Legislature(1997 - 1998)
03/09/1998 09:15 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
9 March, 1998
9:15 a.m.
TAPES
SFC 98 # 69, Side A (000-591)
Side B (591-267)
CALL TO ORDER
Senator Drue Pearce, Co-Chair, convened the meeting at
approximately 9:15 a.m.
PRESENT
In addition to Co-Chair Pearce, Senators Sharp, Donley,
Torgerson, Adams and Parnell and were present when the
meeting was convened.
Also Attending: ANNALEE MCCONNELL, Director, Office of
Management and Budget, Office of the Governor; CHRIS
CHRISTENSEN, Staff Council, Alaska Court System; MARYLOU
BURTON, University of Alaska; BOB BARTHOLOMEW, Deputy
Director, Division of Income and Excise Audit, Department of
Revenue; JOHN BITTNEY, Alaska Housing Finance Corporation,
DOR; MARGARET PUGH, Commissioner, Department of Corrections;
DWAYNE PEEPLES, Director, Division of Administrative
Services, DOC; MARGO KNUTH, Department of Law; MIKE IRWIN,
Commissioner, Department of Community and Regional Affairs;
KIM METCALF-HELMAR, Special Assistant, Office of the
Commissioner, DCRA; JANET CLARKE, Director, Division of
Administrative Services, Department of Health and Social
Services; NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public
Facilities; TOM BRIGHAM, Director, Statewide Planning, DOT;
NICO BUS, Administrative Services Manager, Division of
Support Services, Department of Natural Resources; SHARON
BARTON, Director, Division of Administrative Services,
Department of Administration; DWIGHT PERKINS, Special
Assistant, Office of the Commissioner, Department of Labor;
KEVIN BROOKS, Director, Division of Administration,
Department of Fish and Game; MARY PETE, Director, Division
of Subsistence, ADF&G; MIKE GREANY, Director, Division of
Legislative Finance; SUSAN TAYLOR and DAVE TONKOVICH, Fiscal
Analysts; and aides to committee members and other members
of the Legislature.
SUMMARY INFORMATION
SENATE BILL NO. 292
"An Act making supplemental appropriations; making,
amending, and repealing capital or other
appropriations; making appropriations to capitalize
funds; and providing for an effective date."
Co-Chair Pearce started the meeting announcing the
committee's intention to address SB 292 and try to get
through Section One and the Department of Corrections Cleary
Order Compliance portions of the supplemental budget packet
this morning. Then at 10:30 start deliberations on SB 36.
She anticipated the committee would be returning at 4:30 to
continue if necessary.
She pointed out the several handouts provided as backup for
SB 292. There was a House Bill version of the same
supplemental - CS HB 461 (FIN) that the committee would be
using as a vehicle in the processing of SB 292. There was
also an additional supplemental CS HB 370 (FIN), that
requested relief for the 1997 economic disaster in Bristol
Bay and on the Kuskokwim River. This was included in the
Governor's original version of the bill and the House
decided to separate the two. Susan Taylor, Fiscal Analyst
for Legislative Finance, provided a sectional for HB 461
that showed the dollar amounts. The House Bill version
totaled $56 million with $29.9 million federal funds, $4.87
million General Funds and $22.250 other funds.
She suggested starting with the Cleary Order section of the
bill first. Because the commissioner of Department of
Corrections had not yet arrived, it was decided to hold off
of that portion of the presentation until later.
Co-Chair Pearce invited ANNALEE MCCONNELL to address the
committee on Section One-A, ALASKA HOUSING FINANCE
CORPORATION, LEASE PAYMENTS. Ms. McConnell spoke of the
purchase last year of the Bank of America Building. She
informed the committee that due to the high level of
activity at the end of last session, there was a need to now
make some technical adjustments to ensure proper lease
payments processing and operations maintenance costs. JOHN
BITTNEY joined the committee and addressed the specifics of
the needed adjustments. He told the committee that AHFC did
not receive any authorization to use the receipts of the
private lease tenants in the building. This was a request
for that authorization to use those receipts to pay for this
fiscal year's operations and maintenance. He explained a
lease arrangement with the Department of Administration and
AHFC's intent to make the receipts available to DOA who was
responsible for the building's day to day operation.
Senator Donley impressed that last year he opposed this
purchase with one of the reasons being the parking
situation. He felt there was not adequate access to the
building, and therefore state offices, by the public. This
would create an isolated office that nobody could get to due
to there being no place to park. At that time he was told a
detailed parking plan to address these concerns would be
developed and he would be provided a copy. He had not
received this yet and announced that, until he did, he would
not be supportive of any budget revisions to facilitate this
project. Without some clear plan on how the public would
access the state offices, the tendency would be that the
bureaucracy was building a wall between them and the public,
he stated.
