Legislature(1995 - 1996)

02/02/1996 01:00 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE JUDICIARY STANDING COMMITTEE                              
                        February 2, 1996                                       
                           1:00 P.M.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Brian Porter, Chairman                                         
 Representative Joe Green, Vice Chairman                                       
 Representative Con Bunde                                                      
 Representative Bettye Davis                                                   
 Representative Cynthia Toohey                                                 
 Representative David Finkelstein                                              
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Al Vezey                                                       
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL 428                                                                
 "An Act giving notice of and approving a lease-purchase agreement             
 for construction and operation of a correctional facility in the              
 Third Judicial District, and setting conditions and limitations on            
 the facility's construction and operation."                                   
                                                                               
  - CSHB 428(JUD) PASSED OUT OF COMMITTEE                                      
                                                                               
 HOUSE BILL 429                                                                
 "An Act relating to the authority of the Department of Corrections            
 to contract for facilities for the confinement and care of                    
 prisoners; and annulling a regulation of the Department of                    
 Corrections that limits the purposes for which an agreement with a            
 private agency may be entered into."                                          
                                                                               
  - HEARD AND HELD                                                             
                                                                               
 HOUSE BILL 154                                                                
 "An Act requiring the Department of Law to provide guidelines                 
 regarding unconstitutional state and municipal takings of private             
 real property; relating to the taxation of private real property              
 taken unconstitutionally by state or municipal action; establishing           
 a time limit for bringing an action for an unconstitutional state             
 or municipal taking of private real property; and providing for an            
 effective date."                                                              
                                                                               
  - SCHEDULED BUT NOT HEARD                                                    
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 428                                                               
 SHORT TITLE: LEASE-PURCHASE CORRECTIONAL                                      
 SPONSOR(S): FINANCE                                                           
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 01/17/96      2470    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/17/96      2470    (H)   JUDICIARY, FINANCE                                
 01/26/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
 01/26/96              (H)   MINUTE(JUD)                                       
 01/31/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
 02/02/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
                                                                               
 BILL:  HB 429                                                               
 SHORT TITLE: CORRECTIONS: PRIVATE CONTRACT FACILITIES                         
 SPONSOR(S): FINANCE                                                           
                                                                               
 JRN-DATE     JRN-PG             ACTION                                        
 01/17/96      2470    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/17/96      2471    (H)   JUDICIARY, FINANCE                                
 01/26/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
 01/26/96              (H)   MINUTE(JUD)                                       
 01/31/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
 02/02/96              (H)   JUD AT 01:00 PM CAPITOL 120                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 JERRY SHRINER, Special Assistant                                              
   to Commissioner                                                             
 Department of Corrections                                                     
 240 Main Street, Suite 700                                                    
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4646                                                    
 POSITION STATEMENT:  Provided information on CSHB 428(JUD)                    
                                                                               
 RUSS KINNEY, Deputy Commissioner                                              
 Treasury Division, Department of Revenue                                      
 P.O. Box 110400                                                               
 11th Floor State Office Building                                              
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4880                                                    
 POSITION STATEMENT:  Provided information on CSHB 428(JUD)                    
                                                                               
 RITA ANDERSON                                                                 
 P.O. Box 1253                                                                 
 Nome, Alaska  99762                                                           
 Telephone:  (907) 443-2407                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 JOAN BENNETT SCHRADER, State Vice President                                   
 Coalition of Labor Union Women                                                
 P.O. Box 1587                                                                 
 Kenai, Alaska  99611                                                          
 Telephone:  (907) 283-4359                                                    
 POSITION STATEMENT:  Testified on CSHB 428(JUD)                               
                                                                               
 GLEN SCHRADER                                                                 
 P.O. Box 1264                                                                 
 Kenai, Alaska  99611                                                          
 Telephone:  (907) 283-4359                                                    
 POSITION STATEMENT:  Testified on CSHB 428(JUD)                               
                                                                               
 ROSS DUNFEE, Vice President of Engineering                                    
 Arctic Slope Consulting Group, Inc.                                           
 310 Arctic Slope Avenue                                                       
 Anchorage, Alaska  99518                                                      
 Telephone:  (907) 267-6268                                                    
 POSITION STATEMENT:  Testified in support of CSHB 428(JUD)                    
                                                                               
 DANIEL RAY                                                                    
 2550 Snow Shoe Lane                                                           
 Wasilla, Alaska  99654                                                        
 Telephone:  (907) 376-6150                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 RICHARD TAYLOR                                                                
 3020 David Road, D42                                                          
 Fairbanks, Alaska  99709                                                      
 Telephone:  (907) 479-6344                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 KEN BROWN                                                                     
 Department of Corrections                                                     
 10 Chugach Avenue                                                             
 Kenai, Alaska  99611                                                          
 Telephone:  (907) 283-4359                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 CHUCK O'CONNELL                                                               
 9851 Basher Drive                                                             
 Anchorage, Alaska  99507                                                      
 Telephone:  (907) 337-6452                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 GARY DAMRON, Officer III                                                      
 Hiland Mountain Correctional Center                                           
 AFSCME Local 52, AFL-CIO                                                      
 1510 Spenard Road, Suite 201                                                  
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 277-5200                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 STEVE LARSEN                                                                  
 American Federation of State & County                                         
   Municipal Employees                                                         
 707 Barrow Street                                                             
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 277-5200                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 ARNOLD VILLEGAS                                                               
 1802 Mark Alan                                                                
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 780-6573                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 BILL BONN                                                                     
 P.O. Box 32725                                                                
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 790-2665                                                    
 POSITION STATEMENT:  Testified about CSHB 428(JUD)                            
                                                                               
 PAM LABEAU, President                                                         
 Alaska State Chamber of Commerce                                              
 217 Second Street                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-2323                                                    
 POSITION STATEMENT:  Testified in support of CSHB 428(JUD)                    
                                                                               
 BILL PARKER                                                                   
 HC 1 Box 1418                                                                 
 Soldotna, Alaska  99669                                                       
 Telephone:  (907) 262-7677                                                    
 POSITION STATEMENT:  Testified against CSHB 428(JUD)                          
                                                                               
 DENNY DEWITT, Aide                                                            
 REPRESENTATIVE MULDER                                                         
 716 W. 4th Avenue, Suite 310                                                  
 Anchorage, Alaska  99501-2133                                                 
 Telephone:  (907) 465-2647                                                    
 POSITION STATEMENT:  Testified in support of CSHB 428(JUD)                    
                                                                               
 REPRESENTATIVE MULDER                                                         
 Alaska State Legislature                                                      
 State Capitol, Room 411                                                       
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-2647                                                    
 POSITION STATEMENT:  Testified in support of CSHB 428(JUD) as                 
      sponsor                                                                  
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-12, SIDE A                                                            
 Number 000                                                                    
                                                                               
 CHAIRMAN BRIAN PORTER called the House Judiciary committee meeting            
 to order at 1:00 P.M.  Members present at the call to order were              
 Representatives Bunde, Toohey and Davis.  Representatives Green and           
 Finkelstein arrived at 1:05 P.M.  Representative Vezey was absent.            
                                                                               
 HB 428 - LEASE-PURCHASE CORRECTIONAL FACILITY                                
 HB 429 - CORRECTIONS: PRIVATE CONTRACT FACILITIES                             
                                                                              
 CHAIRMAN PORTER offered that a there would be a public hearing for            
 CSHB 428(JUD) and with time permitting, a public hearing as well              
 for HB 154.                                                                   
                                                                               
 Number 232                                                                    
                                                                               
 JERRY SHRINER, Special Assistant to the Commissioner, Department of           
 Corrections, was the first witness to testify on CSHB 428(JUD).  He           
 stated there were two aspects about the bill which the department             
 finds of considerable interest.  This legislation provides a clear            
 recognition that additional prison beds are needed in the state.              
 The department agrees with this.  He noted the Cleary Final                   
 Settlement Act which dictates that the Department of Corrections              
 send prisoners out of state because of over-crowding in Alaska's              
 prisons.  The second thing the department finds particularly                  
 attractive is the notion of a lease purchase financing for this               
 prison bed space.                                                             
                                                                               
 MR. SHRINER stated that the department does not believe that they             
 have a problem with impediments to contracting out goods and                  
 services.  He believed that the department had an enviable record             
 in this regard.  They have an approximately $142 million budget and           
 over $30 million of this budget is contracted out for goods and               
 services.  This is more than 25 percent of their budget for                   
 everything from groceries to pens and pencils, prisoner space, etc.           
                                                                               
