Legislature(1995 - 1996)

04/23/1996 03:04 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                          
                       STANDING COMMITTEE                                      
                         April 23, 1996                                        
                           3:04 p.m.                                           
 MEMBERS PRESENT                                                               
 Representative Cynthia Toohey, Co-Chair                                       
 Representative Con Bunde, Co-Chair                                            
 Representative Gary Davis                                                     
 Representative Norman Rokeberg                                                
 Representative Caren Robinson                                                 
 Representative Tom Brice                                                      
 Representative Al Vezey                                                       
 MEMBERS ABSENT                                                                
 COMMITTEE CALENDAR                                                            
 CS FOR SENATE BILL NO. 244(FIN) am                                            
 "An Act relating to transportation of public school students;                 
 relating to school construction grants; relating to state                     
 foundation aid and supplementary state aid for education; and                 
 providing for an effective date."                                             
      - BILL WAS TABLED                                                        
 CS FOR SENATE BILL NO. 253(FIN)                                               
 "An Act relating to insurance coverage for costs of prostate cancer           
 or cervical cancer detection."                                                
      - HEARD AND HELD                                                         
 HOUSE BILL NO. 488                                                            
 "An Act relating to matching funds requirements for municipal                 
 school construction grants."                                                  
      - BILL POSTPONED                                                         
 PREVIOUS ACTION                                                               
 BILL:  SB 244                                                               
 SHORT TITLE: STATE AID TO EDUCATION                                           
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
 JRN-DATE     JRN-PG               ACTION                                      
 01/26/96      2224    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/26/96      2224    (S)   HES, FIN                                          
 01/26/96      2224    (S)   FISCAL NOTE (DOE)                                 
 01/26/96      2224    (S)   GOVERNOR'S TRANSMITTAL LETTER                     
 02/28/96              (S)   HES AT  9:00 AM BUTROVICH ROOM 205                
 02/28/96              (S)   MINUTE(HES)                                       
 03/06/96              (S)   HES AT  9:00 AM BUTROVICH ROOM 205                
 03/06/96              (S)   MINUTE(HES)                                       
 03/06/96      2625    (S)   HES RPT  2NR 1AM                                  
 03/06/96      2625    (S)   PREVIOUS FN (DOE)                                 
 03/27/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/02/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/11/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/11/96              (S)   RLS AT  7:45 PM FAHRENKAMP RM 203                 
 04/11/96      3148    (S)   FIN RPT  CS  1DP 6NR     SAME TITLE               
 04/11/96      3148    (S)   FISCAL NOTE TO CS (DOE)                           
 04/12/96      3193    (S)   RULES TO CALENDAR & 1DNP  4/12/96                 
 04/12/96      3196    (S)   READ THE SECOND TIME                              
 04/12/96      3196    (S)   PLACED AT BOTTOM OF CALENDAR                      
 04/12/96      3210    (S)   FIN  CS ADOPTED UNAN CONSENT                      
 04/12/96      3211    (S)   AM NO  1     FAILED  Y9 N10 E1                    
 04/12/96      3212    (S)   AM NO  2     FAILED  Y7 N12 E1                    
 04/12/96      3213    (S)   AM NO  3     FAILED  Y7 N12 E1                    
 04/12/96      3215    (S)   AM NO  4     ADOPTED Y12 N7 E1                    
 04/12/96      3217    (S)   AM NO  5     WAS NOT OFFERED                      
 04/12/96      3217    (S)   ADVANCED TO THIRD READING UNAN                    
 04/12/96      3217    (S)   READ THE THIRD TIME CSSB 244(FIN) AM              
 04/12/96      3218    (S)   PASSED Y11 N8 E1                                  
 04/12/96      3218    (S)   EFFECTIVE DATE PASSED Y19 N- E1                   
 04/12/96      3218    (S)   PHILLIPS    NOTICE OF RECONSIDERATION             
 04/15/96      3246    (S)   RECON TAKEN UP - IN THIRD READING                 
 04/15/96      3246    (S)   HELD ON RECONSIDERATION TO 4/16                   
 04/16/96      3316    (S)   IN THIRD READING ON RECONSIDERATION               
 04/16/96      3316    (S)   RTN TO 2ND RESCIND ACTN FLG AM 1                  
                             Y16 N4                                            
 04/16/96      3316    (S)   RESCINDED ACTN FLG TO ADPT AM 1                   
                             Y14 N6                                            
 04/16/96      3317    (S)   AM NO  1     ADOPTED Y13 N7                       
 04/16/96      3317    (S)   AUTOMATICALLY IN THIRD READING                    
 04/16/96      3317    (S)   RETURN TO SECOND FOR AM 6  UNAN                   
 04/16/96      3318    (S)   AM NO  6     MOVED BY PHILLIPS                    
 04/16/96      3318    (S)   AM NO  6     FAILED  Y10 N10                      
 04/16/96      3325    (S)   AUTOMATICALLY IN THIRD READING                    
 04/16/96      3325    (S)   RETURN TO SECOND FOR AM 7  UNAN                   
 04/16/96      3325    (S)   AM NO  7     MOVED BY HALFORD                     
 04/16/96      3325    (S)   AM NO  7     ADOPTED Y12 N8                       
 04/16/96      3326    (S)   AUTOMATICALLY IN THIRD READING                    
 04/16/96      3326    (S)   PASSED ON RECONSIDERATION Y12 N8                  
 04/16/96      3326    (S)   EFFECTIVE DATE PASSED Y18 N2                      
 04/16/96      3329    (S)   TRANSMITTED TO (H)                                
 04/17/96      3808    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/17/96      3808    (H)   HES, FINANCE                                      
 04/23/96              (H)   HES AT  3:00 PM CAPITOL 106                       
 BILL:  SB 253                                                                
 SPONSOR(S): SENATOR(S) DUNCAN,Ellis,Salo,Zharoff,Lincoln,Kelly;               
 REPRESENTATIVE(S) Robinson,Kubina,Navarre                                     
 JRN-DATE     JRN-PG               ACTION                                      
 02/02/96      2279    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2280    (S)   L&C, FIN                                          
 02/05/96      2309    (S)   COSPONSOR(S):  ELLIS, SALO                        
 02/07/96      2330    (S)   COSPONSOR(S):  ZHAROFF                            
 03/07/96              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 03/07/96              (S)   MINUTE(L&C)                                       
 03/12/96              (S)   MINUTE(L&C)                                       
 03/14/96      2736    (S)   L&C RPT  3DP 1NR                                  
 03/14/96      2736    (S)   ZERO FISCAL NOTES (DCED, ADM)                     
 03/28/96              (S)   FIN AT  8:30 AM SENATE FINANCE 532                
 04/02/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/03/96              (S)   RLS AT  1:15 PM FAHRENKAMP RM 203                 
 04/03/96      3042    (S)   FIN RPT  CS  7DP       NEW TITLE                  
 04/03/96      3042    (S)   ZERO FN TO CS (ADM)                               
 04/03/96      3042    (S)   PREVIOUS ZERO FN (DCED)                           
 04/10/96      3112    (S)   RULES TO CALENDAR  4/10/96                        
 04/10/96      3115    (S)   READ THE SECOND TIME                              
 04/10/96      3115    (S)   FIN  CS ADOPTED      Y18 N2                       
 04/10/96      3115    (S)   ADVANCE TO THIRD READING FLD Y14 N6               
 04/10/96      3136    (S)   COSPONSOR:  LINCOLN                               
 04/10/96      3116    (S)   THIRD READING 4/11 CALENDAR                       
 04/11/96      3167    (S)   READ THE THIRD TIME  CSSB 253(FIN)                
 04/11/96      3168    (S)   PASSED Y19 N1                                     
 04/11/96      3168    (S)   KELLY  NOTICE OF RECONSIDERATION                  
 04/12/96      3205    (S)   RECON TAKEN UP - IN THIRD READING                 
 04/12/96      3205    (S)   COSPONSOR(S): KELLY                               
 04/12/96      3206    (S)   PASSED ON RECONSIDERATION Y18 N1 E1               
 04/12/96      3220    (S)   TRANSMITTED TO (H)                                
 04/15/96      3733    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/15/96      3733    (H)   L&C, STATE AFFAIRS                                
 04/15/96      3783    (H)   HES REFERRAL ADDED                                
 04/15/96      3785    (H)   CROSS SPONSOR(S): ROBINSON, KUBINA                
 04/22/96      3936    (H)   CROSS SPONSOR(S): NAVARRE                         
 04/23/96              (H)   HES AT  3:00 PM CAPITOL 106                       
 WITNESS REGISTER                                                              
 RICHARD CROSS, Deputy Commissioner                                            
 Department of Education                                                       
 801 West 10th Street, Suite 200                                               
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-2800                                                    
 POSITION STATEMENT:  Testified on CSSB 244(FIN) am                            
 EDDY JEANS, Project Assistant                                                 
 School Foundation                                                             
 School Finance                                                                
 Department of Education                                                       
 801 West 10th Street, Suite 200                                               
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-8685                                                    
 POSITION STATEMENT:  Answered questions on CSSB 244(FIN) am                   
 VERNON MARSHALL, Executive Director                                           
 114 Second Street                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-3090                                                    
 POSITION STATEMENT:  Testified on CSSB 244(FIN) am                            
 LORRAINE FERRELL, Vice President                                              
 Anchorage School Board                                                        
 4358 Rendezvous Circle                                                        
 Anchorage, Alaska                                                             
 Telephone:  (907) 337-4003                                                    
 POSITION STATEMENT:  Testified in support of Section 1,                       
                      CSSB 244(FIN) am                                         
 JAMES ELLIOTT, Director                                                       
 School Finance                                                                
 Department of Education                                                       
 801 West 10th Street, Suite 200                                               
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-2891                                                    
 POSITION STATEMENT:  Testified on CSSB 244(FIN) am                            
 BILL WRIGHT, Administrator                                                    
 Pupil Transportation Program                                                  
 Department of Education                                                       