Co-Chair Pearce asked Mr. Bittney for a response. He told
the committee the AHFC did not administer the day to day
functions of the building. He said there were still a
number of private tenants in the building, which may be a
factor. Department of Labor, Child Support Enforcement
offices were in the building, but he didn't think any other
state offices had moved into the building yet. He suggested
asking the DOA for assistance on the turnover schedule. Co-
Chair Pearce directed Ms. McConnell to have the DOA respond
to Senator Donley's concerns and make copies available to
all committee members.
Co-Chair Pearce proceeded to Section One-B, Community and
Regional Affairs, BRISTOL BAY ECONOMIC DISASTER RELIEF.
MIKE IRWIN was invited to speak to the committee on this
portion of the supplemental. He gave a brief update on the
purpose of this appropriation. Last year in the Magnasson-
Stevens reauthorization there was a new section 3-12 added,
whereby the US Commerce Secretary could declare an economic
disaster area for situations like was found last summer in
the Kuskokwim River drainages and Bristol Bay. The US
Department of Commerce Commissioner declared a disaster area
for Alaska under this provision and Congress appropriated $7
million. Mr. Irwin explained that the State of Alaska was
required to come up with a $2.3 million match in order to
receive the federal funds. The supplemental before the
committee today requested $1.875 million to go towards the
necessary $2.3 million. The remaining balance of the match
would come mainly from the local level.
Co-Chair Pearce asked why the process took so long in going
back and forth with the federal government. Mr. Irwin said
that most of the delays had to do with the funding question.
This was a new federal statute and the Commerce Commissioner
felt he needed to take extra measures to ensure that all the
criteria for the disaster declaration had been met. Mr.
Irwin speculated that the Commissioner also wanted to make
sure there would be adequate federal appropriations to match
the declaration.
Senator Adams referred to the $1.8 million and asked if
those monies would come from the General Fund or from
program receipts from fish taxes. Mr. Irwin said they had
originally requested General Funds from the House of
Representatives. The House Finance Committee, when it
deliberated on CS HB 370, decided to incorporate $ 400,000
from the fisheries business tax along with about $1.5
million from the General Fund. Ms. McConnell clarified the
source of the fisheries tax as the Commercial Fisheries Loan
Fund. She said that in a sense, this was like sharing back
some of the fish taxes although technically it was General
Funds.
Senator Donley asked if the committee member's packets
contained more detail on this project. Co-Chair Pearce
assured him there was quite a bit of back up material,
including a large memorandum from the commissioner and the
actual disaster declaration.
Senator Sharp wanted clarification of the process that the
department went through to secure the disaster declaration.
As he understood it, FEMA originally turned it down as a
disaster area, but they now had funding through the US
Department of Commerce. He interpreted the wording of the
supplemental request to say the DCRA anticipated funding
under the MSA and the USDC had, or may make funds available.
He wanted to know which was it, and how much.
Mr. Irwin answered that $7 million had been made available.
His department did apply to FEMA for a declaration of a
natural disaster. In addition, they applied to USDC for a
declaration of economic disaster. The main reason for
applying for a natural disaster, he explained, was to try to
obtain relief under the Disaster Unemployment Assistance
Program. This was for people who were ineligible for
regular UI benefits, which included most of Alaska's
fishermen and crew. The only way to make this program
available was through a presidential declaration of disaster
under the Stafford Act. Mr. Irwin said the department felt
it would be worthwhile to try to convince the federal
government to approve both types of declarations - one at
the FEMA level and one at the Commerce Secretary level.
They were successful in the latter, but were unable to show
the science to tie the failure to a single catastrophic
incident. This was a requirement for obtaining the FEMA
declaration.
Senator Sharp asked if the disposition of the funds was
detailed in the backup and if it consisted of sending money
to the communities, making individual loans or awarding
grants. Mr. Irwin said that generally speaking, about 20%
of the $9.3 million would be going into a loan program.
Most of the remainder would be sent directly to the affected
communities in the form of grants for infrastructure and
economic development.
Mr. Irwin pointed out another item in the Governor's
supplemental packet, a $3 million request to the Department
of Labor. This would be the state's version of the federal
DUA. He went on to describe how other states had found the
DUA to be the best use of funds for recovery from fisheries-
type disasters. Since Alaska was unable to get those
federal funds, the Governor would like to provide this
assistance on the state level. This was a separate request
from the one before the committee now.
Senator Donley referred to the area of unemployment
insurance. He said that because these people were not
paying any unemployment insurance this program really could
not be called such. He suggested it was a government
substitute for insurance. Mr. Irwin replied the program was
to compensate for lost wages or earnings, conceptually
modeled after the federal version of the program. He
thought it depended upon what one considered the perimeters
of an unemployment insurance program.
Senator Donley said he was also interested in the federal
program. He speculated that the fisheries industry was one
where management had kept the government from imposing an
unemployment insurance program through strong lobbying
efforts. Now there was a disaster and a strong need for the
benefits yet there was no program in place. As a result the
government gave them money. The problem as he saw it was
created because there have been pressures to keep out the
unemployment system in the fisheries industry.
