Legislature(1993 - 1994)
03/29/1994 08:10 AM Senate FIN
| 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
MINUTES
SENATE FINANCE COMMITTEE
March 29, 1994
8:10 a.m.
TAPES
SFC-94, #42, Side 1 (000-end)
SFC-94, #42, Side 2 (575-end)
SFC-94, #44, Side 1 (000-563)
CALL TO ORDER
Co-chair Drue Pearce convened the meeting at approximately
8:10 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Kelly, Rieger, and
Sharp were present. Co-chair Frank and Senator Kerttula
arrived soon after the meeting began. Senator Jacko arrived
as it was in progress.
ALSO ATTENDING: Nancy Usera, Commissioner, Dept. of
Administration; Shelby Stastny, Director, Office of
Management and Budget; Nancy Slagle, Director of Budget
Review, Office of Management and Budget; Cheri Jacobus,
Chief Assistant Attorney General, Dept. of Law; Peter
Bushre, Chief Financial Officer, Alaska Permanent Fund
Corporation, Dept. of Revenue; Thomas C. Williams, Director,
Permanent Fund Dividend Division, Dept. of Revenue; Karen
Crane, Director, Libraries, Archives and Museums, Dept. of
Education; Doug Hanon, Finance Officer, Alaska Postsecondary
Education Commission, Dept. of Education; David Teal,
Director, Division of Administrative Services, Dept. of
Labor; Fred Fischer and Kathryn Daughhetee, fiscal analysts,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
ALSO PARTICIPATING VIA TELECONFERENCE FROM ANCHORAGE: Mary
Gay, Director, Child Support Enforcement Division, Dept. of
Revenue; Phil Petrie, Operations Manager, Child Support
Enforcement, Dept. of Revenue; Will Gay, CEO/Executive
Director, Alaska Housing Finance Corporation; Judith
DeSpain, Deputy Executive Director, AHFC; Will Abbott,
Public Housing Section, AHFC; and Ray Utter, AHFC.
SUMMARY INFORMATION
SB 363 - APPROP: FY 95 CAPITAL PROJECTS AND GRANTS
A general overview of the governor's capital
budget was presented by Shelby Stastny.
Individual overviews were then presented for the
following departments:
Dept. of Administration
Dept. of Education
Dept. of Labor
Dept. of Law
Dept. of Revenue
Upon convening the meeting, Co-chair Pearce directed that SB
363 be brought on for discussion. SHELBY STASTNY, Director,
Office of Management and Budget, and NANCY SLAGLE, Director
of Budget Review, Office of Management and Budget, came
before committee. In his introductory statement, Mr.
Stastny explained that the thrust of the capital budget was
inclusion of bare essentials. The first emphasis was placed
upon state dollars needed to match federal moneys in water,
sewer, and highway programs. The next emphasis was on areas
where attention was absolutely necessary. He acknowledged
that arguments could be made that some of the projects in
this area should be in the operating budget (the ferry
overhaul was cited as an example). Remaining funding within
the $100 million cap was then left for agencies and the
capital matching grants program.
Mr. Stastny referenced agency funding within the Office of
the Governor and specifically noted $2 million for Americans
with Disabilities Act upgrades on state-owned facilities.
Many millions of dollars are need to comply with the federal
act. Last year, $4.6 million was appropriated for
development of a strategy for ensuring that priority repairs
are made first. A comprehensive survey of all facilities
scored state buildings in terms of need, and funding from
last year was applied to the highest priorities. A
methodology is in place to systematically take care of the
problem over time. The $2 million will be applied to
buildings that are next in priority.
In response to requests from members, Mr. Stastny agreed to
provide a list of state buildings with associated survey
scores.
[Co-chair Frank and Senator Kerttula arrived at the meeting
at this time.]
DEPARTMENT OF ADMINISTRATION
NANCY USERA, Commissioner, Dept. of Administration, came
before committee. She explained that the department's
capital request, as approved by the Governor, totals $500.0.
Commissioner Usera stressed need for "the tools to become
more efficient." A primary mission of the Dept. of
Administration is to provide policy direction and
centralized development of systems that can be applied
statewide for greater productivity and efficiency for all
agencies. Of continued concern is department inability to
help agencies become more efficient because of lack of
manuals and training in key areas such as finance,
personnel, and procurement. Approximately $120.0 of the
capital request will finish the applicant tracking system--
the personnel system. This project alone will save the
state $86.0 a month in chargeback costs.
