Legislature(2025 - 2026)ADAMS 519
03/20/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB53 || HB54 | |
| HB10 | |
| HB36 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 54 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 10 | TELECONFERENCED | |
| += | HB 36 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 20, 2025
2:50 p.m.
2:50:07 PM
CALL TO ORDER
Co-Chair Josephson called the House Finance Committee
meeting to order at 2:50 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Lacey Sanders, Director, Office of Management and Budget;
Representative Ashley Carrick, Sponsor; Cadence Conner,
Staff, Representative Ashley Carrick; Representative Andrew
Gray, Sponsor.
PRESENT VIA TELECONFERENCE
Abel Bult-Ito, Faculty, University of Alaska Fairbanks,
Fairbanks.
SUMMARY
HB 10 ADD FACULTY MEMBER UNIV BOARD OF REGENTS
HB 10 was HEARD and HELD in committee for further
consideration.
HB 36 FOSTER CHILDREN PSYCHIATRIC TREATMENT
HB 36 was REPORTED out of committee with eight
"do pass" recommendations, two "no
recommendation" recommendations, and with one
previously published fiscal impact note: FN1
(DFCS) and one previously published zero fiscal
impact note: FN2 (JUD).
HB 53 APPROP: OPERATING BUDGET; CAP; SUPP
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 APPROP: CAPITAL/SUPPLEMENTAL/FUNDS
HB 54 was HEARD and HELD in committee for further
consideration.
Co-Chair Josephson reviewed the meeting agenda.
HOUSE BILL NO. 53
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
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. 54
"An Act making appropriations, including capital
appropriations and other appropriations; making
reappropriations; making appropriations to capitalize
funds; and providing for an effective date."
2:51:15 PM
Representative Johnson asked if a Committee Substitute (CS)
would be heard.
Co-Chair Josephson responded that it would not be heard
today.
2:51:44 PM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
introduced the PowerPoint presentation "Office of
Management and Budget FY2026 Governor Amended Budget,"
dated March 20, 2025 (copy on file). She began on slide 2
and the updated fiscal summary which incorporated the
amendments for FY 25 and FY 26. The summary also
incorporated the updated spring revenue forecast from the
Department of Revenue (DOR). She began by speaking about FY
25. The grand total for supplementals was $460 million, and
$91.4 was Unrestricted General Funds (UGF). The capital
supplementals totaled $500,000 of UGF and $69.9 thousand
for total funds. There was a grand total of $91.4 million
of UGF and $529.8 million for all funds. The surplus
deficit was at the bottom, and with the addition of the
supplementals the overall deficit was just under $165
million.
Ms. Sanders continued that for FY 26, the overall total for
operating amendments was brought to $314.7 million, $46.2
million of which was UGF. For capital amendments, the total
was $12 million, with $11.6 million in UGF. With the
addition of the amendments that had been submitted earlier,
the overall deficit was brought to $1.65 billion.
Ms. Sanders continued to slide 3 to address the newly
submitted amendments. On March 5, there was a packet of
amendments that was submitted to the legislature to address
Executive Order (EO) 136, that would have created the
Department of Agriculture. The amendment packet had
reversed out the total of $2.7 million for the addition of
13 positions and provided a transfer of existing vacant
positions to support the EO.
Ms. Sanders continued that in the March 13 amendments there
were 3 packets of bargaining unit agreements or salary
adjustments. There were three agreements put forward. The
first was under the Department of Corrections (DOC) and
involved the Alaska Correctional Officers Association
(ACOA) had an agreement as a result of an interest
arbitration award that provided an 11 percent increase for
FY 26 that totaled $14.4 million. Under the Department of
Education and Early Development (DEED), the collective
bargaining unit agreement for the Teachers' Education
Association - Mount Edgecumbe (TEAME) resulted in an
increase of a median of 5.46 percent for FY 26. The cost
was $24.2 thousand in General Funds (GF) and a total of
$167.5 thousand.
