Legislature(1997 - 1998)
02/24/1998 08:40 AM 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 24 February 1998 8:40 p.m. TAPES SFC-98, #43, Sides A and B CALL TO ORDER Senator Bert Sharp, Co-chair, convened the meeting at approximately 8:40 a.m. PRESENT In addition to Co-chairman Sharp, Senators Phillips, Torgerson, Parnell and Adams were present when the meeting convened. Senators Pearce and Donley arrived respectively thereafter. ALSO ATTENDING: Senator Gary Wilken; Mike Ford, Attorney, Legal Services, Legislative Affairs Agency; Richard Cross, Deputy Commissioner, Department of Education; Mary Gore, staff to Senate President Mike Miller; Keith Laufer, Financial and Legal Affairs Manager, AIDEA; Mike Greany, Director, Division of Legislative Finance; Dave Tonkovich, Fiscal Analyst, Division of Legislative Finance; aides to committee members and other members of the Legislature. VIA TELECONFERENCE: Teleconference was listen only. SUMMARY INFORMATION SENATE BILL NO. 36 "An Act relating to transportation of public school students; relating to school construction grants; relating to the public school foundation program and to local aid for education; and providing for an effective date." Co-chair Sharp convened the meeting and reviewed the expected schedule. He did note that SB 173, Charitable Gaming, would be held over until Thursday morning at 8:30 a.m. Co-chair Pearce would be chairing the afternoon meeting on Results-based Budgeting beginning at 4:30 p.m. At 6:00 p.m. Thursday evening will begin public testimony on SB 36, continuing for three hours, and will continue daily until everyone has been given an opportunity to testify, up through Saturday. He said Senator Phillips would introduce a new CS work draft and the drafter would go through it section by section for the benefit of committee members and the public. Then the bill will be set aside so the Department of Education can complete their runs on it as to how the bill will affect the school districts throughout the State and to do the fiscal notes. After public testimony is complete he said the committee would work on amendments and have further discussions which probably would be on Tuesday at 8:30 a.m. Senator Adams asked when the public could have their copy of the new drafted CS. Co-chair Sharp said it would be available as soon as the committee adopted it for work purposes, and further it would be available electronically. Co-chair Sharp said copies were being made for the public to follow along presently. Senator Torgerson asked about the time limit on public testimony or if it would be the regular three minutes. Co- chair Sharp said it was publicized for three minute testimony but he could go a little longer for school district testimony. Co-chair Sharp cautioned the audience to be more orderly so the committee could begin work on the bill. In further response to Senator Torgerson he said he would be somewhat lenient in the taking of public testimony but he wanted everyone to be able to testify and therefore would try to hold to the three minutes limit so it would be a dependable schedule. Senator Phillips, representing Senate District "L", introduced proposed CSSB 36, which is an accumulation of various bills. He noted one correction to the work draft on page 3, line 2, delete "three" and insert "four" so it would read "...four mills...". Senator Adams indicated this was a bad change. Co-chair Sharp further reiterated that there would be no teleconference testimony taken at this time. This would be "listen only". Senator Phillips continued and said that the Department of Education would come up with its own analysis and hopefully the numbers would be available to the committee and the public by Thursday morning. Then we can see the effects of the bill on the various fifty-three school districts around the State. Mike Ford is available to review the bill section by section Senator Phillips said they had tried to accomplish three main principles: simplicity, equity and accountability. They believe they reached those goals. First, funding was allocated per student rather than instructional unit value. Second, the size adjustment in the formula was based on individual schools instead of "funding" community. Third, the adjustment for geographical cost differences is based on the 1998 McDowell Study of the actual cost of operating schools, instead of household cost of living. Number four and five points are based on the equity equation. Fourth, requires local contribution from municipal districts at four mill value, or one hundred percent of the district's State support. He noted that currently the limit is thirty-five percent. Fifth, the required local contributions for the REAA's was set at the equivalent of four percent employment tax. This referred to those areas of the State that were not contributing locally would now contribute something towards the cost of education. Sixth, the Regional Educational Service Areas, or more commonly called REAA's were established using the boundary proposals of the model borough in the 1995 local boundary commission "model boroughs boundaries report". Seventh, category funding is set at twenty percent State funding plus funding for intensive needs. The last point he made was that funding for Statewide correspondence studies programs offered by the districts was set at point six five times the ADM, same as the State operated program. He emphasized the three basic principals that were being worked