Legislature(1997 - 1998)
03/06/1998 03:30 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 6, 1998
3:30 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Joe Ryan
Representative Tom Brice
MEMBERS ABSENT
Representative John Cowdery, Vice Chairman
Representative Bill Hudson
Representative Jerry Sanders
Representative Gene Kubina
COMMITTEE CALENDAR
HOUSE BILL NO. 400
"An Act combining parts of the Department of Commerce and Economic
Development and parts of the Department of Community and Regional
Affairs by transferring some of their duties to a new Department of
Commerce and Rural Development; transferring some of the duties of
the Department of Commerce and Economic Development and the
Department of Community and Regional Affairs to other existing
agencies; eliminating the Department of Commerce and Economic
Development and the Department of Community and Regional Affairs;
relating to the Department of Commerce and Rural Development;
adjusting the membership of certain multi-member bodies to reflect
the transfer of duties among departments and the elimination of
departments; and providing for an effective date."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 400
SHORT TITLE: DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
SPONSOR(S): REPRESENTATIVES(S) KOHRING, Austerman, Barnes,
Cowdery, Hodgins, Kelly, Mulder, Ogan, Ryan, Therriault, Vezey
Jrn-Date Jrn-Page Action
02/12/98 2307 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/98 2308 (H) L&C, FINANCE
02/23/98 (H) L&C AT 3:15 PM CAPITOL 17
02/23/98 (H) MINUTE(L&C)
02/25/98 (H) L&C AT 3:15 PM CAPITOL 17
02/25/98 (H) MINUTE(L&C)
02/27/98 (H) L&C AT 3:15 PM CAPITOL 17
02/27/98 (H) MINUTE(L&C)
03/06/98 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
DAVID ALEXANDER
Alaska Adult Education Association
125 West Fifth Avenue
Anchorage, Alaska 99501
Telephone: (907) 279-7827
POSITION STATEMENT: Testified against Section 65 of HB 400, which
moves the Job Training Partnership Act
Program to the Department of Labor
REPRESENTATIVE VIC KOHRING
Alaska State Legislature
Capitol Building, Room 421
Juneau, Alaska 99801
Telephone: (907) 465-2186
POSITION STATEMENT: Sponsor of HB 400.
DAN KENNEDY
851 East Westpoint Drive, Suite 108
Wasilla, Alaska 99654
Telephone: (907) 376-1272
POSITION STATEMENT: Testified in support of HB 400.
MIKE KRIEBER, Legislative Administrative Assistant
to Representative Vic Kohring
Alaska State Legislature
Capitol Building, Room 421
Juneau, Alaska 99801
Telephone: (907) 465-6863
POSITION STATEMENT: Provided information on HB 400.
TOM LAWSON, Director
Division of Administrative Services
Department of Commerce and Economic Development
P.O. Box 110803
Juneau, Alaska 99811-0803
Telephone: (907) 465-2505
POSITION STATEMENT: Presented fiscal note for HB 400.
REMOND HENDERSON, Director
Division of Administrative Services
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4708
POSITION STATEMENT: Testified on the fiscal note for HB 400.
KEITH GERKEN, Architect
Facilities
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
Telephone: (907) 465-5683
POSITION STATEMENT: Testified on the fiscal note for HB 400.
JOSEPH SPEARS, Data Processing Center Supervisor
Division of Administrative Services
Department of Community and Regional Affairs
333 West Fourth Avenue, Suite 220
Anchorage, Alaska 99501
Telephone: (907) 269-4513
POSITION STATEMENT: Testified on the fiscal note for HB 400.
REPRESENTATIVE ALAN AUSTERMAN
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
Telephone: (907) 465-2487
POSITION STATEMENT: Testified on HB 400.
ACTION NARRATIVE
TAPE 98-26, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:30 p.m. Members present
at the call to order were Representatives Rokeberg and Ryan;
Representative Brice arrived at approximately 4:10 p.m.
HB 400 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
Number 0050
CHAIRMAN ROKEBERG announced the committee's order of business was
HB 400, "An Act combining parts of the Department of Commerce and
Economic Development and parts of the Department of Community and
Regional Affairs by transferring some of their duties to a new
Department of Commerce and Rural Development; transferring some of
the duties of the Department of Commerce and Economic Development
and the Department of Community and Regional Affairs to other
existing agencies; eliminating the Department of Commerce and
Economic Development and the Department of Community and Regional
Affairs; relating to the Department of Commerce and Rural
Development; adjusting the membership of certain multi-member
bodies to reflect the transfer of duties among departments and the
elimination of departments; and providing for an effective date."
Chairman Rokeberg stated the committee would take testimony for the
record on HB 400, noting the purpose of the meeting had been to
review the bill in greater detail.
Number 0159
DAVID ALEXANDER, Alaska Adult Education Association, testified via
teleconference from Anchorage. He said the association is a
provider of job training to adults throughout Alaska, with 20
centers in Alaska; the largest of those centers are located in
Juneau, Fairbanks, Anchorage, Soldotna and Wasilla. Job Training
Partnership Act (JTPA)-funded programs are occurring in each of
those centers. Mr. Alexander referred to Section 65 of HB 400
moving the JTPA Program from the Department of Community and
Regional Affairs (DCRA) to the Department of Labor (DOL). He said
the Alaska Adult Education Association would prefer have the JTPA
administration left with the new Department of Commerce and Rural
Development because DCRA's approach to delivery of job-training
services has been effective. He noted the three private industry
councils have been much more sensitive to the needs of the business
community in terms of orienting job-training programs toward
business's actual needs than many of the other job training
initiatives undertaken in the state. He noted the councils are
made up of private employers; there is one statewide council, and
one council in each Anchorage and Fairbanks.
Number 0338
MR. ALEXANDER said the Alaska Adult Education Association is very
much in favor of some of the DOL's work, but finds DOL is generally
not a job-training agency and may not have the right philosophical
orientation in this area. He indicated the association believes
the JTPA Program administration would be much more effective if the
program is left in the new department. Mr. Alexander commented on
his 27 years of job-training experience working in Anchorage and
statewide and noted he had also been on Alaska's models committee
for the new "one-stop centers." In his tours of about ten of these
facilities he said he consistently found that the existing private
industry council set-up in each city where an effective job
training program was going on was stimulated by the private
industry council members themselves, the private business community
members involved in the job training program decisions. He
indicated he feels the current private industry council arrangement
is effective and said his association believes the new Department
of Commerce and Rural Development is the best location for JTPA
programs.
Number 0651
CHAIRMAN ROKEBERG asked if he was a state employee or a contractor.
MR. ALEXANDER replied that he is a contractor; he works for Nine
Star Enterprises in Anchorage. He noted it has Anchorage and
statewide JTPA programs recruiting, training and employing adults.
He stated this year's current placement rate is between 62 and 67
percent.
Number 0542
CHAIRMAN ROKEBERG asked the amount of federal versus state money to
finance the JTPA programs.
MR. ALEXANDER replied he did not know.
Number 0559
CHAIRMAN ROKEBERG asked why, in brief, Mr. Alexander's organization
did not feel DOL would be effective with the JTPA Program.
Number 0581
MR. ALEXANDER replied it is the association's perspective that DOL
is focused on employment services where people come in, find out
about jobs and take those jobs. He noted he has worked with DOL
and is pleased with a lot of its services, but does not think it is
a job-training organization or currently oriented toward job
training. Mr. Alexander said he thinks the private industry
council structure might not survive if DOL administered the JTPA
funds, and he thinks a move away from the current business
orientation maintained by the three private industry councils would
not be good for the people served.
Number 0716
CHAIRMAN ROKEBERG asked Representative Kohring to review the
documentation he has provided to the committee. Chairman Rokeberg
indicated after Representative Kohring's review the department
members would have an opportunity to testify or answer questions.
Number 0778
REPRESENTATIVE VIC KOHRING came forward to testify, noting the
presence of Mike Krieber to help answer questions. Representative
Kohring stated he chairs the Department of Commerce and Economic
Development (DCED) and DCRA budget subcommittees; he feels he has
a good understanding of those budgets and that it is consequently
appropriate for him to pursue this legislation. He stated HB 400
would merge two economic development-related state government
entities, DCED and DCRA; with the expectation upper-management
dollars would be saved, taking the focus off of cutting specific
programs within those two budgets. He reiterated that they were
speaking of streamlining and restructuring government with the
expectation that funding for these programs would go farther by
eliminating upper management. Representative Kohring reviewed a
26-page packet of HB 400 materials distributed to the committee.