Ms. Sanders shared that under the University of Alaska (UA)
and United Academics there was a collective bargaining
agreement that was reached and voted upon by the UA Board
of Regents, which included a 2.75 percent increase for FY
26. She noted that the state was working on the remaining 6
collective bargaining unit agreements that were outstanding
as well as one for UA. The amendments for salary
adjustments would be brought to the legislature as the
agreements were signed.
2:56:55 PM
Representative Galvin thought it was important to follow
the information with some analysis. She commented that that
the correctional officers had a salary increase of 11
percent and the one teacher salary adjustments for Mt.
Edgecumbe was 5.4 percent, while the university was at
about 2.7 percent. She noted that throughout the two years
she had been at the legislature, increments had been
approved again and again, but the teachers that served the
children of the state had not received the same sort of
increases.
Representative Johnson responded that she could not comment
because she was seeing a snapshot in time. She did not
think the correctional officers should receive less to keep
them on par. She asked about the 11 percent increase and
asked if there was a change in the number of personnel.
Ms. Sanders responded that the number only affected the 11
percent that was part of the interest arbitration. There
had been an arbitration outcome that resulted in a one-year
increase of 11 percent for FY 26, and the parties would
have to go back to the negotiating table for future years.
Representative Bynum asked for clarification that the
outcome was not tied to any appropriation but was an
agreement put in place regardless of the appropriation that
the legislative body made.
Ms. Sanders responded that an agreement had been reached
for the three increases, which were brought forward to take
action on in the back of the bill. There was also an
appropriation request to fund the costs associated with the
agreements.
Representative Bynum understood that the agreement was
agreed to but still needed approval.
Ms. Sanders answered in the affirmative.
3:00:01 PM
Representative Hannan commented that the legislature did
not have the authority to approve an arbitration but had
the authority to appropriate the funding of the settlement.
She clarified that the settlement was reached between the
employees and the administration, who had the authorization
to approve and negotiate. The legislature's authorization
was to fund it.
Co-Chair Josephson relayed that if the legislature had to
approve the agreements, then over the previous 60 meetings
it had missed a lot of meetings.
Ms. Sanders responded that there was a reference at the
back of the operating budget that gave the legislature had
the ability to approve the agreements that had been
reached. She did not have the bill in front of her. She
noted that the reference allowed that the legislature could
make a decision to not include the agreement, and the
agreement would be considered no longer valid. She relayed
that the legislature did have a role, but it was at the end
of the process.
Co-Chair Josephson asked if the legislature had ever asked
for an adjustment in the history of the state. He stressed
that the legislature did not attend the contract meetings
and did not know what was negotiated. He proposed that if
the meeting was voided by the legislature, the parties
would go back to the bargaining table and presumably there
would still be inflationary adjustments and workplace
considerations. He asked if his understanding was correct.
Ms. Sanders said "yes." She responded that the legislature
was not part of the negotiating process, but there was a
role for the legislature to play in the appropriation
process. The language was in the back of the bill to vote
it up or down.
3:02:50 PM
Ms. Sanders continued to slide 4 and the governor's amended
capital requests. She relayed that each year in the
governor's original budget, there was a placeholder for the
Statewide Transportation Improvement Program (STIP) for
both the federal funds as well as the state match required.
In the amendment process, the administration brought
forward the allocations listing out the projects under the
plan. She referenced a large spreadsheet (copy on file)
that listed each of the projects. She noted that it
included advanced construction projects and the remaining
other funds, which were receipts for community
contributions for the projects as well as an additional
$215 million to allocate all of the projects through an
amendment for the committee's consideration.
Ms. Sanders continued to slide 5 and the operating
supplemental requests that were brought forward in the
March 13 package. The first was for DOC for two items for
$4.6 million. The first was for community residential
centers. There were two contracts recently finalized for
the Tundra Center in Bethel and the Seaside Center in Nome,
which resulted in a $2 million increase for FY 25. There
was a corresponding amendment in the governor's FY 26
budget that accounted for the increases in the next fiscal
year, which would bring both years into alignment with the
agreed contracts.