Mr. Irwin gave the Miller's Reach fire as example for his
rebuttal. The federal program benefits normally went to
business people who didn't have an unemployment insurance
eligibility and through no fault of their own, were unable
to make their normal livelihood. In the Bristol Bay,
Kuskokwim River situation, the fishermen were the business
people. He summed up saying the issue depended on how it
was looked at conceptually.
Senator Donley assured that he would support this funding
request because he feels it was the right thing to do.
However he said, "we shouldn't question why we were in these
situations every time they happen." He spoke of other
safeguards like Business Interruption Insurance which
fishermen may not have access to. He said efforts should be
made to look at why they didn't have access to that type of
insurance and why they couldn't protect themselves instead
of the government always being the solution. Working
together, that type of capability should be developed.
Although it was a worthy expenditure to help these people in
need, the underlying problem shouldn't be ignored, he said.
Mr. Irwin said he appreciated that perspective and shared
that department was learning a lot as they went along. This
was the first time they've had a program like this and they
were making a list of things to explore on this issue.
Senator Donley's concerns would be on that list.
Senator Donley surmised there was probably a good reason the
federal government didn't want to implement this program in
these types of situations. If they did, they would be
subject to similar unemployment insurance program exemption
requests from all types of industries. In this case the
Legislature needs to take care of Alaskans, but shouldn't
ignore the fact that the federal government turned it down.
Ms. McConnell interjected telling the committee that the
federal government intended this program to deal with a
specific catastrophic natural disaster such as the poor
fishing season in western Alaska. The federal government
had plans for providing assistance in those cases. This was
also a reason why the Salmon cabinet was established to deal
with many of the underlying issues in the salmon industry so
more could be done to strengthen the industry in areas of
marketing, product quality, etc. She stated that while El
Nino can't be controlled, there were other factors that
could be addressed. That was part of the Knowles
Administration's overall response to this issue: look at a
number of areas to see what can be done for the future that
if didn't prevent - at least minimized the impact, she
stressed.
Senator Torgerson asked if the state also forgave or
extended loans through efforts of the commercial fisheries
division or any other division. Mr. Irwin said that was
some of the first work that was completed within the first
six weeks following the fisheries collapse. He detailed how
staff went to the affected areas and addressed the area.
This was common practice for the division when something
like this happened and they were able to do that in this
case, according to Mr. Irwin. Senator Torgerson requested a
breakdown of those costs. Mr. Irwin said he didn't have
that information at this time and would need to get it later
for the committee. Senator Torgerson said he would like to
see the total package of relief the state provided. He
noted the involvement of different agencies all giving
various services and loan packages.
Mr. Irwin compared this case with other instances where
loans were renegotiated in order to provide relief for the
borrower. He admitted that in the end, it meant more money
to the State because of deferred payments and interest
accrual. He believed there would be a "net positive."
Senator Donley shared Senator Torgerson's concerns. He said
information he had been getting indicated that many of these
loans had serious problems already. He wanted to know if
there were written guidelines on how to prevent this from
being used as an excuse to extend loans that were
problematic anyhow. He felt this extension could be an
excuse to bail out overextended loans that were not
justified. He had been told this was a very serious problem
and understood the opportunity for extensions under this
program should be granted on loans that legitimately could
be re-paid.
Mr. Irwin responded saying that he would get as much written
information from the Division of Investments as possible
speaking to the committee members' concerns. He admitted he
had not heard either anecdotally or formally that there was
anything about the overall portfolio that showed it out of
balance with other similar portfolios. He had no knowledge
of there being a lot of people with the loans, who were in
trouble and would use this extension grant as an excuse, but
that he would research the matter.
Senator Donley added he would like to see a copy of any
written policy the division had that addresses this issue.
He would like to know what were the standards the division
followed in making their determinations.
Ms. McConnell wanted to reiterate that this was not excusing
the loans, just restructuring them. The loan obligation
remained. Senator Donley countered that this was done
already and in some cases, the loan was never getting paid.
He pointed out language in the supplemental request that
showed the State Of Alaska essentially provided a match to
federal receipts. What happened if the federal funds
weren't allocated, would the state still be obligated to its
portion? Would the division still plan to spend the $1.875
million General Funds? Mr. Irwin responded that there was
never a question on allocation of the federal funds. The
appropriation was signed by President Clinton in the first
week of December.
Senator Donley requested a copy of the federal law that laid
out the required State-funding match. Mr. Irwin told him
the ratio was one dollar of state funds for every three
dollars of federal funds.
This concluded the discussion on the Bristol Bay area relief
programs.
Co-Chair Pearce noted the arrival of MARGARET PUGH,
Commissioner of the Department of Corrections. She invited
Ms. Pugh and DWAYNE PEEPLES, Director of Administrative
Services, to come to the table to speak to CRC BEDS.
