Legislature(1997 - 1998)
04/08/1997 06:09 PM Senate FIN
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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
April 8, 1997
6:09 P.M.
TAPES
SFC-97, # 87, Sides 1 & 2 (000-590, 590-000)
SFC-97, # 88, Side 1 (000-225)
CALL TO ORDER
Senator Bert Sharp, Cochair, Senate Finance Committee,
reconvened the meeting at approximately 6:09 P.M.
PRESENT
In addition to COCHAIR SHARP, SENATORS PHILLIPS, TORGERSON,
PARNELL and ADAMS were present when the meeting was
reconvened. COCHAIR PEARCE and SENATOR DONLEY arrived as
the meeting was in progress.
Also Attending:
SENATOR LYDA GREEN, SENATOR RICK HALFORD, SENATOR JOHNNY
ELLIS, MICHAEL MORGAN, Facilities Section Manager,
Department of Education; LARRY WIGET, Director, Government
Relations, Anchorage School District; CARL ROSE, Executive
Director, Alaska Association of School Boards; JEFFREY BUSH,
Deputy Commissioner, Department of Commerce and Economic
Development; SHARON BARTON, Director, Administrative
Services, Department of Administration (DOA); KAREN MORGAN,
Deputy Director, Division of Information Services, DOA;
WENDY REDMAN, University of Alaska; MARYLOU BURTON,
Director, Statewide Budget Office, University of Alaska;
MIKE GREANY, Director, Legislative Finance Division; fiscal
analysts and aides to committee members.
SUMMARY INFORMATION
SB 11 SCHOOL DEBT REIMBURSEMENT
SENATOR HALFORD, Sponsor, testified on behalf of the
bill. Also testifying were MICHAEL MORGAN, LARRY WIGET
and CARL ROSE. SENATOR PHILLIPS MOVED Amendment #1.
SENATOR DONLEY objected, then withdrew his objection.
SENATOR PARNELL objected. Amendment #1 was ADOPTED by
a 5 to 1 vote. SENATOR TORGERSON MOVED Amendment #2.
There being no objection, Amendment #2 was ADOPTED. SB
11 was HELD for further consideration.
HB 58 CIVIL ACTIONS/ATTY FEES/INSURANCE
Testimony was heard from JEFF BUSH. HB 58 was HELD for
further consideration.
HB 75 APPROPRIATIONS: OPERATING BUDGET
HB 76 APPROPRIATION: MENTAL HEALTH PROGRAM
SENATOR PARNELL, Chair of the Information Technology
Subcommittee, testified on behalf of the subcommittee's
recommendations. Also testifying were SHARON BARTON,
KAREN MORGAN, WENDY REDMAN, and MARYLOU BURTON.
SENATOR PARNELL MOVED to incorporate the
recommendations into HB 75. SENATOR ADAMS objected.
The MOTION CARRIED on a vote of 6 to 1.
HB 46 MINING: CREDITS/LEASES/REC. AREA
This bill was scheduled but not heard.
SENATE BILL NO. 11
"An Act relating to state aid for school construction debt;
and providing for an effective date."
COCHAIR SHARP noted that representatives from the Department
of Education were present to speak to the bill, as was the
bill sponsor. He invited Senator Halford to address the
committee.
SENATOR HALFORD indicated he was available for questions.
SENATOR ADAMS inquired about the retroactivity clause and
its effect on long term financial goals. SENATOR HALFORD
responded that retroactivity applied to reimbursement of up
to seventy percent for bonds sold with prior approval. It
would apply to Mat-Su and Anchorage, and there had been a
question regarding North Slope projects. It was not
intended to apply to anything that had already been
accomplished. It would apply to projects that had been
approved but not yet had bonds sold. If bonds had already
been sold, but departmental approval had not been received,
they could go back to the department to get approval.
SENATOR ADAMS had another concern which was covered in a
draft amendment being copied for submittal to the committee,
according to SENATOR HALFORD. SENATOR ADAMS asked for
comments on a proposal to reduce the percentage from
seventy-five to fifty. SENATOR HALFORD responded that fifty
percent of something was worth more than seventy-five
percent of nothing. SENATOR ADAMS expressed interest in
merging other legislation into the bill so there would be
equity among school districts, particularly for rural
Alaska. SENATOR HALFORD responded briefly about the nature
of the problem.