 Number 428                                                                    
                                                                               
 MR. SHRINER cited that the system includes 4,045 people in some               
 form of secured custody, from minimum to maximum security and in              
 half-way houses in the state.  The majority of this population                
 includes confined misdemeanants, restitution placements (under                
 prison sentence but, allowed to work and pay restitution), or as              
 furloughs from prison, which means they are technically                       
 incarcerated, but on furlough usually for community re-entry at the           
 end of their sentence.  This total in private facilities is about             
 650 people, or roughly 16 percent of their population which is in             
 secured custody.  About 450 of these individuals are in the state             
 in Community Residential Centers (CRC's) and halfway houses.                  
 There's been no study done, but in discussions with other states,             
 they believe that 16 percent of the secured population is greater             
 than the national average.  Almost all states have these types of             
 people in placements.  The department feels as though they are                
 doing well in this regard and don't feel as though they have a                
 problem.                                                                      
                                                                               
 Number 560                                                                    
                                                                               
 MR. SHRINER outlined the department's concerns regarding specific             
 sections of the legislation.  Firstly, he referred to page two,               
 line six of the CS, which adds the language, "including the                   
 standards of custody, care, and discipline that are required by               
 order of a court."  The department is concerned about this                    
 additional required standard, for example, if a facility did not              
 meet either the Cleary Order or any unforeseeable order this                  
 pending legislation would require that the department bring these             
 people out of certain facilities which would have been originally             
 chosen based on these particular prisoner's needs.                            
                                                                               
 MR. SHRINER shored up this point by using the Arizona facility as             
 an example.  If for some reason this prison did not meet Cleary               
 standards, presently this situation would be dealt with the court             
 and the department would argue their position.  This is not a                 
 statutory requirement and the department is concerned that this               
 pending legislation would give prisoners more standing to oppose              
 conditions that they weren't happy with or to demand immediate                
 redress than they currently have under the court order.                       
                                                                               
 Number 719                                                                    
                                                                               
 MR. SHRINER then moved to page two, Sections (B) "may provide for             
 the detention and confinement of all persons held by the                      
 commissioner under authority of state law, whether charged with or            
 convicted of felonies or misdemeanors, without regard to the                  
 custody classifications for prisoners as determined by the                    
 commissioner, unless the security of the facility is inconsistent             
 with those custody classifications; and (C) may not be                        
 administratively restricted or limited by the commissioner to use             
 only for prisoners involved in certain rehabilitative or treatment            
 programs authorized by law."                                                  
                                                                               
 MR. SHRINER stated that the department is concerned that these                
 sections would possibly conflict with sections of the already                 
 existing Alaska Statute 33.30 and add an unreasonable burden on the           
 Commissioner of Corrections.  The department asked the committee to           
 take a closer look at these sections.                                         
                                                                               
 Number 795                                                                    
                                                                               
 MR. SHRINER urged the requirement of feasibility studies and                  
 comprehensive cost benefit analysis before a decision is made with            
 regard to privatizing a facility.  He pointed out that these                  
 studies might be required anyway under existing labor contracts.              
 Mr. Shriner pointed out that some states are satisfied with their             
 private facilities and others are not.  The majority of states seem           
 to be in the middle.  Before this type of privatization project is            
 undertaken in Alaska, feasibility studies should be undertaken                
 while being mindful of Alaska conditions, costs, and the needs in             
 Alaska.  He stressed that these aspects are very important and ones           
 which the department would like to stress.                                    
                                                                               
 Number 893                                                                    
                                                                               
 MR. SHRINER referred to the section of the bill regarding the                 
 construction of a facility up to 1,000 beds in the third judicial             
 district.  The department's main concern is whether or not it is              
 necessary to place these beds all in one location, in one facility.           
 The department would like these beds spread around the state.  The            
 one facility, one location concept would make it difficult for the            
 department to move populations.  This would be especially true for            
 pre-trial and pre-sentence populations, in order to have them in              
 the right location, at the right time, without undue costs to                 
 support systems, judicial transportation officers and to the                  
 department.                                                                   
                                                                               
 Number 1013                                                                   
                                                                               
 MR. SHRINER referred to page three, line nine which states, "(1)              
 the total construction and related costs of establishing the                  
 correctional facility may not exceed $100,000,00."  His impression            
 regarding the intent of this section was to have both construction            
 and operation for this facility combined in one Request for                   
 Proposal (RFP) contract.  If this is the case, the department has             
 additional costs that are related to establishing standards,                  
 assisting the Department of Administration, the department of                 
 revenue, site selection and setting standards for the design of the           
 facility and in the on-going supervision of whatever private                  
 contractor who might operate the facility.  There will be                     
 additional operating costs through the construction phase and on an           
 on-going basis after this facility is in operation.  He wondered if           
 the additional costs which the department might accrue would also             
 be included in the related costs description outlined in this                 
 legislation.                                                                  
                                                                               
 Number 1102                                                                   
                                                                               
 MR. SHRINER stated that the department had concerns about what                
 population will be held in this proposed facility.  There seemed to           
 be some conflict with this issue.  He referred to the section                 
 dealing with changing contracting of rules and regulations which              
 seemed to indicate that this facility would hold all prisoners                
 committed to  the custody and care of the department.  Other                  
 sections of the bill seemed to indicate that this facility would              
 hold only prisoners classified except for maximum security                    
 prisoners.   The department's definition of classified are those              
 individuals who have been sentenced and classified as medium,                 
 close, etc.  The definition outlined in the legislation would                 
 preclude pre-trial and pre-sentence individuals from being held in            
 this facility.  He wondered what the intent of this section was.              
 He specified further that the department was confused as to whether           
 or not this facility would accommodate female prisoners and male              
 prisoners other than maximum or whether it would take female and              
 male, but not maximum of either one.                                          
                                                                               
 Number 1247                                                                   
                                                                               
 MR. SHRINER referenced the section where it discusses under what              
 conditions the department could assume the operation of this                  
 facility.  Their question was, would the state be precluded from              
 operating this facility if it was found that the state could                  
 operate it at less cost, and it would it preclude the state from              
 operating this facility if for some other reason it was found to be           
 in the best interest of the state, for example, treatment programs            
 of whatever issues might come up.  The limits of precluding the               
 state from operating this facility is important.                              
                                                                               
 MR. SHRINER stated that finally under Section 3, the department is            
 not clear about the reference to corrections employees being able             
 to operate as contractor for the construction and operation of the            
 facility.  While the department does not have objection to this               
 possibility, the way in which it is worded seems to indicate that             
 current employees could also be the contractor and operator of the            
 facility.  This is certainly not acceptable since this could allow            
 Mr. Shriner for example to be a special assistant, as well as a               
 stockholder and an operator of the facility.                                  
                                                                               
 Number 1371                                                                   
                                                                               
 REPRESENTATIVE CON BUNDE commented on an economy of scale concept             
 in light of bigger prisons being cheaper, he asked Mr. Shriner if             
 southcentral Alaska would be capable of filling a 1000 bed prison,            
 which would aid in not needing to move people around as much.                 
                                                                               
 MR. SHRINER stated that not entirely.  He added up the 200                    
 prisoners in Arizona, plus the roughly 200 prisoners over the                 
 operating capacity Statewide which makes 400 and an additional 100            
 or so people in the 6th Avenue jail, if that were to be closed,               
 totalling about 500 people.  He made the point that any of these              
 individuals could be spread out to different locations in Alaska,             
 other than the 6th Avenue prisoners.  He added that there is severe           
 over-crowding in Matsu pretrial.  If that facility doesn't expand             
 for example, and these people were held in an Anchorage facility,             
 they still need to go to court in the Matsu Valley, which means               
 transporting them back and forth.  Mr. Shriner summed up his                  
 comments by noting that after accounting for these 500 individuals,           
 there would still be 500 beds left over to be filled in this 1000             
 bed facility.  This additional bed space would still need to be               
 paid for.  He suggested incremental increases to the system to                
 avoid paying for something that's not being used.                             
                                                                               
 Number 1565                                                                   
                                                                               
 REPRESENTATIVE DAVID FINKELSTEIN asked what in the existing law               
 keeps the department from considering this legislation as an                  
 option.  Is the department able to carry out what's outlined in               
 this legislation if they chose to?  Does the department have the              
 discretion to most of this?                                                   
                                                                               
