Legislature(1997 - 1998)
04/18/1998 09:08 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 18 April 1998 9:08 a.m. TAPES SFC-98, #126, Sides A and B CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:08 a.m. PRESENT In addition to Co-chair Pearce, Senators Sharp, Torgerson, Parnell and Adams were present when the meeting was convened. Senators Phillips and Donley arrived shortly thereafter. Also Attending: SENATOR ROBIN TAYLOR; DAVE KOIVUNIEMI, Deputy Commissioner, Department of Administration; SHARON BARTON, Director, Division of Administrative Services, Department of Administration; DOUG HOLT, Administrator, Juneau Pioneer Home, Department of Administration; DUGAN PETTY, Director, Central Office, Division of General Services, Department of Administration; TIM LAWSON, Director, Division of Administrative Services, Department of Commerce and Economic Development; BARBARA BRINK, Director, Central Office, Public Defender Agency, Department of Administration; DWAYNE PEOPLES, Department of Corrections; REMOND HENDERSON, Director, Division of Administrative Services, Department of Community and Regional Affairs; TRACI CARPENTER, Budget Analyst, Department of Community and Regional Affairs; KIM METCALFE-HELMAR, Special Assistant, Office of the Commissioner, Department of Community and Regional Affairs; NICO BUS, Budget Coordinator, Department of Natural Resources and Department of Military and Veterans Affairs; KAREN REHFELD, Director, Education Support Services, Department of Education; KEVIN BROOKS, Director, Division of Administrative Services, Department of Fish and Game; JANET KOWALSKI, Director, Division of Habitat and Restoration, Department of Fish and Game; JANET CLARKE, Director, Division of Administrative Services, Department of Health and Social Services; BOB LABBE, Director, Division of Medical Assistance, Department of Health and Social Services; ANNALEE MCCONNELL, Director, Office of Management and Budget; Laura Baker, Budget Analyst, Office of Management and Budget; BRENDA MARKEY, Director, Division of Administrative Services, Department of Law; BARBARA RITCHIE, Deputy Attorney General, Civil Division, Department of Law; DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section-Juneau, Criminal Division, Department of Law; TINA KOBAYASHI, Assistant Attorney General, Oil, Gas and Mining Section, Department of Law; JAYNE ANDREEN, Executive Director, Council on Domestic Violence and Sexual Assault, Department of Public Safety; LAURIE PERKINS, Director, Division of Administrative Services, Department of Revenue; NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities; ROBERT DOLL, General manager, Ferry Operations, Southeast Region, Department of Transportation and Public Facilities; ARBE WILLIAMS, Director, Administrative Services, Department of Labor; DWIGHT PERKINS, Legislative Liaison, Office of the Commissioner, Department of Labor; REBECCA GAMEZ, Director, Division of Employment Security, Department of Labor; WENDY REDMOND, University of Alaska; JOHN BITNEY, Alaska Housing Finance Corporation; SUSAN TAYLOR, Fiscal Analyst, Division of Legislative Finance; fiscal analysts, Division of Legislative Finance; aides to committee members and other members of the Legislature. Via Teleconference: JIM SANDERS, Supervisor, Southcentral Regional Office, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs; LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs; PAT POLAND, Director, Central Office, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs; PERCY FRISBY, Director, Division of Energy, Department of Community and Regional Affairs; BRANT MCGEE, Public Advocate, Anchorage Office, Office of Public Advocacy, Department of Administration; COL. GARY PEDERSON, Director, Alaska National Guard Youth Corps, Department of Military and Veterans Affairs; GEORGE BUHITE, Director, McLaughlin Youth Center; MARLA GREENSTEIN, Executive Director, Commission on Judicial Conduct; all testified from Anchorage. SUMMARY INFORMATION Co-chair Pearce convened the meeting and explained the schedule. She said the committee would first hear HB 17. HOUSE BILL NO. 17 "An Act establishing the Department of Natural Resources as the platting authority in certain areas of the state; relating to subdivisions and dedications; and providing for an effective date." CS FOR HOUSE BILL NO. 17(RES) "An Act establishing the Department of Natural Resources as the platting authority in certain areas of the state; relating to subdivisions and dedications; and providing for an effective date." SENATE CS FOR CS FOR HOUSE BILL NO. 17(RES) "An Act establishing the Department of Natural Resources as the platting authority in certain areas of the state; relating to subdivisions and dedications; and providing for an effective date." Co-chair Pearce advised that there had been a previous hearing on this bill and presently before the committee was a Senate CS. Senator Torgerson indicated that he had asked HB 17 to be held in committee pending title searches on all properties brought to the Department of Natural Resources to be platted. After consultations with the State Assessor and Legal Services it was decided that would be too cumbersome to put in the bill and it was not his intent to continue to slow this bill down. The department advised him that they would have title search incorporated into their regulations and therefore he will not have any amendments. Senator Torgerson MOVED SCS CSHB 17(RES) and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations and accompanying fiscal note from Department of Natural Resources, Land Development in the amount of $71.3. SENATE BILL NO. 346 "An Act relating to competition in the provision of local exchange telephone service; and providing for an effective date." CS FOR SENATE BILL NO. 346(L&C) "An Act relating to competition in the provision of local exchange telephone service; and providing for an effective date." Co-chair Sharp announced that he was referring SB 356 to the Telecommunications Subcommittee, chaired by Senator Parnell. 