MICHAEL MORGAN, Facilities Section Manager, Department of
Education, testified in opposition to the legislation based
on two reasons. The first related to continued advocacy for
legislation that addressed statewide needs, whereas SB 11
only addressed needs for communities with the ability to
bond. The other reason was that it ignored the
prioritization process currently used by the department
which the legislature put in statute. In response to a
question from SENATOR ADAMS about a proposal to reduce the
percentage to fifty, MR. MORGAN supported it because it
potentially freed up money for communities not addressed by
the bill. In response to a question from SENATOR PHILLIPS,
he said he was speaking on behalf of the department and not
the entire administration. There were requests for the
department's priority list of projects. MR. MORGAN informed
the committee that the department had been recommending $100
million annually for statewide construction.
SENATOR PARNELL brought up an April 15 ballot in Anchorage
with a list of school projects to be 100 percent funded by
city taxpayers. The retroactivity clause would make some of
the projects available for reimbursement. He questioned the
wisdom of reimbursement versus using the money to further
fund additional projects. SENATOR HALFORD provided
additional explanation.
LARRY WIGET, Director, Government Relations, Anchorage
School District, addressed the committee. He brought up the
issue of willingness of a community concerning overall
indebtedness. By providing retroactive reimbursement at
seventy-five percent, it lowered bonded indebtedness which
would allow communities to take on greater debt in the
future, or increase bond capacity. Research showed there
would be greater likelihood for voters to support bond
measures if they knew the funds were available.
There was additional discussion about departmental approval
of projects. MR. MORGAN offered explanation of timing
differences concerning approval. In response to a question
from SENATOR PARNELL, MR. MORGAN explained there was no cap
and districts could bond for as much as they chose. There
had been a statutory limit in the past. With the cap there
had been a prioritization process, but under the legislation
there would be none, so communities could submit the
projects they chose.
In response to a question from SENATOR ADAMS, MR. MORGAN
stated the fiscal note addressed a portion of the
retroactivity clause but did not include the proposed
amendments which had been discussed. There was additional
discussion about the indeterminate amount of the fiscal
note. SENATOR ADAMS believed the North Slope Borough would
be eligible, but the bill still needed to be made equitable
for rural schools. He reiterated his concern about how it
would impact the long range financial goal.
The presence of Senator Donley was noted.
SENATOR HALFORD informed the committee about the
applicability of the amendment. It was not intended to pay
back prior expenditures and had a narrow window.
COCHAIR SHARP called for further questions or comments.
There being none, SENATOR PHILLIPS MOVED Amendment #1 and
explained that it dropped the reimbursement percentage from
seventy-five percent to fifty percent. SENATOR DONLEY
objected for sponsor comment. SENATOR HALFORD briefly
reiterated his position. SENATOR DONLEY then withdrew his
objection. SENATOR PARNELL objected. A roll call vote was
taken on the MOTION to adopt Amendment #1.
IN FAVOR: Donley, Adams, Phillips, Torgerson, Sharp
OPPOSED: Parnell
Amendment #1 was ADOPTED by a 5 to 1 vote.
SENATOR TORGERSON MOVED Amendment #2. There being no
objection, Amendment #2 was ADOPTED.
A request was made of the department by COCHAIR SHARP to
provide additional information regarding other school
districts with bond issues that would be eligible under the
retroactivity clause. He announced that SB 11 would be HELD
for further consideration.
CARL ROSE, Executive Director, Alaska Association of School
Boards, addressed the committee, commenting that the bill
had been somewhat divisive because it created haves and have
nots. He didn't oppose the legislation, but noted it left
out a large portion of the membership he represented, namely
in the rural areas, because they lacked the capacity to
issue bonds. The main issue was fairness and equity. Brief
discussion followed MR. ROSE'S comments.
The presence of COCHAIR PEARCE was noted.
COCHAIR SHARP stated that SB 11 would be HELD for further
consideration and took up HB 58.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 58(FIN) am
"An Act relating to civil actions; relating to independent
counsel provided under an insurance policy; relating to
attorney fees; amending Rules 16.1, 41, 49, 58, 68, 72.1,
82, and 95, Alaska Rules of Civil Procedure; amending Rule
702, Alaska Rules of Evidence; and amending Rule 511, Alaska
Rules of Appellate Procedure."