Mr. Peeples told the committee that when the supplemental
was been originally submitted to the committee, the
department had expected to need $886,000. That amount had
been subsequently reduced due to delayed startup of new CRC
beds with that money being transferred to this request.
Another reason for the reduced need was due to the
availability of $64,000 General Funds that came about due to
under-utilization during the months of November, December
and January in the CRC per diem beds. These funds were now
available to use towards the supplemental request. Co-Chair
Pearce clarified the adjusted amount of funding was
$804,000.
Co-Chair Pearce asked what was included in the supplemental
request. Mr. Peeples responded, telling how the department
put out a bid to purchase 470 CRC beds with the expiration
of contracts for the fall of 1997. The bids came in far
exceeding what had been projected, averaging 20% more. This
had increased the budgeted costs. Ms. Pugh added that the
CRC contracts were out to bid for continuation of services.
This supplemental request was for the amount of the
contracts in excess of the budgeted funds. Co-Chair Pearce
wanted to know if the bids were equally higher for
facilities across the state. Ms. McConnell said they were,
but not at an even rate. There were different degrees to
which the bids were higher than the existing contracts.
When the budget was passed last May, there was no way to
anticipate what those new figures would be, she said. She
continued saying that obviously, the state had no interest
in putting more money into the budget than what was included
in the current contracts to anticipate higher bids. This
would take all the competition out of the process, she
speculated.
Senator Sharp wanted clarification that the increased cost
was not for any new beds, but just an increase in the cost
of the additional beds. Ms. Pugh affirmed that was what
this increment represented.
Senator Sharp asked if each "call for bids" had at least two
respondents, or if there were some areas of the state that
received only one response. Ms. Pugh said the department did
not receive at least two for every area, and in fact in
several areas where a call was issued, they only received
one response. Senator Sharp asked for a calculation of how
many beds received only one bid response. Mr. Peeples
estimated that three-quarters of the 470 beds up for bid had
only one response. Senator Sharp asked if it was a "sole-
source limited provider situation," which Ms. Pugh
confirmed. She said the market was limited as far as the
availability of providers, but the department issued a
"request for proposals" to allow others to place a bid.
Senator Sharp wanted to know if the department had analyzed
the increases to determine if the costs of operation (i.e.,
heating, labor) actually increased, or if the increase
reflected a "what the market would bear" response. Ms. Pugh
responded that he raised a good point. In fact, she said,
in almost every case, the bids originally came in much
higher than the amounts shown here and the department was
successful at negotiating and bringing the bids down
somewhat. She attributed the high requests to the fact that
the contracts ran on a three-year basis and many of the
providers felt they were due an increase. Senator Sharp
speculated that the providers probably knew they were the
only provider in the area and that the court was coming down
hard on the state to continue the program. Mr. Pugh said
that in a market where there was limited competition, that
could certainly happen.
Ms. McConnell added that was the reason OMB worked with DOC
to help negotiate with the providers to lower the prices.
OMB found the original bids unacceptable and Ms. McConnell
agreed with Senator Sharp's observation of the difficult
situation with the limited number of providers. She
stressed that this did not mean, that the state would simply
write out a check based on what the private market dictated.
Senator Sharp had a final question, wanting to know the
percentage of occupancy of the 470 beds during the term of
the last contract. In other words, how many beds were the
state paying for, on average, that were not actually
occupied. Ms. Pugh responded that under each contract the
department had successfully negotiated a "15% per diem,"
meaning that 15% of the beds were paid only if occupied. The
remainder of the contract was intact, and was paid in any
event. The department well exceeded the base contracts and
had about a 98% occupancy rate during the time period of the
last contract. The unfilled beds were not paid for by the
state. Senator Sharp clarified that the department filled
the guaranteed limit, which Ms. Pugh affirmed. She said
there was some fluctuations based on seasonal changes that
accounted for the changes in occupation rates. She added
that they never overcrowd the residential centers, and
because of this, some people may be released and the bed not
refilled until the next morning, which plays to the state's
advantage.
Senator Torgerson wanted to know the average cost per bed,
understanding that the costs varied. Mr. Peeples didn't
have an exact figure but estimated the amount to be in the
high fifties. This was a statewide figure, he said
answering Co-Chair Pearce's question. Ms. Pugh stipulated
that each contract was different.
Senator Torgerson stressed that he was still hung-up over
the 20% cost increase, although he realized the contract was
for three years. He asked if the large increase was an
attempt to make up for losses incurred in the last three
years by the providers. Mr. Peeples said he wouldn't
classify the situation as that. His reason was because the
original bids came in dramatically higher, and after
lengthily negotiations the department settled on the amount
requested here.
Senator Torgerson asked if this was the beginning of another
three-year contract. Mr. Peeples told him yes, it was. Mr.
Pugh corrected Mr. Peeples and said that not every provider
was at the end of a three-year contract.