toward; simplicity, equity and accountability. It is believed that this bill achieves those goals and it is understood that there may also be some changes through the committee process. The bill is a starting point, however complicated; therefore making it also complicated for the Legislature to deal with it. It was a good faith attempt at rewriting the foundation formula, which he believed, along with others, was broken and needed to be fixed. Senator Adams gave the minority position regarding this bill which he only received this morning. He said one of the problems with the McDowell Study was that it was flawed. There were approximately ten disclaimers, making something wrong with the study, and in using that study the bill was considered flawed. This bill would pit rural areas against urban areas. The study suggested shifts of education resources from rural to urban. There the economic tax base and scales is good for that area. Basically if the study is looked at it relies on misinterpretation of the laws that are presently on the books. Also, there was the setting of financial targets regardless of education needs and the reality of education delivery system in Alaska. The particular study done by LB&A predetermines direction so the study would favour urban over rural Alaska. The public needs to look at the study and then submit a list of questions with regards to his statement just made and then they can be responded to, whether he is correct or not. He noted Senator Phillips referral to simplicity, equality and accountability. Basically it has been forgotten the oath of office that was taken. Article XII, section 8, reads that "The Legislature shall, by general law, establish and maintain a system of public schools open to all children of Alaska and may provide for other public education." The Legislature is summonsed to provide free public education. Looking at, in particular section 14.17.410 (2), money is taken away from a school district, which goes against the grain of the Constitution. That is not right. If it is done against a particular school district, which one is next? By the adoption of a committee substitute lawsuits are being encouraged against the Legislature and the State of Alaska. Simplicity, equality and accountability are not being reached in this bill. However, it is a start. Senator Adams continued, referring to the foundation task force that was set up, it was not said that money should be taken from one district and put into another. Rather, it was said there was inadequate funding available. Sufficient funds are available, for instance, from cigarette taxes. He continued his opposition this legislation but said he would be happy to work with the chairman in coming up with appropriate legislation. Co-chair Sharp thanked Senator Adams. Mike Ford, Attorney, Legal Services, Legislative Affairs Agency was invited to join the committee. He said he would give a brief overview of CSSB 36 (FIN) "F" and the provisions contained therein. Section 1: Purpose section Section 1: Rewrite of the foundation formula 14.17.300: Establishes public school account and provides the money can only be used for certain purposes, public schools, community schools programs or centralized correspondence study. 14.17.400: Provision that provides for funding for school districts and specifies that funding is the amount calculated under section 14.17.410. The section also provides for a pro rata reduction in State funding if the amount appropriated is insufficient to meet amounts authorized under this section. 14.17.410: Actual funding formula. It provides that a district is eligible for public school funding in an amount equal to the sum calculated under (b) and (c) of this section. Subsection (b) breaks down what actual public school funding consists of. It consists of a State share and local contribution and it provides for how we determine what those two parts are. The State share actually consists of State support less local contribution and ninety percent of Federal funds. Following through subsection (b)(1) it contains the elements necessary to calculate what each district will receive in State funding. Subsection (b)(2) is the local contribution from city and borough school districts, a four mill levy on taxable real and personal property. Subsection (b)(3) is a local contribution from REAA's and that is the equivalent of a four percent employment tax. Subsection (c) is the optional local contribution for city and boroughs. That is set at an equivalent of a two mill tax levy or twenty-three percent of the State share, whichever is greater. Subsection (d) describes the local contribution required of an REAA and what that consists of. That is an equivalent tax on services performed in REAA's. Subsection (e) provides that public school funding cannot be provided to cities and boroughs who don't make their local contribution. Subsection (f) provides similar provisions for REAA's. If they fail to make the local contribution then their State share is reduced by the amount they fail to contribute. 14.17.420: Funding provision for special needs and intensive services funding. He noted there was a blank on line twenty-five, page four, and that was because it had not been established what the number should be. (a)(1) is special needs funding and (a)(2) is intensive services funding. 