SENATOR PHILLIPS brought up a letter from Bruce Cain
requesting a teleconference on the bill. He reiterated the
request. COCHAIR SHARP indicated that an attempt had been
made to teleconference but the operators were unavailable
for the evening meeting.
JEFFREY BUSH, Deputy Commissioner, Department of Commerce
and Economic Development, represented the administration
concerning HB 58, the tort reform bill. He was optimistic
that the negotiations going on between the interested
parties regarding the issues would result in a compromise.
He pointed out that the governor introduced similar
legislation developed by the task force on civil justice
reform and to the extent that HB 58 was consistent, they
supported it. He expressed some disappointment that the
task force proposals received little attention by the
legislature. The task force approach was that the problem
was primarily one of the cost of the system to the parties
involved. As much as sixty percent of damages paid are
eaten up by the system in court costs, attorney fees, expert
witnesses, et cetera. There were two ways to save money,
either to cut costs in the litigation process or cut off a
person's right to recover. The task force decided the
second option was inappropriate and unfair. They wanted to
make sure people's rights were retained and to save money in
the process by settling cases more quickly and to insure a
higher percentage of the money went to the deserving victim
rather than the attorneys and witnesses. He believed HB 58
was faulty in that regard. It contained provisions that had
been unanimously rejected by the task force because they
were not deemed to be fair to the litigants.
End SFC-97 #87, Side 1, Begin Side 2
In response to a question from SENATOR ADAMS, MR. BUSH
discussed the task force requirements to get a
recommendation or proposal to move forward. SENATOR ADAMS
inquired which were the high points of the task force that
were missing in HB 58. MR. BUSH responded that the most
significant missing pieces dealt with the process of
litigation. There had been a proposed pilot program for
alternative dispute resolution in an effort to achieve quick
resolution before they went to trial. Another
recommendation was that the District Court jurisdiction be
raised from $50 thousand to $100 thousand and have an
expedited process that required the litigants to go to trial
within one year. According to the sponsor, the reasons they
were not included in HB 58 was because the court system said
they would cost too much money. He disagreed with the court
system analysis. In response to a question from SENATOR
PHILLIPS, MR. BUSH stated that of the 21 members of the task
force, 9 held law degrees.
COCHAIR SHARP announced that HB 58 would be HELD for further
consideration. He called for a brief recess and turned the
gavel over to COCHAIR PEARCE.
CS FOR HOUSE BILL NO. 75(FIN) am(brf sup maj pfld)
"An Act making appropriations for the operating and loan
program expenses of state government, for certain programs,
and to capitalize funds; making an appropriation under art.
IX, sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund; and providing for an
effective date."
CS FOR HOUSE BILL NO. 76(FIN)
"An Act making appropriations for the operating and capital
expenses of the state's integrated comprehensive mental
health program; and providing for an effective date."
COCHAIR PEARCE reconvened the meeting after a few minutes.
She noted the remaining budget to close out on today's
schedule was the Information Technology Subcommittee, headed
by SENATOR PARNELL.
SENATOR PARNELL addressed the committee. He explained that
the subcommittee was charged with pulling all the
information technology expenditures out of each department,
including the university, and examining the combined budgets
that totalled between $120-140 million. The administration
had commissioned a Compass America study which conducted an
in-depth review of the state's information environment.
Some of the noted findings included random, uncoordinated
purchases of technology throughout state government, wide
disparity of available technology among departments, and the
fact that the state is comparatively more technologically
advanced, but wasn't fully utilizing equipment in many
cases. The subcommittee recommended a reduction of all
agency expenditures on computer equipment on a proportional
basis for a total reduction of $1.25 million. SENATOR
PARNELL further explained that they would like the
Department of Administration (DOA) to set up an account of
$500 thousand for new computer purchases. The next major
component was a reduction to DOA's Division of Information
Services of $350 thousand, via the reduction of rates for
services to other departments. SENATOR PARNELL summarized
by noting the total reduction by the subcommittee was $1.1
million.
COCHAIR PEARCE inquired whether the Compass America report
specifically addressed the university. SENATOR PARNELL
replied that it did not. He explained the university's
concerns about contributing to the $500 thousand account and
competing for a portion of the funds.