Ms. McConnell offered to provide the committee with a chart
that would show the improved utilization of CRC beds and the
cost per bed. She felt that would show the impact of the
changes and how well the department was using the program
and also the effects of using the "per diem" system for some
of the beds.
Co-Chair Pearce commented that this was an area where the
Legislature thought the department was doing a good job and
suggested there might be other areas the department could
spend its efforts at convincing the Legislature to support.
She directed the committee to the next DOC item, the CLEARY
ORDER COMPLIANCE. She pointed to the location in the House
Bill (Section One-L) where this was listed and noted that it
was not in the original supplemental request.
MARGO KNUTH, came to the table to speak to this item. She
introduced herself as an Assistant Attorney General on loan
to the DOC. She told the committee that Judge Karen Hunt in
the Cleary lawsuit had ordered the state to bring its
institutional populations under the emergency capacities
that had been set in the Cleary Case.
Ms. Knuth said the state had until May 1 when the actions
must be done. Today was the day the department must submit
a plan as to how it would be done. She warned that if the
department failed to comply, there were a variety of actions
that the judge could take, not of which were any better than
compliance. In the long run, she stressed, the facilities
would be almost 20% over the emergency capacities for
institutions statewide, even if the Cleary Case didn't
exist. That applied to where prisoners slept and whether
there was enough sewer capacity or air exchange to
accommodate more people, in terms of fundamental physics of
the institutions.
The DOC had come up with a three-part plan, according to Ms.
Knuth. One part was to increase the number of halfway house
beds being utilized. She explained that a portion of the
requested amount included in the supplemental would complete
the purchase of 72 new CRC beds. The amount that was needed
to do that was $40,000 General Funds and $25,700 Federal
Funds received under the Violent Offender Incarceration Act
Grants Program. This amount was only the difference between
what the funds department already had and what was needed to
make up the difference. The $65,700 was by no means the
total cost for FY98 for these beds, she emphasized.
Part two of the proposed solution, which required the most
money, would be to send more long-term felons out of the
state. Currently, Ms. Knuth informed, the DOC was sending
256 more prisoners to Arizona.
The cost of doing this for the rest of FY98 would be
$1,136,250 million, which represented a slight break over
the contract price. This was the result of a kind of "buy
one - get the second at a discount" arrangement, she
explained. The price went down from $57.50 per day/per
prisoner, to $55.50 per day/per prisoner for the group of
256 new transfers. It would not affect the rate charged for
the existing prisoners already at the Arizona facility.
In addition to the flat contract rate amount, Ms. Knuth went
on, there was also about $70,000 in costs associated with
shipping the prisoners to the new facility. She said this
wasn't for transportation costs, which the DOC had funds to
cover, but in part, to pay inmates $1.85 per day for work
they performed. The total of those wages would be $30,000.
Other funds needed in this request would cover the costs of
items such as food carts that were not covered by the
contract and would amount to about $20,000. Ms. Knuth said
that because of the large number of inmates housed out of
state, DOC would need $20,000 to get staff on location who
would process grievances and also work on probation and
parole plans for the inmates. That amount made up the
remainder of the $70,000 request.
The last part of the plan the department intended to use to
come into compliance with the Cleary Order was to create
alternative housing for up to 125 inmates, Ms. Knuth told
the committee. This housing would take two different forms,
one would be erecting 25-person tents at the Southeast
Alaska institutions of Lemon Creek and Ketchikan and two
tents at Palmer. The second form of alternative housing,
would turn a room in the Fairbanks Correctional Institution
into a temporary dorm. The costs of the necessary supplies,
equipment and extra staff would be $405,000, she conveyed.
Ms. Knuth summarized by saying this brought the total to
$1.6 million.
Co-Chair Pearce asked if all 256 additional out-of-state
beds located at the same facility that the present prisoners
were being housed. Ms. Knuth responded that they were for
the remainder of FY98. She continued saying, that for FY99
the DOC has a Request for Proposal (RFP) issued nation-wide.
She surmised that with the high number of prisoners, it was
unlikely that all inmates would be housed at the same
institution because of the better rates other facilities
might offer.
Senator Sharp noted a point of interest on sending the
prisoners Outside and asked if there was any type of
screening process the courts required. He wanted to know if
that process had already been started to select the 256 so
they would be ready to be moved when the funds became
available. He noted the short time frame. Ms. Pugh
affirmed. Senator Sharp asked if the department anticipated
whether those prisoners would be ready to be moved by May 1.
Ms. Knuth said that was their projection. She alluded to
some cost savings if there did happen to be any delay. Ms.
Pugh said Senator Sharp was correct in viewing this as an
aggressive plan, the DOC had already started its planning
because the screening process was time-consuming and labor
intensive. She said the department and Ms. Knuth had been
working with the court-appointed monitor to expedite the
process, which was how they would be able to accomplish this
by May 1.