 MR. SHRINER thought there were no impediments to considering most             
 of what's in this bill.  The department in trying to develop a plan           
 which would involve building a new facility, they would have to               
 consider whether those facilities should be privatized or not.  The           
 department doesn't think they have any legal impediments to doing             
 this.                                                                         
                                                                               
 Number 1646                                                                   
                                                                               
 ROSS KINNEY, Deputy Commissioner, Department of Revenue, stated               
 that his testimony would center around the credit and financing               
 issues related to the issuance of $100 million of debt.  In this              
 case, if a private developer plans to sell certificates of                    
 participation or any other debt obligations associated with this              
 stream of state lease payment.  The developer would probably want             
 to receive a rating for the proposed financing and the state                  
 ultimately looses control over their representation before the                
 rating agencies since the developer doesn't require the state's               
 participation.  This could create serious coordination and                    
 representation problems for the state, particularly at this point             
 in time when they're dealing with a long-range financial plan for             
 the state of Alaska.                                                          
                                                                               
 MR. KINNY stated that even though this debt would be financed                 
 through a private developer, it would still appear on the state's             
 debt statement and would part of the state's debt load as computed            
 by the rating agencies.  The manner in which the rating agencies              
 consider this debt is very important for the state.  A private                
 developer interfacing with rating agencies without the benefit of             
 the state's participation could possibly result with adverse debt             
 ratio ramifications.                                                          
                                                                               
 MR. KINNEY added that the most important feature which needs to be            
 considered is the maturity structure.  The state bond committee is            
 currently in negotiations with the rating agencies regarding the              
 length of the state's maturity schedule.  The rating agencies have            
 historically viewed negatively any debt structure of the state that           
 extended approximately beyond the year 2003.  However, because of             
 the extension with the Prudoe Bay curve, the rating agencies now              
 indicate the possibility that they would be willing to extend this            
 curve to possibly 2015 without adverse affect on the state's                  
 ratings.                                                                      
                                                                               
 MR. KINNEY asked the committee to consider that these negotiations            
 are very sensitive and the state needs to be the primary liaison              
 with any credit issues related to matters of this nature.  He                 
 pointed out that advances to securing the state's own financing,              
 include the ability to refinance at any time favorable market                 
 conditions might provide savings.  Also, it would eliminate the               
 need to un-bundle the lease purchase from the construction and                
 operating contracts should any problem arise due to non-performance           
 on the part of the contractor or default in lease payments.                   
 Because of the state's high credit standing and institutional                 
 structure for the issuance of debt, it was Mr. Kinney's opinion               
 that the state can sell lease purchase obligations more efficiently           
 and at a lower cost than a private contractor.                                
                                                                               
 MR. KINNEY stressed that Office of Management and Budget (OMB) is             
 in the process of preparing a six year capitol needs assessment in            
 order to develop an overall financing plan to deal with these                 
 (indisc.)  He added that concerns could be raised by the rating               
 agencies and investors when a piece meal approach is taken to the             
 capitol financing without realizing how the whole puzzle fits                 
 together.  This comprehensive financing plan is needed in order to            
 resolve the fiscal gap and finance capitol moods in a financially             
 responsible manner.                                                           
                                                                               
 Number 1803                                                                   
                                                                               
 CHAIRMAN PORTER asked Mr. Kinny if there was a way to construct a             
 lease purchase agreement so that the state's rating not be                    
 affected, minimized or negated.                                               
                                                                               
 MR. KINNEY responded that it would be possible to include language            
 in an agreement which required the state's participation and                  
 negotiation as it relates to debt issuance.  He thought that the              
 state's (indisc.) involved in the process to insure that there was            
 a coordinated effort, not only in relation to this project, but to            
 other projects which are currently on the table is important.                 
                                                                               
 Number 1803                                                                   
                                                                               
 CHAIRMAN PORTER asked if there was anything in this bill which                
 would preclude this.                                                          
                                                                               
 MR. KINNEY said he didn't know if there was any language in this              
 present legislation which would precludes this, but he felt there             
 was no language which ensured that the state was in this loop.                
                                                                               
 CHAIRMAN PORTER asked that Mr. Kinney propose language which would            
 address his concerns.                                                         
                                                                               
 Number 1900                                                                   
                                                                               
 RITA ANDERSON, testified by teleconference from Nome against CSHB             
 428(JUD).  Ms. Anderson stated that she has given members of the              
 public tours of the facility in which she works in Nome.  She                 
 argued that an adequate amount of people to work as correctional              
 officers at reduced wages would not be feasible.  She noted the               
 high turnover rate of officers in private facilities and the                  
 increased incidents of violence, etc. of the prisoner population in           
 private facilities.                                                           
                                                                               
 Number 2043                                                                   
                                                                               
 JOAN BENNETT SCHRADER, testified by teleconference from Kenai on              
 CSHB 428(JUD).  She pointed out that this was an extremely                    
 important bill and that their chapter had requested that a public             
 hearing regarding this legislation be held on the peninsula.  The             
 Wildwood facility would be deeply affected by this.  The chapter              
 did not take a position good or bad about this bill, but asked that           
 they receive more information.                                                
                                                                               
 Number 2215                                                                   
                                                                               
 CHAIRMAN PORTER stated that the CS before the committee makes no              
 substantive change to the bill, it only rearranges two sections so            
 that they are isolated.                                                       
                                                                               
 REPRESENTATIVE CYNTHIA TOOHEY made a motion to adopt the CS before            
 the committee.  Hearing no objection, it was so moved.                        
                                                                               
 Number 2153                                                                   
                                                                               
 GLEN SCHRADER testified by teleconference from Kenai on CSHB                  
 428(JUD).  He noted the figures for this project.  He felt as                 
 though this legislation created duplication.  Instead of building             
 a new facility, he felt it would be economically more sound to add            
 onto already existing facilities.  He said he was totally against             
 the privatization of this facility.  Mr. Schrader also had his                
 doubts about the requirements of this private facility to supply              
 adequate meals to the prisoners, etc. because the word "similar"              
 used is so vague.  (It was not entirely clear as to what section of           
 the legislation he referenced.)                                               
                                                                               
 Number 2277                                                                   
                                                                               
 ROSS DUNFEE, Vice President of Engineering, Arctic Slope Consulting           
 Group, Inc. (ASCG) testified by teleconference from Anchorage to              
 indicate their support for HB 428 and HB 429.  He felt this                   
 legislation would help decrease prison over-crowding and provide an           
 important economic opportunity for the state.  Mr. Dunfee also felt           
 that privatization of such a facility would help to ease the                  
 financial pressure of the state to fund such a project.  He noted             
 the long and short term job opportunities created by this                     
 legislation.                                                                  
                                                                               
 Number 2376                                                                   
 DANIEL RAY testified by teleconference from Wasilla in opposition             
 to CSHB 428(JUD).  Mr. Ray works for the Department of Corrections.           
 He cited the weak reputation of private prisons in the other                  
 states.  He also pointed out the reduced wages and no benefit                 
 packages for private correction officers.  Mr. Ray thought that the           
 Matsu Valley correction officers could be put out of work by this             
 privatization concept.  He urged the committee to be careful in               
 their consideration of this legislation.                                      
                                                                               
 Number 2468                                                                   
                                                                               
 REPRESENTATIVE BUNDE said that it was his understanding that this             
 legislation would not jeopardize the employment of any existing               
 state employee prison guards.                                                 
                                                                               
 CHAIRMAN PORTER answered that this was his understanding too.                 
                                                                               
 TAPE 96-12, SIDE B                                                            
 000                                                                           
                                                                               
 REPRESENTATIVE JOE GREEN asked about the references in testimony              
 about closing the 6th Avenue jail in Anchorage and asked if this              
 were true.                                                                    
                                                                               
 CHAIRMAN PORTER understood that the usefulness of this facility has           
 come and gone, the facility itself, not the people running it.                
                                                                               
 Number 038                                                                    
                                                                               
 RICHARD TAYLOR, testified by teleconference from Fairbanks against            
 the privatization of prisons.  He works for the Fairbanks                     
 Correctional Center.  He noted the increase in contraband which               
 would result from privatization, among other things.  Mr. Taylor              
 said that a professional core of officers is needed, something a              
 private facility could not provide.                                           
                                                                               
 Number 106                                                                    
                                                                               
 KEN BROWN, testified by teleconference from Kenai against                     
 privatization of prisons.  He has worked for the Department of                
 Corrections for more than 24 years.  He has been a member of the              
 American Correctional Association since 1982 and is a certified               
 auditor for this same organization.                                           
                                                                               