Ms. Sanders explained that the second item had to do with
physical health care within DOC. She relayed that the
number of individuals entering correctional facilities with
complex and fragile medical conditions was increasing,
requiring a higher level of care and more specialized
medical attention. There was a need to have round-the-clock
booking available as well as ensuring that there were
adequate healthcare staff on site to address the increased
needs. Under the Department of Health (DOH) there was a
lapse extension, which showed as a $0 appropriation for the
department's Homeless Information Management System, which
allowed for the multi-year appropriation to be carried into
the next fiscal year to continue the work on the project.
Ms. Sanders listed that lastly, under "special
appropriations," there was an appropriation for $2.7
million to the Division of Retirement and Benefits (DRB).
The item was identified as a fast track supplemental given
the urgency and was related to the security breach that
occurred late the previous year. The breach had delayed
retirement contributions into individuals' accounts, which
had impacted investment returns for participants. To
correct the matter, DRB was depositing the contributions
into the employees' accounts and crediting them for the
lost interest associated with the earnings. The project was
currently underway and was hoped to be processed very
quickly before the close of the fiscal year.
3:06:41 PM
Representative Galvin asked about the security breach and
delayed payment. She wondered if the state had any
insurance to cover the issue. She thought the state paid
for security measures to keep data secure and wondered if
there was any sort of contract or way of paying for the
item through arbitration.
Ms. Sanders was not aware of any insurance policy that
would cover the issue.
Representative Galvin thought it seemed that when the state
purchased technology for help, that there would be some
sort of agreement that nothing would happen. She referenced
individual purchase of identity theft protection.
Ms. Sanders agreed to follow up with the Office of
Information Technology (OIT) to hear about options, and
with DRB to see if such a policy had been considered or
explored.
Representative Allard asked to go back to slide 3. She
asked about the $14 million for DOC and noted that there
was 146 vacant positions. She wondered about the movement
of vacant positions.
Ms. Sanders responded that when there was a vacant
position, DOC had to have a person at the post to cover its
facilities. She explained that it could result in having to
cover the cost of paying overtime, which came at an
increased cost. She thought it was important to remember
that DOC had to have a person filing the role, which could
cost more than having a person that was in the position.
Representative Allard relayed that she would look for more
information and revisit the matter at a later time.
3:10:17 PM
Representative Hannan asked to go back to the special
appropriation for the loss of earnings on retirement
contributions. She referenced a press release that
discussed the effect on the Public Employees' Retirement
System (PERS) and the Teachers' Retirement System (TRS)
Alaska Retirement Management (ARM) Board allocation. She
had heard from constituents that the effect was mostly on
those in the defined contribution (DC) system, in a time of
a booming economy when the contributions should have been
invested with substantial earnings. She asked if there was
a sense of how much of the special appropriation was going
to individual's defined contributions versus into the
PERS/TRS allocations.
Ms. Sanders responded that she could share a detailed
spreadsheet and an analysis on how the calculations were
made. She relayed that the information had been broken down
between PERS and TRS and the supplemental annuity plan
(SBS), but not between defined benefit (DB) and DC plans.
She relayed that the lost interest earnings were generated
using the United States (U.S.) Department of Labor's
voluntary fiduciary correction program calculator. The
calculation had been received for each date to determine
what should have been deposited in each account. She would
follow up to provide the calculation information.
Representative Hannan applauded the administration for its
action on the matter. She had heard from constituents that
they had concerns about missed returns. She understood that
there had been no litigation, and the administration was
taking care of the error. She considered that the situation
was a costly error, but she thought it was the right
decision.
3:13:09 PM
Representative Allard referenced DOC and understood that
the 146 positions that were vacant had to be there by law.
She asked for clarification on Ms. Sander's earlier
comments related to overtime.
Ms. Sanders responded that the term used was staffing
minimums. There were national acceptable levels of staffing
to cover a certain number of individuals in each facility
in the institutions. The staffing levels ensured the safety
of the inmates and the employees. When the department had
vacancies, it had to bring on another officer to fill
staffing minimums to ensure the correct number of people
were in place 24 hours per day.