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 called SB 292. She referred to a memo from Susan Taylor, Fiscal Analyst, Division of Legislative Finance, which included a spreadsheet of SB 292 by section. The committee would use this as direct reference to get through each department. She asked department heads to be prepared to outline their priority requests as they were called before the committee. She noted an error in the spread sheet, section 10(c), line 52, page 6 and noted it should correctly read $300.0 GF and $300.0 total, rather than the other funds of $320.8. JIM SANDERS, Supervisor, Southcentral Regional Office, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs testified via teleconference from Anchorage. He said the Governor declared the Bristol Bay disaster last 18 July. At that time there were no resources to begin to assist the impacted regions. They looked to two funding sources for assistance and U.S. Senator Stevens was able to get $7 million appropriated for the disaster last October. It is necessary for Alaska to match that at twenty-five percent, which equals $2.33 million. Part of that is being made up of in-kind matches from local communities and the department. Approximately $1.7 million is needed to complete the match. He explained three different components: one, a loan program being run through the Division of Investments; two, community projects; and three, fisheries research and education. He said there were already grant applications from communities and they were working with them in anticipation of funding being approved. Most communities should begin their projects after this coming fishing season. Senator Phillips asked why this disaster was so different from the economic disaster along the rail belt, 1985 - 1989? Mr. Sanders said there was such a tremendous drop in income to the region. The Bristol Bay disaster impacts the fishermen's ability to return to the fishery this year. He explained that it took approximately $10,000 to $20,000 for start up for the fishing season. In some areas it is just plain a matter of survival. Senator Phillips reiterated concern over the economic disaster and the fact that the Governor did not assist them during that time. He asked specifically what criteria were used. LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs testified via teleconference from Anchorage. He said he appreciated the comments from Senator Phillips, however he could not sit and debate what was done previously. At this time they were considering what was in front of them and that was a series of communities that did not have alternative work. There are no other opportunities for the fishing vessels to work other than fishing in the Bristol Bay area. These individuals are not looking for a handout or for a welfare program. However, the fishermen and the communities are in a very tough spot. Senator Sharp asked what the annual income of fishermen was. Mr. Sanders responded that on the Kuskokwim they make approximately $6,000 to $10,000/year. They also do other part-time work in the community during the winter. Bristol Bay fishermen make approximately $40,000/year after having paid off all their expenses. Senator Sharp indicated that was higher than the family income of people he represented in his district. He asked Mr. Cotten what the cut-off date on the loan application portion of the proposal was and how many applications did they receive for the $1,000 loan. Mr. Cotten said they received approximately 500 applications. He explained that any remaining balance would be applied toward community projects. Senator Sharp asked how much was earmarked for commercial fisheries? Mr. Cotten indicated there was approximately $300,000 to be spent mainly in the Kuskokwim for fisheries research. They were working with the Department of Fish and Game to develop the project. Senator Sharp asked for the breakdown of the funding source. Mr. Cotten explained that for every dollar the State spends on fisheries research the Federal grant would match that with three. Senator Torgerson asked if the State of Alaska was a party to the lawsuit regarding price fixing in Bristol Bay and would they receive any money? Second, would the fish tax be at least three percent? Mr. Cotten said they were not participants in the lawsuit. It was a class action suit by a series of fishermen who have permits in Bristol Bay. He did not know if the State or local raw fish tax would apply to any settlement. He guessed it would not as it is a legal matter between the companies and fishermen. He will check with the Department of Law and advise the committee. Co-chair Pearce said the Department of Labor's $3 million was embodied in another bill so the committee would continue on with the Department of Administration, line 17, Longevity Bonus. SHARON BARTON, Director, Division of Administrative Services, Department of Administration was invited to join the committee. The following requests were made by the Department of Administration: CENTRAL DUPLICATION: She explained the request in the amount of $260,000 for Central Duplication. The decision was made after noting a downward trend for several years to close Central Duplication. The downward trend was the result of changing times. The three big factors were: one, legislation requiring the use of private printers whenever that was cost effective; two, legislation reducing the number of reports agencies were required to do; and three, increased use by departments of high-speed copy machines and the transfer of reports to Internet rather than printing copies. This cost of shutting down was $260,000. OFFICE OF PUBLIC ADVOCACY: This request was in the amount of $265.4 for the Office of Public Advocacy. She noted the shortfall projection had been reduced from $441,000 to the requested amount of $265.4. OFFICE OF THE PUBLIC DEFENDER: This request was in the amount of $351,000. An original shortfall projection had been in the amount of $650,000. Despite an 3.5 percent increase in caseload the Public Defender kept four positions vacant and carefully scrutinized other expenditures. LEASE COSTS: Ms. Barton noted the request was for $383.6. In response to a query from Co-chair Pearce, Ms. Barton advised the number was a valid one. In response to a question from Senator Phillips, Ms. Barton said any monies left over from the Longevity Bonus Program would lapse to the general fund. EPORS: She said there had been two new retirees in FY 98 and some additional health insurance costs. The department has need for $59.7 in order to pay full costs for EPORS. Senator