14.17.430: Funding for correspondence study. The provision breaks down correspondence into three components: State centralized correspondence study program, Statewide correspondence study program and a district correspondence study program. It was all under ADM funding. 14.17.440: State funding for State boarding schools. 14.17.450: New school size factor. 14.17.460: District cost factors. This section also required the department to monitor the cost factors and to come back to the Legislature with proposed new cost factors beginning in January 2001. 14.17.470: (contains a missing element) It will be the base student allocation, formerly known as the instructional unit value. This will be a key element of the formula. 14.17.500: Contains provisions that are in existing law that should have been rewritten. They are substantiatively the same as existing provisions of law. 14.17.500: Concerns student count estimates when the data is required to be reported to the department. 14.17.505: Concerns fund balances limiting the accumulation of fiscal year end fund balances by school districts. 14.17.510: Provision which requires Community and Regional Affairs to assess values in city and borough districts. 14.17.520: Authority for the department in consultation with the Department of Labor to adopt regulations necessary to calculate, determine, collect or enforce the local contribution from REAA's. 14.17.530: Cap on administrative expenditures by school districts. The cap is $950/ADM multiplied by the district cost factor. It also provides a mechanism for waiver of that cap at the discretion of the commissioner or the board. 14.17.600: Establishes student counting periods. Those periods in which a district would count are actual attendance and would report it to the department for purposes of calculating how much State funding they are entitled to. 14.17.610: Established provisions for distribution of State funding. These two provisions are similar to existing law. 14.17.900: Provides the Chapter 14.17 is not a debt of the State. It requires each district to operate under a balanced budget and again provides for pro rata reduction if amounts are insufficiently appropriated. 14.17.910: Establishes restrictions concerning receipt and expenditure of district money; requiring each district to keep complete financial records, providing that the public school funding is for general operational purposes of the district. 14.17.920: Authority for the department to adopt regulations that are necessary to implement the chapter. 14.17.990: Definition section. Section 3: Technical amendment, as is sections 4, 5, 6 and 7. Section 8: Provision requiring the reorganization of REAA's into areas that are identified in the local boundary commission report, entitled: "Model Borough Boundaries". Actually, they are reorganized into educational service areas and an educational service area will constitute a new REAA. Section 9: Adds additional authority to an REAA school board and allows them by resolution to request organization into a municipality. Sections 10, 11, 12 and 13: Technical amendments. Section 14: Changes existing law to allow a school district to implement a ten-year teacher lay-off plan if State support decreases in a fiscal year by three percent or more or from one fiscal year to the next by three percent or more. Section 15: Technical amendment. Section 16: Amends existing law on when a district has to provide transportation for exceptional children to qualify that to transportation has to be provided to all children in the district. Section 17: Adds new language regarding special education service agency to allow a pro rata reduction in funding if amounts appropriated are insufficient. Sections 18, 19, 20, 21 and 22: Technical amendments. Section 23: Amends a provision that concerns child care facility grants. Because there is no longer instructional unit allotments the child care grant provision is now tied into the same percentage as funding under 14.17.460. Section 24: Repealers necessary to implement the bill. Section 25: Delayed repealer concerning reorganization of REAA's. Section 26: Transitional funding provision. It basically holds districts harmless for the upcoming FY year 1998. In 1999 it reduces the hold harmless to fifty percent; in the third year you're into the new system. Section 27: Deals with regulations providing that existing regulations are consistent and remain in effect. Other regulations are nulled. It also requires the Department of Education to define by regulation the term "school". And that term, of course, is essential to many of the elements of the formula. Section 28: Provides a two year transition period for the local contributions from REAA's. First year that it takes effect would be a one percent contribution. The second year would be a two percent and then the third transition year would go to the full percent. Section 29: Specifies when the first new proposed cost factors would be required to be submitted to the Legislature. Section 30: Transition section for the base student allocation. Those numbers are not available yet, but they will be anticipated to be a two year transition process through the full base student allocation. Section 31: Requires for purposes of 14.17.450, which is calculation of school funding elements, that a school smaller than ten ADM is calculated into the largest school in the district. Section 32: Provision that requires new REAA school board elections once the REAA's have been reorganized. Sections 33 and 34: Effective dates. Senator Adams asked Mr. Ford to go back to page three and