Most sections of the statewide administrative manuals have
not been updated for five years. This is the code book for
state policy and procedures. The balance of the request
will be devoted to user manuals for AKSAS and AKPAY. These
programs are now inefficiently and superficially utilized.
Manual development projects are the first phase. No
training is included. This is critical to ongoing operation
of government.
Co-chair Frank questioned whether the AKSAS and AKPAY
programs came with manuals. Commissioner Usera explained
that the programs were developed on an ongoing basis. Some
of the software was purchased, but much of the programming
was developed in house. All agencies use these systems.
The division of finance is the receptacle for all agency use
of AKSAS and AKPAY--the state accounting system.
In further discussion with Co-chair Frank, Commissioner
Usera advised of cut backs in the division of personnel
budget resulting in inability to perform day-to-day
functions. There are 214 backlogged arbitrations presently
costing the state $166.0 a month "on things like
administrative leave." The department does not have the
funding to provide the requested applicant tracking system
or the necessary computer program manuals.
DEPARTMENT OF LAW
CHERI JACOBUS, Assistant Attorney General, Dept. of Law, and
DICK PEGUES, Director, Administrative Services, Dept. of
Law, came before committee. Ms. Jacobus explained that the
capital request is a continuation of an appropriation begun
two years ago to fund state operations dealing with
federal/state issues. The main thrust of the request is
protection of Alaska's fisheries. She referenced ongoing
treaty negotiations with Canada, involvement with the
Pacific Salmon Commission, involvement in protection of
state management of Alaska's fisheries, and commencement of
litigation to protect the Southeast fishery from effects of
the Columbia River power system.
The CIP will also fund protection of Alaska's access to its
resources. Ms. Jacobus pointed to assertion of title to
state navigable waters. At the time the CIP was begun,
fewer than 50 had been identified. The department has now
identified more than 200, and 4 are in litigation in federal
court.
The department is also involved in protection of in-holder
access in conservation system units as well as protection of
in-holders from applicable regulations within CSUs. The
state is the largest in-holder. The second largest
landholders within conservation units are Native
corporations.
The department is also active in protection of state access
to its resources under RS2477. The identification project
begun by the legislature is being coordinated with the Dept.
of Natural Resources.
Alaska has also filed a compact lawsuit. It is important to
the state to ensure that Congress lives up to agreements
made to the Alaska at statehood. The most notable is the
90/10 split.
In response to a question from Senator Sharp, Ms. Jacobus
advised that approximately 20% of the requested funding
would be devoted to navigable waters. The compact case
involves 10 to 15%, the RS2477 project 10 to 15%, and the
majority of the request relates to protection of fisheries.
Senator Rieger asked if litigation seeks reimbursement of
legal costs. Ms. Jacobus explained that the state is unable
to ask for reimbursement in some of the cases. She cited
the claims court case as an example. Reimbursement is
sought for cases in Alaska.
Senator Kerttula asked if the department has sufficient
funds to continue the submerged lands case. Ms. Jacobus
responded affirmatively.
Co-chair Pearce referenced last year's CIP appropriation to
the Dept. of Fish and Game for use and reauthorization of
endangered species legislation. She then asked how work
done by staff in Washington, D.C. interrelates with efforts
of the department. Ms. Jacobus explained that, under the
current CIP, the department is funding some Dept. of Fish
and Game activities. In particular, staff time for one and
a half people is devoted to preparation of documentation and
other aspects of the litigation. They are also helping
identify issues where Alaska's interests should be
protected. As an example, she cited instances where CSUs
have issued rules and regulations in violation of ANILCA and
which limit individual and state access to areas within the
CSUs. If it had not been for efforts of the Dept. of Fish
and Game, the department would not have been able to
identify the violations. This effort is vigorously pursued.
It appears that the state will be able to resolve some of
the issues without litigation.
Senator Kerttula noted that the agency request was $2,064
million, and the Governor provided $1,032 million. He again
inquired concerning the adequacy of funding. Ms. Jacobus
explained that the original request was for two years. The
Governor provided funding for a single year.
DEPARTMENT OF REVENUE
PETER BUSHRE, Chief Financial Officer, Alaska Permanent Fund
Corporation, came before committee. He explained that the
$251.5 capital budget request will fund an electronic
imaging project. The corporation is becoming choked with
paper documents (dealer and broker confirmations were
cited). It is important that these documents be on site at
all times, because as a stockholder in major corporations
throughout the nation, the corporation is party to class
action lawsuits. When plaintiffs win, the corporation
shares in proceeds of the settlement. However, the
permanent fund must be able to prove ownership of the stock.