Sharp asked if the figure included any individuals that were not running for reelection but were running for a different office? Ms. Barton said it did not. She advised that the two individuals were Jay Kerttula and Chancy Croft. PIONEER HOMES: She said this was a request for a fund source change from $250,000 general fund program receipts to $250,000 straight general fund. This was necessary due to a shortfall in revenues in the pioneer homes. The amount could not be made up partly because of additional expenses in having to set up the in-house pharmacy and also due to the fact that this program has wrung every dime out of potential efficiencies. The revenue shortfall was further due to the inability of some residents to pay, and the new revenue unit set up this year was not up and running until about mid-year. DOUGLAS HOLT, Administrator, Juneau Pioneer Homes, Department of Administration was invited to join the committee. In response to a query from Senator Sharp he said they expected to collect about $1.4 million from residents. Currently bills were being sent out to residents and there was a follow-up on those that were not paid. That shortfall projection has been shrunk from $700,000 to $250,000. They feel that next year they will be better set up in both billing and collections. He said the revised budget would add $1.4 million. Senator Phillips asked if they were on a five-year or seven- year plan? Mr. Holt indicated they were on year three of a seven-year plan. Senator Phillips asked if they were getting volumes of complaints? Mr. Holt said there had been a number of complaints and they had listened to them all carefully. It was noted that most people did not realize how much was being subsidized by the State. One lady, he said, asked that he convey her thanks to the Legislature for the assistance they were giving the elders. Senator Phillips asked at what percent the State was subsidizing this program. Mr. Holt said in FY 98 the State subsidized the program about two-thirds with residents paying about one-third. In FY 99 that will change to approximately thirty-eight and a half percent from the residents and the balance will come from the State. He indicated that at the end of the seven-year plan the residents will pay $14 million of the $30 million program. Ms. Barton continued with the following: SENIOR EMPLOYMENT SERVICES: She said under older rules this request would have been dealt with through Legislative Budget and Audit. It is just a request for additional authorization to receive a higher Federal grant and to be able to expend the funds. Ms. Barton advised Co-chair Pearce there were still two other sections for the department and asked they be picked up at this point. She referred to a 17 April memo, which was an amendment to section 2. Co-chair Pearce advised that these two requests were just received and had not been incorporated into the spreadsheet provided by Susan Taylor. LONGEVITY BONUS: Ms. Barton said there was an anticipation of $2.2 million being available in addition to what was taken out of the Governor's budget. She said both Longevity Bonus and APOC were increments in the Governor's budget for FY 99 and the Senate Subcommittee has now closed out funding these two increments. They are not in the House Finance budget at this time. These are one-time items and should be dealt with in the supplemental budget with an extended lapse date. Both are critical items. $310 was for labor contract negotiations beginning in FY 99 for eleven contracts that are expiring. They have reduced the staff by five positions with the strategy in mind that they did not need negotiators on staff when they were not negotiating and they would just be added in those years when negotiations were in progress. However, they do not care if it is funded in the operating budget, in conference committee deliberations or whether it is funded as a supplemental one-time item. APOC: This request is for one-time costs related to an election year. Senator Phillips indicated that they just received money. However, Ms. Barton clarified that the House opted not to fund the request through the operating budget, but rather through a supplemental. It was not double dipping. (pause on record) STALE DATED WARRANTS: She said these warrants were collected from all agencies and then they were presented each year to the Division of Finance for payment. In response to a query from Senator Phillips, she will check if there is a statute of limitations on stale dated warrants. RECORDS STORAGE LEASE: It was explained that the lease budget for archiving had been shut down. Now agencies would be paying the archives bill direct and the department would distribute the proper funds to all agencies that were having to cover the new costs. This was a deletion from leasing of $120.0, which has been redistributed to all agencies. In response to a question from Senator Sharp she indicated the deletion of $120.0 was an agreement between all agencies to distribute said amount. (Tape #126, Side A switched to Side B.) TOM LAWSON, Director, Division of Administrative Services, Department of Commerce and Economic Development was invited to join the committee. HEARING OFFICERS: He explained the request was for funding of hearing officers, which were incorrectly charged to occupational licensing. He said in FY 97 occupational licensing absorbed about $50.3 in hearing examiner costs that should have been paid by banking, as well as insurance. This was caught by a legislative audit last fall and the department was advised they should take action. Since the years fiscal transactions for 1996-1997 have been closed that was the basis for this request. If the Legislature signs off on this, Banking and Insurance would RSA the funds to Occupational Licensing to right this wrong. Methods have been set in place to enable the hearing officer to make the right charges to the appropriate division. Senator Sharp asked if the credit should not be returned to the general fund? Mr. Lawson said that occupational licensing operates on fees. The auditor was very sensitive to the fact that fees had been gathered from the licensees and that money should not lapse into the general funds and they should get credited back for the funds that were not properly expended. LAMAR COTTON, Deputy