explain (2) and (3) again. Basically, (2), the way it's read is not to exceed one hundred percent. He asked if this was correct. Mr. Ford responded that under paragraph two, lines one through six, if a city or borough school district did not make a contribution then they potentially are not going to get their support because of subsection (e), which says no support if contribution is not made. Under paragraph three, which is the REAA contribution, if they fail to make their contribution, then under subsection (f) the amount by which they fail to contribute is taken out of their State share. Senator Adams asked if the State share was equivalent to four percent employment tax on people in unorganized areas? Mr. Ford indicated that was correct. Senator Adams said they were not segregating but rather tax an area without the rest of the State? To discriminate? Mr. Ford said the bill provided for local contributions from all districts, cities and boroughs as well as REAA's. The contribution in an REAA is the equivalent of a four percent employment tax. Senator Adams asked if in one of his rural villages that isn't an organized borough and one makes twelve thousand dollars they would have to pay four percent of that money? Mr. Ford said that if it met the definition of compensation for services as is calculated is how one will be paying. Co-chair Sharp asked if there were any more questions for Mr. Ford. Senator Phillips MOVED CSSB 36 draft as a working document. Senator Adams objected. Senator Adams said he objected to this committee substitute because rural Alaska, including the North Slope Borough, already bears the impact of resource development of its oil, timber and fish. While most of the wealth flows from this area into the general fund and then into the urban areas, what really is happening is an attempt to reallocate funding or redistribute tax revenues from one community to another's school district. That is not the answer to this legislation. He said that robbing one school district to serve another is wrong. He asked what other school district would be next. Equity was mentioned in the presentation. Measuring this on a per capita basis is heavily discriminating against rural Alaska. Local rural areas and rural governments should be expected to pay for urban population group. Rural Alaska also has a high delivery of education and needs. Those that he represents in rural Alaska do not need to be taxed the four percent tax. Basically, adequate funding within the State coffers to take care of areas that have overcrowding and over enrollment, such as in the urban centers. Rural Alaska would like to help out, but one school district should not be pitted against another. This does not do what the majority of people want to do as far as simplicity, equality and accountability. He noted for the record that his objection was maintained. Co-chair Sharp asked the roll call be taken and the Secretary did so, showing a vote of 5 - 1 (Parnell, Phillips, Torgerson, Pearce, Sharp; yea) (Adams; nay) (Donley; absent) adopting CSSB 36 (FIN) "F" version as the working document before the committee. Co-chair Sharp said his intent was to set the bill aside until the committee had actual figures to work with to analyze to see the effect of the legislation. The runs would be made available upon request. Senator Phillips asked that the runs be made available to all LIO offices around the State as well. Co- chair Sharp concurred. Richard Cross, Deputy Commissioner, Department of Education was invited to join the committee. He said the runs would be made available via electronic transfer as soon as possible. He said they hoped to work into this evening and have runs available by Thursday. However, they needed some additional guidance from the committee because there were blanks in the bill. He referred to page four, line twenty- five there being a blank for the ADM multiplier. The base student allocation specified on page eight, line nine is blank. The transitional allocation on page twenty-one, lines twenty-two and twenty-three are also blank. If the values are to be determined and if it is the intent of the committee they must have some guidance of what the total amount of spending that is intended to be allocated. Otherwise they will show up Thursday with no numbers. Co-chair Sharp indicated that the totals would be gotten from Senator Phillips and Senator Wilken. Senator Phillips asked if the question was on the amount of funding for this year. Mr. Cross responded that if they were being asked to back in numbers that had been done before, however, they needed the amount of funding that is going to be provided to the formula in order to accomplish this. Also, he received the bill only twenty minutes ago and they may have some pretty significant questions about how the transition language is supposed to work. He asked if staff would be made available to answer these questions while reading this language so they would be sure of the intent as opposed to making up their own theory. Co-chair Sharp indicated that was corrected and asked Mr. Cross and his staff to work in conjunction with Senator Phillips and his staff to obtain the necessary information. Senator Phillips requested an at ease. Senator Adams said it was important that the total amount for education be made clear for this year. Senator Phillips indicated they would have an answer. Senator Adams further said there had been runs made to make the bill and those favoured