Copies of dealer confirmations provide that proof.
Electronic imaging would convert thousands of documents to
computer images for storage on discs. That will allow the
corporation to index, retrieve, and copy documents from the
computer system. The cost savings in staff time and storage
will be substantial. The estimated maintenance cost of the
program is approximately $10.0. The CIP request covers
hardware, software, and the cost of retaining an independent
contractor to sort through 95 archive boxes of corporate
history and reduce it to computer discs.
Responding to a question from Senator Rieger, Mr. Bushre
advised that the cost of hardware totals $50.0. The
greatest share of the request is devoted to contractual
arrangements for imaging documents dating back to 1977.
TOM WILLIAMS, Director, Permanent Fund Dividend Division,
Dept. of Revenue, next came before committee to speak to the
$359.0 request for microfilm work on auxiliary permanent
fund dividend applicant files. The division routinely
microfilms applications as they are received. Auxiliary
files containing requested missing information and responses
from applicants have not been microfilmed. In 1991, the
division commenced a project to catch up on this effort.
The division can maintain microfilm efforts for all incoming
documents. However, the CIP is needed to microfilm
approximately 3 million documents in historical files.
In addition, current microfilm equipment is beginning to
wear out. Requested funding would allow for replacement and
addition of four temporary positions to accomplish the
microfilming task.
Senator Rieger asked why the division is using microfilm
rather than an optical scanner similar to that to be used by
the Alaska Permanent Fund Corporation. Mr. Williams
explained that cost analysis indicated optical scanning and
retrieval through the computer system would be much more
expensive, given the volume of paperwork involved. The
division processes two to three million documents each year.
Discussion followed between Mr. Williams and Senator Rieger
regarding current storage and retrieval of permanent fund
dividend information. Further discussion followed between
Senator Kelly and Mr. Williams concerning the temporary
positions. Mr. Williams further commented on cost
differentials between imaging and microfilming.
DEPARTMENT OF EDUCATION
KAREN CRANE, Director, Libraries, Archives and Museums,
Dept. of Education, came before committee. She explained
that for the last ten years, the materials budget has been
funded primarily by capital moneys. All books, magazines,
newspapers, etc. are purchased through the capital request.
The request for the upcoming fiscal year is $200.0.
The second request is for acceptance of $140.0 in federal
funds for public library construction through LSEA Title II.
These are pass through moneys. There are no state funds
involved; the match is local. In response to a question
from Co-chair Pearce concerning the number of grants
involved, Ms. Crane acknowledged that $140.0 does not go
very far. However, the department is allowed to carry
funding forward from year to year and "bundle" two or three
years' worth of funding together. Over the past year, the
division spent $130.0 on rewiring the Loussac Library in
Anchorage in preparation for the new automated system. The
department also provided a grant to the Seward Library for
ADA remodeling. Approximately $175.0 was spend over the
past year. That funding was accumulated over a two-year
period.
DOUG HANON, Finance Officer, Alaska Postsecondary Education
Commission, Dept. of Education, came before committee,
noting that the commission has requested three capital
items. The first relates to an intelligent dialing system
to deal with skip tracing and debt collection. The system
will interact with the data processing system and extract
accounts approaching 120 days past due. This technology is
used by most other student loan systems nationwide.
End: SFC-94, #42, Side 1
Begin: SFC-94, #42, Side 2
The other two requests relate to data processing
enhancements and ongoing data processing system efforts.
Included is network expansion. During FY 93 and 94,
Postsecondary implemented a personal computer network. That
allows the commission to integrate systems and bring
mainframe data to local loan servicing people at their
stations.
The intelligent dialing system and the p.c. network are
interrelated in that they will reside locally at
Postsecondary and will exchange data across the land
network. One does not work efficiently without the other.
The third request is for microfiche equipment. Current
equipment is old, the failure rate is high, and images are
not good. Need for replacement is desperate.
Funding for all projects is from corporate receipts. No
general funds are involved.
In response to a question from Senator Rieger, Mr. Hanon
explained that the microfilm system is Postsecondary's
record system. It is both the interactive record source for
loan servicing as well as the method of archiving records.