 801 West 10th Street, Suite 200                                               
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-8687                                                    
 POSITION STATEMENT:  Testified on CSSB 244(FIN) am                            
 KRISTINE PELLET, Student Intern                                               
   to Senator Jim Duncan                                                       
 Alaska State Legislature                                                      
 Capitol Building, Room 119                                                    
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-4766                                                    
 POSITION STATEMENT:  Presented sponsor statement for CSSB 253(FIN)            
 JANET PARKER                                                                  
 Retirement & Benefits Manager                                                 
 Department of Administration                                                  
 P.O. Box 110203                                                               
 Juneau, Alaska  99811-0203                                                    
 Telephone:  (907) 465-4470                                                    
 POSITION STATEMENT:  Answered questions on CSSB 253(FIN)                      
 GENE DAU, Representative                                                      
 American Association of Retired Persons; and                                  
    Veterans of Foreign Wars                                                   
 P.O. Box 20995                                                                
 Juneau, Alaska  99802                                                         
 Telephone:  (907) 586-3816                                                    
 POSITION STATEMENT:  Testified in support of CSSB 253(FIN)                    
 BILL CHISHAM                                                                  
 6550 North Douglas Highway                                                    
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-8911                                                    
 POSITION STATEMENT:  Testified in support of CSSB 253(FIN)                    
 BOB STALNAKER, Director                                                       
 Division of Retirement & Benefits                                             
 Department of Administration                                                  
 P.O. Box 110203                                                               
 Juneau, Alaska  99811-0203                                                    
 Telephone:  (907) 465-4460                                                    
 POSITION STATEMENT:  Testified in support of CSSB 253(FIN)                    
 GORDON EVANS, Lobbyist                                                        
 Health Insurance Association of America                                       
 318 4th Street                                                                
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-3210                                                    
 POSITION STATEMENT:  Testified in opposition to CSSB 253(FIN)                 
 REED STOOPS, Lobbyist                                                         
 Aetna Life & Casualty                                                         
 240 Main Street, Number 600                                                   
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 463-3223                                                    
 POSITION STATEMENT:  Testified on CSSB 253(FIN)                               
 JERRY REINWAND, Lobbyist                                                      
 Blue Cross of Washington & Alaska                                             
 2 Marine Way, Number 219                                                      
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-8966                                                    
 POSITION STATEMENT:  Testified on CSSB 253(FIN)                               
 ACTION NARRATIVE                                                              
 TAPE 96-44, SIDE A                                                            
 Number 001                                                                    
 The House Health, Education and Social Services Standing Committee            
 was called to order by CO-CHAIR CON BUNDE at 3:04 p.m.  Members               
 present at the call to order were Representatives Bunde, Toohey,              
 Davis, Robinson and Brice.  Members absent were Representatives               
 Rokeberg and Vezey.  He announced the calendar was SB 244,                    
 Calculation of State Aid for Education; SB 253, Insurance for                 
 Prostate and Cervical Cancer Tests and HB 488 was postponed.                  
 CSSB 244(FIN) am - STATE AID TO EDUCATION                                   
 CO-CHAIR BUNDE announced the first order of business to come before           
 Number 088                                                                    
 RICHARD CROSS, Deputy Commissioner, Department of Education, said             
 first he would point out the differences between the original                 
 Senate Bill 244 and the Committee Substitute before the committee.            
 The Committee Substitute has an amendment which reimburses the                
 Anchorage pupil transportation at the same level as the contractor            
 rate.  He noted this was not in the original bill.  The Department            
 of Education had provided a fiscal note which showed the impact of            
 changing that rate of reimbursement for the Anchorage School                  
 District.  That fiscal note reflects increased costs of $1.992 for            
 FY 97.  The fiscal note also indicates a potential cost for FY 96             
 which is speculative, but he would explain that for the committee.            
 Section 8 of the legislation specifies the Act would take effect              
 immediately and should the Governor sign the bill prior to July 1,            
 1997, then potentially it could impact and require a proration of             
 this year's transportation funding because the entitlement to the             
 Anchorage School District figured under this year's schedule would            
 be $2,050,243.  He commented that is one substantive change between           
 the original Senate Bill and the Committee Substitute.  The                   
 Committee Substitute also contains an amendment on portables, which           
 says that portables will not count into the space when used in                
 figuring unhoused students.  It is current practice of the                    
 department to not count that space now so the amendment would not             
 change their practice.                                                        
 MR. CROSS said the Committee Substitute increases the deductible              
 PL-874 from Regional Education Attendance Areas (REAA) from 95                
 percent in the original bill which would have started in FY 97 and            
 kicks it in this year at 96 percent.  He noted that both bills give           
 a payment to REAAs of $500 per instructional unit in order to meet            
 disparity.  He said the Committee Substitute contains a hold                  
 harmless provision and explained the Senate Finance Committee                 
 amended the bill to have it take effect this year in order to                 
 minimize the cost of the $500 instructional unit to the REAAs.  In            
 the original bill, next year the department had planned to pay out            
 the $500 payment, but in effect, recover it by increasing the                 
 deductible PL-874.  The Senate amendment kicks that system in this            
 year rather than next year.  Under the original bill, the method of           
 accomplishing that was to get a $1.2 million appropriation in order           
 to cover that $500 payment and did not increase the deductible.  So           
 the Senate Finance Committee put in a hold harmless provision so              
 any district that would lose money as a result of that 96 percent             
 deductible and then $500 payback would not in fact lose money, but            
 would be held even.                                                           
 Number 380                                                                    
 MR. CROSS stated the original bill allowed the Department of                  
 Education to adjust the $500 allotment to make sure that disparity            
 was met if such an adjustment should be necessary; the Committee              
 Substitute does not allow for that.  The original bill funded                 
 single sites through the formula program; the Committee Substitute            
 does not.  The Committee Substitute sunsets the provision for the             
 public school foundation formula on June 30, 1997, which the                  
 department interprets as meaning there would be no funding formula            
 after June 30, 1997, unless and until a new one was adopted.  The             
 effective dates are different and the fiscal notes are different.             
 The fiscal note for SB 244 of $311 million does not include the               
 transportation fees.  He commented those are essentially the                  
 differences between the original Senate Bill and the Committee                
 Substitute and he and members of the department were available to             
 answer questions.                                                             
 Number 458                                                                    
 CO-CHAIR BUNDE referred to the hold harmless provision and asked              
 Mr. Cross if he knew which districts and how much money was                   
 MR. CROSS invited Eddy Jeans from the department to join him at the           
 witness table.                                                                
 Number 493                                                                    
 EDDY JEANS, Project Assistant, School Foundation, School Finance,             
 Department of Education, explained the hold harmless section                  
 basically keeps districts at the level they would have been funded            
 in FY 96 had this legislation not passed.  He directed the                    
 committee's attention to the schedule attached to the fiscal note             
 and said there were nine districts that would qualify for the hold            
 harmless provision.  In other words, the hold harmless provision              
 ensures that these districts do not lose any funding in FY 96.                
 CO-CHAIR BUNDE questioned if the loss wouldn't occur in FY 97.                
 MR. JEANS explained that some districts will experience some loss             
 in FY 97 and noted the previously mentioned schedule indicated a              
 $20,000 increase.  He continued to explain the bracketed amounts              
 on the schedule indicate the state aid those districts would lose             
 in FY 97.  Essentially, the hold harmless provision is because the            
 districts already have their budgets established for the current              
 year and it would be difficult for them to make the adjustment in             
 the current year.                                                             
 Number 598                                                                    
 CO-CHAIR BUNDE commented he thought it would be cheap insurance to            
 change the effective date so it doesn't become effective until July           
 MR. CROSS pointed out the problem with changing the effective date            
 to July 1 for Sections 3, 4 and 5 is that the Senate Finance                  
 amendment took the mechanism the department was suggesting for next           
 year and wanted to implement it a year earlier in order to not                
 incur the full $1.2 supplemental cost in the budget.  Therefore,              
 some aspect of the bill has to be retroactive in order to enable              
 the department to deduct the PL-874 at 95 percent and return the              
 $500 payment to make the adjustments for this year.  In order for             
 that mechanism to work, there would have to be retroactivity.                 