the urban areas. Co-chair Sharp at approximately 9:30 a.m. said there would be approximately a two minute at-ease. He called the Finance Committee back to order at approximately 9:45 a.m. Richard Cross, Deputy Commissioner, Department of Education was again invited to join the committee. Senator Sharp indicated to Mr. Cross that they would like them to use the FY '99 adjusted numbers from the Governor's budget as a base and go from there. Mr. Cross reiterated his understanding. Senator Phillips advised the amount was $631,677,700. and that it would be used for now. Senator Adams said that amount just as a base did not include public transportation. Senator Phillips concurred. He said it also did not contain the single sites. Senator Phillips asked Mr. Cross if that was enough information to go by and Mr. Cross said he believed it was sufficient. Co-chair Sharp at this point SET ASIDE CSSB 36 (FIN) and said it would be taken up again at 6:30 p.m. on Thursday for public testimony. After a short pause on record Co-chair Sharp indicated the committee would take up SCR 19, Prototype School Design. SENATE CONCURRENT RESOLUTION NO. 19 Relating to the use of prototype designs in public school construction projects. CS FOR SENATE CONCURRENT RESOLUTION NO. 19(HES) Relating to the use of prototype designs in public school construction projects. Senator Adams said he thought they had gone through the bill and that only amendments were going to be presented today. Co-chair Sharp indicated the bill had been previously heard and noted amendments in the file for consideration. (Tape #43, Side A switched to Side B.) Senator Gary Wilken was invited to join the committee. He indicated that there were two amendments and they were both fine with the sponsors. One amendment was from Senator Adams to strike "elementary" on page two of the bill; the other two were from Senator Torgerson and more clearly defined the bond reimbursement committee. They will help the bill. Senator Adams MOVED amendment #1, page two, line thirteen, to strike the word "elementary" and WITHOUT OBJECTION it was ADOPTED. Senator Torgerson MOVED amendment #2, which would better define what the bond council was as reflected in that portion of the legislation. Senator Donley asked what AS 14.11.014 and Senator Torgerson responded that there was a regular bonding committee that makes recommendations and sells bonds for the State of Alaska. It is made up of the Commissioner of Revenue, the Commissioner of Commerce and the Commissioner of Administration. It would direct that they would be required to make determinations as to Prototype Schools, but in further speaking with the sponsor, section 14.11.014 has a special committee within the Department of Education that is already designated to analyze existing prototype designs for school construction projects. It was the intent of the sponsor that this committee should be doing the review, not the general bond committee of the State of Alaska. (pause on tape) Co-chair Sharp announced that WITHOUT OBJECTION, amendment Senator Adams said this was a very good bill but the fiscal note should also be looked. There should be a presentation due to the fact that it is indeterminate and perhaps there would be problems on the floor. It is necessary to have the cost of something like this. What is seen as the cost of this and where would the money come from? Senator Wilken said he has not seen the fiscal note. They are trying to get more schools for their money. He noted the effort of Fairbanks to have prototypical schools. That has been extremely successful. There has been some money out of deferred maintenance effort set aside in order to explore the idea of having what conceptually are three elementary prototype schools that would be used by people around the State. One of the seven charges of the bond reimbursement committee that was put in place in 1984 was to evaluate the prototypical issue and bring to the Legislature a plan. He said he thought the deferred maintenance task force was a perfect opportunity to do that. Especially in travels through Kotzebue, Senator Adams district, he saw perfect application for prototypical schools; put three schools on a barge and build the same three schools in three different villages rather than starting from scratch. If ten percent is saved on every school that is one school free with ten. Senator Parnell noted that most everyone around the table agree with the concept of prototypes. He asked about page two, lines fourteen through sixteen, and quoted the following: "Further Resolved that the Governor is requested to direct the Department of Education to develop prototype school designs for schools in consultation with engineering and architecture design professionals..." and while the resolution does not have the force of law and he can ignore it, if it is being requested of him to direct DOE to develop prototype school designs in consultation with engineering professionals there is going to be some cost. He can be told how much to spend if there is a fiscal note. Otherwise next year the department can come before the Legislature for more money. He said he felt better direction was needed as to how much this was going to cost and what DOE's position is depending on what they are requested by the Governor. Senator Wilken responded that there was a meeting with the bond reimbursement committee at their quarterly meeting last week. He said he thought that group would be charged