Representative Allard asked if the individuals being
discussed were already staff and were temporarily holding
an empty spot.
Ms. Sanders responded that the staff in question were
existing employees (correctional officers) that were
already doing the job and generally had a week on and a
week off schedule. The individuals would be paid overtime
when vacancies required the employee to work on their
normal week off. She continued that the department was
trying to fill vacancies so as to not have to pay the
escalated overtime costs.
Representative Allard understood that there were 146 vacant
positions, but they were not being filled. She understood
that there were people already in a position that were
brought back and required $18.6 million in overtime.
Ms. Sanders noted that the $14 million number was the 11
percent increase to pay all employee salaries. She relayed
that Representative Allard was correct in that DOC was
bringing officers already hired to fill vacancies to meet
the minimum standard. She emphasized that the department
was actively working to recruit across the state to fill
the vacancies. She noted that there was constant turnover
and there were constant new hires coming on.
Representative Allard understood that they were not filling
vacancies, but rather there were people already in a
position that were being paid overtime with the funds.
Ms. Sanders responded in the affirmative.
3:17:19 PM
Co-Chair Schrage wanted to follow up on Representative
Hannan's remarks to commend the administration for making
the employees whole with respect to delayed contributions
and earnings. He referenced reporting in the Anchorage
Daily News and thought the Alaska Municipal League (AML)
had expressed concern that while the employees had been
made whole, the state's unfunded pension liability had been
negatively impacted by the delayed contributions. He asked
Ms. Sanders to comment. He understood that the state would
have paid down unfunded the liability earlier if the breach
and subsequent delay had not happened.
Ms. Sanders responded that she was not aware of the
comments in the article referenced. She relayed that she
had not made a connection between the delay and the
unfunded pension liability. She offered to follow up at a
later time.
Co-Chair Schrage wanted to note the concern.
Ms. Sanders continued to slide 6 and the capital
supplemental request. There was one amendment submitted for
the Department of Military and Veterans Affairs (DMVA) for
a scope change for an older capital project of
approximately $90,000 for the Interior Alaska Veterans'
Cemetery in the Fairbanks area. The appropriation was
originally to address ditch mitigation, and was no longer
required. The amendment requested an adjusted scope so the
funds could be used on work to establish the cemetery.
Representative Tomaszewski clarified that the original
funds were for ditch mitigation for the former site of the
cemetery, and the amendment proposed to shift the funding
to the new cemetery site.
Ms. Sanders responded in the affirmative.
Co-Chair Josephson thanked Ms. Sanders.
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 was HEARD and HELD in committee for further
consideration.
3:20:39 PM
AT EASE
3:21:05 PM
RECONVENED
Co-Chair Foster took over chairing the meeting. He relayed
that he would try to get through the agenda quickly.
HOUSE BILL NO. 10
"An Act relating to the Board of Regents of the
University of Alaska."
3:22:08 PM
REPRESENTATIVE ASHLEY CARRICK, SPONSOR, gave a brief
overview of HB 10. She informed that the legislation simply
added an additional faculty member seat to the UA Board of
Regents. She requested that her intern provide an answer to
a question that was asked previously.
3:22:41 PM
CADENCE CONNER, STAFF, REPRESENTATIVE ASHLEY CARRICK,
responded to a question from an earlier meeting. The
question related to the qualifications that were needed to
be appointed to the UA Board of Regents. According to AS
14.40.13(a), each regent shall be a resident of the United
States and of the state. The requirement was the only
qualification needed.
Co-Chair Foster relayed that the committee would hear
invited testimony.
3:23:30 PM
ABEL BULT-ITO, FACULTY, UNIVERSITY OF ALASKA FAIRBANKS,
FAIRBANKS (via teleconference), relayed that he was
President of the University of Alaska Fairbanks (UAF)
Faculty Senate, a member of the UA Faculty Alliance, and
was a Professor of Neurobiology and Neurophysiology at UAF.