 CO-CHAIR BUNDE said, "So we have good news and bad news.  If they             
 wanted to take a look at it as figuring into this year's -- you               
 said if it takes effect before July 1, districts on the pupil                 
 MR. CROSS said in his opinion, the cleanest way to accomplish that            
 would be to amend Section 8, not the retroactive part of it.                  
 CO-CHAIR BUNDE responded that was what he was referring to -                  
 amending Section 8 to read July 1.                                            
 Number 731                                                                    
 REPRESENTATIVE CAREN ROBINSON asked what the thinking was on                  
 Section 6?                                                                    
 MR. CROSS responded that Section 6 was added in the Senate Finance            
 Committee and he didn't want to characterize the author's intent              
 except to say there was a clear message they wanted a new formula;            
 they wanted this to be a temporary fix, not a permanent fix.                  
 REPRESENTATIVE NORM ROKEBERG arrived at 3:16 p.m.                             
 REPRESENTATIVE ROBINSON asked where the department was at in terms            
 of getting ready for a new formula.                                           
 MR. CROSS replied that Commissioner Holloway had met all last week            
 with the State Board of Education and he, Mr. Jeans and Dr. Elliott           
 would be meeting with the commissioner later that day.  He added              
 that an aggressive schedule had been set to adopt a new formula and           
 the department expects the Governor will submit a new formula in              
 legislation in January 1997.                                                  
 REPRESENTATIVE ROBINSON asked what happens if that time line wasn't           
 MR. CROSS responded that either existing legislation would have to            
 modified and extended or there have been years where there has been           
 no "funding formula" and there's been a temporary measure for                 
 continuing funding for districts from one year to the next.                   
 REPRESENTATIVE AL VEZEY arrived at 3:17 p.m.                                  
 CO-CHAIR BUNDE observed the State Board of Education worked long              
 and hard this past summer to rewrite the formula and stopped when             
 they got to making the hard decisions.  This will encourage the               
 board to get to the hard decisions and keep going.                            
 Number 915                                                                    
 REPRESENTATIVE GARY DAVIS said it was his understanding that the              
 amendment on the pupil transportation has added a $2 million fiscal           
 note to the bill.                                                             
 MR. CROSS said that's correct; it has added a nearly $2 million               
 fiscal note for FY 97 and potentially a fiscal note for FY 96 of              
 REPRESENTATIVE DAVIS observed that was approximately a $4 million             
 additional funding request this legislation would require as it               
 stands now.                                                                   
 MR. CROSS replied yes.                                                        
 REPRESENTATIVE DAVIS asked what happens if the funding isn't                  
 provided and the legislation passes as it is written.                         
 MR. CROSS stated the department would prorate the transportation              
 program and that proration would result in a proportional deduction           
 to all school districts in the state that have transportation                 
 Number 983                                                                    
 CO-CHAIR BUNDE asked if it would be fair to say the $4 million is             
 somewhat close to the $4 million originally cut from pupil                    
 transportation in the Governor's proposed budget.                             
 MR. CROSS replied it would be fair to say that if the original cut            
 was $4 million, but he didn't have that number readily available.             
 CO-CHAIR BUNDE thought it was in the ball park.                               
 Number 1027                                                                   
 VERNON MARSHALL, Executive Director, NEA-Alaska, said that NEA-               
 Alaska feels it is a tremendous and important obligation that                 
 Alaska educate all its children and that public schools have a                
 responsibility to accept all children and educate them to the best            
 of their opportunity.  In order to do that, funding is necessary              
 and NEA-Alaska has been an advocate for additional funding for                
 schools.  He said NEA-Alaska has some general concerns about the              
 formula, but it is their feeling that what makes the formula anemic           
 many times is the fact that funding isn't adequate and then local             
 governmental units don't pass that funding on to local school                 
 districts so that children benefit.  NEA-Alaska is concerned that             
 single site school districts have been omitted from CSSB 244(FIN)             
 which they believe is a cost of about $3.2 million in the scheme of           
 a $850+ million budget program for schools.  It is NEA-Alaska's               
 belief that single sites should be a priority; there are kids that            
 exist in those single sites who need to be taken care of.                     
 MR. MARSHALL said that NEA-Alaska feels that federal disparity is             
 an issue that needs to be addressed.  Their concern is that if it             
 is not addressed, it will have a negative impact through proration            
 on all children in the state by actually having the effect of                 
 reducing the instructional unit by approximately $2,000.  At a time           
 when schools are attempting to prepare kids for the challenges of             
 the new century, it is critical to upgrade and modernize facilities           
 relative to not only the books they read but the technology as well           
 and not the time to jeopardize funding.  He expressed concern with            
 the section that deals with June 30, 1997.  He said he understood             
 what happened in Michigan, having received some reports about the             
 "Michigan experience."   He thought Alaska given its uniqueness,              
 had a better approach to dealing with the whole issue of the whole            
 formula and as he understood, the State Board of Education was                
 carefully looking at the formula, entertaining proposals and ideas            
 and hopefully developing a process that is designed to involve                
 everyone in terms of identifying deficiencies if they exist, and              
 ways to deal with the formula that best meets the educational needs           
 of kids.  That process is taking place and NEA-Alaska feels that              
 sunsetting the formula raises the apprehension of a lot of people.            
 He wasn't trying to be paranoid, but he felt it is important that             
 schools be assured of some stability.  He didn't necessarily                  
 understand the history of the past when somehow schools were taken            
 care of when provisions sunsetted, but he thought there was a                 
 statement of state policy that everyone needed to be concerned                
 about.  He encouraged the committee to remove the section and take            
 a look at single site school, the disparity and the sunset                    
 provision.  NEA-Alaska believed those issues should be addressed              
 and removed.                                                                  
 Number 1271                                                                   
 CO-CHAIR TOOHEY asked Mr. Marshall if he had been involved in the             
 meetings that took place during the summer?                                   
 MR. MARSHALL responded that he was involved in some of the meetings           
 as an observer, not as a participant of the committee.  He did have           
 an opportunity to follow and hear much of the report.                         
 CO-CHAIR TOOHEY asked if Mr. Marshall was of the opinion that the             
 State Board of Education could have come up with an answer.                   
 MR. MARSHALL replied the committee had a tremendous amount of work            
 to do and he didn't know that they were given the resources and the           
 time to get the job done.  He believes the committee could come up            
 with an answer; however, he felt that probably some polarization              
 did take place during the process of the meetings, but in his                 
 opinion that could have been overcome.  He contended if that group            
 or another group is empowered and charged with the responsibility,            
 and given the time and support they could come up with an answer.             
 Number 1328                                                                   
 CO-CHAIR BUNDE said as an interested observer, he would                       
 characterize the end result of what was accomplished.  Basically              
 the committee came up with three possible solutions:  1) status               
 quo, hope for a miracle; 2) change the formula, hope for a miracle            
 by an infusion of a lot of money; and 3) change the formula and               
 live within the current budget which means there would be clear               
 winners and losers in various school districts.  The decision                 
 didn't go forth is because two of them were not viable options and            
 the third was not comfortable.                                                
 MR. MARSHALL thought the committee had addressed a couple of                  
 issues.  He said one was the formula fix for single site school               
 districts and the other was to minimally address the problem of us            
 not addressing the federal disparity issue.  He thought that was              
 put in place primarily because of changes on the federal level.               
 CO-CHAIR BUNDE understood the State Board of Education planned to             
 continue their quest and it is a high priority.  He asked if there            
 were any other questions for Mr. Marshall.  Hearing none, he                  
 invited Lorraine Ferrell to testify at this time.                             
 Number 1440                                                                   
 LORRAINE FERRELL, Vice President, Anchorage School Board (ASB),               
 said she particularly wanted to address Section 1 of CSSB 244(FIN)            
 amended.  She testified in support of Section 1 which corrects a              
 disparity in transportation reimbursement that the Anchorage School           
 District has been living with for quite some time.  This particular           
 section would reimburse the ASB 100 percent for their district-run            
 route, as well as their contracted routes.  This is important to              
 the ASB because currently they are funding that portion which is              
 not state funded out of their operating budget.  As times get                 
 tighter, they believe they could find better uses for this                    
 particular operating money, especially since every other district             
 in the state gets 100 percent reimbursement on their                          
 transportation.  She encouraged the committee to keep Section 1 in            
 the bill and eliminate the disparity that's been particularly aimed           
 at Anchorage for many years.                                                  
 Number 1529                                                                   
 REPRESENTATIVE DAVIS asked how long the disparity had been in                 
 MS. FERRELL said she couldn't answer in the exact number of years,            
 but it had been quite awhile.  She thought originally the disparity           
 was put into place when there was such a difference in compensation           
 for contracted drivers versus district drivers.  Now that those two           
 are pretty much in alignment, there is no reason to not fund both             
 at 100 percent.   She noted there is no contractors other than                
 Laidlaw Transit that could provide this service to the students of            
 the Anchorage School District.  She explained they were caught                
 between a rock and a hard spot; they continue to run routes on                
 their own to put them in a favorable position to be able to                   
 negotiate the contracted routes with Laidlaw.                                 