He indicated the objective is to combine two departments, transfer
certain programs out of these departments into more appropriate
departments, and eliminate overlapping functions. He gave the
examples of job training and child care as programs to be
transferred. In addition to budget-cutting, a primary objective
would be allowing the new department to focus on economic
development throughout the entire state. House Bill 400 eliminates
one of the two commissioner's offices and upper administrative
division staff in one of the two departments. Representative
Kohring reiterated that it does not eliminate or cut programs or
impact services. He indicated, however, once the new department
was in place some adjustments would probably be made after
duplicating functions were precisely identified.
Number 0997
REPRESENTATIVE KOHRING said another feature of HB 400 would be to
unify financial resources under a new division intended to provide
optimum funding for private and public projects, and businesses.
This would enhance the development of infrastructure, which is
inherent to the economic development and community self-
sufficiency. Representative Kohring stressed that HB 400 would
save approximately $1 million a year by eliminating one of the two
commissioner's offices and the upper management staff. He
indicated another benefit would the optimum funding of construction
projects and the minimization of debt service for communities and
private owners. Economic development-related projects would be
completed sooner because of quicker project funding identification,
expediting economic development. Businesses would benefit through
"one-stop" access to various loan programs. Representative Kohring
referred to his previous testimony on HB 400, noting the new
department would be made up of four new divisions: the Division of
Rural Affairs, formerly DCRA; the Division of Statewide
Development, formerly DCED; the Division of Financial Resources,
consolidating the various funding sources; and the Division of
Administration, providing payroll-related services, personnel
management, budgeting, et cetera.
Number 1130
DAN KENNEDY testified next via teleconference from the Matanuska-
Susitna Legislative Information Office (Mat-Su LIO). He stated he
is a certified public accountant (CPA) and president of the greater
Wasilla Chamber of Commerce). Mr Kennedy said he was testifying on
his own behalf in support of HB 400 but noted the Wasilla Chamber
of Commerce board would have a resolution in support of HB 400
before it on March 25. Mr. Kennedy said he feels like somewhat of
an expert witness. He commented he has been practicing as a CPA in
Alaska for 18 years; 7 years with an international CPA firm in
Anchorage and 10 years as the chief financial officer, vice
president of finance, for Matanuska Telephone Association (MTA).
He said he has been in public CPA practice with his wife, also a
CPA, for the last two years. He referred to his article entitled
"The Re-engineering of Local Telecommunication Companies,"
published two years ago as he received his master's degree in
business administration (MBA) from Alaska Pacific University. Mr.
Kennedy said he feels very qualified to speak on the topic of
merging departments because he orchestrated the merger, or re-
engineering, of MTA's departments of finance and administrative
services at the corporate headquarters in Palmer. He commented MTA
is the third largest local exchange carrier in Alaska with annual
revenues greater than $40 million and he noted the company will
save approximately $200,000 annually.
Number 1264
MR. KENNEDY congratulated the representatives who have brought HB
400 forward and indicated he believes future cost savings are very
important to this task. Mr. Kennedy commented he thinks
government, and even the private sector and corporate America to
some degree, often improperly focuses on current year budgets or
the current fiscal year (FY), overlooking long-term benefits or
strategic planning efforts. He indicated he believes HB 400 would
result in significant cost savings to state government, urging the
commissioners of both DCRA and DCED to "grasp onto" this concept in
HB 400 and cooperate fully with the legislative re-engineering
efforts. Mr. Kennedy said the commissioners should take the
initiative and show their leadership, noting both have tremendous
private sector experience. The way to become more effective, he
said, at least in corporate America, is by always re-engineering,
looking at the most efficient and effective method of organization.
Mr. Kennedy also said, as a CPA and advisor of both large and small
Alaska businesses, he was truly disappointed that the current
Administration continues to press for more government and more
spending. He recommends state government follow the private
sector's leadership by becoming leaner and more effective. Mr.
Kennedy reiterated his support for the merger of DCED and DCRA,
stating he was available for further testimony and noting his
expertise in this area. He said he would also be very interested
in making a proposal in a public RFP (Request for Proposals)
process to assist with this merger.
Number 1412
CHAIRMAN ROKEBERG asked Mr. Kennedy how many people were in the two
merged groups at MTA.
Number 1425
MR. KENNEDY replied that there were 28 people in the finance
department and approximately 40 people in the administrative
services department, which included purchasing, procurement,
warehousing, contract administration and human resources. He
noted, similar to HB 400, MTA removed an unnecessary top management
level, eliminating a vice president and an executive assistant,
saving approximately $200,000 without losing any particular thrust
or important functions of the merged departments.
Number 1470
CHAIRMAN ROKEBERG indicated Mr. Kennedy, as the vice president of
finance, must have been the surviving head executive of the new
department.
Number 1478
MR. KENNEDY answered in the negative, stating he "walked the talk."
Because he felt so strongly that MTA had to become more competitive
in an emerging, highly competitive industry, he eliminated his own
position and started his CPA firm.
Number 1509
CHAIRMAN ROKEBERG asked Mr. Kennedy what he would include in an RFP
to assist with this endeavor.
Number 1534
MR. KENNEDY indicated the RFP should specify a firm with experience
effectively merging either governments or departments in the
private sector, especially looking "for the seal of long-term
Alaskans for the work that the two departments do." He said he is
familiar with the work of the two departments, referring to
summaries from the departments' world wide web sites, and stated,
"I think it's (indisc.) qualifications and understanding of Alaska
needs are the two primary elements of the scope of that
engagement."
CHAIRMAN ROKEBERG asked what the scope of work would be.
Number 1583
MR. KENNEDY said he thought HB 400 recommended cost savings, first
and foremost, by eliminating one of the commissioner positions.
Secondly, he said, the re-engineering of an entity in the private
sector is an extensive process with focus on gathering input from
the employees. He said he is a strong advocate of empowering
employees, noting employees at all levels in a company have a
tremendous understanding for the business they perform. He thinks
an engagement similar to the re-engineering concepts used
extensively in corporate America in the last four or five years
would work very well here because these two departments interact
often with the private sector. Mr. Kennedy recommended gathering
input from both the employees and the customers of these two
departments, i.e. the users of the services, for better and more
effective management of this element of state government.
Number 1649
CHAIRMAN ROKEBERG asked how the compensation was usually arranged
in an RFP.
MR. KENNEDY indicated he had seen it both by the hour and by
contract, noting he has seen RFPs through the state of Alaska and
said he has seen (indisc.) within state government that could
better answer that question in accordance with state regulation.
CHAIRMAN ROKEBERG asked Mr. Kennedy his "ballpark" cost estimate
for a third-party contractor such as himself.
MR. KENNEDY replied he thought it would be an engagement not to
exceed $100,000.
CHAIRMAN ROKEBERG said the committee would appreciate Mr. Kennedy
written input with further thoughts on this, particularly regarding
what needs to be done to accomplish this.
Number 1719
REPRESENTATIVE KOHRING came forward to continue his review of HB
400, thanking Mr. Kennedy for his outstanding testimony.
Representative Kohring provided copies of addition written
testimony in support to the committee, indicating two were from
witnesses who had testified at the February 27 public hearing. He
noted one of the other statements was from Don Tanner, a member of
the Hickel Administration and former deputy commissioner of DCRA.
Mr. Tanner's letter reiterates the merits of HB 400: unnecessary
overhead would be cut; efficiencies in implementing programs would
be increased; and economic growth, particularly in rural Alaska,
would be enhanced. Representative Kohring said Mr. Tanner feels
the departments do perform similar tasks in spite of previous
testimony to the contrary, Mr. Tanner thinks HB 400 would be good
for rural Alaska, and he thinks HB 400 would be good for the state
budget. Representative Kohring noted helping economic development
in rural Alaska is one of the goals. Representative Kohring
referred to additional support letters in the HB 400 packet, noting
three were from people representing Tamsure Construction (ph), a
Wasilla-area general contracting firm. Representative Kohring also
provided a two-page summary to the committee containing answers to
frequently asked questions about HB 400.