Postsecondary handles tens of thousands of documents each
month.
Responding to an additional question from Senator Rieger,
Mr. Hanon advised that Postsecondary is participating in the
state study on optical imaging. Costs are unknown at this
time. Optical imaging is a possibility for the future.
Postsecondary must deal with its paper problem now and
replace equipment that is failing and costing $15.0 to $20.0
in maintenance and upkeep.
DEPARTMENT OF REVENUE
MARY GAY, Director, Child Support Enforcement Division,
Dept. of Revenue, spoke via teleconference from Anchorage.
She told members that, as a result of the Family Support Act
of 1988, the child support enforcement division is required
to have an automated system that meets specific
requirements. The system must be complete by October of
1995. The division has been working on enhancements to its
current system. A recent audit highlighted need for further
enhancement. The most expedient means of achieving required
automation is via a contractor rather than through continued
utilization of in-house staff. All additions to the system
were outlined in a planning document submitted to the
federal government. The federal government has given
conceptual approval to the plan and has further advised that
90% funding will be available when final approval is
provided.
Ms. Gay explained that a portion of the capital request
relating to hardware will receive only 66% funding. She
stressed that the upgrades are federally mandated and must
be completed by October, 1995, or sanctions will be applied
in the form of penalties levied upon the AFDC budget.
Senator Rieger inquired concerning contractors who might not
only provide enhancement but operations as well. PHIL
PETRIE, Operations Manager, Child Support Enforcement, Dept.
of Revenue, responded via teleconference from Anchorage. He
acknowledged that several national contractors have
commenced operations. Mississippi and several counties in
California have contracted out this type of work.
Contractual arrangements for child support collection are,
at this early stage of development, both risky and costly.
A study would have to be done comparing existing costs with
privatization. There is not sufficient time between now and
the October, 1995 deadline, to explore that option. The
requested CIP would put the division in a good position to
consider it for the future in that a viable system would be
in place for "someone to come in and take over." Senator
Kerttula voiced opposition to privatization of "these types
of systems." Mr. Petrie remarked that he was not
recommending that option; he was merely responding to
Senator Rieger's question.
JUDITH DeSPAIN, Deputy Executive Director, Alaska Housing
Finance Corporation, Dept. of Revenue, next testified via
teleconference from Anchorage. She explained that the
capital budget request for the corporation focuses on three
areas: special needs housing, energy efficiency, and public
housing. The corporation seeks $79.4 million. Of that,
$34.6 million is federal, and $44.9 is agency corporate
receipts. The special needs housing program provides
housing for lower income Alaskans and special needs groups--
seniors, the mentally ill, disabled, or homeless. The Home
fund and Hope fund are federally funded.
Energy efficiency programs came to AHFC through merger with
the housing assistance division in the Dept. of Community
and Regional Affairs. General funds have been used in the
past for low income weatherization and energy rated homes of
Alaska. These programs incluse home energy loans and
rebates. Also included is the supplemental housing
development program--a match program bringing in federal
moneys.
Public housing projects are new to the capital budget
process. They support activities aimed at maintaining,
improving, and adding to public housing facilities.
WILL ABBOTT, Public Housing Program, AHFC, next spoke via
teleconference from Anchorage. In explaining the $1 million
request for environmental abatement, he advised that when
ASHA merged with AHFC, the corporation assumed all duties
associated with the merger. An assessment of former ASHA
projects uncovered a significant number of problems. Old
underground storage tanks and need for asbestos removal were
cited as examples. The major portion of the request relates
to replacement and cleanup associated with storage tanks.
Mr. Abbott advised of an average cost of $15.0 to $18.0 if
"it . . . comes out of the ground fairly clear and there is
not a lot of environmental damage . . . ." He cited a cost
of $60.0 for a recent removal and cleanup at a project in
Wrangell. A total of 85 tanks have been identified at
various locations. Phase I environmental studies are
ongoing on some projects. Co-chair Pearce asked that Mr.
Abbott fax a priority list to committee. Senator Rieger
requested an itemization of proposed expenditure of the $1
million. He observed that backup information speaks to
lead-based paint, asbestos removal, water purification
systems, risk assessments, etc.
Mr. Abbott next spoke to the $1 million request relating to
the energy conservation retrofit. He explained that utility
costs for public housing are extremely high ($4 million for
FY 95). This retrofit will attempt to improve
weatherization. The corporation has conducted an energy
audit in order to determine best use of the funding. Every
project undertaken will show a cost savings in energy
utilization. Co-chair Pearce stressed need for a list of
projects evidencing use of the $1 million. Mr. Abbott said
he would fax a list of projects based on energy audits to
date.