with the effort to develop the prototypical designs. They would quantify the cost and go to DOE because the bond reimbursement committee does not have the authority to spend money. DOE must spend it. The bond reimbursement committee would organized and ask for the appropriation. The group is made up of two legislators, two individuals from the Department of Education and three professionals. It is not dominated by DOE. There is some concern for the $3.9 million set aside for prototypical schools. There needs to be some oversight on how the money would be used and the bond reimbursement committee would provide just that. Senator Parnell said the Governor did not have to comply with direction to DOE because this is only a resolution and had no force of law. Senator Torgerson said the resolution was only reinforcing what was already in existing law which is currently being ignored. He quoted existing law under paragraph three of 14.11.014 "...to develop criteria for construction of schools in the State. Criteria developed under this paragraph must include requirements intended to achieve cost effective school construction." and then a subsection of that is: "...analyze existing prototypical designs for school construction." He said the difficulty in generating a fiscal note is not the cost of doing their job, which is clearly defined by statute, as to the savings to the State of Alaska if one design for all the schools was to be utilized. Co-chair Sharp indicated there was one individual on teleconference that would like to testify. Phillip Skilbred via teleconference from Fairbanks testified before the committee. He asked the committee to look at page two, lines twenty-eight through thirty-one. He said he felt that if statutory changes were to be made in order to implement the referred to program the alarms would go off in every office in Juneau. He felt the bill was loaded and corruptible beaurocracy. (There was very poor sound quality due to the fact that our bridge was not being used and miscellaneous conversation between members during the testimony taken.) Co-chair Sharp thanked Mr. Skilbred and the meeting continued. Senator Adams MOVED CSSCR 19 (FIN) with accompanying fiscal notes and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations and an indeterminate fiscal note from the Department of Education. SENATE BILL NO. 261 "An Act relating to the Special Olympics World Winter Games to be held in Anchorage in the year 2001; establishing a reserve fund for the games; providing certain duties and authority for the Alaska Industrial Development and Export Authority regarding financing for those games; and providing for an effective date." Co-chair Sharp called SB 261. He noted that it had been held due to his absence and there had been concern regarding the financing plan or guarantees. Mary Gore, staff to Senate President Mike Miller, was invited to join the committee. She said what was before the committee today was changes to the original piece of legislation that would tighten up the concerns the committee noted last week. She said another changes had been discussed between herself and Senator Donley on page three, section 4(3). She said this change would make sure no money would be appropriated to the organizing committee prior to the year 2001. Senator Donley referred to page three, line twelve and said the organization desired financial assistance from the State. It has now been modified that the plan being submitted is a financial guarantee plan and not just a request for money. He would further like to see language added that would specifically say the local organizing committee would make a good faith effort to raise money on their own even when the financial plan is in place. He suggested that on line nineteen language could be added to ensure the local organizing committee uses it's best efforts to minimize cost to the State so there is an ongoing written responsibility by the local organizing committee to minimize the cost to the State to continue to raise money. Senator Adams said he agreed with the concept of the amendment but would like to see it in writing to make sure the sponsor does not mind and that it is on record. Co- chair Sharp concurred. Senator Donley said due diligence had been discussed and there had been several attempts to incorporate that concept, which he considered a good explanation of best effort. He noted the drafters had refused to put it into ... Ms. Gore said that was because it was not technical. Senator Phillips reminded her that due diligence inquiries is done in the oil and gas areas. Senator Donley concurred and said he was confused by their refusal. Senator Parnell said he had a procedural question and asked if the Co-chair would like him to move the work draft and have it adopted or would he rather they wait for Senator Donley's changes. Co-chair Sharp said the work draft should be adopted and then they could take up amendments if there were any. Senator Parnell MOVED work draft CSSB 261 (), "E" version, dated 23 February 1998. Senator Adams OBJECTION. He asked Ms. Gore regarding page three, line thirty, as to where the actual money would be coming from. Ms. Gore said it would be up to the Legislature in the year 2001 to make that determination. Senator Adams asked if the organization had designated any specific funding source? Ms. Gore indicated negative. Senator Adams advised Co-chair Sharp that he REMOVED his OBJECTION. Co-chair Sharp said WITHOUT OBJECTION the work draft had been ADOPTED. Senator Donley asked there be discussion regarding his suggested conceptual amendment on page three, line nineteen after the word "State" be added "and ensures local organized committee uses it's best efforts to minimize cost to the State". Would the committee prefer to say "and insures the local organizing committee uses due diligence to minimize the cost to the State."