Number 1829
REPRESENTATIVE KOHRING referred to page three of the packet,
"Overlapping Economic Development Related Activities of DCED and
DCRA." He commented one of the major points he is trying to make
with this legislation, in addition to cutting the budget and
enhancing economic development, is that these two entities are very
much related in the sense they are economic development
organizations trying to spur growth in Alaska's economy.
Representative Kohring noted they examined the missions of DCRA's
and DCED's different programs to see where that overlap is
occurring. He commented that the activity categories are listed in
the left column, the middle column lists corresponding DCRA
programs, and the right column lists corresponding DCED programs.
The activities categories are: rural economic/business
development; rural tourism; rural sanitation and infrastructure
projects: planning/funding/management/operations; energy/electrical
development and funding; utility assistance; assistance to
economically distressed regions; fisheries. Representative Kohring
stated there aren't necessarily identical programs in both
entities, but there are certainly related programs which tie into
these activity categories.
Number 1889
CHAIRMAN ROKEBERG noted the former Division of Tourism was not
listed in the tourism activity category for DCED. He asked if the
former division was now being called the Office of Tourism.
Number 1908
REPRESENTATIVE KOHRING said there was a new Budget Review Unit
(BRU) calling it the Office of Trade and Tourism, which reflected
their changes in Finance last year. He commented that should have
been noted and was an oversight.
Number 1919
MIKE KRIEBER, Legislative Administrative Assistant to
Representative Vic Kohring, said they were focusing on the rural
aspects of tourism; in particular, efforts toward rural development
in the tourism industry.
Number 1930
CHAIRMAN ROKEBERG noted, however, the title is "Overlapping
Economic Development Related Activities of DCED and DCRA," and
said he thought they were supposed to be merging the departments.
Number 1940
REPRESENTATIVE KOHRING noted he wouldn't go into each specific
program because of time constraints, but said he wanted to show the
committee DCED's and DCRA's different programs relating to the
major activity areas identified in that left column. He stated the
committee could see there are many programs that not only relate to
economic development but are also similar to each other.
Representative Kohring stated the next page gives the actual cost
savings of HB 400. He commented the bill calls for the elimination
of the DCRA commissioner's office, but the composition of the upper
management team would actually be up to the Governor.
Representative Kohring listed the savings: $458,000 from the
elimination of the commissioner's office specifically; $421,000
from the elimination of the administrative services office;
$102,000 from the elimination of the Division of Community and
Rural ["regional" stated on tape] Development (DCRD) director
position; $73,000 from the elimination of miscellaneous expenses
such as travel, contractual and supplies, for a total of $1,054,000
in savings. Representative Kohring indicated those are significant
savings, and he emphasized the savings would be ongoing for every
future year, an important consideration for the committee.
Number 2016
REPRESENTATIVE KOHRING indicated further justification for HB 400
is that the one-time implementation costs would be more than offset
by the many millions the state would save over time. He referred
to the next page, "Evaluation of New Department Staffing Levels,"
stating he wanted the committee to see how the DCED and DCRA
compare to other state government departments. He commented
concern was expressed at the last hearing that a merger would
create a cumbersome colossus which would be difficult manage
without incurring extra personnel expense. He said DCED currently
has only 348 employees and DCRA has 180 employees for a combined
total of 528. He said the total would be just under 500 employees
after some positions are eliminated, commenting it would still be
a small department , the fourth smallest in state government.
Representative Kohring said they feel it would still very much be
a manageable department.
Number 2088
CHAIRMAN ROKEBERG commented that a battalion size in the United
States (US) Army was around 400 or 500, noting Representative
Kohring might want to check this. There was some discussion
regarding the sizes of US Army divisions and Roman legions.
Number 2128
REPRESENTATIVE KOHRING said the packet's last section contained his
rebuttals to DCRA and DCED staff testimony at the February 25
hearing, and to concerns expressed by Mr. Perkins, Special
Assistant, DOL. Representative Kohring said the deputy
commissioner who spoke [note: both the DCRA and DCED deputy
commissioners testified at the February 25 hearing] noted DCED has
a fundamentally different mission from DCRA, and DCED programs
focus more on private sector businesses while DCRA focuses more on
public. Representative Kohring said the deputy commissioner was
essentially saying the missions of the departments are separate
because one is public and the other is private, and Representative
Kohring indicated he disagrees. He stated DCED does provide
funding for publicly-owned projects not just private. He noted the
Governor's proposed FY 1999 capital budget includes $16.8 million
in Alaska Industrial Development and Export Authority (AIDEA)
funds; including monies for DCRA, the departments of
Administration, Corrections, Environmental Conservation (DEC),
Transportation and Public Facilities (DOT/PF), Revenue, Natural
Resources (DNR), Military and Veterans Affairs, et cetera.
Number 2189
CHAIRMAN ROKEBERG said, "You mean these agencies are ripping off
AIDEA for this amount of money?" He asked, "Or is this capital
budget grants ...?"
REPRESENTATIVE KOHRING confirmed it was capital budget grants, and
also part of the Governor's proposed budget, not necessarily what
the legislature was going to authorize. However, it does
underscore the fact, he said, that DCED is not simply involved with
the private sector; it is providing monies for the public sector as
well, contrary to previous testimony. Representative Kohring also
noted that the Alaska Public Utilities Commission (APUC) oversees
private and public utilities, and is inherently involved in public
and public infrastructure development as well; including water,
sewer, natural gas, telecommunications and various other utilities.
Thirdly, Representative Kohring commented on a quote in DCED's
operational budget overview document for FY 1999 which states that
one of the functions of the Division of Trade and Development is
"helping communities develop needed infrastructure," which he
said further underscores DCED deals with public financing not just
private. In explanation, Representative Kohring indicated that
public financing, as also done by the legislature, involves
spending monies dealing with infrastructure development impacting
the public sector. In summary, he said, both DCED and DCRA
participate in planning and funding of public and private projects
and he thinks it is pretty clear the deputy commissioner's position
in that regard was not completely accurate. Representative Kohring
commented he has tried to clearly note that there are multiple
examples of duplicating, related functions and programs dealing
with economic development in both departments. He referred to
Exhibit 1, noting there are many types of overlapping functions
despite the deputy commissioner's testimony that there were
literally no duplicating functions within DCRA. Representative
Kohring said the duplicating functions include rural tourism,
infrastructure and community facilities [order in packet: 1)
sponsor's rebuttals to DCED; 2) sponsor's rebuttals to DCRA; 3)
sponsor's rebuttals to DOL; 4) 5-page Exhibit 1; 5) 1-page Exhibit
2; 6) 2-page Exhibit 3. There is also a small section identified
as Exhibit 1 on page 2 of the rebuttal to DCRA].
Number 2285
CHAIRMAN ROKEBERG indicated Exhibit 1 referred to the DCRA Rural
Development Initiative Fund (RDIF) loan summary.
Number 2295
REPRESENTATIVE KOHRING reviewed the materials and indicated he made
a misstatement about the deputy commissioner's testimony regarding
duplication. Representative Kohring said, "He feels that there's
no connection between the two, that there's no duplicating
functions between DCED and DCRA, and if you'll note ... on Exhibit
1, you'll see that DCRA does, in fact, have functions that relate
to DCED and economic development here, particularly when it comes
to private organizations that have been the recipient[s] of funds."
Number 2317
CHAIRMAN ROKEBERG referred to the various loan programs, grants, et
cetera, in Exhibit 1 and asked if that was what Representative
Kohring was referring to as far economic development-related
activities.
REPRESENTATIVE KOHRING referred the question to Mr. Krieber.
MR. KRIEBER answered in the affirmative.
Number 2330
REPRESENTATIVE KOHRING indicated there are many types of
overlapping functions of these departments. He summarized that
they have found many examples which indicate overlapping functions
exist and that there is much in the way of duplication occurring
between these two agencies. Representative Kohring noted the
deputy commissioner said many staff would have to be relocated due
to the merger. Representative Kohring also referred to the fiscal
note which Mr. Lawson would present later and indicated DCED's
perspective is that the merger would require relocating many
personnel. Representative Kohring disagreed, noting the DCED
deputy commissioner also noted two full-time space planners would
be necessary for office space consolidation because DCED felt all
of these staff people would have to be put in one location.