 Number 1568                                                                   
 REPRESENTATIVE DAVIS inquired to what degree had the disparity been           
 addressed in the legislative process.  He noted this was the first            
 time he had heard of it.                                                      
 MS. FERRELL believed it was just one of those "sleepers" that                 
 happened, and no one noticed it or realized that it was continuing            
 to go forward.  It came up in a review of their transportation                
 dollars so the Anchorage School District requested it be brought              
 before the legislature to be equalized.                                       
 CO-CHAIR BUNDE asked if there were other questions of Ms. Ferrell.            
 Hearing none, he asked if there was further public testimony on               
 CSSB 244(FIN) am.                                                             
 REPRESENTATIVE ROBINSON asked the Department of Education to                  
 explain how this language impacts the other school districts in the           
 Number 1620                                                                   
 JAMES ELLIOTT, Director, School Finance, Department of Education,             
 introduced Bill Wright, Administrator of the Pupil Transportation             
 Program who would provide some background on the difference between           
 the Anchorage contract routes and their district-run routes.                  
 Number 1644                                                                   
 BILL WRIGHT, Administrator, Pupil Transportation Program,                     
 Department of Education, said the effect of this amendment without            
 additional funding, will result in about another 5 percent                    
 proration of the program.  Each district will receive 5 percent               
 less funding.                                                                 
 REPRESENTATIVE ROBINSON confirmed that all the school districts               
 except Anchorage would receive 5 percent less.                                
 MR. WRIGHT responded that Anchorage would be prorated as well and             
 would receive 5 percent less.                                                 
 REPRESENTATIVE VEZEY stated he was confused as to why this wording            
 would avoid or not avoid a proration.                                         
 MR. WRIGHT asked Representative Vezey to repeat his question.                 
 REPRESENTATIVE VEZEY inquired if there was a proration if the                 
 appropriation is less than the expenses.                                      
 MR. WRIGHT responded affirmatively.                                           
 REPRESENTATIVE VEZEY commented that was a certain formula under               
 existing statute, but it changes under the proposed language.                 
 MR. WRIGHT said that was true.  He added that if the department               
 bases their budget on what they estimate to be the total                      
 entitlement, but receive less money than what they need to fully              
 fund the districts, everyone would be prorated equally.                       
 REPRESENTATIVE VEZEY asked if equally meant on a per dollar basis             
 or per student basis?                                                         
 MR. WRIGHT responded per dollar basis.                                        
 REPRESENTATIVE VEZEY affirmed it would be a straight across the               
 board per dollar basis proration.                                             
 MR. WRIGHT said the department reimburses under the pupil                     
 transportation program on an actual cost basis.  It depends on                
 their contracted daily rates, so that amount changes over the year            
 based on whether buses are added and (indisc.) changes, so this is            
 the department's best guess right now as to what their full funding           
 level is going to be.  However, during the year that amount can go            
 REPRESENTATIVE VEZEY asked how the proposed amendment to the                  
 statute change the formula?                                                   
 MR. WRIGHT responded it increases Anchorage's entitlement by                  
 approximately $1.2 million, so unless the department receives                 
 additional funding to cover that, their estimated entitlement in              
 the budget is $1.9 short.                                                     
 REPRESENTATIVE VEZEY remarked the wording could just as well read,            
 "The Anchorage School District is entitled to more money."                    
 MR. WRIGHT confirmed that.                                                    
 CO-CHAIR BUNDE asked if there were further questions or testimony?            
 Number 1774                                                                   
 REPRESENTATIVE ROKEBERG asked if the $500 REAA in Section 4 related           
 to the disparity problem?                                                     
 MR. ELLIOTT responded it was of a different type than the busing.             
 REPRESENTATIVE ROKEBERG said he was referring to the federal                  
 disparity definition and asked why it occurred.                               
 MR. ELLIOTT explained that the federal government changed the                 
 Number 1795                                                                   
 REPRESENTATIVE DAVIS recalled the discussion last year about the              
 non-counting of students housed in portables and said in his                  
 opinion they should be counted.  He asked Mr. Elliott to refresh              
 his memory regarding the reasons for the students not being                   
 MR. ELLIOTT understood that prior to this year, districts that had            
 students in portable classrooms were not counted as unhoused for              
 the purposes of requesting money to build facilities.  He noted the           
 department has grappled with the issue of unhoused students in                
 portable classrooms through the bond reimbursement grant review               
 committee that was set up under SB 7 which passed in 1993.  The               
 department grappled with the issue for better than a year and were            
 unable to resolve the issue, but the department, based on its own             
 interpretation, this year has left it up to districts as to whether           
 to count those students as housed or unhoused.  This amendment, as            
 it is written, doesn't do anything different than what the                    
 department is doing.  It did hurt Anchorage about a year ago,                 
 because when they made their submission to the department many of             
 students they had in portables were not counted as unhoused and               
 therefore, did not qualify for needed space.                                  
 Number 1853                                                                   
 CO-CHAIR BUNDE explained the students in portables were considered            
 adequately housed.  This amendment says they are not adequately               
 REPRESENTATIVE VEZEY expressed curiosity about how the Anchorage              
 School system works and inquired if they own their own buses.                 
 MR. WRIGHT explained the Anchorage district-operated purchase their           
 own buses.  They are the largest district-operated transportation             
 system in the state; the next largest is Barrow.                              
 REPRESENTATIVE VEZEY inquired how many buses the Anchorage district           
 MR. WRIGHT replied about 81.                                                  
 CO-CHAIR TOOHEY believed there were also Laidlaw-contracted buses.            
 MR. WRIGHT stated that Anchorage was unique in that they have                 
 district-operated and contracted within the same community.  He               
 believed that Laidlaw operates 158 buses in the community and the             
 district operates about 81.                                                   
 Number 1910                                                                   
 CO-CHAIR BUNDE asked if it would be a fair statement that the                 
 district started out with a busing program, owned some buses and              
 had employees, but as things grew they chose to contract.                     
 MR. WRIGHT commented he didn't know if it started out with just the           
 district and then went to contracting or if they both can about at            
 the same time.                                                                
 Number 1927                                                                   
 REPRESENTATIVE VEZEY asked if there was an evaluation of which                
 service was more cost effective.                                              
 CO-CHAIR BUNDE commented that unfortunately the representative from           
 the Anchorage School Board had departed, but he recounted that her            
 testimony had been that by providing their own, they set a base and           
 provide competition with the only vendor that provides this service           
 so they can keep the bids down.                                               
 MR. WRIGHT mentioned a study done in the early 1980s that compared            
 the district-operated with the contractors; comparing the rates and           
 the services.  That's when the district-operated rate of                      
 reimbursement was established which was 66.83 percent.  Since then,           
 that has just been carried over.                                              
 REPRESENTATIVE VEZEY inquired 66.83 percent of what.                          
 MR. WRIGHT responded 66.83 percent of what it actually cost them to           
 operate the district-operated program.  It includes the                       
 transportation director, the purchase of the buses, drivers, etc.             
 REPRESENTATIVE VEZEY inquired if that was to equate it to the cost            
 of contracting for the services.                                              
 MR. WRIGHT responded yes, because to contract it is much cheaper              
 than the district operating their own buses.  He added if you look            
 at it on a per student reimbursement on a per bus on a per mile               
 basis, to contract it is always cheaper than what the district can            
 operate it for themselves.  He was aware that a study had just been           
 completed by an accounting firm in Anchorage that compares the two            
 operations; however, that study has not been released.                        
 CO-CHAIR TOOHEY asked if Mr. Wright had any figures available from            
 that study?                                                                   
 MR. WRIGHT responded no, because it hadn't been released yet.                 
 Number 2004                                                                   
 CO-CHAIR BUNDE asked if there were further questions or anyone else           
 wishing to testify.  Hearing none, he closed public testimony.                
 Number 2017                                                                   
 CO-CHAIR TOOHEY offered an amendment to Section 8 to have this Act            
 take effect July 1, 1996.                                                     
 CO-CHAIR BUNDE asked if the department would like to comment on the           
 Number 2039                                                                   
 MR. CROSS said the amendment would change the fiscal note to only             
 include $1.9+ million for FY 97 for pupil transportation.                     