 MR. BROWN noted that Alaska has one of the safest correctional                
 systems in the country.  There has never been an officer or an                
 inmate killed in prison.  The number of escapes is small compared             
 to other states, as well as prison violence.  The few hostage                 
 situations that have taken place ended without injury.                        
                                                                               
 MR. BROWN said the Department of Corrections has developed a                  
 professional work force.  If the state builds a 1000 bed facility             
 and this turns out to be a mistake, it will be a mistake which                
 would be hard to correct.  He noted that to institute the concept             
 of privatization would be a radical change.  This should not be               
 taken lightly.                                                                
                                                                               
 MR. BROWN pointed  out that the state should consider what they               
 would do if they were required to take over the administration of             
 a private institution.  He noted that a 1000 bed facility would               
 make up almost 30 percent of the already existing prison                      
 population.  He also questioned whether or not the state needed a             
 facility of this size.  If the state was required to take over this           
 facility they would have a hard time mustering the required staff             
 numbers.                                                                      
                                                                               
 MR. BROWN noted that this facility would not accommodate maximum              
 security inmates, hence it would probably not be intended for pre-            
 trial inmates.  He added that pre-trial space is sorely needed.               
 Mr. Brown also questioned the feasibility of the financial funding            
 of this project, which also called for the state to eventually buy            
 this facility.  He suggested that the state ask the department what           
 they could do with this money instead and cited some studies which            
 had been done in years past that addressed these projects.                    
                                                                               
 MR. BROWN also wondered why it wasn't a requirement of this                   
 privatization system to come under budget of what it would take the           
 state to build the same facility.  He said that if this were the              
 case, personnel costs would be cut first.  He outlined what each              
 correctional officers pay levels presently are.  Mr. Brown felt               
 that no correctional officer presently is overpaid.                           
                                                                               
 Number 490                                                                    
                                                                               
 CHUCK O'CONNELL testified by teleconference from Anchorage against            
 privatization of prisons.  He noted that he has been a labor                  
 relations advocate for the past 23 years and said that he was                 
 involved with the public employment act when it was passed in 1972.           
 During this time lots of consideration was given to public safety,            
 especially as it relates to people in 24 hour facilities.  He added           
 that employees working at facilities now are restricted from                  
 striking by law.  He wondered how privatization would affect this             
 concept and believed that the workers at this slated facility could           
 be organized, but wouldn't come under the same statutes not to                
 strike which affect current employees now.  If these employees were           
 able to strike, the liability would be unimaginable.                          
                                                                               
 Number 645                                                                    
                                                                               
 OFFICER GARY DAMRON testified by teleconference from Anchorage                
 against the privatization of prisons.                                         
                                                                               
 "I am currently a Correctional Officer III at Hiland Mountain                 
 Correctional Center.  I am the shift supervisor there.  I have ten            
 years with the Department of Corrections, and today I am here on              
 behalf of the 800 members of Alaska State Employee's Association              
 (ASEA), and nearly 75,000 Correctional Officers of American,                  
 Federal State, county and Municipal Employees (AFSCME) in AFSCME              
 Corrections United.                                                           
                                                                               
 If you will indulge me for a few minutes, I would like to give the            
 committee a brief history lesson on privatization in the                      
 corrections arena.  It has a long history of failure.  And as                 
 someone spoke on Wednesday, we either have to remember history or             
 we are doomed to repeat it.                                                   
                                                                               
 In 1780 the Walnut Street Jail in Philadelphia was opened by the              
 Church of Pennsylvania.  Then about 1810 it had to be taken over by           
 the city because of abuses against prisoners.                                 
                                                                               
 Louisiana was the first state in the mid-1800s to privatize a                 
 prison.  It is now known as Angola and, as you know, it is run by             
 the State of Louisiana.                                                       
                                                                               
 New York's most prominent prisons, both Auburn and Sing-Sing were             
 once private facilities run by companies.  In the late 1880s                  
 private prisons were so popular, they were the norm, not the                  
 exception.  But around 1900, due to the abuse complaints from the             
 private sector, both business and labor, the states were forced to            
 accept responsibility from the private companies to manage and                
 operate these facilities.  That's our history lesson; we know that.           
 We also know that we're thinking about doing it again.                        
                                                                               
 Some of the things about privatization that I would like to point             
 out is (1) there is a very substantial conflict of interest for a             
 private company to run a public prison.  The first is that the                
 state is charged by the Alaska Constitution with the reformation of           
 the offender and deterrence.  The private companies want to keep              
 the cells full, to keep profits up.  What incentive is there for              
 them to run quality rehabilitation programs?  Well, there's not.              
 Because, if you reform, the offender, he or she becomes a                     
 productive member of society and you lose your revenue.  The other            
 thing is, rehabilitation programs are very expensive.                         
                                                                               
 Another conflict of interest comes to disciplinary problems inside            
 of prisons.  One of our best management tools that we have today is           
 the forfeiture of statutory good time.  If I were running a private           
 prison and I thought I could take a few days or a few months away             
 from a prisoner and keep him in my jail, I would jump on it in a              
 heartbeat.  It means more money.                                              
                                                                               
 I would like to talk to you a little bit, too, about the two                  
 companies that seem to be at the forefront of Alaska's                        
 privatization efforts, Wackenhut and Corrections Corporation of               
 America (CCA).                                                                
                                                                               
 Wackenhut runs the Savannah River and Rock Flats Nuclear Test                 
 Facilities.  The employees there have been used to repress peaceful           
 demonstrations and gather intelligence, quote/unquote, on U.S.                
 citizens.  And we all know about their reputation in Alaska.                  
 Unlicensed investigators in Alaska were used to quiet Alyeska                 
 Pipeline Service Company critics.  They broke the law in three                
 states, and they even went so far to investigate a U.S.                       
 Congressman.                                                                  
                                                                               
 CCA, on the other hand, while not doing this kind of activity, was            
 linked to possible corruption over its relationship to state and              
 local officials in its home state of Tennessee.  A U.S. Attorney in           
 Nashville is currently investigating charges of a bribery kick-back           
 surrounding a $1 million contract to CCA to operate the                       
 Southcentral Correctional Center in Pipeville, Tennessee."                    
                                                                               
 OFFICER DAMRON summed up his comments by stating that privatization           
 was a public policy shift for the state of Alaska and privatization           
 is not in the interest of public safety.  Officer Damron submitted            
 the remainder of his testimony in writing, which can be found in              
 the appropriate bill packet.                                                  
                                                                               
 Number 840                                                                    
                                                                               
 STEVE LARSEN, AFSCME stated that he represented over 8,000 Alaska             
 state employees for the American Federation of State and County               
 Municipal Employees, including over 1000 correctional officers and            
 staff.  He cited the high level of professionalism and skill                  
 obtained by the Department of Correction employees, as well as a              
 strong level of public safety.  He felt this legislation would not            
 ease overcrowding, first of all this a statewide problem.  Adding             
 1000 beds in Anchorage is not only unnecessary, but does nothing to           
 deal with overcrowding around the state.                                      
                                                                               
 MR. LARSEN stated that privatization does not save money, it merely           
 shifts costs.  Once a private company has set up a facility, the              
 state has no choice but to pay the asking price.  They will                   
 initially low-ball the project, then raise the numbers when the               
 costs are more accurately reflected as the project develops.                  
                                                                               
 MR. LARSEN noted that there was only one area where a private                 
 prison can save money.  This area is employee wages and benefit, as           
 well as staffing levels.  He added that employees determine how               
 successful a program is.  He noted the low escape rates, low                  
 employee turn over rates, and a zero corruption rate in Alaska                
 prisons.  Mr. Larson asked the committee to consider expansion of             
 already existing facilities.                                                  
                                                                               
 Number 1123                                                                   
                                                                               
 CHAIRMAN PORTER asked Mr. Larsen if his organization would have an            
 opportunity to bid on this project.                                           
 MR. LARSEN said he was not familiar with any mechanism which would            
 allow them to do this.                                                        
                                                                               
 Number 1153                                                                   
                                                                               
 ARNOLD VILLEGAS, Correctional Officer, III, Department of                     
 Corrections made the argument that prisoners have the right while             
 in incarceration to be safe.  The privatization of prisons would              
 compromise this safety.  He also noted the exemplary safety record            
 of the department.                                                            
                                                                               
 Number 1252                                                                   
                                                                               
 BILL BONN, as a correctional officer, stated from the gallery that            
 he felt as though his concerns had already been addressed and made            
 himself available to answer any questions.                                    
                                                                               
