly impressed and
inspired by the efforts board members were taking on behalf
of Alaskans. She thought it was unfortunate if the
executive order process did not have enough opportunities
for individuals to weigh in and she did not believe it was
reflective of how the department felt about the service of
the board members.
Representative Hannan stated that prior to Commissioner
Sande's tenure with the department there had been an
executive order to divide the former Department of Health
and Social Services in two. She explained there had been
substantial pushback that had delayed the split in favor of
engagement with constituencies involved prior to moving
forward. She noted the pushback had delayed the split by
almost two years. She had heard reasons to do it, but there
was strong concern by people serving on functional boards
who felt left out of the process. She stated it had become
a political football. She considered that perhaps she did
not have enough information from the department's side of
the analysis on why the executive orders should go forward,
but it was because the impacted people were not engaged in
the analysis. She believed it was a shame. She reasoned
that if it was so logical to make the change and it would
be cheaper and more efficient, licensees would not be
opposed. She elaborated that everyone with professional
licensure wanted the money they spend to be cost effective
in a timely and predictable way.
Representative Ortiz congratulated the department on
bringing down the nurse licensure timeframe. He noted he
also heard about delays in other areas in the healthcare
field such as physical therapy. He asked about gains that
had been made in areas outside the nursing field. He noted
that 62.4 percent increase in professional licenses over
the last 10 years reflected rapid growth. He asked if the
department was capable of handling the increase if it
continued at that level.
Commissioner Sande addressed Representative Ortiz's
question about whether the department could keep up with
the work if it continued to grow. She was concerned about
the issue as well. She relayed that when the department
talked about the executive orders it had first gone to the
team to see if the proposal appeared to make sense and how
much work it would create. She shared that the department
was proud of the work done by Director Robb and the prior
CBPL director. The last thing the department wanted to do
was hinder gains that had been made and she did not want to
lose employees to another department. She was protective of
her team, and she would vocalize it if something did not
seem like a good fit for the department. She had been
assured by her team that much of the work was being done by
the staff and the shift seemed doable. She remarked that
the department would not know the result until the change
took place.
Commissioner Sande stated there was at least one bill
offered during the current session where they talked about
an additional professional being licensed. She clarified
that she was not for or against having more professions
licensed and it was possible to argue both sides. She
stated that it was always possible to argue for the sake of
safety that something needed to be licensed. She
appreciated it, but it was necessary to calculate how much
work it would add and whether the department could continue
to sustain or pay for it. She deferred to a colleague to
answer Representative Ortiz's first question.
3:18:51 PM
MICAELA FOWLER, DEPUTY COMMISSIONER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, answered that
licensing times across the board had decreased post
pandemic largely due to more successful hiring in recent
months. She noted that Ms. Lager would provide the
committee with information on DCCED's current vacancy rate
at the end of the presentation. The department had also
been identifying regulation changes it could enact to
improve its ability to license more efficiently. She shared
that a three-month extension had been implemented for all
programs when a license was up for renewal once the renewal
application had been received. She explained that one of
the things that was causing substantial frustration during
the pandemic was licensees were turning in their renewals
one or two days before their license expired and the
license was not reviewed for renewal for a month or so. The
situation resulted in individuals being unlicensed for a
period of time.
Ms. Fowler explained that the regulation enabling licenses
to automatically renew for three months when an application
was received allowed staff to work on new licenses coming
in instead of putting them all on hold to focus on
renewals. The staff were able to work on renewals as time
allowed, which had helped the department bring wait times
down for new licensees to receive licenses. There were
occasionally issues with quorum and some professions
required a board to approve a license, while others did
not. The department was also anticipating that the 12 new
positions in the department's FY 24 budget would speed up
all of its licensing times. The department was very
appreciative of the governor and legislature for supporting
the positions. She noted that it took time to create and
fill positions.
Co-Chair Foster noted there were only eight minutes
remaining in the meeting. He asked committee members to
hold any questions until the end of the meeting.
Ms. Lager reviewed CBPL budget changes on slide 22. The
large item on the slide was maintaining licensing
operations. She highlighted a theme throughout the
department's budget to align authority with its current
year projections for the division. There was an increase in
a variety of costs including inflationary increases and
core services increases, which DCCED had managed through
the high periods of vacancies during the pandemic; however,
the department needed to have the authority to pay its
bills. She briefly moved to the Division of Insurance on
slide 23. She lauded Director Lori Wing-Heier for her work
and noted the division had done some remarkable innovative
work. She added that the division was one of the
department's primary revenue generators.
3:23:08 PM
Ms. Lager reviewed budget changes for the Division of
Insurance on slide 24. The only real increase in the
division's budget was to protect Alaskan businesses from
loss of insurance coverage. She explained there had been
some pressure from environmental, social, and corporate
governance groups to limit insurance availability to key
sectors of the economy. She highlighted the importance of
protecting insurance coverage in order for key businesses
to continue operating.
Ms. Lager turned to slide 25 pertaining to the Division of
Investments. The division had 11 loan programs and provided
an important service to Alaskans. She noted there were no
changes in its budget.