Commissioner, Department of Community and Regional Affairs again testified via teleconference from Anchorage. He introduced PERCY FRISBY, Director, Division of Energy, Department of Community and Regional Affairs also on teleconference. POWER COST EQUALIZATION: Mr. Frisby explained the supplemental request needed for this year. It was in the amount of $1,700.0. This would leave them the ability to fund PCE at its full demand level next year. Co-chair Pearce asked if this was for FY 98? Mr. Frisby said it was. Senator Sharp voiced concern that this might be a stretch of what the Federal government allows them to use. The past three years AHFC has been saying that the funds could only be used for weatherization and energy efficiency. This will have to be checked out. Mr. Frisby advised that the funds could be applied or used for PCE. Co-chair Pearce said she thought PCE was funded at eighty-five percent last year. Mr. Frisby concurred. (10:05 a.m. at ease - 10:08 a.m. back to order) Co-chair Pearce said PCE was funded at $17 million last year, which was the Governor's request. That was not eighty-five percent, rather a continuation from the previous year. SUSAN TAYLOR, fiscal analyst, Division of Legislative Finance explained how PCE was funded. She said it was unlikely it was funded at eight-five percent. Co-chair Pearce asked Mr. Frisby if $1.7 million bring them to the eighty-five percent level? He indicated that it would. She further indicated that there was already adequate description of what record storage costs were. Mr. Cotten indicated there was nothing in the latest memo that came from OMB relating to the department. TRACI CARPENTER, Budget Analyst, Department of Community and Regional Affairs was invited to join the committee. She explained these were two small over-expenditures. Her research showed that these were most likely accounting errors that occurred at the time of conversion. The $12,000 one was again an accounting error. These were funds that were applied to the 1989 RSA when they should have been applied to the 1988 RSA. She advised that the Division of Finance could fix this. Co-chair Pearce asked that a memo be provided for the committee's back up regarding this request. DWAYNE PEOPLES, Department of Corrections was invited to join the committee. PAROLE BOARD: He explained this was a request for $50,000 general funds as operational expenses for the parole board to address the incarcerated population both in-State and out-of-State. This would include costs for travel, per-diem and stipends for the parole board members in dealing with a backlog of approximately two hundred parole requests. ADMINISTRATION AND OPERATIONS: This was in the amount of $721.0 general funds to be spread across the State's twelve institutions because of abnormally high populations in the institutions this year. This additional support would be applied to maintenance of the institutions, including personal services and overtime. INMATE HEALTH CARE: This was a $1.650 million general fund request for inmate health care services. He said this was a reduction from the original $2.5 million. He believed this can be reduced down another $50,000 to $75,000 based on their most recent analysis. He will communicate the exact figure to the committee next week. PRISONER TRANSPORTATION: This was a $230,000 general fund request for the cost of prisoner transportation both in- State and out-of-State. This includes travel and staff time. NICO BUS, Budget Coordinator, Department of Natural Resources and Department of Military and Veterans Affairs was invited to join the committee. DISASTER RELIEF: Mr. Bus explained this was a request for $2.6 million to capitalize the disaster relief fund. Over the last number of years the department has tried to close out all the old disasters. In order to meet their obligations they are requesting a total amount of $2.6 million. This request included a Department of Transportation emergency relief in the amount of $620,000 for flooding in the eastern Tanana/northern Copper River valleys last summer. Mr. Bus further explained the request for $40,000 Federal receipts as the Federal government requires they attend some of their emergency training. This is an authorization to receive an expended Federal receipt on the State books. He noted the next item was similar in that when the National Guard goes out on medivac or special mission some of the expenses are reimbursable by regional health corporations, specifically for the members of the flag crew that are State active duty. The requested $11,000 would put the expended monies back into the National Guard budget by allowing accountability as statutory designated program receipts. (Co-chair Pearce requested an at ease at approximately 10:23 a.m. to see if Col. Pederson was on line.) Co-chair Pearce identified the next item to be taken up was the Youth Corps Challenge Program. Nico Bus asked permission of Co-chair Pearce to explain the budget point of view for the committee. ALASKA NATIONAL GUARD/YOUTH CORPS: Mr. Bus said at the time of the budget they were not sure of the Federal funding. He said they reduced the Federal funding in the Governor's FY '99 budget to $1.4 million in Federal funds and $600,000 in general funds. In December the Federal funds were increased to $2.1 million. They approached the Governor and asked for the supplemental to go in two parts; the first part the Legislature earlier funded in the fast track supplemental in the amount of $608,000 which would get the Youth Corps program from February to 30 June 1998. They are requesting the additional supplemental funding that would make the 1999 budget to $2.1 million. The general fund portion would get the Youth Corps funding from $600,000 to approximately $1.3 million. Together they make for a $3.4 million, which would fund two classes with a targeted graduation level of eighty students. The initial intent was to make sure there was funding to finish the class they just started from February through September. He realizes this is confusing but hopes the committee understands. Co-chair Pearce asked Senator Phillips if the money he had in the operating budget for the Youth Corps was enough to finish the two classes started now and slated to finish September 1998. She also asked if there was additional