Legislature(1995 - 1996)
04/11/1996 09:50 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 11, 1996
9:50 a.m.
TAPES
SFC-96, #73-B, Side 1 (000-575)
SFC-96, #73-B, Side 2 (575-395)
CALL TO ORDER
Senator Rick Halford, Co-chairman, convened the meeting at
approximately 9:50 a.m.
PRESENT
In addition to Co-chairmen Halford and Frank, Senators
Rieger, Sharp, and Zharoff were present. Senators Donley
and Phillips arrived as the meeting was in progress.
ALSO ATTENDING: Senator Green; Commissioner Shirley
Holloway, Dept. of Education; Dr. James Elliott, Acting
Director, School Finance, Dept. of Education; Chris
Christensen, Staff Counsel, Alaska Court System; Jay Livey,
Deputy Commissioner, Dept. of Health and Social Services;
Curt Lomas, Welfare Reform Program, Division of Public
Assistance, Dept. of Health and Social Services; Glenda
Straube, Director, Child Support Enforcement Division, Dept.
of Revenue; Jim Nordlund, Director, Division of Public
Assistance, Dept. of Health and Social Services; Mike
Tibbles, aide to Senator Green; and aides to committee
members and other members of the legislature.
SUMMARY INFORMATION
SB 98 - PERSONAL RESPONSIBILITY ACT
A draft CSSB 98 (Fin) (Version "N," dated 4/10/96)
was distributed. Review of pages 1 through 12 was
had with Senator Green and Mike Tibbles. The bill
was held in committee for continued review at the
next meeting.
SB 167 - DAY FINES & INFO FOR COLLECTING FINES
Discussion was had with Chris Christensen from the
Alaska Court System. Senator Donley explained
proposed Amendments 3 and 4. The bill was
subsequently held in committee for further work by
Senator Donley.
SB 244 - CALCULATION OF STATE AID TO EDUCATION
Discussion was had with Mr. Elliott from the Dept.
of Education. A draft CSSB 244 (Fin) (Version
"F," dated 4/4/96) was adopted. Amendment No. 1,
by Co-chairman Frank, (removing subsection (b)
from page 2 of the draft) was adopted. Amendment
No. 2, by Senator Zharoff, (Restoring Sec. 4
(single-site schools) of the original bill) failed
on a vote of 1 to 5. CSSB 244 (Fin) was REPORTED
OUT of committee with a fiscal note from the Dept.
of Education showing a cost of $311.7 for FY 96
and $20.2 in subsequent years.
SENATE BILL NO. 244
An Act relating to state foundation aid and
supplementary state aid for education; and providing
for an effective date.
Co-chairman Halford directed that SB 244 be brought on for
discussion. Co-chairman Frank distributed a draft CSSB 244
(Fin) (9-GS2043\F, Ford, 4/4/96) and said the intent was to
solve the disparity problem in a manner similar in concept
to the department's proposal but to make it revenue neutral
and applicable to FY 96. The draft does not include single-
site districts, with the recognition that they will be dealt
with as they have, in the past, through supplemental
funding. A hold harmless provision within the bill ensures
that no district will lose money this year because of the
increase in the deduct from 90 to 96 percent.
Co-chairman Frank voiced need for an updated fiscal note
from the department, to accompany the bill.
JAMES ELLIOTT, Acting Director, School Finance, Dept. of
Education, came before committee. He advised of no
opposition to the proposed draft with the exception of the
single-site issue. The department has received several
notifications from the federal government, in administrative
appeals of Alaska's standing as an equalized state, that
"They consider this to be a circumvention of the formula."
Mr. Elliott expressed the department's preference for
retention of single sites within the formula.
Speaking to the new fiscal note, Mr. Elliott advised that
hold harmless provisions for FY 96 would total $311.7. The
cost for FY 97 should approximate $20.0. Senator Rieger
voiced his understanding that, exclusive of the hold
harmless, the bill "causes a $20.0 per year increase in
foundation expense." Mr. Elliott concurred. Co-chairman
Frank noted that the hold harmless cost of $311.7 for FY 96
reflects a one-time only cost. He further attested to the
neutrality gained by increase of the deduct from 90 to 96
percent and reduction of FY 96 costs from $1.2 million to
$300.0.
In response to a question from Senator Zharoff regarding the
single-site issue, Mr. Elliott explained that any 874
recipient district can challenge the department's standing
as an equalized state. One is currently ongoing. The
administrative law judge hearing the appeal noted that this
appeared to be a circumvention of the formula and that it
had been repetitive, year after year. An issue has not been
made beyond that. Funding has been provided in this manner
in the past, and the state still passed the disparity test.
With single sites out of the formula, the state will
continue to pass the disparity test. The department was
attempting to place itself in the best position in case of
subsequent challenges to Alaska's equalized standing.