 Number 1272                                                                   
                                                                               
 PAM LABEAU, President, Alaska State Chamber of Commerce thanked the           
 committee for the opportunity to testify.  She stated that the                
 chamber represents approximately 700 business members statewide.              
 As the voice of business their mission is to create a climate in              
 the state which is conducive to a strong private sector.  Ms.                 
 LaBeau said she was present to support this legislation because it            
 represents a reasonable and logical action by state government                
 which will save money for the state, while at the same time enhance           
 business opportunities in the private sector.                                 
                                                                               
 MS. LABEAU stated that the top priority of the state chamber is to            
 help the state find ways to close the fiscal gap.  A second                   
 priority is to help the state finds ways to privatize those                   
 government services that could affordably and efficiently be                  
 provided by the private sector.  This bill does so.                           
                                                                               
 MS. LABEAU noted the Arizona private prison as an example, that the           
 private sector can provide for the confinement and care of                    
 prisoners as satisfactorily and at a lesser cost than that                    
 experienced within the Alaska system.  The missing element within             
 a government operation is competition.  The private sector must do            
 things more efficiently and at a lesser cost in order to be the               
 successful bidder among their competitors.                                    
                                                                               
 MS. LABEAU said that the chamber does not accept the thinking that            
 only government employees can do things well.  It was private                 
 individuals who made this country and set up the government.  This            
 bill does require that the correctional officers would have the               
 same training as the government employees.  Ms. LaBeau said they              
 felt the contract and lease purchase of a prison makes a great deal           
 of sense.                                                                     
                                                                               
 MS. LABEAU said in all the chamber sees no down side to this                  
 legislation.  It makes good business sense and they urged the                 
 committee to support this bill.  The chamber offered their                    
 assistance to work through the elements of this legislation.                  
                                                                               
 Number 1497                                                                   
                                                                               
 BILL PARKER testified by teleconference from Soldotna.  He pointed            
 out that private prisons are in business to make money for the                
 shareholders.  This takes money out of the state.  He cited private           
 prison track records and problems some of these prisons had in                
 other states.  Mr. Parker made the suggestion to expand on already            
 existing facilities.                                                          
                                                                               
 Number 1782                                                                   
                                                                               
 REPRESENTATIVE MULDER as sponsor came to the table to respond to              
 some of the presented testimony.  He thought it was ironic how the            
 concerns of the Department of Corrections never found their way to            
 his desk in order that he could respond to them or work out some of           
 the problems raised.                                                          
                                                                               
 REPRESENTATIVE MULDER referenced the statutory court order as                 
 expressed on page two, line six of the CS, which reads "including             
 the standards of custody, care and discipline that are required by            
 order of a court."  REPRESENTATIVE MULDER pointed out that this               
 section refers to the Cleary Settlement, ensuring that this prison            
 meets this standard.                                                          
                                                                               
 Number 1989                                                                   
                                                                               
 REPRESENTATIVE MULDER then referred to the language outlined on               
 page two, subsections (B) and (C) which Mr. Shriner thought could             
 conflict with existing statutes, but REPRESENTATIVE MULDER pointed            
 out that both these subsections begin with the word "may."  These             
 are not requirements imposed upon the department, but allow the               
 department flexibility.                                                       
                                                                               
 REPRESENTATIVE MULDER then referenced language on page three, line            
 nine and ten which reads, "the total construction and related costs           
 of establishing the correctional facility may not exceed                      
 $100,000,000."  REPRESENTATIVE MULDER felt as though this language            
 was clear and it provided security for the state, that the                    
 construction and related costs would not exceed this amount.  He              
 pointed out that if the words "related costs" were deleted the                
 state could be hit with charge backs.  This total amount for                  
 building this facility would include everything.                              
                                                                               
 Number 1970                                                                   
                                                                               
 CHAIRMAN PORTER pointed out for clarification that this amount is             
 in relation to the successful bidder, not other attendant costs of            
 the Department of Corrections.                                                
 REPRESENTATIVE BETTYE DAVIS asked that if this related cost number            
 reflects construction costs, then there is a concern about what the           
 added cost to the department would be.                                        
                                                                               
 Number 2022                                                                   
                                                                               
 REPRESENTATIVE MULDER stated that he felt the added expenses were             
 already outlined in the fiscal note.  The fiscal note is a part of            
 his frustration because he's not necessarily arguing about the                
 price, but it denotes that the department does not intend to do any           
 work on this project until FY 98.                                             
                                                                               
 REPRESENTATIVE MULDER then moved to the next concern as outlined by           
 the Department of Corrections.  He referred to page three, line 19            
 which reads, "must be designed and constructed so as to house, in             
 separate housing, (A) female prisoners; and (B) male prisoners..."            
 REPRESENTATIVE MULDER said he didn't understand the confusion about           
 classified prisoners and where this came from.  He suggested it               
 might be an attempt to confuse the issue.                                     
                                                                               
 Number 2140                                                                   
                                                                               
 CHAIRMAN PORTER asked for clarification whether this facility would           
 preclude pre-trial people from being housed there.                            
                                                                               
 REPRESENTATIVE MULDER said he didn't believe that it did, male or             
 female pre-trial people would be housed at this facility.  In                 
 response to the department's concern about whether it was found to            
 be in the best interest that this legislation would somehow                   
 preclude the state from operating this facility, REPRESENTATIVE               
 MULDER said that this assumption was absolutely, 100 percent right.           
 This legislation directs the private sector to build and operate              
 this facility.  In regards to the concern about the facility being            
 built and operated by the same entity REPRESENTATIVE MULDER noted             
 an example of this which actually took place in Indianapolis.                 
                                                                               
 REPRESENTATIVE MULDER said he was willing to accept the figure of             
 $77 per day, per prisoner at Lemon Creek.  He noted that if this              
 were the case, this adds up to $2.9 million in savings.  The true,            
 direct cost figure is $91.90 per day, per prisoner and if direct              
 and indirect costs are combined, this figure changes to $119.20 per           
 day, per prisoner at Lemon Creek.  He noted a hand out as reference           
 to additional similar figures from around the state.                          
 REPRESENTATIVE MULDER generally presented a figure of $106 per day,           
 per prisoner without referencing a particular facility.  He noted             
 that if they were able to reduce by $1.00 per prisoner, per day, it           
 would result in a $1 million a year savings.                                  
                                                                               
 TAPE 96-13, SIDE A                                                            
 Number 000                                                                    
                                                                               
 REPRESENTATIVE MULDER then cited present correctional officer's               
 salaries.  He stated that public employees continue to suggest that           
 the private sector employees with the same training somehow can not           
 be as responsible as someone receiving a check from the state                 
 government.  He said that the integrity of the private sector has             
 been impugned here.  After all, it's the profit that generates                
 taxes to pay public employee wages.                                           
                                                                               
 REPRESENTATIVE MULDER in response to testimony concerning insurance           
 of private facilities, he cited Wackenhut as a company that's                 
 insured by AIG, the largest and one of the oldest in the world.               
 The former Commissioner, Roger Endell, disagrees with the concept             
 that existing facilities can be expanded.  REPRESENTATIVE MULDER              
 quoted a section of a memorandum included in the committee packet             
 from Mr. Endell as follows:                                                   
                                                                               
 "Unfortunately perhaps, the expansion of existing state                       
 correctional centers would be a very expensive proposition.  In               
 fact, most of the infrastructures of existing facilities will not             
 support expansion.                                                            
                                                                               
 Simply adding on to existing correctional centers by adding a wing            
 here or there is neither wise from a correctional management                  
 perspective, nor from an intrastructural perspective.  Sewer,                 
 heating, ventilation, food service, library, classroom, shop and              
 all other spaces have to be sized to handle expansion.   For                  
 example, the sewer treatment plant at the Hiland Mountain/Meadow              
 Creek complex near Eagle River is at maximum capacity; the Juneau,            
 Cook Inlet Pretrial (Anchorage), Hiland Mountain, Palmer and                  
 Fairbanks correctional centers have already been previously                   
 expanded, Juneau and Fairbanks a couple of times.  Further                    
 expansions at these sites will likely require totally new 'stand              
 alone' facilities in order to function safely."                               
                                                                               
 REPRESENTATIVE MULDER pointed out that the concept of expanding               
 onto existing facilities is not viable.  This option is expensive             
 and inefficient.                                                              
                                                                               