 CO-CHAIR BUNDE inquired if the fiscal note for FY 97 is $1.992                
 million as it stands now.                                                     
 MR. CROSS confirmed that.                                                     
 CO-CHAIR BUNDE asked if there was some possibility that the fiscal            
 note could have gone up, but this amendment would keep it at $1.992           
 MR. CROSS clarified the amendment would eliminate the potential of            
 the current year fiscal impact of $2,050,243.                                 
 Number 2071                                                                   
 REPRESENTATIVE ROBINSON asked Mr. Cross to put it in simple terms -           
 - was it good or bad?                                                         
 MR. CROSS remarked it depends on the point of view.  He said if you           
 believe that the 66.23 percent rate for reimbursement of the school           
 transportation program in Anchorage is unfair and that 100 percent            
 is fair, then they're only getting half-a-loaf and with this                  
 amendment and they're getting it corrected prospectively, but not             
 for this year.  It is predicated on the belief that that                      
 reimbursement is inappropriate and that Anchorage is entitled to a            
 higher rate.                                                                  
 Number 2111                                                                   
 CO-CHAIR BUNDE, speaking to the amendment, agreed he would like to            
 see the 100 percent reimbursement, but in the spirit of compromise            
 we change prospectively and it cuts the fiscal note for this year             
 in half.                                                                      
 CO-CHAIR BUNDE asked if there was any objection to Amendment 1.               
 Hearing none, Amendment 1 was adopted.                                        
 Number 2185                                                                   
 REPRESENTATIVE VEZEY proposed Amendment 2.  As a defender of the              
 private sector, Amendment 2 clarifies that the reimbursement of the           
 transportation costs would be on a daily cost comparison basis                
 rather than a level basis which tests will indicate that was to be            
 the same percentage of total cost.  This amendment would take it              
 back to the basis of if a municipality wishes to provide its own              
 transportation, it will be reimbursed at the lower unit cost                  
 available through the contracting.  He made a motion to adopt                 
 Amendment 2.                                                                  
 CO-CHAIR BUNDE objected to Amendment 2.                                       
 REPRESENTATIVE DAVIS understood Amendment 2 would return to the               
 status quo, as it had been in the past 5-10 years.                            
 Number 2208                                                                   
 MR. WRIGHT responded it would not return to the status quo.  He               
 said currently they are reimbursed on a percentage of their actual            
 cost instead of on a daily rate per bus which is how the contracts            
 are reimbursed.                                                               
 CO-CHAIR BUNDE recalled that Mr. Wright had previously testified              
 that the daily rate of the contractor is unknown at this point, so            
 adopting this amendment would say the district would be reimbursed            
 MR. WRIGHT interjected the department knows what the daily rates              
 are for the contracts, but they don't know what it is for the                 
 district-operated portion.                                                    
 CO-CHAIR BUNDE understood that Mr. Wright had testified that a                
 comparison had just been done and the audit showed the contract               
 daily rates, but not the district rates.  He asked if that was Mr.            
 Wright's testimony?                                                           
 MR. WRIGHT said yes, the contracts are on a daily rate.  The review           
 that was done compared the two operations but he didn't believe it            
 established a daily rate for the district-operated.                           
 Number 2246                                                                   
 REPRESENTATIVE DAVIS recollected the testimony of Ms. Ferrell had             
 been that she felt the costs were getting fairly even, although $2            
 million is not quite too even.                                                
 CO-CHAIR BUNDE pointed out it was important to remember that                  
 currently the Anchorage School District is reimbursed at 66 percent           
 of actual cost; it's not 66 percent of the private operator.  They            
 are not reimbursed at the private level, but rather 66 percent of             
 the actual cost.  He added that it's not sure what 66 percent of              
 the actual cost to the district is compared to the private                    
 Number 2286                                                                   
 REPRESENTATIVE ROBINSON was under the impression that this                    
 amendment brought it back to where it was originally.                         
 MR. WRIGHT commented it's extremely close; much closer than what              
 the first amendment does, but he couldn't say what the impact is of           
 reimbursing the district at the contracted daily rate.                        
 Number 2307                                                                   
 REPRESENTATIVE VEZEY clarified that Amendment 2 simply says that if           
 a public agency wants to compete with the private sector, they can            
 do that.  They will be reimbursed but only at the same cost that we           
 can contract for and receive the service.  He couldn't say how that           
 compares with the existing system but it does say there will not be           
 two unit costs for pupil transportation.                                      
 TAPE 96-44, SIDE B                                                            
 Number 001                                                                    
 REPRESENTATIVE BRICE said, "Considering the fact that currently not           
 fully funding student transportation - at least on our side of the            
 budget, that's still sort of nebulous as to what's happening there,           
 but what this does is it ensures that my district doesn't get                 
 brought down based on the old language.  There's not a transfer of            
 funds -- not as great of a transfer of funds."                                
 MR. WRIGHT said he couldn't answer that at this time because he               
 didn't know what the effect of reimbursing the district is at the             
 same rate as the contractor.  He added it would certainly be less             
 than the $1.9 million indicated on the original fiscal note.                  
 REPRESENTATIVE ROBINSON asked if the existing language was removed            
 on page 1, lines 8-12, would bring it back to the status quo?                 
 MR. WRIGHT responded that removing the original amendment would               
 bring it back to the status quo.  He added the department had met             
 with representatives from the Anchorage School District and have              
 agreed to revisit the issue of what their percent reimbursement is            
 for the district-operated.                                                    
 CO-CHAIR BUNDE remarked that Ms. Ferrell would be returning to give           
 more specific information about Anchorage.  He asked how many                 
 school districts own their own buses.                                         
 MR. WRIGHT guessed about 15 districts operated their own buses, but           
 they are typically 1 or 2 bus operations.  Usually when it gets               
 above that level, districts choose to contract it out.                        
 CO-CHAIR BUNDE asked if these were all small cities or districts?             
 MR. WRIGHT responded yes.                                                     
 CO-CHAIR BUNDE asked if the Fairbanks district owned any of their             
 own buses?                                                                    
 MR. WRIGHT replied no, they contract.                                         
 Number 112                                                                    
 REPRESENTATIVE DAVIS had spoken with the Kenai School District who            
 indicated they have their own in-house busing in Seward.  He                  
 explained the core contract for the central peninsula area is                 
 geographically conducive to a contract where Seward being separated           
 from the central peninsula would boost the contract price per bus             
 because of the distance between the central area.  He didn't know             
 how many buses were involved, but Seward had probably 800-1000                
 students, so there would be a number of buses in Seward.  It was              
 also indicated that the district preferred that because they have             
 something to compare when the contract prices come in.  If they               
 come in under their in-house price, then it is beneficial.  Also,             
 it had been alluded to that Mat-Su had some of their own buses and            
 he assumed probably the same rationale would apply; if there are              
 remote areas that don't fit into the central core, it would                   
 increase the contract price.                                                  
 MR. WRIGHT said Representative Davis was correct in that the Kenai            
 School District does operate the buses in Seward, they also have              
 other contracts through other contractors within the district.  The           
 Seward operation has about eight buses he believed.  He noted that            
 Mat-Su owns their own buses, but they use them for activity trips;            
 they are not reimbursed by the state.  All their state reimbursed             
 to/from school transportation is contracted by Laidlaw.                       
 CO-CHAIR BUNDE announced that Lorraine Ferrell was back and advised           
 her of the discussion of an amendment that would allow                        
 reimbursement only to the daily cost level; in other words to the             
 contracted cost.  He noted that questions had been raised about how           
 that would impact Anchorage, being the biggest owner of their own             
 busing system.                                                                
 Number 214                                                                    
 MS. FERRELL said the Anchorage School District would prefer to have           
 it reimbursed on a per route basis or a daily basis rather than the           
 cost per hour basis.                                                          
 CO-CHAIR BUNDE noted it would be on a daily basis, but what it                
 amounts to is that Anchorage would get reimbursed for the amount              
 they pay the private contractor Laidlaw, and not for the amount it            
 costs the district to run their buses.                                        
 MS. FERRELL said the Anchorage School District would not agree with           
 that amendment.                                                               
 CO-CHAIR BUNDE remarked he assumed that, but he was trying to get             
 an idea of the amount of the impact.                                          
 MS. FERRELL said it would take $1.9 million to bring it up to                 
 CO-CHAIR BUNDE stated this was different and explained that the               
 Anchorage School District gets reimbursed at 66 percent now and it            
 would take $1.9 million to bring that up to 100 percent.  He said             
 what we are doing is comparing now the cost of the 100 percent cost           
 of Anchorage owned buses as compared to the Laidlaw buses.  This              
 amendment would reimburse the Anchorage School District at the rate           
 paid to Laidlaw per day.  He asked Ms. Ferrell if she had an idea             
 of what it costs per day to run an Anchorage bus as opposed to what           
 it costs per day to run a Laidlaw bus.                                        
 MS. FERRELL thought there were individuals in the audience that               
 could answer that question.                                                   
 CO-CHAIR BUNDE commented that no one has been able to provide the             
 answer.  The bottom line is it costs the Anchorage School District            
 more to run the district-owned buses per day than it costs to run             
 a Laidlaw bus per day.  He noted that Ms. Ferrell had testified               
 earlier the district maintained the city portion in order to                  
 provide competition to Laidlaw, because she felt that without                 
 competition Laidlaw prices would go up.                                       
 MS. FERRELL said yes, there would be a 15 percent increase                    
 immediately in the cost of busing if the school district's busing             
 was eliminated.                                                               
 CO-CHAIR BUNDE inquired if that was 15 percent not just because               
 there would have to be more Laidlaw buses.                                    