Representative Kohring disagreed with that also, referring to
Exhibit 3 which points out that DCED currently occupies multiple
locations and is functioning fine without being consolidated.
Kohring continued, "I'd also like to point out that a few other -
a few programs ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE]
TAPE 98-26, SIDE B
Number 0001
REPRESENTATIVE KOHRING continued, "... being transferred to other
departments as well, and what that really means is there's gonna be
a very minimal number of employees that are going to be transferred
to other locations." He indicated a maximum would be 19 people
being moved and it could be as few as 3. Three people would
essentially be moved across the street with the transfer of the
Head Start Program to the Department of Health and Social Services
(H&SS) from its current DCRA location. He said relocating 19
people would cost $95,000 at most, based on the standard $5,000
used by the department. Representative Kohring referred to Item 4
in the rebuttal to DCED, noting the deputy commissioner indicated
the new department would require two deputy commissioners.
Representative Kohring rebutted that, commenting the new department
would have under 500 employees, approximately 350 employees if the
104 people in the independent entities were excluded.
Representative Kohring referred to his earlier testimony on
department sizes, noting that was a relatively small department and
there are only three departments in state government currently with
two deputy commissioners. Representative Kohring noted the new
department would retain the DCED special assistant. Representative
Kohring said the DCRA deputy commissioner indicated during his
February 25 testimony that DCED funds public and private projects,
but DCRA only funds public entities. However Representative
Kohring referred to Exhibit 1, noting there are 34 different
private entity recipients of RDIF loans. Page 2 of Exhibit 1 shows
that DCRA has a mini-grant award program with a total of 6 public
and private partnership grants. Representative Kohring indicated
this further underscores that private parties as well as a public
entity are involved.
Number 0146
CHAIRMAN ROKEBERG referred to one RDIF loan entries in Exhibit 1,
stating he assumed Tailor Made Pizza (in McCarthy) was a private
entity.
Number 0150
REPRESENTATIVE KOHRING answered in the affirmative. Representative
Kohring next addressed DCRA's claim that it does not participate in
rural tourism development. He said the committee can see that
there are rural tourism development-related programs funded through
DCRA. He next addressed the commissioner of DCRA's assertion that
DCRA funds mostly publicly-owned infrastructure projects, stating
that is completely incorrect. Referring again to Exhibit 1,
Representative Kohring noted DCRA's RDIF loan program shows only
one of 34 loans used for infrastructure and that loan was for a
privately-owned RV (recreational vehicle) park. The mini-grant
program list shows none of the 23 grants were actually used for
infrastructure. In summary, both DCED and DCRA fund and administer
private and public projects; rural tourism projects as well as
infrastructure and community facility energy electric-related
projects, and he asked, "Why do we have two departments that
perform these same tasks? We should merge these two departments
together if they're in fact out there performing the same tasks."
Number 0215
REPRESENTATIVE KOHRING referred to the February 27 memorandum to
the committee from Lamar Cotten, Deputy Commissioner, DCRA, noting
there were disagreements there also. He commented Mr. Cotten
stated DCRA has limited involvement in assisting communities to
develop a community strategy for health and safety, community
infrastructure, and jobs and economic development and so forth. In
rebuttal, Representative Kohring asked if rural communities would
ever become independent if only a few communities were actually
receiving limited assistance from DCRA, indicating DCRA's function
is to help rural communities attain economic self-sufficiency.
Representative Kohring said HB 400 would provide the framework to
enable rural Alaska a chance to build its economy through greater
coordinated assistance for rural communities through these programs
administered through the new department. He agrees a comprehensive
approach to economic development is needed, but it seems an
effective strategy is especially needed because of the many factors
affecting economic development. Representative Kohring said DCRA
is inherently involved in such a strategy but he indicated there
isn't a good focus on effective development in the present
situation, the focus the new department would provide. The next
rebuttal items deals with the DCRA's assertion that it refers
community officials to other agencies including DCED after a
development strategy is determined. Representative Kohring noted
DCRA is not involved with developing this strategy and only serves
as a "middleman" agency; therefore, DCRA should be merged into DCED
where such coordination would be more effective. Another point in
the memorandum is that DCRA's regional development efforts are
primarily provided through funding and administrative support of
the Alaska Regional Development Organization Program (ARDOR).
Number 0303
CHAIRMAN ROKEBERG indicated the ARDOR Program has been in two or
three departments in the past three years.
Number 0313
REPRESENTATIVE KOHRING noted the ARDOR Program funding comes
through interagency receipts from DCED and under HB 400 this
program would be funded directly through the new department,
eliminating DCRA's current middleman role and creating greater
efficiency.
Number 0338
REPRESENTATIVE JOE RYAN asked if Representative Kohring had
identified the costs involved in this transfer of funds.
REPRESENTATIVE KOHRING said they haven't specifically identified
the resulting savings from addressing the duplicating functions.
REPRESENTATIVE RYAN indicated he thought there would be associated
administrative and auditing costs with this transfer of funds.
Number 0355
REPRESENTATIVE KOHRING said they would expect the departments, if
merged, to examine and recognize that there are duplicating
functions, combining those programs with resulting more efficient
use of funds in delivering the same programs. Representative
Kohring referred Item 4 in his rebuttal to DCRA, saying DCRA states
its RDIF program differs from DCED's small business economic
development revolving loan program because they serve different
clienteles. In rebuttal, Representative Kohring referred again to
Exhibit 1, noting DCED is also involved in the RDIF program, and he
said they feel efficiencies in management can be achieved if this
program is operated under one department. He asked, "Why should we
have this RDIF loan program providing loans through DCRA and also
providing loans through DCED?" noting that is another example of
duplicating functions where greater efficiencies could be achieved
through merging. Referring to Item 5, he said DCRA indicated it
agrees that it provides infrastructure scoping, planning and
funding. He said DCRA states also that it provides rural
sanitation, in this case rural sanitation business management
assistance. However, he said DCRA said DCED does not perform these
tasks.
Number 0425
REPRESENTATIVE KOHRING pointed out that DCED does perform these
tasks, and it is another example of DCRA doing something similar to
DCED. Representative Kohring more specifically pointed to AIDEA,
noting AIDEA is an important part of DCED relating to economic
development, international and domestic trade. He stated, "Again,
we've got AIDEA running under this auspices referring to DCED and
then we've got the - the other program under DCRA, so there are
very similar functions there." He also noted that AIDEA is
apparently involved in early scoping and planning in the course of
funding these projects and its participation in the Southeast
Alaska Community Economic Revitalization Team [SE-CERT], despite
the deputy commissioner's assertion.
Number 0466
CHAIRMAN ROKEBERG pointed out AIDEA is an independent agency,
indicating this would be discussed later.
Number 0473
REPRESENTATIVE KOHRING summarized in response to the deputy
commissioners of both DCED and DCRA that there is ample evidence
all kinds of duplicating activities are currently occurring. He
said that again, it is not precisely the same, necessarily, in some
cases yes, but by and large they are speaking about related
economic development programs being administered in both DCRA and
DCED. He said they think that further justifies merging the two
departments, noting the departments are both economic development
entities, commenting that they should put the two together under
one "management roof," saving themselves that $1 million in costly
and expensive upper management bureaucracy.
Number 0508
REPRESENTATIVE RYAN asked Representative Kohring if he knew offhand
the number of child care functions are performed by the state,
commenting he knew of three: child care assistance under H&SS
which goes to municipalities, Division of Family and Youth Services
(DFYS) which pays for babysitters for people, AFDC (Aid to Families
with Dependent Children) in the "welfare to work" program, and he
imagines there are a few more.
Number 0525
REPRESENTATIVE KOHRING stated he was not really familiar with all
of the programs under H&SS, but they feel H&SS would be a much
improved fit for the child care and Head Start programs currently
in DCRA, since there are child care and early child development-
related programs in H&SS.
Number 0542
MR. KRIEBER indicated there were three child-related programs with
DCRA: the Head Start Program, the Child Care Program and the day
care assistance program.
Number 0568
REPRESENTATIVE KOHRING noted he disagreed with the comments of Mr.