He spoke in strong support of the bill. He thanked the
sponsors. He asserted that adding a faculty member to the
board was vital for providing meaningful context for
diverse student experiences, potential ramifications of
poor decisions, and to help the educational environment at
the university. He thought most members were decades
removed from college experiences and lacked understanding
and experience in the modern and often highly technical
educational environment.
Mr. Bult-Ito emphasized that faculty taught students and
knew what issues were important to students. He noted that
faculty lacked the ability to communicate insights and
experiences to the board in a meaningful manner without a
seat at the table. He noted that faculty also provided
students with research experiences, which were life-
changing for students. He discussed research funding
obtained by faculty and the knowledge necessary to achieve
the funding. He thought faculty needed to communicate
research intricacies to the board in order to provide
context for making informed policy decisions. He stressed
that having a faculty presence would build trust between
the board and faculty and would benefit all students.
3:27:09 PM
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony.
3:27:52 PM
Representative Bynum hoped for more insight related to why
adding a faculty member to the board would be good for UA
as a whole. He noted that the sponsor statement referred to
stakeholder groups, and he understood that the Board of
Regents was to give direction to UA as a whole and guide
its mission. He was trying to understand how it would be
positive to have a faculty member on the board, which was
supposed to give direction to faculty.
Representative Carrick responded that the legislation came
at the request of many years of UA faculty members having
limited opportunities to provide testimony or input to the
board. Faculty desired to have a seat at the table as part
of UA's mission. She relayed that in researching the
legislation she found there were several state university
systems that had a voting member that was a tenured faculty
member. She had heard board members at other universities
be supportive of the idea and agree with the same concepts
expressed by Professor Bult-Ito. She relayed that the idea
was to offer the real dialogue with the board of regents,
in the same form that the student member did, and provide
parity in the two groups that formed the backbone of the
system.
Representative Bynum understood that the bill proposed to
add a seat onto the board, which would make it a 12-member
board. He asked if there was an idea about how the board
would perform if a seat were to be added rather than
substituted.
Representative Carrick thought the question would be a good
policy call for the House Finance Committee or another
committee. She wanted to see the stakeholder group
represented. She thought substituting a seat would be
diluting the power of the current regents that were not the
student or faculty regent. She was not necessarily opposed
to the idea but clarified that the way the bill was
structured was to add a stakeholder while not diluting any
current members power.
Representative Bynum asked if there was consideration to
adding the seat as a non-voting member.
Representative Carrick relayed that the idea had been
discussed in the past. She noted that a full voting member
of the board had access to executive sessions and to travel
with the board, which were conferred currently on the
student regent. She reiterated the idea of parity. She
noted that there was a student regent that had to
occasionally recuse themselves from difficult votes.
3:32:39 PM
Representative Allard asked about the faculty alliance,
which she thought was for faculty advocacy. She thought the
board was more for oversight rather than operations. She
would prefer a faculty member to be non-voting and thought
there was conflict of interest with unions and other
issues. She asked the sponsor if the faculty board member
would give operational input.
Representative Carrick responded that the mission statement
of the university was to inspire learning; advance and
disseminate knowledge through teaching, research, and
public service; and to emphasize the North and its diverse
peoples. When she considered who guided the overall culture
of the campuses and learning community and university
system, it was both the student and faculty populations.
Representative Carrick acknowledged that here were some
operational decisions made by the board, but even more so
an advisory capacity over system operations and governance.
She thought faculty had a strong voice to add to the
conversation. She stressed that the faculty seat was not to
substitute or infringe on the rights of current regents or
their experience. She knew many regents were very
experienced and had a lot to offer. The additional seat was
meant to add to the decision-making process. She thought if
every member of the board was asked, the addition of a
student regent had offered a deeper perspective.
Representative Allard understood the mission statement. She
emphasized that the faculty members already had a faculty
alliance and could already bring issues to the board.