Senator Rieger voiced his understanding that the basic
"change of shape of state aid because of this bill is to
increase aid to districts which do not have a local
contribution." Mr. Elliott concurred, advising that it
provides an additional $500.00 per instructional unit.
Further discussion of the disparity test and local
contributions followed.
Co-chairman Halford directed attention to Page 2, lines 17-
19, and questioned need for the bill in light of regulation
authority within subsection (b). Mr. Elliott advised that
the department does not currently have the authority
provided by the subsection. Co-chairman Frank acknowledged
that authority granted by the subsection appears to be broad
and suggested that the subsection be removed in order to
keep the issue of school funding within the legislative
arena. He then formally MOVED to delete subsection (b).
Senator Zharoff OBJECTED. Co-chairman Frank REMOVED his
MOTION and MOVED instead for adoption of CSSB 244 (Fin).
Senator Zharoff again OBJECTED, noting deletion of single-
site schools. He then said he would withdraw his objection
and offer reinstatement of single-site schools as an
amendment. No further objection having been raised, CSSB
244 (fIN) was ADOPTED.
Co-chairman Frank then replaced his MOTION for removal of
subsection (b) at Page 2, lines 17-19. Mr. Elliott
explained that authority provided by subsection (b) was the
main purpose of "having the bill in the first place." It
would give the department the ability to make necessary
adjustments to ensure that the state meets the disparity
test. The department presently has parallel authority to
restrict or lower local contributions for cities and
boroughs. That proved to be unpalatable for districts like
Juneau, Ketchikan, and Kenai, which are at the cap.
Provisions within subsection (b) are viewed as a mechanism
by which the department could adjust the floor and the
ceiling. Removal would entail a major change from what the
department intended. Co-chairman Halford commented that the
bill, as introduced by the administration, reflects a major
change in existing law. Co-chairman Frank voiced his
understanding that the $500.00 per instructional unit
allotment would solve the problem for the current year. Mr.
Elliott noted that the variable is the amount of local
contributions. That will not be known until late in the
spring. If there are no changes in local revenues, the
$500.00 (the department's best estimate of what would be
needed) should serve as a place-holder. Co-chairman Frank
suggested that the subsection be removed, and, as the bill
moves through the process and better numbers are available,
the department notify the legislature if the $500.00 figure
needs to be changed.
Senator Zharoff voiced OBJECTION to the proposed amendment,
advising that it appears to remove the "heart" of the
administration's legislation. Co-chairman Halford called
for a show of hands. The AMENDMENT was ADOPTED on a vote of
4 to 1.
Senator Sharp said he continued to have difficulty with "the
logic and the fairness of this application." He noted that
the Alaska Gateway district will gain $25.0 (the average ADM
is $9,178.00) while Annette Island (with an ADM of
$4,100.00) loses $28.0. It appears that the lower the ADM,
the more a district loses; the higher the ADM, the more a
district gains. He suggested that the bill makes "a bad
situation worse." Mr. Elliott explained that since Annette
Island is part of a reservation, it receives over half of
its budget as 874 funds. The Gateway district has very few
federally-connected students. The $500.00 per instructional
unit will mean that districts with a greater number of units
will receive more money. Senator Sharp cited the reduction
for the Lower Yukon District and the increase at Yukon Flats
District as a further example of funding that does not make
sense in terms of educating children. He expressed
frustration over federal mandates and bureaucracy and
suggested that the legislation adds "fuel to the fire."
Discussion followed between Co-chairman Frank and Senator
Sharp regarding elimination of the $1.2 million in
supplemental funding, the $311.7 for FY 96 hold harmless,
and the ongoing additional $20.2 commencing in FY 97. Co-
chairman Frank shared in Senator Sharp's frustration
regarding changes in funding for individual districts. He
advised that the proposed bill "makes it somewhat revenue
neutral in totality." He acknowledged that "It doesn't make
it neutral with regard to each district."
[Senator Phillips arrived at the meeting at this time.]
Senator Sharp expressed need for development of a new
foundation formula that is fair to all districts.
Senator Zharoff said the proposed bill represents an
opportunity to "take care of the single-site question" so
that it is not raised year after year. He then offered
Section 4 (single-site funding) from the original bill as an
AMENDMENT to CSSB 244 (Fin). He noted support for the
funding by the department, educational-related entities, and
rural legislators. He then formally MOVED for adoption and
requested unanimous consent. OBJECTION was raised. Senator
Randy Phillips noted an opportunity within SB 7 to deal with
the single site/duel site question. Co-chairman Halford
called for a show of hands on adoption. The motion FAILED
on a vote of 1 to 5.
[Senator Donley arrived at the meeting at this time.]