 MS. FERRELL interjected it would be an overall increase of 15                 
 percent to the cost of busing because the competition has gone                
 away.  There would then be a sole source or a monopoly.                       
 Number 334                                                                    
 REPRESENTATIVE VEZEY offered that he had been around the public               
 procurement process for approximately 24 years and the competitive            
 marketplace will step in and will fill the gap.  He noted if there            
 was any validity to what was being said, the federal government               
 would build its own airplanes just to keep contractors in line, but           
 they learned a long time ago not to try to compete with the private           
 sector.  The competition with the opportunity to make a dollar is             
 a far stronger incentive than anything the district can do by                 
 threatening them with a couple of buses that probably costs the               
 district 50 percent more per hour to operate.                                 
 MS. FERRELL believed there was a rather unique situation in Alaska            
 in that Laidlaw has systematically bought out all the other bus               
 companies, so she didn't think there was much chance another bus              
 company would come in and establish a competitive market.                     
 REPRESENTATIVE VEZEY said the marketplace seems to belie that fact.           
 Laidlaw has bought out other companies simply because they have               
 underbid them.  He commented there was no shortage of people                  
 bidding on busing contracts in Fairbanks.  The incentive behind the           
 profit motive cannot be underestimated; it is tremendous.                     
 CO-CHAIR TOOHEY asked if Ms. Ferrell had any idea of the                      
 approximate amount of the annual contract for Laidlaw?                        
 MS. FERRELL said she didn't have that figure available at this                
 time.  She offered to provide the information at a later date.                
 REPRESENTATIVE DAVIS agreed with Representative Vezey regarding               
 competition.  He made reference to the Kenai School District and              
 said a couple of years ago Mayflower came in and outbid Laidlaw,              
 and Laidlaw eventually bought them out.  He didn't think there were           
 any laws that dictate that Laidlaw will be the only bidder in                 
 Anchorage, and perhaps in a couple years there will be competition.           
 Number 485                                                                    
 CO-CHAIR BUNDE noted Amendment 2 was before the committee and an              
 objection had been raised.  A roll call vote was taken.  Voting in            
 favor to adopt Amendment 2 were Representatives Vezey, Davis,                 
 Brice, Robinson and Toohey.  Voting against Amendment 2 were                  
 Representatives Rokeberg and Bunde.  Co-Chair Bunde announced CSSB
 244(FIN) was tabled.                                                          
 CO-CHAIR BUNDE announced the next item on the agenda was CSSB
 253(FIN).  He turned the gavel over to Co-Chair Toohey.                       
 Number 543                                                                    
 KRISTINE PELLET, Student Intern to Senator Jim Duncan, said the               
 importance of screening for malignant cancer is well documented.              
 Both prostate and cervical cancer can be detected early by simple             
 screening procedures and Senator Duncan believes that insurance               
 companies should provide coverage for these screening procedures.             
 Prostate cancer accounts for 36 percent of all male cancer and is             
 the second leading cause of death in men after lung cancer as                 
 reported by the National Cancer Institute.  It is estimated that              
 this year in the United States 25,000 men will be diagnosed with              
 prostate cancer and about 40,000 men will die from this disease.              
 Although often presumed to develop slowly, nearly two-thirds of new           
 cancer cases have spread beyond the prostate gland by the time of             
 diagnosis.  In addition to coverage of the Prostate Specific                  
 Antigen (PSA) test, SB 253 would require coverage for cervical                
 cancer screening.  Cervical cancer accounts for about 16 percent of           
 all cancers in women.  It is estimated that nearly one-half of the            
 approximately 15,000 women who are diagnosed annually with the                
 condition never underwent early screening procedures which could              
 have led to highly successful treatment.  Senate Bill 253 makes               
 health issues a priority.  Senator Duncan welcomes the committee's            
 support in requiring that insurance companies cover the cost of               
 prostate and cervical cancer screening.  Ms. Pellet offered to                
 answer any questions from the committee.                                      
 Number 617                                                                    
 REPRESENTATIVE ROKEBERG asked what the approximate cost is for a              
 PSA test and a Pap smear?                                                     
 Number 643                                                                    
 JANET PARKER, Retirement & Benefits Manager, Department of                    
 Administration, testified the cost of a PSA test is between $60 and           
 $70 in the state of Alaska.  She didn't have the information                  
 available on the cost of a Pap smear test.                                    
 CO-CHAIR TOOHEY said as a recipient of a Pap smear for many years,            
 the cost runs between $60 and $80.                                            
 CO-CHAIR BUNDE pointed out there had been a Health Fair a couple of           
 weeks ago and the cost of a PSA test was $30.                                 
 CO-CHAIR TOOHEY asked if there were any questions for Ms. Parker.             
 Hearing none, she asked Gene Dau to present his testimony.                    
 Number 689                                                                    
 GENE DAU, Representative, American Association of Retired Persons             
 and Veterans of Foreign Wars, said that prostate cancer is an issue           
 that men don't particularly like to talk about, even with their               
 doctors.  His doctor talked with him about prostate cancer and                
 encouraged him to take the blood test, which he did.  He said                 
 prostate cancer is the second largest killer of men in the United             
 States.  He shared the story of the Juneau swim coach who hadn't              
 undergone the screening test and discovered he had prostate cancer.           
 Unfortunately, it wasn't detected earlier enough and the cancer               
 spread through other parts of his body.  He was given 17 months to            
 35 months to live.  He noted this is a problem and something needs            
 to be done to encourage men to take this simple test.  Mr. Dau                
 believed that requiring insurance companies to provide and pay for            
 the test will result in more men taking the test as part of their             
 annual physical so it can be detected early enough and treated.  In           
 most cases it can be cured if it is detected early.  He supports              
 the bill without the amendment which changes the language to                  
 "offer" rather than "provide" coverage for the costs of prostate              
 cancer screening tests.  If the test is offered, the patient could            
 still have to pay for it, whereas if it is provided, the insurance            
 company will have to cover the cost.                                          
 Number 870                                                                    
 CO-CHAIR BUNDE agreed that men should take more control of their              
 health and be more aware of prostate cancer.  However, he disagreed           
 that insurance companies will pay for the testing in that everyone            
 will pay for it through increased insurance premiums.  The                    
 insurance companies are not going to take the costs out of their              
 profits just because it's mandatory coverage; they will simply                
 raise the premiums to cover the service.                                      
 MR. DAU thought it would be advantageous for the insurance                    
 companies if cancer is detected in the early stages in that it                
 would certainly save a lot of money later on.                                 
 CO-CHAIR TOOHEY commented that's called preventative medicine and             
 that's always advocated but not necessarily funded.  She asked Mr.            
 Dau if he would continue to have the screening test even without              
 the insurance company paying for it.                                          
 MR. DAU said he probably would.  However, he thought it would                 
 encourage more men to discuss it with their doctors and have the              
 screening test.  He commented there were a lot of people living on            
 fixed incomes who probably couldn't afford to pay for the test and            
 he believed that everything should be done to encourage men to have           
 the PSA test.                                                                 
 CO-CHAIR TOOHEY thought education was the key and AARP played a               
 vital role in getting the message out of the importance of the                
 screening test through their monthly newsletters.  Personally, she            
 didn't believe it was the role of government to insist that people            
 get a PSA test, Pap smear or mammogram.                                       
 Number 1074                                                                   
 BILL CHISHAM, resident of Juneau and state employee, testified in             
 support of CSSB 253(FIN) on his own behalf.  He noted that in 1991            
 Aetna covered the cost of his PSA test and the cost was $77.  The             
 first two years he had the test, Aetna covered the cost; however,             
 the last few years Aetna has not paid for it.  He inquired of Aetna           
 why they would no longer cover the cost and the response he                   
 received was, "Well, apparently we made a mistake before by                   
 covering the cost of the test."  He continues to have the test and            
 to pay for it himself because he is in the age range at risk.  He             
 noted that a dental examination is covered as preventative                    
 medicine, but Aetna alludes to the fact that the PSA test may be              
 preventative medicine and therefore will not cover the cost.  He              
 related that he is not opposed to insurance companies.  He attended           
 the Aetna school on health insurance a number of years ago and has            
 spent approximately the last 30 years reviewing insurance contracts           
 and dealing with insurance matters.  He urged the committee's                 
 support of this legislation.                                                  
 CO-CHAIR TOOHEY remarked that people should be encouraged to take             
 advantage of the services offered at the recent Health Fair, which            
 is half the cost for the PSA test.                                            
 REPRESENTATIVE ROKEBERG asked if he was correct in that Aetna had             
 drawn a distinction between this being a preventative type medicine           
 vis a vis a treatment.                                                        
 MR. CHISHAM said yes, it was his understanding the doctor would do            
 the examination with the potential of detecting something rather              
 than treating something.  He questioned how that would equate with            
 going to a dentist on an annual basis, finding a cavity and then              
 taking the action to correct that, whereas Aetna would not cover              
 this on the same basis.  He added there apparently was a medical              
 opinion, which he didn't feel qualified to comment on, that perhaps           
 this test is not the best way to detect prostate cancer.  However,            
 he felt there was argument on both sides of that issue.  When there           
 are two tests available and this test offers a very scientific                
 approach, he was more in favor of this test than hoping the                   
 examining physician in conducting the other test can detect a                 
 minuscule difference in size or texture of what he is examining.              