general fund money for a 1999 class? Senator Phillips indicated there was enough money for one class. She then asked Col. Pederson how the class was going. COL. GARY PEDERSON, Director, Alaska National Guard Youth Corps, Department of Military and Veterans Affairs testified via teleconference from Anchorage. He said they currently had one hundred three cadets in the program to graduate 14 August 1998. Co-chair Pearce asked the Federal funding available for fiscal year '99 and continuation of those funds? Col. Pederson explained the result of the meeting between General Lestenkof and U.S. Senator Ted Stevens. Senator Stevens advised that he would do his best to ensure full funding was available. Even though there is a shortage of funding he has great expectations this will be rectified. Senator Adams asked how many teachers there were within the present program? Col. Pederson said they currently had thirty instructors on staff; five teachers and twenty-five vocational instructors. He explained that the ratio of 3 students to 1 teacher was high because they had to cover the young folks twenty-four hours every day on a shift basis. Mr. Bus continued for the Department of Natural Resources. FIRE SUPPRESSION: This was a request in the amount of $13 million. He explained they started the year with $3.3 million, however due to disaster received another $6.6 million. In order to finish this fiscal year they feel they need this requested amount. It would include monies for a spring fire activity. All indications include a heavy fire season, specifically they are worried about the Kenai Peninsula. Senator Torgerson asked if any of the monies included fire prevention? Mr. Bus advised that it was all fire suppression. Some was for aviation contracts and the largest amount for personal services was to hire fire fighters when the fire starts. He said fire prevention was funded in the Forest Management component. Senator Sharp asked the amount they started with and Mr. Bus reiterated the $3.3 million was correct. He further explained that the $6.6 million was part of the $13. million. That was approximately at total of $16 million. Mr. Bus said that was correct. Senator Phillips asked if any of the money was used in Southwest Alaska, Red Devil. Mr. Bus responded that it included Red Devil, Stony River, etc. RECORDERS OFFICE: Since things are going well and there is a request for more mail-outs, postage and courier they have requested authorization to accommodate this increased work load. Customers pay for the service through program receipts. This request would allow them to keep up with their services. Senator Adams said he thought the fees being collected would take care of the over-load? Mr. Bus explained that it did. The request was for $100,000 in program receipts and the remaining $250,000 was deposited to the treasury. Senator Parnell asked about the equipment upgrade. Mr. Bus explained that one thing that was a real problem in the Recorders' office was that the office still has nineteenth century technology even though we were now living in the twentieth century. Part of the money would be used to upgrade terminals and PC's so the workload could be processed faster. Senator Parnell asked if this was part of their capital budget request and Mr. Bus indicated this portion was not. OLD EAGLE SCHOOL: Mr. Bus explained this project. There was a Court order to move the buildings and then once removed the department would have to clean the contaminated site. A contractor was hired last year with the funds that were appropriated. Rather than haul the material to Fairbanks for proper disposal he burned them on site. There was asbestos in the material and this caused grave concern for OSHA. Department of Environmental Conservation fronted the Department of Natural Resources to properly clean up the site and the total bill came to $155,000. Mr. Bus advised the work has been completed and the funds are to reimburse the Department of Environmental Conservation. Senator Phillips said the contractor should have taken the asbestos across the border to the asbestos mine, which is only about thirty to forty miles away. GEOLOGICAL MATERIALS CENTER: He explained this request was in the amount of $85,000 for storage for core sampling plus another increase in the 1999 budget bringing the total of the project to $1.1 million in order to restart the project. AG. REVOLVING LOAN FUND: The 1999 operating budget drastically reduced the budget for the Division of Agriculture. With the requested funds they feel they can finish the fiscal year. There are two large amounts of money relating to two farms having environmental problems. One is a lagoon that needs to be pumped; the other is a well that needs to be drilled. He noted the audit report will recommend the amount be paid for the protection of collateral for loans. Senator Sharp requested backup regarding the loans and Mr. Bus said he would provide that to the committee. PARKS MANAGEMENT: He briefly explained this item and asked the line item be approved. He said that the budget reduction allowed for fewer fee collectors and therefore the compliance dropped from ninety-five percent of people paying to sixty percent; lack of maintenance; the bottom line is that they are not meeting their program receipt budget. If the funding source is not switched then the Division of Parks may have to look at opening parks later, thus complicating the problem even further. Senator Phillips asked about the compliance reduction. Mr. Bus explained that if there is no campground host then people just camp. He explained that even with budget reductions they can not lay off their Rangers. So the first positions to be cut are the campground hosts. Senator Phillips asked about the campground hosts. Mr. Bus explained that even though they are volunteers they receive a stipend and may receive a little money. (Tape #126, Side B switched to Tape #127, Side A.) Senator Sharp asked about the program receipts and if they were not there how could they be transferred? Co-chair Pearce explained they had previously budgeted for $150,000. Senator Parnell said these funds would then be transferred from program receipts to general funds. Co-chair Pearce advised the meeting would recess to the floor and then return to Senate Finance Committee at 