 Number 265                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN pointed out that these are complicated             
 decisions to be made, whether to add onto existing facilities or to           
 build an entirely new prison.  He stressed that no matter what                
 option is chosen, it's going to be expensive.  REPRESENTATIVE                 
 FINKELSTEIN asked REPRESENTATIVE MULDER if he had reached the                 
 conclusion that it's more efficient to build the facility as                  
 outlined in the legislation.                                                  
                                                                               
 REPRESENTATIVE MULDER answered that he found it to be far more                
 preferable to look for alternatives to the existing standard,                 
 business as usual, within the Department of Corrections.  He stated           
 he believed this legislation provided an alternative.                         
 REPRESENTATIVE MULDER stressed that the state is under court order,           
 incurring fines in the range of $750,000.  Every day the state of             
 Alaska is being fined by the court for being in violation with                
 Cleary.                                                                       
                                                                               
 REPRESENTATIVE FINKELSTEIN said that REPRESENTATIVE MULDER had not            
 responded to his question.  He again asked REPRESENTATIVE MULDER if           
 he could assure him that he has some basis that this is a less                
 expensive alternative than expansion of one or two of the already             
 existing facilities.  REPRESENTATIVE FINKELSTEIN asked how they               
 should decide as a committee that REPRESENTATIVE MULDER'S                     
 suggestions have more basis than the professional managers hired              
 who happen to be heading in a different direction.                            
                                                                               
 Number 485                                                                    
                                                                               
 REPRESENTATIVE MULDER challenged the Department of Corrections to             
 oppose this alternative by finding a cheaper proposal, but cited              
 that they have expressed no interest or desire to come up with a              
 long term, concrete plan and present it to the subcommittee.                  
                                                                               
 Number 547                                                                    
                                                                               
 REPRESENTATIVE GREEN referred to the financing of the facility.  He           
 wondered about the concept of the project not exceeding $2 million            
 and after doing the math he came up with the figure of $55 per                
 prison, per day to meet the pay out cost of the facility.  This was           
 a concern to him since this would be almost equivalent to what the            
 state pays now for the prisoners in Arizona.  This per day figure             
 would increase too, once the cost of the facility is factored in to           
 anywhere from $125 to $150.                                                   
                                                                               
 DENNY DEWITT, Aide to REPRESENTATIVE MULDER spoke to these                    
 concerns.  He stated that when the numbers in the bill are used,              
 which are the top side numbers this would be true.  It is their               
 judgment that the numbers put in the original legislation are high,           
 but they could be adjusted down through the legislative process.              
 If a full 1000 bed facility was constructed, which he said they               
 doubted would be the case, although there are numbers to persuade             
 them to suggest this would be appropriate, then the ability to                
 proceed with this legislation is economically viable.  The                    
 importance of noting that this a private sector proposal is that              
 this project is required to be economically viable in a private               
 sector setting.  This is not an inhibition within the private                 
 sector.  Mr. Dewitt seriously doubted that a private sector                   
 contractor would be required to meet a $55 rate debt service per              
 day, in addition to the operating costs of a facility.                        
                                                                               
 Number 827                                                                    
                                                                               
 REPRESENTATIVE MULDER noted that a prison he visited in Texas                 
 operated by Wackenhut was charging the state $35 per day, $28 per             
 diem, $7 debt retire.  He pointed out that the real operative                 
 question here is the lease purchase agreement.  REPRESENTATIVE                
 MULDER said he was not necessarily wetted to a lease purchase.                
 This facility could stay in the private sector as a property tax              
 paying operation.                                                             
                                                                               
 REPRESENTATIVE FINKELSTEIN asked REPRESENTATIVE MULDER if he would            
 be open to the idea of mending this approach, by amending the bill            
 language to say facility or facilities and broaden it beyond the              
 3rd judicial district.                                                        
                                                                               
 REPRESENTATIVE MULDER stated that his direction is pointed towards            
 a facility that creates an efficiency of scale.  He added that he             
 is sincere in reining in cost.                                                
                                                                               
 REPRESENTATIVE FINKELSTEIN stated with REPRESENTATIVE MULDER's                
 expanse of rhetoric aside, he pointed out that REPRESENTATIVE                 
 MULDER had stated that one of the facilities was prone to                     
 expansion, which could very well be a cheaper alternative.  He                
 asked why REPRESENTATIVE MULDER would want to preclude this if his            
 goal is cost cutting.                                                         
                                                                               
 Number 997                                                                    
                                                                               
 REPRESENTATIVE MULDER stated that he was looking for a change of              
 direction.                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN responded that he was afraid that when             
 someone attempts to insert their own particular view points as if             
 that's the only wisdom that exists, this is a much bigger issue.              
 REPRESENTATIVE FINKELSTEIN said he missed the point when                      
 REPRESENTATIVE MULDER outlined the correctional officer salaries.             
 He asked if there was a point behind this outline of salaries.                
                                                                               
 REPRESENTATIVE MULDER stated that he provided REPRESENTATIVE TOOHEY           
 with this information since she had asked for it.                             
                                                                               
 Number 1074                                                                   
                                                                               
 REPRESENTATIVE DAVIS asked what the time line to this project would           
 be as versus a 1998 projection by the Department of Correction for            
 their alternative.  She felt as though the project might not be               
 feasible absent any studies being undertaken to research this                 
 facility as an alternative.                                                   
                                                                               
 REPRESENTATIVE MULDER stated that the difference is that if this              
 bill was passed, they had been given an indication by contractors             
 that they could be up and running within 18 months.  This would be            
 the same timetable that the department has said they would begin              
 looking at the problem and address it.                                        
                                                                               
 REPRESENTATIVE DAVIS responded that she understood the department             
 might be working on plans presently.  She wondered if                         
 REPRESENTATIVE MULDER had actually met with the department to                 
 discuss their suggestions.                                                    
                                                                               
 Number 1181                                                                   
                                                                               
 REPRESENTATIVE MULDER said their door is open.  He stated that they           
 have bi-weekly finance subcommittee meetings and they talk to the             
 department several times a week.  He said that if the department              
 has a plan, then they're all ears.                                            
                                                                               
 REPRESENTATIVE DAVIS noted that when she introduces bills the first           
 thing she does is meet with the affected department to make sure              
 they understand what it is she is trying to do and to get an idea             
 of what they need.  She wanted to know if this is how                         
 REPRESENTATIVE MULDER handled this bill.                                      
                                                                               
 REPRESENTATIVE MULDER noted for the record that the department was            
 involved with hearings this summer, even the Commissioner was                 
 present and listened to the testimony.  She and REPRESENTATIVE                
 MULDER spoke in length about these hearings.  He put her on notice            
 about how he was going to proceed.  This is not a new concept.  He            
 also pointed out that he was not the prime sponsor on this bill,              
 but the finance committee.  This legislation has been supported by            
 the majority of it's members.                                                 
                                                                               
 Number 1278                                                                   
                                                                               
 REPRESENTATIVE DAVIS asked about copies of the minutes from these             
 finance subcommittee meeting.                                                 
                                                                               
 REPRESENTATIVE MULDER pointed out that because this is a                      
 subcommittee they were not appointed a secretary, but said there              
 were tapes available.                                                         
                                                                               
 Number 1311                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN noted that all the amendments to be                
 presented were drafted according to the previous CS.  Before                  
 outlining his first amendment REPRESENTATIVE FINKELSTEIN stated               
 that he does not disagree with the basic premise of this proposal,            
 more specifically that privatization must be considered.   He also            
 felt as though the department was sincere on considering this.                
 This bill affects directly the issue of building a new facility or            
 adding on to already existing facilities.                                     
                                                                               
 REPRESENTATIVE FINKELSTEIN also pointed out the issue of location             
 of the new facility is very different issue than the privatization            
 issue.  The size of the facility is also a consideration, as well             
 as the lease purchase versus private sector run facility.  The                
 middle ground would be to ask the department to consider this                 
 alternative, that the approach has been clearly laid out and a                
 credible case can be made.  REPRESENTATIVE FINKELSTEIN thought this           
 legislation was a bit premature and rather than pushing it through            
 the system, they should first let the department come up with a               
 solution.  If this solution is not satisfactory, then the                     
 legislature can institute some of these concepts as options.                  
                                                                               
 REPRESENTATIVE FINKELSTEIN then moved amendment number one which              
 would affect the language on page one, line one following "Act"               
 through page four, line 30.  REPRESENTATIVE FINKELSTEIN proposed to           
 delete all this material language and insert the following:                   
 "requiring the Department of Corrections to consider a lease-                 
 purchase option for the construction and operation of a                       
 correctional facility."  The clause as rewritten would read as                
 follows:                                                                      
                                                                               