 He felt there was too much possibility that something might be                
 overlooked during the examination, so he had more faith in this               
 Number 1292                                                                   
 BOB STALNAKER, Director, Division of Retirement & Benefits,                   
 Department of Administration, testified the Administration supports           
 CSSB 253(FIN).  He noted that everyone knows there are certain                
 steps that can be taken to find illnesses earlier on that will save           
 the health costs into the future for both insurance companies and             
 employers.  However, it is a hard step to take because it generally           
 costs money up-front to be able to find illnesses in the earlier              
 stage.  He clarified that under the state of Alaska's plan, this              
 test is not denied all the time; it is covered after the digital              
 test has been performed or if there is indications by the doctor              
 that there is the need for this test as a further test.  Also, the            
 test itself is generally performed in a well-physical and that is             
 a cost borne entirely by the employee at this point.  He explained            
 that's why the fiscal note from the Division of Retirement &                  
 Benefits shows there will be an impact on the plan.  He commented             
 that if the number of tests increase, there will be a cost but the            
 employees are paying the cost themselves now by virtue of the                 
 Supplemental Benefits System (SBS) Option 1.                                  
 CO-CHAIR TOOHEY asked him to explain how the employees are paying             
 MR. STALNAKER explained the Supplemental Benefits Option 1                    
 provision under the state plan provides for an annual well-                   
 physical.  Currently, the annual well-physical will cover a digital           
 exam and only in the case that further test is needed will the plan           
 cover this test.  In other words, the current plan covers the                 
 digital exam.  This bill would provide for the SBS to also cover              
 the blood test as an initial test.                                            
 CO-CHAIR TOOHEY inquired if the state plan covers the cost if the             
 doctor would like to do blood test, also.                                     
 MR. STALNAKER responded it would not be covered in the event the              
 doctor would like to do the test; there has to be an indication or            
 a finding by the doctor.                                                      
 Number 1441                                                                   
 REPRESENTATIVE VEZEY questioned why this wasn't negotiated into the           
 contract if the Administration believes this is a good idea; there            
 doesn't need to be a law to negotiate benefits for employee health            
 MR. STALNAKER stated that was true for the state and yes, the state           
 employees can through negotiation amend the health contracts to               
 include these provisions at whatever the cost is, which he believed           
 wouldn't be much.  The Administration support is as a public                  
 policy:  Early detection helps find the number 2 killer of men in             
 the country at an early stage where not only can treatment be                 
 provided that will save lives but also at a much lower cost to the            
 health industry as a whole.  The Administration's support is based            
 on the policy issue that pre-advanced notice through this kind of             
 test is more accurate than just a digital type of an examination.             
 REPRESENTATIVE VEZEY again questioned why the Administration didn't           
 negotiate that into the health benefits package for state                     
 MR. STALNAKER remarked he is not part of the negotiations for labor           
 contracts and he wasn't sure what the strategy is currently with              
 negotiating on the contracts for this unique provision.  Therefore,           
 he couldn't speak to if the Administration is or why it isn't                 
 negotiating to include this provision under the plan.  He                     
 reiterated the inclusion of this provision under the state health             
 plan deals with state employees, and it does not deal with the                
 coverage of this kind of treatment in general.                                
 REPRESENTATIVE VEZEY noted there are a number of state employees              
 who are not part of a bargaining unit, but they are covered by the            
 state plan the Administration puts together on their behalf.  If              
 the Administration believes this is a good policy, why don't they             
 negotiate it into that service?                                               
 MR. STALNAKER pointed out that a change in the health plan is being           
 looked at for non-covered employees which would include a flexible            
 benefit plan that employees then could select certain types of                
 coverages but there would be minimal coverages.  As a matter of               
 fact under that plan, one of the minimal coverages is a well-                 
 physical for employees annually because it has been determined that           
 it is a good idea for people to get physicals from time to time.              
 Therefore, the idea of preventative care or early detection would             
 be embedded in that approach to the flexible plan being looked at.            
 REPRESENTATIVE VEZEY asked Mr. Stalnaker, "Then is your testimony             
 that the Administration intends to make this sort of health care as           
 a mandatory provision that's employee's health care packages for              
 non-covered employees at least, if not for covered employees?"                
 MR. STALNAKER said, "The Administration's position is that these              
 types of treatment are good for the health costs as a whole for               
 early detection.  What part of these coverages, whether it be Pap             
 smears, whether it be -- well, mammograms are already mandated                
 coverage, but that these kind of early detection tests are                    
 beneficial with the end result because the end result of the health           
 plan will be the result of a group of people that will include                
 legislative employees as well as Executive Branch employees as well           
 Court system employees, deciding exactly what kind of coverages               
 will be provided.  So, I can't speak to a guarantee, but certainly            
 the Administration is supportive of early detection and the types             
 of tests that would help to provide early detection."                         
 REPRESENTATIVE VEZEY asked if that means the Administration is                
 going to insist that this sort of medical plan be included in its             
 health care programs in the future or not?                                    
 MR. STALNAKER responded he couldn't speak specifically as to what             
 the plan will look like at the end.  He could however, say the                
 group that has worked on this plan to this date, meaning the                  
 supervisory bargaining unit as well as the Administration, believes           
 there is value to early detection tests and types of medical                  
 treatments that would provide early detections.                               
 Number 1748                                                                   
 CO-CHAIR TOOHEY asked why these people making the decisions on what           
 is included in the new contracts weren't at the hearing to testify?           
 She felt it was important to get the word to them that the                    
 committee believes these tests are necessary.  She announced the              
 bill would be held over until the following Tuesday to allow the              
 people involved to be present.                                                
 REPRESENTATIVE VEZEY said that Mr. Stalnaker had testified the                
 Administration supports this legislation, and then testified the              
 Administration thought it would be a good idea to put in the                  
 contract, but they weren't sure.  He asked if the Administration is           
 sure this legislation is a good bill?                                         
 MR. STALNAKER responded the Administration thinks this bill is a              
 good idea.                                                                    
 CO-CHAIR TOOHEY asked if the Administration thinks testing is a               
 good idea or do they think this bill is a good idea?                          
 MR. STALNAKER replied the Administration believes testing is a good           
 Number 1877                                                                   
 REPRESENTATIVE ROBINSON said this bill, as written, basically                 
 provides this coverage to all people of the state, not just state             
 MR. STALNAKER responded that was correct.                                     
 REPRESENTATIVE ROBINSON felt this would probably be difficult to              
 negotiate into a contract since the legislature has continued to              
 indicate they want any contract negotiations to come in at a lower            
 MR. STALNAKER confirmed that.  He added there had, at times, been             
 comments that the state's plan is very generous and that is a                 
 sensitive issue as the unions and Administration negotiate.                   
 REPRESENTATIVE ROBINSON surmised it was the Administration's                  
 position as preventative measure, that it is important all                    
 insurance coverage for health benefits offer the opportunity for              
 people to be able to get this kind of screening and have it paid              
 MR. STALNAKER said that was correct.                                          
 Number 1963                                                                   
 CO-CHAIR BUNDE said Representative Robinson had used two important            
 key words - opportunity and offering.  As a person who could be               
 impacted by prostate cancer, he had done some research on the issue           
 and had read that on a statistical average nationwide,                        
 participating in this screening test extends the life of prostate             
 cancer victims by six months and may in some cases decrease the               
 quality of life for the individuals who get a PSA test that is                
 high, have surgery and end up being incontinent the rest of their             
 life.  He noted there are some down sides; it should be a personal            
 decision and it is not going to prevent or cure prostate cancer.              