SENATOR ADAMS inquired how departments would justify new
technology and updated equipment when technology changes so
quickly. He also requested a copy of the Compass America
study. SENATOR PARNELL responded that the attempt was to
slow down uncoordinated random purchases of computer
equipment. As an example, he referred to the
Telecommunications Information Council (TIC) which had just
established a standard software suite for all of state
government that would allow volume purchase. It basically
changed the decision-making process.
SENATOR ADAMS requested testimony from the university
regarding a $459 thousand reduction and expressed his hope
that it did not hurt students because of insufficient
computers to handle their work load.
SHARON BARTON, Director, Administrative Services, DOA, spoke
about the departmental reductions, many of which would end
up as an unallocated reduction from budgeted amounts that
may have been for priority FY98 purchases. She suggested
they not slow down on those purchases, although the
intention was good. She agreed with the concept of buying
smarter and taking advantage of volume purchases. Regarding
the $500 thousand fund, the priority of the department and
the TIC was to set standards for state government. The fund
would be valuable to the anticipated difficult transition.
MS. BARTON elaborated on a bigger concern for her
department, that being the chargeback reduction and the
complexity of the internal service fund. She referred to a
multiplier effect of a $350 thousand reduction to the
Division of Information Services that would result in a
service level reduction of $1.4 million and provided
additional information. In response to a question from
COCHAIR PEARCE, MS. BARTON responded that the Information
Services fund was very dynamic in that money was flowing in
and out of it on a daily basis.
KAREN MORGAN, Deputy Director, Division of Information
Services, DOA, responded to the same question. She noted
that they operate the fund at a zero balance level because
of the accounting requirements to not make a profit. The
federal government disallows a balance to be carried over
sixty days. She further described the cash flow of the fund
as it related to the fiscal year.
SENATOR ADAMS asked for further explanation of the structure
of the proposed fund. SENATOR PARNELL responded by
describing the composition of the TIC. He added that it
would have oversight of a limited pool of funds as an effort
to get a handle on this area.
In response to a question from COCHAIR SHARP about rates
charged by the division, there was lengthy explanation and
discussion from MS. MORGAN and MS. BARTON.
SENATOR ADAMS restated his request to hear about the impact
of a $459 thousand reduction on the university.
WENDY REDMAN, University of Alaska (UA), stated that they
had no difficulty with the chargeback portion for provided
services, as they represented a small amount. She provided
written information to the committee (copy on file)
regarding the impact of the overall reduction, noting that
the university's share totaled 37 percent, adding that it
had been based on a study that didn't include the
university. She pointed out that the university already had
an integrated system and software standards. She called
attention to a difficulty regarding the national standard of
twenty students per computer, noting the university average
was currently closer to fifty students per computer, so they
were far behind in student computing. That was a major
concern with regard to the reductions.
End SFC-97 #87, Side 2
Begin SFC-97 #88, Side 1
MARYLOU BURTON, Director, Statewide Budget Office, UA, spoke
briefly in response to a question from SENATOR ADAMS about a
recalculation of what reduction the university could stand.
MS. REDMAN commented that they were supportive of the TIC,
but many of their discussions did not apply to the
university. In response to a question from COCHAIR PEARCE,
she further explained how they control spending through
their integrated standards.
SENATOR PARNELL requested an explanation from Mike Greany
regarding how the university number was arrived at.
MIKE GREANY, Director, Legislative Finance Division,
testified that they treated the university similar to other
agencies with regard to identifying a base amount for
equipment and explained in detail. He acknowledged that the
university didn't do their budget in the same way as other
state agencies, so they made their best attempt to fit the
university into the main scheme, purposely taking a
conservative approach. He stated there was a policy
question on whether or not the university should be included
within this type of review. In response to a question from
SENATOR ADAMS, MR. GREANY explained that the Legislature and
Court System were excluded because they were separate
branches of government with their own needs and governing
structure. SENATOR PARNELL added that another distinction
was that they were not voting members of the TIC.
SENATOR PARNELL MOVED to incorporate the subcommittee
recommendations into HB 75. SENATOR ADAMS objected.
A show of hands was taken on the MOTION.
IN FAVOR: Donley, Torgerson, Phillips, Parnell, Sharp,
Pearce
OPPOSED: Adams
The MOTION CARRIED on a vote of 6 to 1.
COCHAIR PEARCE announced upcoming committee agendas.
ADJOURNMENT
The meeting was adjourned at approximately 8:03 P.M.
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