Perkins, the DOL's special assistant, on February 27 that DOL would
not be a "good fit" for the JTPA Program to be transferred from
DCRA. Representative Kohring referred to the DOL's mission per AS
23.05.010:
AS 23.05.010. Purpose. The Department of Labor shall
foster and promote the welfare of the wage earners of the
state, improve their working conditions and advance their
opportunities for profitable employment.
REPRESENTATIVE KOHRING noted the language "advance their
opportunities for profitable employment." which he believes refers
to job training. If DOL's statutory mission is to provide for job
training, then it only makes sense to put JTPA in DOL. Also,
Representative Kohring pointed out that the transfer of JTPA, the
State Training Employment Program (STEP) and the "one-stop"
programs from DCRA into DOL are consistent with the statutory
purpose. Representative Kohring noted currently DCRA refers JTPA
and STEP trainees to employment services at DOL, providing the
funding to DOL for this service, and he said they question why a
middleman is even involved.
Number 0635
CHAIRMAN ROKEBERG confirmed that DOL collects the STEP money "from
unemployment compensation" and turns it over to DCRA to expending
it.
Number 0659
REPRESENTATIVE KOHRING answered in the affirmative, noting they
feel it would more appropriate for DOL to keep and spend that money
with JTPA under its management auspices. He indicated that
concluded his presentation, noting they had a relatively lengthy
rebuttal, probably Representative Brice's benefit, justifying the
transfer of the child care and Head Start programs to H&SS.
REPRESENTATIVE TOM BRICE requested a copy.
CHAIRMAN ROKEBERG said anything Representative Kohring had in that
regard should be in the record.
Number 0697
REPRESENTATIVE KOHRING indicated they think moving these programs
to H&SS will provide the administration the opportunity to gain
greater efficiencies as far as providing improved services to
Alaska's families. He said this newly-established federal child
care and development fund, which is part of the federal
government's welfare reform package, does require the various
states to "serve families through a single integrated child care
system," indicating putting all the various child-related services
into one integrated child care system would satisfy this mandate of
the federal government. He commented this was also based on their
belief that having everything under one roof would provide much
better service for the residents of the state.
Number 0759
REPRESENTATIVE BRICE noted the day care, child care and Head Start
programs in DCRA were not all income-based programs and he
indicated he was concerned that moving these programs into the
welfare programs would take child care away from families needing
child care assistance in order to stay off welfare. He indicated
putting these DCRA programs, not strictly income-based programs,
under the new Alaska Temporary Assistance Program (ATAP), formerly
AFDC, made them strictly income eligibility-types of programs. He
was concerned because he thought they would end up putting 10,000
or 12,000 working families on welfare, or taking away their child
care, and thought there would be major problems if these families
were paying the full amount for their child care. He indicated a
somewhat associated problem would be the effect on programs
directed toward operators of day care centers rather than
individual families, questioning whether this would require those
centers to be completely income-based if receiving those benefits.
Number 0841
REPRESENTATIVE KOHRING referred to his involvement with the DCRA
and DCED budgets the last two years and said that issue had been
addressed last year concerning the two child care-related programs,
the day care assistance program and Child Care Program. House Bill
400 would not make any changes to those programs but there is a
possibility that the budget subcommittee might take action to
combine the two programs, as it tried to last year.
Number 0860
REPRESENTATIVE BRICE reiterated his concern about the effect of
possibly turning a non-income-based program into an income-based
program on those people on the margin of eligibility who need a
small amount of child care assistance in order to work
Number 0889
CHAIRMAN ROKEBERG asked how these families would lose their
benefit, questioning whether it was a federal criteria.
Number 0893
REPRESENTATIVE BRICE answered in the affirmative. He said the
income standards for ATAP qualification are statutorily established
in Alaska at approximately 70, 75 percent federal poverty levels
(FPL). He said a lot of these people are probably at 85, 90
percent FPL, or 100 or 110 percent FPL which is approximately
$12,000 to $14,000 a year.
Number 0926
CHAIRMAN ROKEBERG indicated he didn't think an administrative
merger alone would have an effect, mentioning the possibility of
having bifurcated criteria.
Number 0935
REPRESENTATIVE BRICE commented about possible effects of putting it
all within the "child care providers" under H&SS, stating, "In
other words, if you take this pot of money, throw it in that pot of
money, it's going to be required that those standards by which that
pot of money is administered is going to be applied to everything
within that pot."
Number 0955
CHAIRMAN ROKEBERG said, however, that HB 400 doesn't provide for
that, and confirmed it would be up to the budget subcommittee to
give direction within the budget document.
Number 0961
REPRESENTATIVE BRICE stated that was the next question: Whether or
not that will happen? He said then it also becomes a question also
of playing the people who aren't on welfare off against the people
who are on welfare, asking "And how do you provide adequate child
care in both instances?"
CHAIRMAN ROKEBERG asked if that was the threat by removing them
from DCRA and putting them into H&SS, questioning whether
Representative Brice was suggesting the department wouldn't follow
the statutory direction.
Number 0989
REPRESENTATIVE BRICE said the question is not whether the
department would but whether the legislature would. He stated
these programs also subsidize those centers so things like snacks
can be provided for some kids. Representative Brice indicated that
the legislature's actions are appropriate because of the
legislative process, but he questions is how the administration of
these programs is seen and how that will work in the long run.
Number 1023
REPRESENTATIVE KOHRING said he didn't think the administration of
those programs would change through moving them to H&SS, other than
perhaps being run with greater efficiency by being run with similar
programs. He reiterated that the legislation doesn't call for any
changes in the child care assistance program or the day care
program, noting the idea of merging the two came from the budget
subcommittee the previous year and could come up again this year.
REPRESENTATIVE BRICE emphasized that the Head Start Program is not
like those other programs, indicating it provides unique services.
REPRESENTATIVE RYAN noted the importance of flexible child care in
"welfare to work" programs and urged that the integrity of these
programs be kept if transferred.
Number 1116
CHAIRMAN ROKEBERG stated he had more questions for the sponsor
regarding scoping for the subcommittee, but wished Mr. Lawson to
present the fiscal note at this time.
Number 1190
TOM LAWSON, Director, Division of Administrative Services,
Department of Commerce and Economic Development, came forward to
testify with Mr. Henderson of DCRA and Mr. Gerken of the Department
of Administration.
Number 1205
REMOND HENDERSON, Director, Division of Administrative Services,
Department of Community and Regional Affairs, came forward to
testify.
Number 1208
KEITH GERKEN, Architect, Facilities, Division of General Services,
Department of Administration, came forward to testify.
Number 1211
MR. LAWSON explained the fiscal note. He stated this fiscal note
represented their best estimate of one-time costs and future
savings, noting they worked with all the state agencies that would
be impacted by HB 400. As a footnote, he said it was a best guess
and many of the numbers would need to be "fleshed out." House Bill
400 impacts four state agencies, more than $200 million in
programs, and more than 500 state employees. He said it was fairly
difficult to quantify the fiscal impacts because of the movement of
the programs and the somewhat limited time they have had. Mr.
Lawson commented it would be easier to explain page 2 of the fiscal
note first and then page 1. The first item is the staff savings.
Based on past program movements to different state agencies, he
said experience indicates it takes about 24 months (two years) for
programs to be fully transferred and operating fairly accurately.
One of the commissioners and secretaries would be deleted
immediately, an administrative services director would be
downgraded to a deputy and the DCRD director would be reduced to a
program coordinator. This would result in $208,000 in savings.
During the first 12 months of implementation, deleting one of the
deputy commissioners, one of the special assistants, and possible
downgrades of the division directors would be examined. Mr. Lawson
noted they expect the administrative staff workload to increase
rather than decrease because of the merger, and, at least during
the first 12 months, no administrative staff would be cut. During
the second year of implementation the administrative staff in the
division of administration, as well as in each of the divisions,
would be examined for possible reductions.
Number 1415
CHAIRMAN ROKEBERG commented that this was not reflected in the
fiscal note.
Number 1417
MR. LAWSON replied that this was because they didn't know whether
staff would be eliminated or downgraded, this was an estimate they
weren't ready to make. Addressing the moving costs, he said they
estimate the total cost of the merger to be $1,849,000; which
includes costs from three different components: moving costs; one-
time computer system costs; and leasing new space, meeting
regulations, et cetera. The moving cost is estimated to be
$1,695,000. They reached this figure through a two-step process.