 "BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                     
                                                                               
 Section 1.  The Department of Corrections shall consider a lease-             
 purchase option for the construction and operation of a new                   
 correctional facility in order to relieve overcrowding of existing            
 correctional facilities."                                                     
                                                                               
 Number 1506                                                                   
                                                                               
 REPRESENTATIVE BUNDE objected.                                                
                                                                               
 REPRESENTATIVE MULDER stated that this language littered the bill             
 and is akin to adding intent language in the budget.  The                     
 legislature is suppose to send a policy directive to the                      
 administrative, which is what this bill is.                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN agreed with this statement, but stated             
 this legislation is more than a policy directive as he's already              
 explained.  He again stated that the issue is more about                      
 privatization and the policy directive can be achieved by the                 
 language proposed in this amendment.  This legislation is a mandate           
 which will impact the entire correctional system in the state.                
                                                                               
 REPRESENTATIVE GREEN stated he was not sure that he followed the              
 amendment.                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN responded that it was the title which is           
 amended in the first place.  This language amended version (O) of             
 the CS instead of version (R).                                                
                                                                               
 Number 1810                                                                   
                                                                               
 CHAIRMAN PORTER recognized that the objection to this amendment               
 still stood.  A roll call was taken.  Representative Finkelstein              
 voted in favor of the amendment.  Representatives Davis, Green,               
 Bunde, Toohey and Porter voted against the amendment.  Amendment              
 number one failed.                                                            
                                                                               
 Number 1831                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN referenced amendment number two and said           
 that this language referred to existing statute which says, Alaska            
 will keep their prisoners in state.  He felt as though this                   
 language was consistent with the testimony given.                             
                                                                               
 REPRESENTATIVE FINKELSTEIN's change was in regards to page two,               
 line nine to delete "or in another state" from this clause.  The              
 language after this change would read as follows:                             
                                                                               
 "CORRECTIONAL facilities provided through agreement with a public             
 agency for the detention and confinement of persons held under                
 authority of state law may be in this state."                                 
                                                                               
 Number 1871                                                                   
                                                                               
 REPRESENTATIVE TOOHEY objected to the motion to move amendment                
 number two.                                                                   
                                                                               
 REPRESENTATIVE MULDER pointed out that this amendment sought to               
 change the existing statute.  This would preclude the department              
 from even considering alternatives.                                           
                                                                               
 CHAIRMAN PORTER said he would speak against the amendment.  If this           
 legislation were to pass they would have a few years with the                 
 Alaskan construction of an institution to determine whether this is           
 a viable option for Alaska or not.  This is the intent of this                
 legislation, but not to take away other options.                              
                                                                               
 Number 1974                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN agreed with these comments, as well as             
 the sponsor.  The reason why it was offered was because of the                
 testimony in support of this facility since that would allow Alaska           
 to bring prisoners back into the state.  If the building of this              
 facility will effectuate this move, then it should be stated in               
 this legislation.                                                             
                                                                               
 CHAIRMAN PORTER requested a roll call vote.  Representatives Davis            
 and Finkelstein voted in favor of amendment number two.                       
 Representatives Green, Toohey and Porter voted against amendment              
 number two.  Amendment number two failed.                                     
                                                                               
 Number 2013                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN stated that he might not need to offer             
 amendment number three if he was able to get some clarification.              
 He referred to language which dealt with maximum security prisoners           
 on page two, line 22, which seemed to contradict language in                  
 another section which referenced classification of prisoners to be            
 determined by the commissioner.  In the one section it seems that             
 prisoners will be housed without regard to the custody                        
 classification and he was confused as to how these sections related           
 to each other.                                                                
                                                                               
 MR. DEWITT responded that the section which REPRESENTATIVE                    
 FINKELSTEIN proposed to amend is one that would generally allow the           
 commissioner with more clarity to place prisoners in private                  
 facilities.  The second section REPRESENTATIVE FINKELSTEIN                    
 referenced would put a limitation on the Anchorage facility in                
 deference to the fact that services are already provided for in               
 Spring Creek.  The first addresses some concern in the authorizing            
 statute, the other section is under codified law.                             
                                                                               
 Number 2083                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN said this explanation helped to explain            
 his concerns, but he was still unclear why there was a need to                
 establish policy that this new facility cannot house maximum                  
 security prisoners, but other private facilities can.                         
                                                                               
 MR. DEWITT responded that is was a judgment as to what they ought             
 to be doing in the construction of a new facility.  The judgment              
 was that Spring Creek fully satisfies the needs today of maximum              
 security male prisoners and to duplicate this would not make any              
 sense.                                                                        
                                                                               
 Number 2145                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN withdrew amendments number three and               
 number four.  He then offered amendment number five.                          
 REPRESENTATIVE FINKELSTEIN said this amendment deletes the                    
 provision on page four, line 28, which reads, "(1) a no-strike and            
 no-slowdown pledge by the union or unions."  He understood that               
 this only applied to construction and, in this context, he didn't             
 understand why they would want to insist on this no-strike issue.             
                                                                               
 REPRESENTATIVE MULDER said that REPRESENTATIVE FINKELSTEIN was                
 absolutely right to the extent that the no-strike provision is a              
 trade-off for the project labor agreement.  If the carpenter's                
 union does not have a problem with this section, then why should              
 this language be stricken.                                                    
                                                                               
 Number 2247                                                                   
                                                                               
 REPRESENTATIVE GREEN wanted to make sure that this did not conflict           
 with any antitrust laws.                                                      
                                                                               
 REPRESENTATIVE FINKELSTEIN noted, for the record, that this is a              
 mandatory clause which tries to micro-manage the construction of              
 the facility.  He pointed out that this ought to be a consideration           
 negotiated at a later time during the construction phase between              
 the department and the labor pool.                                            
 REPRESENTATIVE TOOHEY objected to the motion to move amendment                
 number five.  A roll call vote was taken.  Representatives                    
 Finkelstein, Bunde and Davis voted in favor of the amendment.                 
 Representatives Green, Toohey and Porter voted against the                    
 amendment.  Amendment number five failed.                                     
                                                                               
 Number 2328                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN referred to amendment number six and               
 said that the change he proposed was located on page three, line 27           
 following the word, "except."  He wished to delete the word,                  
 "temporarily."  This clause as amended would read, "(3) may not be            
 operated by the state except when..."                                         
                                                                               
 REPRESENTATIVE TOOHEY objected.                                               
                                                                               
 REPRESENTATIVE FINKELSTEIN understood this provision dealt with               
 those situations when the state would take over the operation of              
 this facility.  He pointed out that the word "temporarily" was not            
 defined anywhere in the legislation.  REPRESENTATIVE FINKELSTEIN              
 worried that if this term was not defined then this takeover could            
 last for an indefinite period of time.                                        
                                                                               
 REPRESENTATIVE MULDER added that temporarily meant that under                 
 unforeseen circumstances, if the state was required to take over              
 the facility until they were able to put out an RFP and find a new            
 private contractor, the state would not permanently take over this            
 facility.                                                                     
                                                                               
 REPRESENTATIVE FINKELSTEIN pointed out that they agree on the                 
 disagreement.  This was his perception as well, there's no                    
 definition of temporarily.  This seems to be a relatively                     
 meaningless term other than intent, which the sponsor just                    
 described.                                                                    
                                                                               
 CHAIRMAN PORTER recognized that the objection still stood and                 
 requested a roll call vote.  A roll call vote was taken.                      
 Representatives Green, Davis and Finkelstein voted in favor of the            
 amendment.  Representatives Bunde, Toohey and Porter voted against            
 the amendment.  Amendment number six failed.                                  
                                                                               
 TAPE 96-13, SIDE B                                                            
 Number 000                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN offered amendment number seven for                 
 consideration by the committee.  The proposed changes would take              
 place on page three, line 30, the word "or" would be deleted and on           
 page three, line 31, after the word "contractor" the word "or" and            
 "(C) the state is able to operate the correctional facility at less           
 cost than a third-party contractor," would be inserted.  This                 
 section would read in it's entirety as follows:  "(A) the private             
 third-party contractor with whom the state has entered into an                
 agreement to operate defaults in performance under the contract and           
 state operation is reasonably necessary to ensure the facility's              
 continued operation; (B) the state is unable to contract with a               
 private third-party contractor; or (C) the state is able to operate           
 the correctional facility at less cost than a third-party                     
 contractor."                                                                  
                                                                               