Co-chairman Frank MOVED for passage of CSSB 244 (Fin) with
individual recommendations and a new Dept. of Education
fiscal note to show costs of $311.7 in FY 96 and $20.0 "per
year into the future." No objection having been raised,
CSSB 244 (FIN) was REPORTED OUT of committee with the above-
noted Dept. of Education fiscal note. Co-chairman Frank
signed the committee report with a "do pass" recommendation.
Co-chairman Halford and Senators Donley, Phillips, Rieger,
and Sharp signed "no recommendation." Senator Zharoff
signed, "No recommendation. (No single/dual sites--!!!)"
SENATE BILL NO. 167
An Act relating to day fines in certain criminal cases
and release of employment information for use in the
collection of criminal judgments.
Co-chairman Halford directed that SB 167 be brought on for
discussion and noted that Senator Donley had been working on
the bill since the previous hearing. Senator Donley
referenced Amendment No. 4 and reiterated inherent problems
with earlier passed legislation, relating to day fines,
which made it inapplicable to high volume crimes such as
drunk driving, driving without a license, etc. He explained
that those particular crimes were not covered by earlier
legislation because they require mandatory jail time. The
concept of day fines is that they serve as a substitute for
jail. To address the problem and increase revenues, the day
fine concept must be changed to create a flexible fine apart
from mandatory jail time. Amendment No. 4 expands the scope
of day fines to include all misdemeanors and run parallel to
misdemeanors that require jail as well. Those convicted of
drunk driving would continue to serve the mandatory three
days in jail, but the fine assessed against them would be
flexible, based on the offender's income.
The amendment sets parameters for fines between $50.00 and
$25,000.00 for a class-A misdemeanor; and $50.00 to
$5,000.00 for a class-B misdemeanor. The maximum for a
felony is $50,000.00.
CHRIS CHRISTENSEN, General Counsel, Alaska Court System,
came before committee. He explained that the proposed
amendment would not resolve problems with earlier day fines
legislation, due to difficulty in collecting fines and
incarceration of offenders. The purpose of day fines is to
reduce the number of people going to jail and the resulting
overcrowding. The proposed amendment does not do that since
mandatory jail terms would continue to be served. Further,
the fine collection unit within the Dept. of Law does not
have adequate resources to collect fines. That will not be
changed by the proposed amendment.
Additional problems with the bill turn it from a potential
money maker to a money loser. The day fine was to be a
substitute for jail. Imposing both jail and the day fine,
in effect, doubles the penalty for the crime. Increased
penalties have historically resulted in increased trial
rates. At the present time, only 10 percent of felonies and
misdemeanors go to trial. In the 1970s when the Dept. of
Law abolished plea bargaining, the trial rate doubled in the
first year and tripled in the second. While continuing its
ban on plea bargaining, the department thereafter began
engaging in "charge bargaining." When presumptive
sentencing laws were enacted, the trial rate also increased.
A further problem is associated with the fact that day fines
apply to state misdemeanors but not municipal ordinances.
Most of the offenses to be covered by the new bill have
equivalent municipal ordinances. The legislation would thus
double the penalty for an offender apprehended by a trooper
while the penalty would remain unchanged for those charged
for the same offense by a municipality. A serious equal
protection problem will be created.
Mr. Christensen reiterated that while Amendment No. 4
attempts to address a problem, it does not solve
overcrowding and collection problems. It also creates
potential for substantial new costs to the state through
dramatically increased trial rates.
Senator Donley countered the suggestion that increased
penalties would increase the number of trials by advising
that the penalty will only be substantially increased if the
offender is in the upper income level. These are the
individual who presently have the ability to litigate.
Further, language could be added to the amendment to make
the law applicable to municipal ordinances as well. Mr.
Christensen advised that the six offenses are of a level
where they would involve the maximum day fine. For a
typical defendant, that would be 30 days of disposal income.
That would be a substantial "hammer." The bill would not
only impact a small percentage of wealthy offenders but all
offenders equally.
Comments followed by Senator Rieger regarding application of
numbers set forth on the court system's income conversion
chart. He noted that since the day fine is based on income,
there is great disparity between what is paid by individual
offenders convicted of the same crime. One individual could
pay 100 times more than another. Under the proposed
amendment, that disparity would widen to 500 times. The
range is too great. Equal protection becomes a factor. Co-
chairman Halford suggested that a 10 to 1 ratio would
probably be appropriate. Senator Donley voiced need to
provide a sufficient deterrent. Co-chairman Halford
suggested that two issues are involved: The first is a day
fine approach that replaces jail time. The other is day
fines that supplement incarceration. He suggested that
$1,500 and three days as well as $5,000 for ten days would
provide a deterrent.