? Senator Parnell said they could certify the financial guarantee plan that they've used due diligence or best effort. He felt that might be another approach when the financial plan was submitted. Senator Donley referred to the original presentation of the plan to the State. Subsequently there is a series of semi- annual updates to the plan. It would be appropriate that when the semi-annual updates were made that the organization certified they used due diligence or good faith effort to raise as much money on their own as possible. That could probably be inserted under section (b). Senator Adams asked that comments be heard from AIDEA staff that was present. Keith Laufer, Financial and Legal Affairs Manager, AIDEA was invited to join the committee. Responding to Senator Donley he said he felt the due diligence responsibility was with AIDEA as opposed to the local committee. As he understood the bill, they would submit a finance plan to AIDEA, which by the amendment would have to minimize State assistance. Perhaps the way to handle the concerns would be under section (d), to amend it to read, "the finance plan and all updates are subject to the approval of the authority following reasonable due diligence." (pause on tape) Senator Donley said the problem still existed with what the committee wanted was not due diligence by AIDEA but that AIDEA used due diligence to confirm due diligence by the organizing committee. They did not want that once the guarantee was put in place everyone would figure they did not have to worry anymore because there was a financial guarantee. He further told Ms. Gore he knew this was a wonderful organization but they were also dealing with people's money and therefore they would have to be conservative and protect these monies. Senator Parnell suggested that at line 19, after the word "State" insert "and ensures the local sponsor organization undertakes to acquire funds through private sources" ... "the finance plan must include a method of financing the games that minimizes the cost to the State and ensures the local sponsor organization undertakes to acquire funds through private sources." Ms. Gore asked that it not be limited to private sources because if the Government of Sri Lanka wanted to give money to us... Senator Parnell continued with "non-State of Alaska sources". Or "sources other than the State of Alaska". (Miscellaneous conversation among members at the table followed regarding the correct wording of an amendment.) Senator Phillips referred to the Arctic Winter Games that were held in Eagle River in 1996. In order to start this off the Municipality of Anchorage set it up with $100,000, with an agreement that the organizing committee would pay that money back. Granted he didn't think the City ever expected the money back, but the community and the organized committee did pay it back. The language in their agreement might be looked at for suggestions. Senator Phillips said he could call the City and get a copy of said agreement. Senator Torgerson asked if there was a time line by which to get this bill heard. Ms. Gore indicated that the international committee had wanted it as soon possible. The letter sent by Senate President Mike Miller and House Speaker Gail Phillips last fall was basically buying time at this point. The sooner it could be gotten to them as passed legislation the better. For the record, she said the City of Anchorage wants to bid on the big winter game. Private industry in Anchorage is basically behind this. They are not going to let this guarantee be used because if they intend to go after the big games they cannot have this as a black eye on their record that they did not come up with the money for the Special Olympic Winter Games. They are committed to raising the money. Three million dollars of the eight million dollars has been raised to date and they are continuing to raise money. Senator Donley MOVED amendment #1 regarding lines 19 and 24. Due to greater discussion by the members regarding the amendment there was NO OBJECTION and it was ADOPTED. Senator Torgerson posed a delayed objection so the sponsor could read the amendment. (pause on record) He then removed his objection. Senator Parnell MOVED CSSB 261 FIN) as amended with individual recommendations and accompanying zero fiscal note and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations and accompanying zero fiscal note from Department of Commerce and Economic Development/AIDEA. Co-chair Sharp reviewed the afternoon schedule commencing at 4:30 p.m. with scheduled budget meeting to be chaired by Senator Pearce. Thursday morning SB 273 would be on the calendar and Thursday evening at 6:00 p.m. public testimony would be taken Statewide on SB 36. The co-chair further noted that the amendments to SB 273 Charitable Gaming had been rolled into a new CS for presentation to the committee. ADJOURNMENT There being nothing further to come before the committee Co- chair Sharp recessed at approximately 10:23 a.m. SFC-98 -17- 2/24/98
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