First, they estimated a moving factor per worker with the help of
Mr. Gerken and his shop because they thought multiple moves would
be necessary. Mr. Gerken's estimate of $6,100 per person was based
on recent moves in both Juneau and Anchorage, and is an increase
from the $5,000 per person figure. The second step, on pages 4 and
5 of the fiscal note, was the creation of a grid locating the
existing DCED and DCRA employees in both Juneau and Anchorage. Mr.
Lawson said they came up with what they think is a reasonable
scenario for staff location, noting they felt 259 positions would
need to be relocated, resulting in a cost of $1,579,900. He stated
the 7 positions of the statewide service delivery program would be
relocated from DCRA to DOL. He noted the rest of the spreadsheet
indicates the balance of the DCRA and DCED staff that would be
moved to the new agency. He said they feel it is necessary to
literally have the staff under one roof if they are to meet the
intent of the bill, as they understand it, of better coordination,
integration, et cetera. The Juneau spreadsheet shows the remaining
DCRA staff would be moved to the ninth floor of the State Office
Building (SOB). It was felt that, of the divisions within DCED,
the Division of Occupational Licensing would best be able to stand
alone, and so would be moved into the DCRA building. The idea is
to integrate the DCRA and DCED administrative services staffs and
programs so they can benefit from co-location.
Number 1720
CHAIRMAN ROKEBERG confirmed the top half of the spread sheet showed
the existing configuration and indicated there was some confusion
about the preferred option shown below.
MR. LAWSON explained that 34 people would be moved out of the DCRA
building into the SOB, 7 people would be moved out of the DCRA
building to the DOL building, and the Division of Occupational
Licensing consisting of 37 people would be moved from the SOB to
the DCRA building, for a total of 81 moves. He indicated the
Anchorage moves were more complex because of the distribution of
office space all over Anchorage, referring to page 5 of the fiscal
note. The top two rows of the spreadsheet show the transfer of the
JTPA Program and the statewide service delivery program transfer to
the DOL. He noted there was no room at the DOL's current Anchorage
location, but through Mr. Gerken's estimate, they feel there would
be no increase in lease costs to find space for these programs.
There is no current space with H&SS in the Frontier Building for
the ten staff of the child care assistance program currently
located at the Post Office Mall, noting page 2 showed that cost.
He stated the rest of the inventory showed DCRA and DCED staff,
indicating new office space would be the best option for location
of the combined staff because of the high cost of leases and
upcoming lease expirations in the Frontier Building and the lack of
space at the Post Office Mall. No new lease costs are necessary
because of the combined current costs of the existing leases. He
noted the independent agencies were being left in their current
locations because of their independent status.
Number 2027
MR. LAWSON stated the fiscal note also did not show movement of
DCRA or DCED staff outside Anchorage and Juneau: both agencies
have Fairbanks staff, DCED has staff in Tok and Seattle, and DCRA
has staff in field offices statewide. He stated there was no
effort to merge any of these offices at this point. Referring to
page 2 and the top of page 3 of the fiscal note, he said the
Division of General Services felt that contracted space design
assistance would be necessary because of the size of staff
movement. The estimated cost would be $50,000: $25,000 in Juneau
and $25,000 in Anchorage. $65,100 is the estimated cost for
Frontier building space for the ten child care office staff ($2.17
per square foot over the course of a year). He said the one-time
computer system costs are estimated at $125,000, with the major
cost being the merger of the two separate DCRA and DCED systems.
The other costs were costs for systems for the child care
assistance program in Anchorage and for the DOL office in
Anchorage. Continuing, he said they don't see a need for two
purchasing agents for 1 year, but do feel an individual would be
needed half-time for one year or full-time for 6 months at a cost
of $29,100.
Number 2315
CHAIRMAN ROKEBERG asked for clarification.
MR. LAWSON explained the purchasing agent was to make sure
regulations were properly followed, et cetera, for leasing bids.
CHAIRMAN ROKEBERG asked if there was an interagency charge for
leasing services from GSA (ph).
MR. LAWSON said they were trying to represent the costs of the
bill. He indicated HB 400 was the reason they would be going out
to bid for this new office.
CHAIRMAN ROKEBERG asked if it was a cost in the time allocation of
an existing position.
MR. LAWSON replied that it could be, or a temporary position.
TAPE 98-27, SIDE A
Number 0001
MR. LAWSON summed up his testimony. He referred to the $175,500
"personal services" cost on page 1 of the fiscal note. He said,
"That is general fund, that doesn't total the $208,000."
["$280,000" stated on tape] Under the funding source, there is
also $32,500 shown as interagency receipts. He explained that as
the commissioner's office and the Division of Administrative
Services have incurred budget cuts, they have gone to the various
divisions for "charge-back" of services.
CHAIRMAN ROKEBERG asked if there would be a decrease in charge-
backs.
MR. LAWSON replied there would be a decrease in charge-backs but
indicated there would only be $175,500 of general fund savings
because of the charge-backs. He said the $1,849,100 capital
expenditures represents the total of the moving costs, computer
system costs, and space planning and leasing costs. He indicated
the net cost for the first year, FY 1999 would be $1,640,900, under
the funding source, and from that point on it would be a savings of
$208,200. He added, referring to the chairman's first question,
that there might be further savings in the second and third years
as they evaluate top management and administrative positions.
Number 0208
REPRESENTATIVE RYAN said in his four years as a legislative aide
and in his second year as a Representative, he's seen various
fiscal notes and he indicated he feels the Administration gives
high fiscal notes for legislation it does not like. He referred to
Commissioner-designee Sedwick of DCED's confirmation hearing in the
House Labor and Commerce Standing Committee on March 4, 1998,
noting she had mentioned weekly meetings with her directors.
Representative Ryan said he felt the physical location of the
various departments was irrelevant because of telephones and the
computer network and that the fiscal note was unjustified. In his
opinion, the computer system upgrade is a management problem. He
indicated he saw a few potential moves but did not agree with
majority of moves in the fiscal note, commenting he thought the DOL
should come in with an appropriate fiscal note if the department
was going to be affected.
Number 0475
CHAIRMAN ROKEBERG asked Mr Gerken for an abstract in the form of a
recap of every lease covered by the fiscal note, including the
square footage, amount of people, et cetera, so the committee could
make an analysis of available space within all the affected
departments. He asked that this also include things like available
space in these buildings, existing leases with no allocation, and
progress on the 550 West Seventh Avenue Bank of America building
(to be renamed the Robert B. Atwood Building), noting this would
assist with the subcommittee proceedings. Chairman Rokeberg asked
for Mr. Gerken's basis for the $6,100 per person moving cost and
information on the computer systems.
Number 0605
MR. GERKEN replied the Department of Administration runs the
mainframe computer with the personnel and accounting systems. He
believes the systems in question belong to the individual
departments.
CHAIRMAN ROKEBERG asked if there is any standardized policy for the
acquisition of computer hardware and software in the state of
Alaska.
MR. GERKEN indicated he could provide some information.
Number 0640
MR. HENDERSON asked if Mr. Spears with DCRA was still on
teleconference in Anchorage.
Number 0655
REPRESENTATIVE RYAN indicted the chairman had spoken very much in
favor of the acquisition of the 550 West Seventh building ["720
Fifth building" stated on tape] the previous year which was
intended to solve the problem of high costs associated with the
Frontier Building. He commented on approximately $26 million paid
the previous year and asked the chairman when they were going to be
able to house some of these people.
CHAIRMAN ROKEBERG replied it was an incremental move, asking Mr.
Gerken to review the time frame.
MR. GERKEN replied he would be happy to provide written information
on that status, noting the Frontier Building leases essentially
expire in January and September of 2000.
CHAIRMAN ROKEBERG noted Mr. Spears was available in Anchorage via
teleconference.
Number 0730
MR. HENDERSON said there were a number of things he would like to
address but noted the specific question had been to data
processing, computer hardware and software. He asked Mr. Spears to
give a brief explanation of the data processing costs associated
with the merger.