Representative Carrick emphasized that there was currently
no slated opportunity for faculty to speak to the board of
regents. The faculty alliance was allowed to make one very
brief report at certain board meetings. The board only
offered one hour of public testimony at the beginning of
some meetings. The board did not take public testimony on
agenda items. She shared that often times the public
testimony would be completely filled up before the meeting
had even begun, and faculty were included in the public
testimony. She thought faculty would agree with the
statement that it did not have enough opportunities to
connect with the board and to make its constituency issues
known.
Representative Allard asked if it was possible for faculty
to send an email for written testimony.
Representative Carrick responded that she would ask the
committee to consider the weight of in-person spoken
testimony versus written testimony.
Representative Allard understood where the sponsor was
coming from. She thought there could be things that could
not pass with a board membership of 12.
Co-Chair Foster set an amendment deadline for March 28 at
5:00pm.
HB 10 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 36
"An Act relating to the placement of foster children
in psychiatric hospitals; relating to the care of
children in state custody placed in residential
facilities outside the state; and amending Rule
12.1(b), Alaska Child in Need of Aid Rules of
Procedure."
3:37:57 PM
REPRESENTATIVE ANDREW GRAY, SPONSOR, offered a brief
overview of the bill. The bill would make it so that a
foster child (child in custody of the Office of Children's
Services [OCS]) would have a hearing in front of a judge
within seven days if they had been admitted into an acute
psychiatric facility. He explained that in these cases, OCS
was acting as the "parent," yet it had not played the same
role as a parent would have played for its child. He
asserted that children had been held for too long and
sometimes without good reason. The bill aimed to close the
loophole. There were no guidelines in statute that covered
when a such a case would be reviewed.
3:39:26 PM
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony.
3:40:09 PM
Representative Tomaszewski liked the bill, and he had no
objection to moving the bill from committee.
Co-Chair Josephson also liked the bill and agreed with
Representative Tomaszewski's suggestions. He noted that
there had been three audits of OCS and there was a myriad
of ways that the office had not followed the law. He
referenced HB 151 sponsored by former Representative Les
Gara. He referenced a provision that stated that if
children were not taken into custody, parents should be
given referrals for services. He asked how the bill would
get enforced.
Representative Gray referenced Kwinhagak v. State of Alaska
[a 2024 case where the Alaska Supreme Court found delays in
child welfare proceedings violated procedural due process],
which found the current way of doing the hearings were
incorrect. He noted that the courts were hearing the
decision in seven to ten days after a change of practice in
the previous year. He explained that the bill would be
putting into statute what was already happening. He
understood that sometimes laws were passed but not
enforced. He pondered that the topic needed to be
revisited. He thought the issue should be revisited to
ensure the children were getting hearings in the time the
bill dictated.
Representative Bynum appreciated the sponsor bringing the
bill forward.
Representative Allard thanked the sponsor.
3:44:07 PM
AT EASE
3:44:41 PM
RECONVENED
Representative Tomaszewski MOVED to REPORT HB 36 out of
committee with individual recommendations and the
accompanying previously published fiscal notes. There being
NO OBJECTION, it was so ordered.
HB 36 was REPORTED out of committee with eight "do pass"
recommendations, two "no recommendation" recommendations,
and with one previously published fiscal impact note: FN1
(DFCS) and one previously published zero fiscal impact
note: FN2 (JUD).
[note: Co-Chair Schrage was absent from the vote]
Co-Chair Josephson relayed that there were several days on
the schedule for next week committed to taking up a
supplemental budget to pay the FY 25 debt and items the
governor sought as supplementals. He relayed that the
committee would consider a CS.
Co-Chair Foster reviewed the agenda for the following day.
Representative Tomaszewski asked about the mention of the
six additional contract negotiations coming forward. He
asked if the contracts would be in the revised governor's
budget.
Co-Chair Josephson responded that the items would be in the
FY 26 budget.
ADJOURNMENT
3:47:05 PM
The meeting was adjourned at 3:47 p.m.