Mr. Abbott next spoke to the $2 million request for senior
housing deferred maintenance. He again advised that he
would provide a list of projects. They include alarm
systems, window replacement, sidewalk repair, etc. Ms.
DeSpain stressed dire need for public housing maintenance
deferred over past years. Much must be done to maintain
safe housing for residents. Co-chair Frank said that when
ASHA was merged with AHFC, it was not the legislature's
intent to "burn up $44 million worth of AHFC's equity in the
total program." He expressed surprise over deferred
maintenance on ASHA buildings that were previously outside
of legislative purview. He said he would have thought the
federal government would require maintenance and protection
of "this federal investment." Senator Kerttula noted that
maintenance should have been covered by rental receipts.
Co-chair Frank concurred. Ms. DeSpain explained that
federal funding was not always provided for maintenance.
ASHA consistently supplemented inadequate federal moneys.
The legislature has not previously seen this funding because
the ASHA budget did not fall under the executive budget act
and was thus not submitted to the legislature for review.
HUD moneys were supplemented with ASHA funds. Ms. DeSpain
advised that she did not know the source of the ASHA
dollars. Co-chair Frank said he was unaware an ongoing
deferred maintenance deficit was not being addressed. Mr.
Abbott explained that when the ASHA/AHFC merger occurred,
all ASHA reserves and general funds flowed to AFHC.
Expenditure from reserves must now be brought before the
legislature for approval. Co-chair Frank attested to need
to understand what prior reserves consisted of as well as
need to ensure that maintenance moneys derive from sources
other than other AHFC resources. Senator Sharp requested
information on balances at the time of merger, accrual from
rent receipts, and use of funds since the transfer.
Discussion of the $4 million request for Etolin Heights and
the setting of fair market rents followed. Mr. Abbott
described the process used to establish public housing
rental rates, explaining that the agency reviews the span of
rental costs, takes the 45th percentile, and subsidizes to
that amount. Reserve requirements for Etolin Heights were
$1.0 per month. The account totals $70.0. That is not
sufficient. Aside from a $200.0 expenditure six or seven
years ago, no major work has been done on the twenty-five
year old project. It must now be completely renovated and
brought up to reasonable standard. A recent increase in the
rent subsidy from HUD will allow only a small accumulation
of reserves.
In the course of continued discussion of rental rates and
subsidies, Mr. Abbott said that renters pay 30% of their
adjusted gross income. HUD subsidizes the difference
between that and fair market rent.
WILL GAY, Executive Director, Alaska Housing Finance
Corporation, stressed that AHFC has assumed responsibility
for buildings that have been allowed to deteriorate because
proper moneys were not expended at the appropriate time. In
some instances, buildings have been condemned. The capital
budget request recognizes major problems that must be
addressed. Senator Sharp noted that requested funding for
the 32 units equates to expenditure of $125.0 per unit.
Discussion followed regarding AHFC assumption of ongoing
debt service on the property at the time of merger. Senator
Kerttula requested information on remaining debt service.
[Senator Jacko arrived at this time.]
Discussion followed regarding removal of lead-based paint
and need for paving of the parking area.
Co-chair Pearce asked that staff speak to the $220.0 request
for statewide renewal and replacement at Anchorage,
Fairbanks, Seward, and Cordova. Mr. Abbott explained that
it relates to senior citizen facilities and would fund
medical alarms and other immediate needs. Recent wiring and
installation of an alarm system entailed an expenditure of
approximately $100.0.
Mr. Gay next spoke to the Cedar Park project in Juneau. He
attested to condemnation resulting from rotting studs and
floor joists. Major replacement and repair consists of
"blowing the units down and rebuilding them." This must be
done systematically so that residents are not "put out on
the street." The project is complicated by the low vacancy
rate in Juneau. Discussion of construction and square
footage costs followed. Members expressed great concern
over the $180.0 cost per unit.
End: SFC-94, #42, Side 2
Begin: SFC-94, #44, Side 1
Co-chair Frank requested information on income from the
existing Cedar Park project. Mr. Gay agreed to provide
numbers.
Co-chair Pearce asked that staff speak to the $1 million
request for public housing support for Juneau and Nome. Mr.