Co-Chair Pearce asked if the RFP was issued for the 256
beds, or for a larger number to accommodate FY99. Ms. Pugh
said the 256 had been added to the existing contract for
FY98. The RFP was already on track for re-issuance because
the department was nearing the end of the three-year
contract with the Arizona facility. Co-Chair Pearce wanted
the number of prisoners already housed Outside. Ms. Knuth
said there had been originally 250, but the number was
increasing by 120 before the 256 would be added. The RFP
was for 600-1000 prisoners.
Co-Chair Pearce had questions on the referred-to 120. Ms.
Knuth said those were in the process of transfer right now.
Fifty more went out this past week and depending on the
availability of marshaled flights, more would be going soon.
This was something that cannot be planned, the department
usually only has one day's notice.
Co-Chair Pearce referred to the alternative housing in
tents. She wanted to know if it was the department's
expectation to continue using this housing into FY99. Ms.
Pugh said this request did not reflect that, and that the
tents would be used just through the summer months because
of the weather. She noted that other northern states have
used tents in the winter, but these tents were not designed
for inclement weather. Ms. Knuth added that the plan
submitted to the courts would indicate two or two and one-
half months of tent usage in FY99.
Co-Chair Pearce asked when the department and Legislature
would know whether or not the judge accepted the proposal.
Ms. Knuth guessed the judge would let them know very
quickly, and that by the end of the week the department
would know.
Senator Sharp wanted to know if the tents would be used to
relieve some of the crowding felt due to short-term
prisoners such as those serving DWI sentences. He wondered
if there would be 150 prisoners needing housing when fall
arrived. Ms. Knuth told the Senator he was correct in
saying the alternative housing would be used to accommodate
the increased population of short-term prisoners. She added
that this population might also include inmates slated for
transfer to Arizona still awaiting transportation
arrangements.
Co-Chair Pearce asked what class of prisoners could be sent
to Arizona and were there any requirements/restrictions used
to select those prisoners. Ms. Knuth answered that there
were requirements and restrictions. She listed some of
them, saying only medium-security prisoners and no maximum-
security prisoners could be sent and that inmates nearing
the end of their sentences would not be sent. Also, she
said, no females, no one with disabilities and no one with
special medical needs would be sent to the Outside
facilities.
Co-Chair Pearce asked if the DOC's new RFP had the same
restrictions, or if they had added a provision to accept
women. Ms. Pugh responded that due to other efforts the
department had taken this year, including the change of
mission of the Highland Mountain Correctional Institution to
a designated female institution, she did not believe there
would be the need to find additional housing for female
prisoners. She also stated another criteria the department
followed screened Alaska Natives. They would not send to
Arizona, those prisoners who had a predominately rural
lifestyle or a language barrier.
This concluded the discussion with DOC. The committee then
heard testimony on the Department of Health and Social
Services' request for MATERNAL CHILD AND FAMILY HEALTH
SPECIALTY CLINICS (listed as Section 1D in SB 292.)
Co-Chair Pearce invited Janet Clarke to come before the
committee. Ms. Clarke outlined the request for $100,000
General Fund program receipts to increase the number of
specialty clinics offered by the Maternal Child and Family
Health Programs for FY98. The specialized clinics included
cleft lip and palette, cardiology, neurodevelopment, and
genetics and birth defects, she said. The department looked
for experts outside of Alaska since there were very few
specialists in these fields practicing in the state. The
experts were then brought to various locations throughout
the state where the department then offered these clinics.
She listed the communities where the clinics were held:
Anchorage, Barrow, Bethel, Dillingham, Fairbanks, Juneau,
Ketchikan, Kotzebue and Sitka. Ms. Clarke pointed out a
schedule listing all the clinics scheduled to be held in
FY98.
She observed that this program had been a very cost-
effective way of identifying problems and allowing people
who did not have adequate insurance to see the specialists
and receive counseling and assessments of these very
traumatic conditions.
Co-Chair Pearce noted that the department's request would
receive money from the state General Fund, but the House of
Representatives version of the bill, changed the funding
source to Federal Receipts. She asked what federal receipts
were identified that would apply to this program. Ms.
Clarke responded that to her understanding, the House had
identified federal receipts the department was receiving
from school-based administrative claims through the Medicare
program that the Governor had identified for another
supplemental section in his original bill. She anticipated
further discussion on this matter.
Senator Parnell said he thought he heard Ms. Clarke say this
supplemental request was to be used to increase the number
of clinics held this year. His question was if the amount
originally funded was adequate to fund the clinics the
department had planned last year. Ms. Clarke shared an
incident at the beginning of the fiscal year where the
program directors felt proud of the amount of program
receipts they were generating. When they made their clinic
schedule, they counted on using those third-party revenues
generated from patient's insurance payments and scheduled
more clinics than the department had planned. She said
changes to the program receipt laws and the way they would
be distributed resulted in less money being funneled back to
the clinics.