1:00 p.m. She said she hoped to finish the supplemental requests today. Co-chair Pearce reconvened the Senate Finance Committee at approximately 1:15 a.m. She noted those present as Co-chair PEARCE, Senators SHARP, TORGERSON, PARNELL and PHILLIPS. She noted the committee had completed Department of Military and Veterans Affairs and Department of Natural Resources and they would commence with the Department of Education. KAREN REHFELD, Director, Education Support Services, Department of Education was invited to join the committee. She explained the following: AVTEC: This is a request for $75,000 in Federal authorization. It relates to their recently received certification from U.S. Department of Education to participate in the PELL grant program. Approximately twenty-two students have applied and received notification of their eligibility. STALE DATED WARRANTS: There are three items under this miscellaneous claim and they are all prior year billings. OVEREXPENDITURES: She said these were ratifications of overexpenditures. Both items relate to the Division of Vocational Rehabilitation under the small business enterprise program. This is being done as a clean up of prior year accounts. RECORDS STORAGE: She noted that part of the funding would allow the department to maintain their records management responsibility. Co-chair Pearce asked if the department had any projects in the memo that was received last night. Ms. Rehfeld indicated they did not. KEVIN BROOKS, Director, Division of Administrative Services, Department of Fish and Game was invited to join the committee. SITUSUILAQ HATCHERY: The request represents lease costs to the land owner wherein the department operated the hatchery north of Kotzebue for approximately fifteen years. The hatchery was closed in June 1995. There was some diesel oil spilled at the site and in conjunction with the Department of Environmental Conservation they have been using oil response funds to clean up the site. The supplemental request represents payment to the land owner. Co-chair Pearce referred to a request made to Senator Adams that a letter be received from the land owner indicating receipt of the lease payments through September. That would preclude any further suits against the State. She wanted to know if the department had done this. Mr. Brooks said that any payment would be part of a written settlement that would address just this issue. The department will not make the payment without a written agreement. SUBSISTENCE: This was a request in the amount of $56,000 to help the division due to a reduction in the amount of $160,000. He said even though the began the year with every intention of living within their budget, several things came up that required additional work and effort by the department that they could not stop doing. This was basically working with the Federal subsistence board process and the task force. The effort expended by the division included working with the Division of Wildlife in representing the department at the Federal subsistence board and protecting the State's rights, trying to keep hunts open for both general and subsistence and challenging proposals in the Federal arena to make sure they were getting the best presentation. (The presence of Senator Adams is noted.) Senator Sharp asked that if this was worked out with the Division of Wildlife why didn't they agree to RSA monies over? Mr. Brooks said they had tried to limit the RSA's to specific harvest surveys and different big game surveys. This project as explained was a more broader item. HARBOR SEAL STUDY: This was $80,000 of EVOS funds for continuation of the harbor seal study in Prince William Sound. There was not a meeting early enough to submit the request to Legislative Budget and Audit. The project will be continued on into 1999 and has been included in the department's 1999 budget as well. U.S./RUSSIA - BERING SEA: This was a request for $25,000 in Federal funds for the Commissioner's Office received from the National Marine Service to provide for travel costs in dealing with the Bering Sea fisheries and boundary issues. Senator Sharp asked if this was for the individuals in the Commissioner's Office that were normally responsible for the North Pacific Fisheries? Mr. Brooks said this involved specific travel to Russia by David Bevin along with fisheries scientists. Senator Phillips asked the status of the talks. Mr. Brooks said these were government to government talks and he would have to get back to the committee for any further specific details. DESIGNATED PROGRAM RECEIPTS: This was submitted to the committee on 9 April with several other items. The request is for a number of projects being done by groups in the private sector and represented specific costs. STALE DATED WARRANTS: These were invoices being submitted now over two years old. OVEREXPENDITURES: This was an amount of $200 to ratify an old expenditure and RSA. This is a clean up item. RECORDS STORAGE: This is the departments share of the larger transfer regarding storage. JANET KOWALSKI, Director, Division of Habitat and Restoration, Department of Fish and Game was invited to join the committee. She gave a brief description of the following: KATCHAMAK BAY: She said $85,000 was included in the Habitat budget in order to receive a Federal grant through DGC. When DGC received their entire NOAA coastal zone appropriation it was larger than originally anticipated. This also would have been an LB&A request if they would have been meeting. Co-chair Pearce moved on to the Department of Health and Social Services. JANET CLARKE, Director, Division of Administrative Services, Department of Health and Social Services was invited to join the committee. ALASKA TEMPORARY ASSISTANCE PROGRAM: She explained this was a reduction in the amount of $1.5 million in general funds. This has to do with reduced welfare caseload during the current fiscal year. In response to Co-chair Pearce, Ms. Clarke explained that item #42 was being withdrawn. PUBLIC HEALTH LAB, ANCHORAGE: This is a request for statutorily designated receipts related to the public health lab being built in Anchorage. The receipts come from certificates of participation that have already been sold and will go the Department of Transportation and Public Facilities for work they are doing on the