 MR. STALNAKER agreed there are weaknesses as well as strengths with           
 this type of testing and people involved need to know what the                
 numbers indicate.  However, it is a way that through a general                
 battery of blood tests the cost of the PSA test could be cut from             
 TAPE 96-45, SIDE A                                                            
 Number 025                                                                    
 CO-CHAIR BUNDE said he believes there is some validity in the test            
 and like many things it has some upsides and downsides.  He thought           
 the choices should be made available to as many men as possible and           
 in the case of cervical cancer, to as many women as possible, but             
 it is not free.  He admitted that maybe people are more inclined to           
 take the test if the money is not coming out of their pocket at the           
 moment, but that's no substitute for personal responsibility.  He             
 was inclined to change it to a mandatory offering rather than                 
 mandatory coverage, which allows a menu of services so to speak,              
 and people who are more inclined to need the services won't take it           
 out of their pocket at the time they need the test, but will pay a            
 premium over a period of time.  He asked what Mr. Stalnaker's                 
 reaction was to changing it from a mandatory coverage to a                    
 mandatory offering.                                                           
 Number 173                                                                    
 MR. STALNAKER said, "Over the years as a health plan administrator,           
 I generally am philosophically opposed to mandated coverages for              
 many of the reasons that were brought out, when I see over the                
 years certain things that you get a real good return for your                 
 investment.  That's my thinking and I think this is one of those              
 things and that's why I think it is a good idea.  It isn't lightly            
 that I say that because I don't think the place is to force an                
 employer to have to provide certain coverages, but sometimes you do           
 things for people's own good.  And I think this is a test that will           
 save that employer a lot of money through the very free market                
 dynamics that you identified.  Because the same can happen if you             
 pay a little bit up-front and the cost of that treatment for                  
 prostate cancer or for late detection, if they have positive                  
 results from the test can lower the costs of those same health                
 plans in the future.  It is for those reasons that I believe this             
 is a good idea.  I think changing it to a mandatory offering would            
 certainly dilute what the bill is trying to do in that respect.               
 The bill does provide for mandatory, and you're suggesting                    
 mandatory offering.  I think it is better than nothing because it             
 at least puts it out in the front and makes it an issue to discuss            
 with employers as insurance plans are suggested."                             
 CO-CHAIR TOOHEY thanked Mr. Stalnaker for his testimony and asked             
 Gordon Evans to come forward and present his testimony.                       
 Number 317                                                                    
 GORDON EVANS, Lobbyist, Health Insurance Association of America,              
 testified that as a representative of his client, they were opposed           
 to this legislation in its present form because of the mandated               
 requirement.  Mandated benefits result in increased premiums more             
 so in individual policies than in group policies because the                  
 benefit can be negotiated in a group policy where there are more              
 people in which to spread the cost.  The Health Insurance                     
 Association of America does support a mandated offering because               
 then the insurance companies can take it into consideration in                
 their underwriting.  He said incidentally, the Health Insurance               
 Association of America does not include Aetna or Blue Cross.                  
 MR. EVANS said on an individual basis, he recently underwent the              
 PSA testing as a part of his physical, and felt comfortable knowing           
 he got a low rating.  He noted the cost was $36 with his family               
 physician, so it isn't all that expensive.  With regard to                    
 insurance companies not covering the cost of the PSA test because             
 of it being preventative medicine, his client had advised that it's           
 not because it's preventative, but rather it's still considered               
 experimental and insurance companies do not pay for experimental              
 tests.  As an individual, he felt the testing was a good thing but            
 he didn't know that his insurance company should necessarily pay              
 for it or if he should.  He concluded that if the bill were changed           
 to a mandated offering, the association would support it.                     
 Number 504                                                                    
 CO-CHAIR TOOHEY asked if Mr. Evans' client considered Pap smears              
 and mammograms experimental?                                                  
 MR. EVANS said he did not know, but added that mammograms have been           
 mandated in this state for several years.                                     
 CO-CHAIR TOOHEY asked if there were any questions for Mr. Evans.              
 Hearing none, she asked Reed Stoops and Jerry Reinwand to testify.            
 CO-CHAIR TOOHEY asked if either Aetna or Blue Cross of Washington             
 & Alaska offered mammograms and Pap smears and/or PSA testing in              
 state contracts?                                                              
 Number 609                                                                    
 REED STOOPS, Lobbyist, Aetna Life & Casualty, testified that Aetna            
 handles the state contract and covers mammograms, Pap smears and              
 PSA testing, but as Mr. Stalnaker pointed out, if it is requested             
 by a doctor for medical reasons, it's covered.  In the case of the            
 PSA test, occasionally it is not covered if it is at the request of           
 the patient on a normal screening basis and there is no other                 
 interaction with the physician.                                               
 CO-CHAIR BUNDE said, "So it is often covered but not always                   
 CO-CHAIR TOOHEY commented it was just two years ago that mammograms           
 were covered; before that they were never covered.                            
 MR. STOOPS understood it was the same criteria; they were covered             
 if it was requested by the physician.  There would be a physical              
 exam first followed by a mammogram, if considered appropriate.                
 Number 671                                                                    
 JERRY REINWAND, Lobbyist, Blue Cross of Washington & Alaska, said             
 basically it operates the same for Blue Cross of Washington &                 
 Alaska.  He added that it depends on how the health care providers            
 deal with it.  He thought that under the retired state employee               
 plan, a physical examination is not covered.  But if the doctor               
 bills it as a diagnostic test, it is covered so providers can                 
 figure out how to get around it.                                              
 CO-CHAIR TOOHEY asked if there were further questions.  She asked             
 Mr. Stoops and Mr. Reinwand if they could see the need or benefit             
 monetarily for preventative medicine?                                         
 Number 747                                                                    
 MR. STOOPS replied yes, on behalf of Aetna.  As a matter of                   
 principle, Aetna normally agrees with the Health Insurance                    
 Association in that mandated coverages are often opposed because of           
 the fact that they increase the cost of care.  In the case of                 
 mammograms, PSA tests and Pap smears, Aetna does not oppose the               
 idea of making those mandatory if the legislature feels that                  
 benefits outweigh the small cost.  Those are areas that Aetna has             
 not opposed that kind of legislation.  He felt the argument could             
 be made that in the end early detection should result in more                 
 efficient treatment later on and ultimately will avoid high                   
 catastrophic treatment at a latter point if not detected.  He                 
 thought where there had been disagreement, it's been the fact that            
 new tests as they evolve become increasingly dependable and there's           
 increasing agreement among providers on exactly how to use the test           
 to best achieve the desired results.  So early on there is often              
 disagreements about whether they should be covered or not.  He felt           
 that PSAs, mammograms and Pap smears have evolved to the point now            
 where they are becoming increasingly common and not quite as                  
 controversial as to their effectiveness.  Therefore, he felt it was           
 more a matter of policy as to whether the legislature wanted to               
 make them mandated coverages.                                                 
 Number 845                                                                    
 MR. REINWAND said he shared Mr. Stoops' feelings and added there              
 has been a shift in the insurance industry where things that were             
 fought and not acceptable four or five years ago are now becoming             
 more acceptable.  He said Blue Cross has had a change in management           
 and a change in how things are viewed and he felt generally they              
 were trying to be more enlightened.  For example, when health care            
 was being debated in the legislature, Blue Cross came forward with            
 a proposal advocating a kids program that would have basically been           
 preventative in nature and very cost effective.  He concluded that            
 generally Blue Cross is supportive of preventative measures because           
 it saves money in the long run.                                               
 CO-CHAIR TOOHEY asked if Blue Cross paid for infant immunizations?            
 MR. REINWAND didn't know, but said he would check into it.                    
 MR. STOOPS remarked that Aetna donated vaccine to the state several           
 years and provided grant funds for non-state employees to get free            
 infant vaccinations.                                                          
 CO-CHAIR TOOHEY announced that she would be holding CSSB 253(FIN)             
 in committee until the following Tuesday.                                     
 Number 944                                                                    
 REPRESENTATIVE ROKEBERG asked if Blue Cross provides these tests in           
 their individual plans, non-group policies that are offered to the            
 MR. REINWAND said he would have to get back with Representative               
 Rokeberg; he didn't know at this point.                                       
 CO-CHAIR TOOHEY commented she didn't think there was an insurance             
 plan that didn't have a deductible, and she thought it would be               
 wonderful if there was an incentive such as deducting a certain               
 amount off their next visit for people who use their deductible for           
 a mammogram or a Pap smear.                                                   
 MR. REINWAND stated that Blue Cross of Washington & Alaska is                 
 having lots of problems in individual policies because of the                 
 "Reform Bill" that was passed in the state of Washington and it's             
 common knowledge that individual policies cost about $30 million              
 worth of losses to the company last year simply because of the                
 mandates and things of that nature.                                           
 CO-CHAIR TOOHEY reminded committee members that CSSB 253(FIN) would           
 be held over in committee.                                                    
 CO-CHAIR TOOHEY adjourned the meeting of the House Health,                    
 Education and Social Services Committee at 4:55 p.m.                          

Document Name Date/Time Subjects