Senator Parnell agreed that the specialized clinics were a
good program, but said that the overall supplemental budget
request seemed to contain many increases and the Legislature
needed to try to limit additional funds to what had been
originally planned. He asked how many more children would
benefit from additional clinics held this year. Ms. Clarke
responded the clinics served an average of 600 clients per
year under this program. This request would increase the
number of clinics offered to 58, up from the current planned
50 clinics contained in the original Governor's budget in
FY99. Senator Parnell clarified that this amount went above
what the Governor proposed, which Ms. Clarke confirmed.
Senator Parnell asked why this request was more time-
sensitive than other requests. Ms. Clarke replied there
were a number of clinics scheduled for March, April and May,
and if the supplemental was not approved, the department
wanted time to readjust the schedule.
There were no further comments and the committee moved to
the next request in Section 1E for the Department of
Military and Veterans Affairs and the University of Alaska.
This request was for $20 million federal RSA to upgrade and
modernize the POKER FLATS RESEARCH RANGE.
MARYLOU BURTON testified on this request. She said the
appropriation would give the DMVA the authority to receive
and expend up to $20 million from the federal government.
Those funds would be RSA to the University, she said. She
was unsure why the two state departments involved were
required the to work it that way, except that the federal
agency, US Army Big Prow program was set up to deal through
the National Guard. She assured the committee the two
departments would try to reduce as much administrative
burden as possible.
The immediate project that was due to begin as soon as
possible called for construction of a new road and an
optical laboratory facility as well as upgraded specialized
equipment, Ms. Burton explained. The reason the request was
included in the supplemental bill rather than the capital
bill was because this two-year project relied on federal
funding, which had a tight time frame. In fact, she
stressed; the federal money was available immediately, as
soon as the Legislature granted approval.
Co-Chair Pearce asked if the entire $20 million would be RSA
with the expectation be to not take an administrative fee to
do the fund transfer. Ms. Burton said she hoped there would
be no administrative fees involved.
C0-Chair Pearce wanted to know what on-going operating costs
the University would have after the project was completed.
Ms. Burton assured her that the operating costs would be
handled entirely through program receipts and federal
dollars. The Poker Flats facility was almost entirely
funded through the federal government now and they did not
expect that to change, she stressed.
Co-Chair Pearce asked what the entire budget for Poker Flats
was. Ms. Burton responded the budget last year was about
one million, but varied from year to year depending on the
projects. Those funds all came from NASA, she said.
The committee then addressed Section 1F, GLENNALLEN TO TOK
RESURFACING AND REHAB for the Department of Transportation
and Public Facilities. NANCY SLAGLE testified on behalf of
this request.
Ms. Slagle said the request was for $8.5 million in federal
receipts and expenditure authority to rehabilitation and
resurfacing of mile 0 to mile 124 of the Glennallen to Tok
interstate highway. She told the committee this project was
listed in a previous STIP as four separate projects that
were due to be constructed from 2000 to 2004. Due to
weather conditions during this past summer, the road had
deteriorated further and the department felt the repairs
could not wait. She said the road suffered from sloughing,
linear cracks, potholes and other problems because of frost
heaves. In September, when DOT&PF asked for public comments
on the "Needs List," the comments heard regarding this
particular stretch of road convinced the department to
evaluate the need for a major one-time project for this
road.
The adjusted STIP request eliminated the four separate
projects and consolidated them into one large project. Ms.
Slagle said the department had received approval on February
26 from the federal highway agency for this particular
project. This supplemental request was a result of that
change.
Co-Chair Sharp wanted to know if the approval received on
February 26 was approval of the entire 1998-2000 STIP. Ms.
Slagle replied that was correct. He asked for clarification
that this particular project was advanced to the FY98
construction season ahead of other projects already planned
in the 1998-2000 STIP. According to Ms. Slagle, the
department believed that because of the critical nature of
dealing with this road, they would be working extensively to
fixing the problems. They planned to go out for bid in
April with the work being completed by August. That was why
the department needed spending authority for this money
instead of waiting until July 1, she explained.
Co-Chair Sharp asked if the remaining projects in the 1998-
2000 STIP would be approved in the FY99 budget. Ms. Slagle
answered yes. Would this project remain on the FY99 budget
request, he asked. TOM BRIGHAM, answered that it would not
and would be added to the FY98 budget in the form of the
supplemental budget request. There were nine other projects
that would remain in the FY99 budget, he said.
Senator Torgerson wanted to know if there were any other
projects that would be moved forward to this year. Mr.
Brigham said there were no others because the department was
assuming a larger program in 1998 and 1999 so they had not
moved anything out to accommodate the Tok Cutoff project.
Senator Torgerson asked if DOT&PF intended to bump any other
projects if supplemental request was not approved for this
project. Mr. Brigham responded that if they received a
smaller amount than requested here, the department would
have to move other projects out. He stressed that they did
not anticipate that would happen because the news from
Washington DC was positive. They had not contemplated
making those decisions as to which projects would be
affected, he said.