new facility. GENERAL RELIEF MEDICAL: She explained that in FY 98 there had been a spike in general relief medical eligible clients who have come to the program. In looking at the numbers she said they have seen that many of the individuals that previously qualified for the Medicaid program are now showing up in the General Relief Medical program. This was due to some of the Congressional changes in eligibility for SSI and Medicaid and they are now not eligible for Medicaid. (The presence of Senator Donley is noted.) Ms. Clarke advised the committee that this program actually ran out of funds in February. Temporarily they have transferred funds from the Medicaid program to keep the bills being paid while the Legislature considered this supplemental. Senator Phillips asked how many individuals were they talking about? Ms. Clarke said it was her understanding they were seeing about three hundred more individuals under general relief. In response to a query from Senator Parnell, Ms. Clarke said there was a bill passed last year with reference to a savings in the Adult Public Assistance Program and the Medicaid Program. At that time they could not estimate how many would apply for general relief medical. They did note in their fiscal note that perhaps as much as $1 million worth of expenses could come to this program. Senator Sharp asked if the individuals now ineligible under Medicare and Medicaid they automatically become eligible under general relief? Ms. Clarke indicated they do have to apply and be eligible for general medical relief as well. There are very strict conditions for application. Senator Parnell indicated that even though the Legislature did not act on that the catch was indicated in the department's fiscal note. He asked what the categories were that got cut off for alcohol treatment. BOB LABBE, Director, Division of Medical Assistance, Department of Health and Social Services was invited to join the committee. He explained the Federal policy, which eliminated certain disabled children and substance abusing individuals as the only basis for disability. The Medicaid eligibility basically follows the Federal SSI program for cash for those groups. They had estimated some individuals because they knew they would no longer qualify for the Federally matched program and would fall into the general relief medical program. He further indicated there were legal alien issues that came up last wherein they were no longer able to cover certain groups of legal aliens under Medicaid but the State did cover them, if they qualified, under general medical relief. Senator Sharp asked if drug addicts could also apply under general medical relief? Ms. Clarke indicated there were only approximately seventy-five drug and alcohol clients. Mr. Labbe noted they had been seeing a decrease in expenditures in general relief medical. In the past in had been a much larger program. There followed general discussion of the committee members. Ms. Clarke further explained that one had to have a monthly income of less than $300, less than $500 in assets to qualify for the general relief medical. You can not qualify for any other medical coverage. The individual must have an immediate need for medical care for a terminal illness, chemotherapy treatment for cancer or a chronic condition. In response to a query from Senator Torgerson, Ms. Clarke explained the seventy-five individuals and that they were a total increase of three hundred individuals to the program. The requested amount under this program was to serve three hundred additional individuals equaling about $5000/individual. Senator Parnell said the back up did not correctly reflect the number of individuals being served. It should read that 1700 to 1800 were being served, including those qualifying for abortions. He felt this deception was outrageous. Ms. Clarke apologized and said there was no effort on her part to deceive. Mr. Labbe commented on the conditions for qualifications and the eligible planned group. The abortion payments that are made as State funded payments come out of the budget but from a population that is eligible for Medicaid. He indicated that there was approximately $800,000 in FY 97 in abortion-related costs out of the total budget. Senator Parnell continued to voice his concern about the lack of abortion individuals not showing up on the records. He felt the department needed to show everyone that was being funded. Otherwise the calculation per person was basically meaningless. Mr. Labbe reiterated there was no intention to deceive. They have always used the same eligibility formula for the program. He said the total dollars include the abortions and therefore the distribution by category of service would include those costs. Senator Parnell said if that was the case then the eligible clients should correctly reflect 1700 or 1800. Mr. Labbe said the difference was one must also look at the distribution of race, age and location. That only includes the 856. Senator Parnell asked for a reprint of the chart so the proper and complete information was presented to the committee. Ms. Clarke said they have tried to put together a more complete picture as this program is debated in the Legislature. Senator Sharp asked if the department was assuming the Legislature was going to fund all requests? Ms. Clarke said that one thing the committee should know was that hospital payments had been reduced to less than twenty-nine percent of the costs. Senator Sharp said the question was regarding the priority list. Mr. Labbe responded and said all of the services on the list were not presently funded. He said they were only part way down for their coverage under general relief medical program. He explained the difficulties in using the lists were that they required regulation changes. Even though a problem is perceived it takes a while to change it. He said the priority list was not a good option for daily management. Senator Parnell asked how this worked if they ran out of money in February. Were they funding right now from other sources? He asked directly if the list was meaningful at all. Mr. Labbe said the list was not terribly meaningful in mid-year. The problem lies in that if they make a decision now for FY 99 they would notice to cut some services or change some rates. Typically, however, the