Number 0760
JOSEPH SPEARS, Data Processing Center Supervisor, Division of
Administrative Services, Department of Community and Regional
Affairs, testified via teleconference from Anchorage. He indicated
he is the director of data processing for that department and
explained the cost estimates he put together for the fiscal note.
He said the costs are basically broken down into three pieces: 1)
A one-time cost of setting up a network site for a child care
office. 2) Setting up a similar stand-alone office for the JTPA
Program office (JTPO) related staff if room in the DOL's Anchorage
lease space is not available. He indicated some infrastructure
build-up is necessary when creating two new offices by splitting an
existing office into three different entities. 3) Converting
DCED's network system to be compatible with DCRA's, or vice versa.
He said the first two parts would each be a quarter of the costs
and the conversion would be the other half. He noted the absence
of a worldwide standard network operating system and indicated that
is some explanation for the various computer systems, network
operating systems, e-mail and application systems within Alaska's
state government.
Number 0903
REPRESENTATIVE RYAN asked about the creation of local area networks
or connection to wide area networks when an office is established.
MR. SPEARS answered in the affirmative, and said that is what these
costs reflect.
REPRESENTATIVE RYAN asked if they were talking about a router.
MR. SPEARS replied that router expenses are part of the new offices
for the Child Care Program and JTPO. He said the Division of
Information Services (DIS) [now Information Technology Group]
basically charges for connecting to the wide area network wherever
the office is located.
Number 0932
REPRESENTATIVE RYAN referred to his previous question, asking why
there has not been uniformity throughout state government in this
area and asking if this is due to management decisions. He
referred to the antiquity of the legislature's Lotus cc:Mail e-mail
system.
MR. SPEARS replied he might not be the best person to answer that
type of a question. He indicated he didn't know whether the
creation and funding of these standards were management or
political types of decisions. He noted Lotus cc:Mail is an antique
but commented he thinks about eight departments were standardized
on that program.
REPRESENTATIVE RYAN indicated major corporations use uniform
systems, commenting on the use of Microsoft Windows NT, and he
couldn't understand why the state of Alaska didn't. He asked for
information on who made these decisions, stating he thinks they
should make a policy on this.
Number 1038
REPRESENTATIVE KOHRING asked why the fiscal note is so much larger
than the one for Representative Kelly's bill two years ago, noting
the costs then were estimated at $1,600,000 and these costs are
$200,000 more. He commented that bill called for moving 161 people
and HB 400 calls for moving a maximum of 19 and maybe as few as
three.
CHAIRMAN ROKEBERG commented that this fiscal note called for 259
positions to be moved.
REPRESENTATIVE KOHRING said that was part of his question as well,
asking where that number came from and why were they dealing with
a much larger fiscal note. He said it seems like an attempt to
discredit his efforts.
Number 1108
MR. HENDERSON explained he thinks that if the idea is to
consolidate services so that the various programs are more
efficient, this part of the fiscal note addresses the issue of co-
locating those people. As Mr. Lawson indicated, no costs were
associated with staff located in various field offices. The costs
only reflect moves within the Anchorage and Juneau locations. In
summary, if the idea of this bill is to consolidate these programs
and services, the people need to be moved so that they are working
together. If they are not going to be moved so that they are
working in the same environment, he said it begs a question of why
do a consolidation.
Number 1162
REPRESENTATIVE KOHRING responded, referring to his presentation,
that DCED and DCRA are working well in scattered locations
throughout the state. He said Mr. Henderson is kind of countering
the way the entity currently operates. Representative Kohring said
his question in return would be that if it's already working
scattered throughout the state, why did they suddenly feel it all
had to be consolidated under one roof.
Number 1210
MR. HENDERSON replied it was not their bill and the bill says
consolidate programs. He stated they think it is working fine
right now, there is no duplication, and there is no reason to
consolidate the programs. If programs are going to be consolidated
for efficiency purposes, the people need to be moved together.
Number 1229
CHAIRMAN ROKEBERG asked about the $50,000 space planner estimate,
questioning whether that was the administration's problem and
addressing the question to "Pete (ph)" in the audience. Chairman
Rokeberg indicated he was not sure the committee or the bill
sponsor had contemplated moving 259 people, and he feels that is an
issue. He confirmed that the Department of Administration and
Division of General Services contracted out for those services.
MR. GERKEN answered that was essentially correct, and it was
anticipated a private architectural firm would be hired for space
planning.
CHAIRMAN ROKEBERG said, however, the only time a space planner was
necessary was when premises were remodeled and staff were relocated
in the remodeled premises. He indicated that only a plan based on
the utilization of existing space would be necessary in this case.
Number 1324
MR. GERKEN indicated that normally, when different groups of people
move into different spaces, figuring out how that space needs to be
reconfigured for the uses of the new group is necessary, and this
the anticipated scope.
CHAIRMAN ROKEBERG stated, "So you anticipate that you would have to
do a complete reconfiguration of the (indisc.) improvement layout
of the particular premise you were dealing with and - and the
totality of the premises here I take it." He indicated he did not
think that was necessary, based on his 25 years of experience.
Additionally, he asked why telephone and telecommunications line
items were omitted from the fiscal note.
Number 1365
MR. GERKEN indicated that was in the $6,100 per worker moving cost
which he was providing more information to the committee on. He
said this cost is made up of five elements: physically moving
people, moving phones, computer wiring, systems furniture
reconfiguration and (indisc.) improvements.
CHAIRMAN ROKEBERG asked Mr. Gerken to add a short narrative on the
cost of new furniture to the abstract he was providing the
committee.
MR. GERKEN replied that no new furniture would be purchased, they
were simply taking the systems furniture down and setting it back
up.
CHAIRMAN ROKEBERG confirmed it was a relocation.
MR. GERKEN answered in the affirmative.
CHAIRMAN ROKEBERG asked why the furniture couldn't just be left in
place.
MR. GERKEN replied that the existing furniture, in terms of desks
and partitions, can be used but, in his experience, will be
reconfigured almost every time to accommodate a different group of
people. He confirmed that the systems furniture could be taken
apart and put back together to do this but there was an associated
cost.
CHAIRMAN ROKEBERG noted any comments Mr. Gerken had on that which
could be helpful to the committee would be appreciated.
Number 1428
REPRESENTATIVE KOHRING stated he was absolutely shocked it was
being proposed that they spend $1.8 million, with $1.6 in moving
costs. He noted his presentation of the bill said they would be
moving 19 people and questioned that it would cost $1.6 million to
move 19 people, stating that was asinine.
Number 1439
CHAIRMAN ROKEBERG indicated they were trying to figure out whether
that was what HB 400 required the departments to do, commenting he
thinks this is an issue. Additional, Chairman Rokeberg said the
bill contemplates the conversion to four divisions and then takes
a number of independent agencies and turns them, via amendment he
believes, into what the sponsor is calling an office. Chairman
Rokeberg indicated that particularly these quasi-judicial or
separate agencies have division directors, and he asked if there
was a specific salary or compensation level that would be changed
by altering the nomenclature in the affected statute.
Number 1495
MR. LAWSON replied that the bill as written does created four
separate divisions, however there are other divisions set in
statue, and, he said, at least the first version of the bill does
not mandate that those divisions go away. He indicated the
elimination of any of the other divisions is not reflected in the
fiscal note. He thinks the sponsor does have amendments to correct
that, and the fiscal note would have to be amended to address that.
Mr. Lawson said he thinks the chairman is right, that there would
be problems with the personnel Act and all that. In essence, the
division directors which go away would have to be downgraded to
office managers or some such classification.
CHAIRMAN ROKEBERG said he is not sure that was the bill sponsor's
intention, commenting he was not sure of the sponsor's goals here.
He questioned whether changing the names impacted the compensation
levels and if there was a problem statutorily.
MR. LAWSON responded that he couldn't answer that.
Number 1567
CHAIRMAN ROKEBERG asked Representative Kohring for his intention,
mentioning the divisions of Insurance; and Banking, Securities and
Corporations; as well as the agency directors.
REPRESENTATIVE KOHRING responded it was his expectation that the
compensation levels would be reduced if the job titles are reduced.
CHAIRMAN ROKEBERG noted Representative Kohring's chart did not show
this.