Senator Rieger voiced his understanding that earlier
discussion involved expanded application of day fines to
misdemeanor crimes against people and those involving
alcohol. He noted that misdemeanors are often not
prosecuted because offenses do not involve jail, jails are
overcrowded, and prosecutors are too busy. The intent of
day fines was to provide a practical means of prosecution
and accrual of revenue.
Discussion followed regarding application of day fines to
DWI offenses. Co-chairman Halford voiced a willingness to
change incarceration requirements for two-thirds of the
required sentence (because of costs to the system) as long
as the day fine serves as strong a deterrent to the
offender. He suggested that the judge be allowed to level
the penalty that imposes the maximum deterrent effect on a
particular offender. A day in jail and a substantial fine
are likely to be as effective as the present three days
served at a half-way house.
Senator Donley acknowledged difficulties associated with the
day fines issue. He suggested that if mandatory sentences
are to be reduced and day fines substituted, groups with
strong interests in mandatory sentences should be contacted
and involved. Co-chairman Halford agreed and asked that
Senator Donley propose the foregoing suggestions to those
groups. The bill was thus held in committee.
SENATE BILL NO. 98
An Act making changes related to the aid to families
with dependent children program, the Medicaid program,
the general relief assistance program, and the adult
public assistance program; directing the Department of
Health and Social Services to apply to the federal
government for waivers to implement the changes where
necessary; relating to eligibility for permanent fund
dividends of certain individuals who receive state
assistance, to notice requirements applicable to the
dividend program; and providing for an effective date.
Co-chairman Halford directed that SB 98 be brought on for
discussion. SENATOR LYDA GREEN came before committee
accompanied by her aide, MIKE TIBBLES.
END: SFC-96, #73-B, Side 1
BEGIN: SFC-96, #73-B, Side 2
She directed attention to a work draft CSSB 98 (9-LS0692\N,
Lauterbach, 4/10/96) and explained that the draft provides
the option for waivers if federal legislation is not
forthcoming. If federal law is enacted, the proposed bill
provides the department the ability to go forward with new
federal requirements. She suggested that time could be
saved in review of the draft since Pages 2 through the top
of Page 7 replicate HB 78 which was passed last year.
Provisions of the Diversion Program set forth on Page 7 were
in HB 78 and picked up by the Governor for inclusion within
his bill.
Pointing to provisions relating to Ineligibility for
Assistance (set forth at Page 8 as Section 2), Senator Green
advised that (a) language is from the Federal Code of
Regulations. Subsection (b) is new language relating to
individuals who intentionally transfer assets to other
individuals so that the individual making the transfer can
become eligible for benefits. Subsection (c) at Page 9 was
included in the Governor's bill, SB 98, and HB 78. The same
is true for provisions relating to Assistance to Minors with
Children (Pages 9 through 11).
Senator Rieger raised a question regarding reference to
"other adult relative" at Page 9. Senator Green explained
that provisions attempt to give latitude to situations in
which a minor, with a child, does not wish to live at home
with parents. The minor may choose to live with another
relative.
Directing attention to Page 11, line 6, Senator Green
referenced the 3 percent deferred benefit and advised that
she envisioned the benefit going directly to a child care
grant which would follow an individual once the individual
goes off benefits. It responds to complaints that
recipients are often suddenly off benefits with no
opportunity or funds to afford child care. It provides an
extension following the two years during which the recipient
prepared to go back to work. The department does not agree
with this provision. In response to a question by Senator
Rieger regarding funding for child care, Senator Green
advised that it would be provided via a fiscal note to
accompany the bill.
The "shelter allowance" at Page 11, line 24, reflects new
language incorporated within the Governor's bill. Those who
qualify for shelter allowance may also qualify for 100
percent of the AFDC program. They would then receive
benefits in excess of those received by other AFDC
recipients. Language at Page 11 provides for accountability
and a deduct based on the percentage of the subsidized
housing.
Page 12, subsection (i) at line 4, also contains a new
concept. It relates to seasonal benefit reductions for
those receiving unemployment. The provision was taken from
the Governor's bill and incorporated as part of the
legislature's waiver proposal.
Section 6, at Page 12, addresses time limits on benefits.
Language is a modification of that in HB 78. It provides
that individuals are not eligible for more than 24 months of
assistance during any 60 consecutive months. In HB 78 this
requirement was tied to the Jobs Program. It is the
standard in this legislation. There will no longer be a
two-tiered approach.
Section 7, on Page 13, is a modification of language from
the Governor's bill. Senator Green noted an attempt within
HB 78 to tie continuing family qualification to school
attendance by dependent children. That became cumbersome.
Modified language requires the minor parent to remain in
school.
Co-chairman Halford noted need to conclude the meeting for
members' attendance at the Senate floor session. He
announced that the next meeting would commence with
continued discussion of SB 98.
ADJOURNMENT
The meeting was adjourned at approximately 11:05 a.m.
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