3:23:44 PM
Ms. Lager moved to AOGCC on slide 27. She noted there were
a few small budget changes truing up needs for future
including overdue vehicle replacements on the North Slope.
She turned to slide 28 pertaining to AMCO showing one
change in the governor's amended budget to extend a non-
permanent position. The department was proud its licensing
system went live for alcohol for the January 1 switchover
for the Title IV rewrite. The department was also preparing
for the marijuana renewal as well as doing data
conversions; therefore, the position would be extended to
provide support for the project.
Ms. Lager addressed the AGDC budget on slide 29. The item
shown in grey was a technical item. She explained that the
past year there was a one-time appropriation for general
funds into the ADGC operating budget, which worked but was
more complicated than it needed to be. Therefore, the
department was asking to put the money into the AGDC fund
to make it easier to manage on the department's end. She
turned to the Alaska Energy Authority (AEA) budget on slide
30. Most of the budget items on the slide were related to
the Infrastructure Investment and Jobs Act (IIJA). The
agency had a number of different capital appropriations it
needed staff to support. She highlighted a $200,000
increment for the AEA data library on slide 31. She
explained that AEA recognized that the state had funded
substantial research into projects in Alaska some of the
projects had gone forward and others had not. The agency
was working on digitizing the records to make them
available to the public so that as people were exploring
new and different energy ideas in Alaska, it would be
possible to learn from the work that had already been done.
Ms. Lager addressed the AIDEA budget on slide 32. She
stated that all of the positions for AEA lived in the AIDEA
component and the two agencies had an agreement to support
the staff for both. The changes to the AIDEA budget were
related to AEA capital appropriation changes. She moved to
the ASMI and RCA budgets on slide 33. She noted there were
no significant budget changes for either agency.
Ms. Lager addressed the department's vacancy history in a
chart on slide 34. The blue portion of the chart at the top
reflected vacant positions and the yellow portions
reflected filled positions. She explained that drops in the
blue line reflected changes in the total position count
overall. She highlighted large staff and funding reductions
in 2015 and 2016. She noted that prior to the reductions
the department had a vacancy rate of approximately 12
percent, which rose slightly and dropped to about 11
percent in 2018. She remarked that the number was
artificially low. She detailed that when the department was
faced with tough budget reductions it had reshuffled staff,
moved people's job duties around, and prioritized keeping
people in jobs and reducing vacant positions rather than
laying people off, which had artificially reduced the
vacancy factor. She believed there were only three layoffs
during that time period.
Ms. Lager pointed out that at the start of the pandemic in
March of 2020, DCCED had a vacancy rate of just under 15
percent. She highlighted that the number climbed to 20
percent by December 2021. She added that the vacancy rate
for CBPL was over 30 percent at the time. She remarked that
it had been incredibly tough for the team and department.
The department had made good progress and as of June 2023
the vacancy rate was down to 14.62 percent, which was back
to pre-pandemic levels. In FY 24, the department received a
number of new positions: 12 in CBPL, 5 related to pharmacy,
and a number of positions for AEA. The department was very
grateful for the new positions, but it resulted in an
unintended impact on the vacancy rate, which looked like it
jumped by 4 percent. In reality, it would just take some
time to set up new positions. The vacancy rate was down to
17.6 percent by January 2024. She noted that when excluding
the new positions, the number was down to 13.7 percent. She
added that the vacancy rate for CBPL was down to 12.6
percent (excluding the new positions). The department was
proud of its progress and staff were currently out at job
fairs trying to get people into the jobs.
Co-Chair Foster thanked the presenters for their
presentation.
Representative Cronk noted that he had a question about
RCA. He stated the committee would need someone present to
answer many questions.
Ms. Lager replied that DCCED was happy to coordinate
getting someone down to Juneau from RCA.
3:29:54 PM
Representative Josephson referenced AOGCC and observed
there was no position on the issue of carbon sequestration,
which would be almost entirely in AOGCC's wheelhouse. He
asked if it was because there was no bill yet.
Ms. Lager answered that AOGCC received two positions in FY
24 in a fiscal note that was similar to the current pending
legislation. She believed the commission anticipated using
the same positions to perform the work; however, any
updates would be provided to the fiscal note associated
with the pending legislation.
Representative Coulombe requested follow up on whatever
measures the departments had to show the wait times for
licenses. She was interested in the number in the queue and
how many licenses had been issued.
Ms. Lager agreed to provide the information.
HB 268 was HEARD and HELD in committee for further
consideration.
HB 270 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
meeting.
ADJOURNMENT
3:31:16 PM
The meeting was adjourned at 3:31 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FHIN - DOLWD FY 25 Budget Overview 030124.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| HFIN DCCED Budget Overview 03.01.2024.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| DOLWD Response to HFC Q 3-1 031124.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| DCCED HFIN 03.01.24 Followup Response.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| EO 129 DCCED Statement of Cost.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| EO 127 DCCED Statement of Cost.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |
| EO 130 DCCED Statement of Cost.pdf |
HFIN 3/1/2024 1:30:00 PM |
HB 268 |