Number 1601
REPRESENTATIVE KOHRING agreed, stating it is not reflected in their
documents. He said it would be his expectation once the bill is
implemented that the decrease in the salaries would be reflective
of the title changes, and he noted the title changes were contained
in one of the three amendments the committee had before it [Note:
four proposed amendments were distributed to the committee at this
meeting].
Number 1615
CHAIRMAN ROKEBERG stated he was concerned about that, noting he
wanted to know if it was the sponsor's intention to demote these
people, and if so, he said it should be reflected in the sponsor's
cost savings analysis.
Number 1626
REPRESENTATIVE KOHRING responded that it is not really intention
but it is his expectation that there would be a change in title and
a commensurate change in salary and benefits package, noting a
division director is certainly expected to make much more than an
office manager.
Number 1639
CHAIRMAN ROKEBERG indicated the committee is working with what the
bill requires, not necessarily with intentions or expectations, and
that is what the committee is trying to figure out.
Number 1648
REPRESENTATIVE KOHRING indicated that once the amendment is adopted
the bill would reflect the fact that the division directors become
office managers. He stated that whatever happens from that point
on is up to the department and whatever the department chooses to
pay those individuals based on the new titles.
CHAIRMAN ROKEBERG suggested they might talk about it later.
Number 1664
REPRESENTATIVE RYAN said he was going to suggest probably the same
thing. He indicated grievances and other problems could result and
a modification to the statute might be necessary so that the
downgrading could occur.
CHAIRMAN ROKEBERG suggested the sponsor speak with the chairman
about that.
Number 1696
REPRESENTATIVE ALAN AUSTERMAN came forward to testify. From a
philosophical point, he indicated he thinks more of these types of
efforts will come from legislators as they look more at combining
and the efficiency of government. He noted, referring to
Representative Kohring's consolidation effort, that he sees
efficiencies coming out of consolidation but he doesn't see
efficiencies in number of people coming out of anything they are
being given. Representative Austerman said he would think "putting
all these people in one building and bring them under one umbrella"
would result in some kind of efficiencies; he stated he would like
to see something regarding the real plan in bringing all these
people together and why there are no efficiencies.
Number 1759
CHAIRMAN ROKEBERG stated that was one thing he would address
shortly. He said Representative Kohring indicated his desire in
his presentation to delete certain personnel positions and asked if
that wasn't reflected in the legislation.
Number 1779
MR. HENDERSON replied he thinks the Administration's fiscal note
reflects that there will be an analysis after or during the first
12 months to determine what additional positions could be deleted,
looking at programmatic and administrative positions. He also
noted there are some examples where they can show there are
differences of opinion in terms of the sponsor's fiscal note and
cost savings that are not really attributable to consolidation of
some of these positions. For example, he said, there is an
identification of a $71,000 cost savings through elimination of a
special assistant in DCRA. He stated none of those funds are
general fund dollars, they are funded from interagency receipts.
Mr. Henderson said he would like an opportunity sometime to point
out those types of things and talk about the sponsor's fiscal note.
Number 1832
CHAIRMAN ROKEBERG said he appreciated Mr. Henderson bring the issue
up and requested a memorandum from him to the committee. He said
DCED had a similar situation and the committee would be interested
in knowing any positions or other funds.
REPRESENTATIVE RYAN stated the charge-backs could be traced in the
various department budgets and general fund savings could be
realized.
Number 1853
CHAIRMAN ROKEBERG commented unless they were federal funds or
something like that, noting DCRA received "ag" funds or other
federal funds for rural economic development. He noted
identification of those would be helpful. He also stated he was
concerned the bill does not contain any transitional provisions,
and stated he thinks the bill needs more statutory direction
regarding what the bill is requesting and what needs to be done.
He noted he feels this may be helpful and asked if they thought if
more specific time frames, methods of consolidation including
premises even, and the elimination of particular positions
including time frames, would be more helpful. He asked if more
specificity would be a positive or negative to the two departments.
Number 1928
MR. LAWSON replied he thought that would be very helpful because he
thinks they have struggled with some of the sponsor's statements
versus what the language of the bill. He indicated any specificity
in terms of time frames, methods, and a quick overview of any
proposed amendments was movement toward that goal.
Number 1953
CHAIRMAN ROKEBERG indicated he feels the original bill version
lacks direction to the departments. He indicated he also wanted to
look at ways to reorganize the responsibilities of the remaining
commissioner in relation to the number of boards and positions in
the new department, noting that most provided for designees. There
has also been a question, he said, about DCRA's Division of
Energy's (DOE) location in the new department, commenting he thinks
there is a split between the DOE rural projects and the "four dam
pool." He asked if DOE goes into AIDEA, indicating that would be
a problem. He also asked what happens to the statewide assessor,
referring the question to Mr. Krieber. Chairman Rokeberg asked if
the fact that both the commissioner of DCED and the commissioner of
DCRA both sit on the Coastal Policy Council had been addressed. He
commented, as the chairman of the House Labor and Commerce Standing
Committee, he is not happy with the way the bill takes existing
independence away from certain groups and agencies for the sake of
creating another division. He stated he thinks that is a mistake
and will be "generating more heat than light by doing that because
these - these are really stand-alone agencies," noting the examples
of APUC; AIDEA; the Division of Insurance; and the Division of
Banking, Securities and Corporations. He noted these entities, as
examples, are not integrated to the functions of either department.
He said it would be his preference to keep those as independent
agencies, not line agencies, and he noted the existence of
statutory mandates. Chairman Rokeberg indicated he thought leaving
these agencies independent would not harm the bill or its concept,
noting there weren't any reductions in those areas in the sponsor's
initial fiscal management plan. He referred the discussion about
maybe doing that, commenting he felt it was unnecessary and that
these agencies be on a stand-alone direction out of the
commissioner's office. He asked Mr. Lawson for his comments on the
responsibilities of those particular groups and their present
relationship with the commissioner, questioning whether they were
just involved in the weekly director's meeting.
Number 2146
MR. LAWSON agreed, stating the policies, work tasks, et cetera, for
the independent agencies are set either by the commission, as in
the case of APUC, or by the boards, giving the example of AIDEA.
He noted DCED probably has more independent agencies than any other
state department with some directors attending a weekly directors'
meeting, but he indicated that is about the extent of DCED's
involvement. He noted the divisions are line divisions under DCED.
Number 2180
CHAIRMAN ROKEBERG indicated the Aerospace Development Corporation
(AADC) in Representative Austerman's district was one of the
entities concerned. He asked rhetorically if this director would
be known as the office manager on his business cards, commenting he
didn't think they wanted this to happen.
Number 2192
REPRESENTATIVE KOHRING said this was certainly something that could
be adjusted to alleviate that concern. He emphasized the focus of
what they were trying to accomplish is simply saving money by
eliminating some of the upper bureaucracy and he has no problem
with maintaining the integrity of programs like AIDEA, AADC and
APUC.
Number 2219
CHAIRMAN ROKEBERG indicated Representative Kohring showed there is
true commonality in the area of economic development and he would
like the subcommittee to look into this. He commented he has
always been philosophically troubled by the two separation between
rural economic development and mainstream economic development,
like DCED has been doing "big" projects and rural development has
been doing "little" projects, or subsidized or federally-funded
ones. He commented he thinks there are synergies there, savings
can be made in those areas through consolidation and the two areas
are better off cooperating rather than separate. He noted that if
one area in the two departments really goes together, it is that
one.
Number 2269
REPRESENTATIVE RYAN commented he thought the chairman was correct,
noting they have been very fortunate to have Willis Kirkpatrick as
the director of the Division of Banking, Securities and
Corporations for a long time, also mentioning David Walsh [previous
director] and Marianne Burke [current director] at the Division of
Insurance. He said, "The 'departments' are humming along, and I
think you'd be remiss in lowering those people because I don't know
if they would want to stay." Mentioning the statewide assessor, he
referred to his time on the borough assembly and his
dissatisfaction with what he considered were imprecise methods for
determining the assessment for education, noting he felt there
should be a better way.
Number 2313
CHAIRMAN ROKEBERG assigned HB 400 to a subcommittee, appointing
Representative Cowdery as chairman, Representative Ryan and
Representative Kubina to that subcommittee.
ADJOURNMENT
Number 2326
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:40 p.m.
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