Gay explained that funding would provide on-site maintenance
facilities and equipment at both locations. Co-chair Pearce
suggested that the facility in Juneau could be provided from
the $9 million proposed for Cedar Park. In response to a
question from Co-chair Frank, Mr. Gay advised of 33 units at
Nome to be serviced by the $500.0 maintenance facility. Co-
chair Pearce requested information on the size of both of
the proposed facilities. Co-chair Frank questioned need for
a $500.0 facility at Nome in light of the number of units to
be serviced and existing maintenance staff consisting of one
full-time and one part-time position. Mr. Gay stressed that
the cost reflects both construction and equipment.
Speaking to the $9.5 million in federal funding for a
comprehensive grant, Mr. Gay explained that the state
receives $3.3 to $3.5 million from HUD each year for larger
maintenance items. The $9.5 million request picks up
funding from older grants for capital budget funding. Much
of the funding has been received. AHFC is now seeking
authority for expenditure. Co-chair Frank noted need for a
description of the work to be performed.
Mr. Gay next spoke to the $5.2 request for HUD funding of
major renovation of obsolete buildings at Bethel Heights.
Fifty units are presently under contract, a subsequent batch
has been funded, and the current request would fund the last
30 houses. Work involves lifting existing units from
foundations, demolishing the structures, and building new
energy efficient units on the foundations. Senator Sharp
noted that the cost amounts to $168.0 per unit. Senator
Kerttula observed that the cost for replacing individual
homes in Bethel is cheaper than replacement of multifamily
units at Cedar Park. Mr. Gay explained that the agency was
able to rotate residents within units at Bethel and did not
incur relocation costs associated with the project in
Juneau.
AHFC applied to HUD for a grant for the 33-unit Beringview
project at Nome and has recently learned that this
particular form of grant funding has been withheld "for
everybody in the country." Mr. Gay asked that authorization
for the project remain in place in the event the grant is
subsequently forthcoming. Renovation at Nome is similar to
that at Bethel.
Co-chair Frank inquired concerning the age of units at both
Bethel and Nome, and Mr. Gay advised he would provide that
information.
Co-chair Pearce next directed attention to the requested $18
million federal grant for special needs housing. RAY UTTER,
Alaska Housing Finance Corporation, explained that a similar
request was included in last year's capital budget. The
planning section of AHFC is attempting to capture available
federal moneys. The request reflects a "catch all" of a
number of small amounts. A number of the programs require a
match, hence the need for corporate dollars. Co-chair
Pearce acknowledged past funding of the effort and requested
information on what was captured and expended in the last
appropriation. Senator Sharp requested a description of
proposed projects (location, number of units, size, etc.)
Senator Sharp inquired concerning who is responsible for
maintenance on 100% federally funded projects. Mr. Gay
acknowledged state responsibility for maintenance of public
housing. Co-chair Pearce voiced concern that additional
construction would only increase the disparity between
deferred maintenance needs and available funding for that
purpose. Mr. Gay explained that the federal government
periodically provides notice of available funding. The
objective is to utilize that funding for units that have
deteriorated because of lack of maintenance. That is why
the agency has applied for federal grants for Nome and Cedar
Park. That type of grant is also the source of funding for
Bethel. Senator Sharp stressed need for feasibility
information indicating that income will adequately address
maintenance or estimating the amount of subsidy required.
Mr. Gay said AHFC has no control over that. The state is
"strictly at the mercy of HUD as far as our subsidy is
concerned with our low rent housing." Comments regarding
fair market rent and need to cover depreciation followed.
Co-chair Pearce questioned the wisdom of accepting federal
moneys to construct facilities for which the state will have
to use corporate receipts for maintenance. Mr. Gay cited
the 50 units at Cedar Park as an example of need for housing
in an area where very little low rent housing is available.