Senator Torgerson said he did not hear DOT&PF give an
adequate reason why this project needed to be included in
this supplemental rather than normal capital budget. Mr.
Brigham attempted to convey the reasons, saying the
department wanted to build this summer. He said the project
would re-surface portions of the road rather than do a
complete rehab of the road. This was a lot of miles of re-
surfacing and if they did not start at the beginning of the
construction season they did not expect to be able to
complete the project this summer. In order to do that they
need to go to bid this spring, he said. If the funding were
to wait until the regular FY99 distribution, the work could
not begin until July 1 and the project would not be
completed this summer. That was the reason for coming to
the committee with this request now.
There was further discussion between Senator Torgerson and
Mr. Brigham about the number of projects planned for the
1999 construction season, and other ICE TEA federal projects
and the direction of funding.
Senator Torgerson asked how many other projects did DOT&PF
receive public comments requesting expedited repairs that
the department in fact moved up on its schedule. Mr.
Brigham responded that he did not have figures on that, but
this was the only project included in the supplemental. He
said there was no question there were other areas the
department received public comments asking for repairs. He
submitted that the Tok highway system was beyond compare as
to its poor condition.
Senator Donley said he was curious how the expedited funding
worked and wanted to know of other projects from the 1998-
2000 STIP that were moved forward with plans to work on
earlier. Mr. Brigham said there were only two projects, the
Tok project and another for the intersection of Minnesota
Avenue and International Airport Road.
Co-Chair Sharp wanted to know if portions of the Tok repairs
had been approved by the Legislature under a previous STIP.
If so, why would the Legislature not be de-authorizing them
in favor of this proposal, he asked. Mr. Brigham was not
aware of any other approved rehabilitation projects. He
said his office would be willing to double check that. The
projects had been planned further out in the program so he
said he would be surprised to find out if there had been any
Legislative authorization. He referred to the 1995 and 1997
STIPs and said they included projects to attempt to repair
permafrost damage along the Tok Cutoff. The result of these
requests was planned projects for every year up to 2004.
However, the department decided that would not be adequate
to repair all the damage and therefore made this request
listed in the supplemental, he said.
Co-Chair Sharp requested Mr. Brigham to double-check that
there was no prior authorization on any of the Tok projects.
He said there were many projects with requests, and if there
was a possibility that a portion of this request already had
funding it would have a better chance of going ahead. Mr.
Brigham said he would do that.
Co-Chair Pearce said she understood that if the Legislature
approved the funding, the project would include milepost 30
to 38 reconstruction at $10.2 million and that design was
already completed. Did that mean the department planned to
resurface some of that portion of the road this year and
tear it out next year for the reconstruction, she wondered.
Mr. Brigham assured her that would not happen. In fact, he
stated, any work was done between miles 30 and 38 would only
be because there had been a wicked frost heave, the
department would plane and smooth it out. Because they
would plan to reconstruct in the next year, any work done
would be minimal.
Senator Donley referred to the modified STIP, saying it
included $250,000 and approximately $1 million for work on
the intersections of Airport Heights and Glenn Highway, and
Otis and Tudor. Would those projects benefit at all from
being moved into the supplemental, he asked. He felt work
could begin on them sooner. Mr. Brigham responded by
telling him the design projects were approved for funding in
a group. The Tok project did not require a specific
authorization in 1998.
Senator Torgerson noted the request did not show a General
Fund match. Was there a reason for that, he asked. He
speculated the project couldn't all be supported with
federal money. Mr. Brigham told the senator he was correct.
He said they might need a separate discussion on the "match"
system, which was fairly complicated. However, he explained
the department estimated they would not need additional
funds for the remainder of this fiscal year. After July 1
the department could use some of next year's General Funds.
Senator Torgerson said he would like to have the discussion
on the federal match process at a later date. He speculated
that the department would require General Funds from FY99 to
meet the federal match - which was about 10%. This would
amount to approximately $850,000 that would be added onto
the $9 million project, he estimated. Mr. Brigham responded
that option was what the department planned to do. They
would use some of the match for next fiscal year, which
would be available after July 1, to complete this year's
program. The department would then expect to return to the
Legislature next spring with a supplemental request. They
figured that would be the safest way to secure the federal
funding since they did not have the federal money in hand
yet and it did not seem wise to ask for the additional state
money now.
Co-Chair Pearce said the committee would stop hearing
departmental testimony on the supplemental for this meeting
and would move on to SB 36. She announced the committee
would reconvene at 4:30 to complete testimony on Section 1
and the Sitka Herring Roe and Child Support Enforcement
issues, from the House Bill version of the supplemental.
Note: Minutes pertaining to SB36 have been written
separately.
ADJOURNMENT
Co-Chair Pearce recessed that portion of the meeting at
approximately 10:35 a.m.
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