 REPRESENTATIVE FINKELSTEIN noted that these changes would allow the           
 Administration to regain control and under the circumstances that             
 when after all the obligations have been made and all the contracts           
 conditions met, if the state could operate this facility cheaper              
 than a third-party contractor, then they should be to take it over.           
                                                                               
 Number 023                                                                    
                                                                               
 REPRESENTATIVE MULDER pointed out that this would allow the                   
 department to construct another state facility if it is so                    
 determined that this was in their best interest.  If in fact, it              
 was determined that a private contractor would not be used to build           
 this facility, the intent would require that the department come              
 back before the legislature to explain why and ask for the                    
 legislature's permission to construct the facility.                           
                                                                               
 REPRESENTATIVE BUNDE asked for clarification that if the state                
 could build a facility for less money, that the intent of this                
 legislation would allow them to do so.                                        
                                                                               
 REPRESENTATIVE MULDER responded that the legislature would                    
 certainly want to review their numbers.  He pointed out that the              
 proposed amendment would allow the department to build the facility           
 without further review from the legislature.                                  
                                                                               
 REPRESENTATIVE FINKELSTEIN thought that this noted section dealt              
 with when the state would take over the facility temporarily.  This           
 section does not answer to the long-term goal of turning these                
 facilities over to private concerns.  There may be circumstances              
 which occur where it's in the state's financial interest to operate           
 this facility for whatever reason.  He noted that it's hard to                
 anticipate under what circumstances this would happen.  This                  
 language should not be construed as meaning to give authority to              
 build state facilities.                                                       
                                                                               
 Number 105                                                                    
                                                                               
 CHAIRMAN PORTER cautioned that there was no way to determine what             
 is the less cost when assessing who should build or maintain this             
 facility.  Would it be a portion of a total of the department's               
 costs.  In this present legislation there is no attempt made to               
 define what the determination of costs would be.  Although he                 
 didn't disagree with the theory, CHAIRMAN PORTER wouldn't want the            
 people in this facility to think they wouldn't have a job because             
 the cost definition could not be agreed upon.                                 
 REPRESENTATIVE FINKELSTEIN pointed out that the problem remains               
 that someone will have to make these calculations.  He questioned             
 whether or not the state would have any recourse available to                 
 manage prisons in some circumstance not necessarily anticipated at            
 this time.  What happens when the state is faced with taking over             
 a facility and this cost criteria has not been met.                           
                                                                               
 REPRESENTATIVE MULDER stated that when this time comes that the               
 state can prove they can run it at a cheaper rate, then they can              
 come before the legislature to obtain a blessing.                             
                                                                               
 REPRESENTATIVE FINKELSTEIN thought this process was analogous with            
 a court proceeding since so many entities, including the governor             
 have to agree upon these numbers.                                             
                                                                               
 Number 230                                                                    
                                                                               
 REPRESENTATIVE BUNDE asked if there were provisions to renegotiate            
 the contract.                                                                 
                                                                               
 MR. DEWITT answered that they received assistance from the Internal           
 Revenue regarding this issue and currently their regulations limit            
 contracts with operation of the facility to five years.  It would             
 be a minimum of every five years, that re-negotiations would take             
 place.  He explained in greater detail the provisions of this                 
 renegotiation process.                                                        
                                                                               
 REPRESENTATIVE FINKELSTEIN added that there may be situations where           
 negotiations are needed beyond and excluding this five year                   
 interim.                                                                      
                                                                               
 CHAIRMAN PORTER asked for a roll call vote.  Representatives Davis            
 and Finkelstein voted in favor of the amendment.  Representatives             
 Green, Bunde, Toohey and Porter voted against the amendment.                  
 Amendment number seven failed.                                                
                                                                               
 Number 405                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN withdrew amendments eight and nine, but            
 offered amendment number ten.                                                 
                                                                               
 REPRESENTATIVE TOOHEY objected to amendment number ten.                       
                                                                               
 REPRESENTATIVE FINKELSTEIN outlined the location of this amendment            
 on page four, line 14, and it would require the deletion of "not              
 more stringent than" and insert instead the phrase, "equal to."               
 The amendment clause would then read, "Accreditation under this               
 subsection shall be under standards of accreditation applicable to            
 correctional facilities that are not more stringent than those                
 applicable to state correctional facilities operated by the                   
 Department of Corrections."                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN pointed out that this language addresses           
 the standards required of the organization who has jurisdiction               
 over the facility.  He stressed that this standard should be at               
 least the same as what the state would be required to perform.                
                                                                               
                                                                               
 Number 486                                                                    
                                                                               
 MR. DEWITT suggested that were several ways to assure quality, one            
 would be through licensure or accreditation, or by a standard set             
 by the department through policy consideration.  The intent of this           
 legislation makes the requirements to be met by a private                     
 contractor no greater than those required by the state.                       
                                                                               
 REPRESENTATIVE MULDER added that currently there are no facilities            
 in Alaska which are accredited, except a private halfway house                
 contractor.                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN said he didn't argue with this intent,             
 but to say that they must be lower or can never exceed it, the                
 middle ground is approximately the same.  He felt that this was               
 also the intent of some of the testimony heard on this issue.                 
 It seems that if there is an accreditation standard on the public             
 facilities in general, this standard should apply to the private              
 facility as well.  He pointed out that there is no bottom limit on            
 this scale.  This was not what was represented to the committee as            
 the intent of this legislation.                                               
                                                                               
 Number 822                                                                    
                                                                               
 CHAIRMAN PORTER made reference to the fact that because the Alaskan           
 facilities are not accredited is not a negative reflection on these           
 institutions.  There are other reasons why this accreditation has             
 not been done, mainly because it costs so much money for the                  
 national accreditation organization to travel to Alaska.                      
                                                                               
 REPRESENTATIVE GREEN offered that they could amend the language to            
 read "as stringent as those applicable to state..."  He understood            
 REPRESENTATIVE FINKELSTEIN's concern about a zero qualification and           
 down grade.                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN asked to amend this amendment with this            
 suggested language.                                                           
                                                                               
 Number 890                                                                    
                                                                               
 REPRESENTATIVE MULDER pointed out that their legal counsel who                
 drafts these clauses does so for a living and had suggested this              
 wording with this discussion in mind.  These were the words the               
 drafter came up with and REPRESENTATIVE MULDER felt as though he              
 would be remise if he didn't stay with this phrasing.  Their                  
 attorney felt as though this was the way it was best expressed.               
                                                                               
 REPRESENTATIVE FINKELSTEIN said these changes were straight forward           
 English.  He questioned that the instructions to the bill drafter             
 could have been as detailed as to the context of the discussion               
 which just took place.                                                        
                                                                               
 Number 1033                                                                   
                                                                               
 CHAIRMAN PORTER interpreted this language to ensure that there                
 won't be any unfair conditions placed on the private contractor.              
 He thought it was appropriate to set guidelines for these                     
 standards.                                                                    
                                                                               
 REPRESENTATIVE GREEN felt as though this language stacked the deck            
 in favor of the private institution.                                          
                                                                               
 CHAIRMAN PORTER responded that the only way this could take place             
 is if the department agrees to it.                                            
                                                                               
 Number 1094                                                                   
                                                                               
 REPRESENTATIVE FINKELSTEIN noted that the private contractor                  
 couldn't make artificially high standards because they already have           
 to be met by the state institutions.  If the state institutions are           
 meeting them, then probably they are realistic.  If no                        
 accreditation is required, then there should be none for either, if           
 there is some level of accreditation, then they should be made the            
 same.                                                                         
                                                                               
 CHAIRMAN PORTER requested a roll call on amendment number ten.                
 Representatives Finkelstein, Green and Davis voted in favor of                
 amendment number ten.  Representatives Bunde, Toohey and Porter               
 voted against amendment number ten.  Amendment number ten failed.             
                                                                               
 Number 1172                                                                   
                                                                               
 REPRESENTATIVE TOOHEY made a motion to move CSHB 428(JUD), version            
 (R), out of the Judiciary Committee with the attached fiscal notes            
 and individuals recommendations.  CHAIRMAN PORTER noted an                    
 objection to this motion and requested a roll call vote.                      
 Representatives Davis and Finkelstein voted against the motion.               
 Representatives Green, Bunde, Toohey and Porter voted in favor of             
 the motion.  CSHB 428(JUD) was so moved from the committee.                   
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIRMAN PORTER adjourned the meeting at 4:00 p.m.                            
                                                                               

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