Co-chair Pearce asked for an itemization of projects covered
by the $22 million request for affordable housing and energy
efficiency. Mr. Utter explained that most of the projects
were transferred from the Dept. of Community and Regional
Affairs. Approximately $7 million in corporate receipts
will be utilized for low income weatherization, primarily in
rural Alaska. The warm homes of Alaska program supports
subprograms such as the Alaska craftsman home program,
energy rated homes of Alaska, etc. It assists contractors
in construction of energy efficient housing. The
supplemental housing program (a HUD program) helps match and
leverage in excess of $41 million in federal moneys. Co-
chair Frank voiced his understanding that $8.7 million for
low income weatherization, resulting from Exxon overcharge
moneys, has largely diminished. Mr. Utter concurred that
settlement amounts specifically set aside for low income
weatherization have been exhausted. The Co-chair emphasized
that, in light of depletion of Exxon moneys, AHFC is now
expending corporate receipts. Mr. Utter concurred,
attesting to progression from general funds to Exxon moneys
to corporate receipts. He further advised of ongoing need
and submission of a five-year plan for low income
weatherization in the amount of $7 million annually. Co-
chair Frank requested historical information on annual
appropriations and the source of funding.
Co-chair Frank next voiced his understanding that HUD funds
for supplemental housing contain minimums which do not allow
for enhancers needed for arctic environments. The state
thus supplemented HUD funds from general fund capital moneys
up to the time of the merger. Mr. Utter concurred that
state moneys provided the 20% match.
Discussion followed regarding the $1 million match for
senior citizen housing development. Senator Rieger voiced
his understanding that HUD funding would pass through to
regional housing authorities in a manner similar to
supplemental housing development grants.
Additional discussion ensued concerning public housing
energy efficiency funding. Mr. Utter explained that it
relates to audits of facilities to determine what needs to
be done. Co-chair Frank asked for information on the number
of units that have been weatherized.
Discussion followed regarding costs associated with
achieving a five star energy rating. Mr. Abbott said that
the agency conducted a cost benefit evaluation. He
acknowledged that securing the rating is not as important in
areas where energy is relatively inexpensive as it is in
locations where energy is extremely costly. The first phase
of the Birch Park project in Fairbanks was built to "four
star plus." That will provide a comparison of utility costs
between new construction and units in "old Birch Park."
Units will be built to the most cost effective standard.
Mr. Abbott attested to need for five star construction at
Bethel and Nome. Senator Sharp requested information on
recoupment of the extra investment between four and five
star construction. He suggested that it sometimes takes the
entire life of a project to recover the investment.
Co-chair Pearce directed that the meeting be briefly
recessed.
RECESS - 10:20 A.M.
RECONVENE - 10:30 A.M.
DEPARTMENT OF LABOR
When the meeting reconvened, DAVID TEAL, Director of
Administrative Services, Dept. of Labor, came before
committee. He explained that two of the department's three
capital projects involve "straight federal funds." One
relates to client access of employment services
(registration and search for work) and the other involves a
$499.0 expansion of the voice response system for
unemployment insurance. The client registration project
would place 200 personal computers in local offices. The
public will utilize these terminals to input registration
data and match individual skills with skills required for
job openings. The intent is to make operations "better and
faster for employers and employees" and reduce demand for
counselor time. Approximately half of the states have
similar systems with some form of public access.
Mr. Teal explained that at the present time Alaska allows
recipients to write in or deposit a card to file for
unemployment insurance benefits. Recipients frequently call
inquiring about their checks, etc. The voice response
system will allow recipients to call and determine if their
checks have been issued, when they are expected to arrive,
and indicate whether or not they are still unemployed and
additional checks should issue. The current system consists
of 16 lines. The requested expansion would add 32. Senator
Sharp asked if the agency accepts out-of-state calls, and
Mr. Teal responded negatively.
The third request relates to need to replace the eleven-
year-old worker's compensation claims processing system.
Three years ago, the department commenced movement toward a
common data base in which each employer and employee is
listed in the system only once, and information is shared
among all divisions. The division received $450.0 for the
project two years ago. Last week staff met with the
contractor, Texas Instruments, over problems with the
contract. It is clear the project was underbid by as much
as $1 million. Mr. Teal advised that negotiations "were
pretty much that they were going to eat the cost."
Unfortunately, this is not a turnkey system. The department
is required, by contract, to work with the contractor. If
the state does not do so, the contractor can legitimately
walk away because the state has not held up its end of the
bargain. If Texas Instruments walks, little will be shown
for the money or effort devoted to the project up to this
time. It appears that the contract will take "another two
years to complete." The department requested two
analyst/programmers for two years plus data conversion
costs. The Office of Management and Budget authorized
$100.0.
Co-chair Pearce called for questions. None were
forthcoming. Due to the impending Senate floor session, the
Co-chair announced that discussion of capital budget
requests would be continued at 6:30 p.m.
RECESS
The meeting was recessed at approximately 10:40 a.m.
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