clients that are eligible go to a provider, the provider sees them and the bill comes in. There is a lag anywhere from one to five months from the date the service is provided until a bill is presented. Therefore, the department incurs liabilities. It is hard to turn this on a dime. A regulation change would have to be made in order to use the list. In response to a query from Senator Phillips, the list as defined by the Legislature and in statute is that the department is to make an estimate of their ability, given the appropriation, to manage that appropriation. This assessment would have to made at the first of the year because there is always this delay, same as last year. The reduction in Medicaid has also created them problems. This is why the list is not effective as a daily management tool. Senator Torgerson asked about money being transferred out of Medicaid or Medicare to cover the shortage. Ms. Clarke said through the Office of Management of Budget when they ran out of funds in February monies were transferred from Medicaid or Medicare. The requested amount would cover monies to be paid back. She did not recall the exact amount but would supply the information to the committee. MEDICAID PROGRAMS: This was a request for $1.306.6 million in Federal funds for school based claims that come into the Department of Health and Social Services. In the FY 98 budget the department estimated a total of $2 million would come in from this program. She briefly explained the program. (Tape #127, Side A switched to Side B.) Ms. Clarke continued. INDIAN HEALTH SERVICE: This is a request in the amount of $1.3 million. She said this is a repository for Federal funds that the department processes. She said the monies are not only used in the Indian Health Service but also moved around in the school districts. Under the time study program each school gets a grant. Senator Torgerson asked how much of the school district claims were being paid under this program? Ms. Clarke said the Federal share of the claim was $4.6 million. Senator Torgerson further asked if the department was going to spend $3 million on back case adoptions? Ms. Clarke explained that the agreement is that any money that comes to the State from this program half is sent back to the school districts. The other half is discretionary funds that the Legislature can appropriate for many different purposes. The Governor has proposed the remainder of the monies be used for the adoption backlog. LB&A acted on part of that and there are several other requests that will be before the Senate Finance Committee at a later time. MEDICAID PROGRAM: This is a request for Federal authority for the Medicaid program for $12,018,400. She explained the department embarked on a fairly severe cost containment effort in this program, which required a number of regulatory changes to try and live within the general fund budget. These efforts have been successful because the department is not requesting any general funds. The Federal authority request now before the committee will eliminate the general fund request. Senator Sharp asked if this was a "break even" on the savings in general funds? Ms. Clarke explained that the request would go for three main items as listed in their backup. MEDICAID SCHOOL-BASED CLAIM: This is the second part of the school based claim. She noted that at the 12 December LB&A meeting the department requested $1.3 million for dealing with the adoption backlog of children they had identified as having been in foster care for a number of months and years. These children also had various barriers to being adopted. The LB&A committee approved $433,000 and allowed the department to go forward with one-third of the request so they could get started right away on dealing with this problem. The department is requesting the remainder of the funds so they can continue this program. The department has coordinated meetings with the Court system, Department of Law, Public Defender and the Office of Public Advocacy in order to allow many of these children to become legally free for adoption. Some four hundred children are eligible for adoption. Co-chair Pearce asked what the results were from the monies approved at the LB&A meeting. Ms. Clarke responded that two primary grants have been awarded to two individuals. They have agreed that they were going to target fifty adoptions of special needs children. So far the work for twenty-two children has been completed with only final adoption proceedings pending. Senator Parnell indicated that he was very supportive of the approach being taken by the department. He said he was concerned whether the department would be able to expend the remaining requested funds and accomplish the task. He felt this request being built into the FY 98 budget was excessive. Ms. Clarke said the grants were not awarded until early February due to negotiations. There were start- up costs, training sessions, home studies and coordination costs with tribal partners. She advised the reason the request was in the supplemental request was because the revenue was available in this current year. The department knows that they would not be able to spend the money this year and therefore are requesting a lapse date through FY 99. She explained the adoption program in the budget was subsidy payments and not related to the backlog of children identified. This was a one-time request. Senator Phillips asked what the rush had been for the request before LB&A back in December? Ms. Clarke explained that the department knew it was going to take awhile to develop an RSP and a program with grantees. They pushed to get this accomplished so they could get the necessary work done to develop a program and protocol for providing names of the children and working out what results they wanted. WIC PROGRAM: She explained that this was a request for $1,241.5 for the WIC program. This is a one hundred percent Federally funded program except for the statutory designated receipts they get from formula rebates. It provides specific nutritious food, packages and nutrition education for low-income, pregnant, at-risk women. They have seen a continuing growth in the program over the last several years. This request will allow the department to keep up with the kind of growth they are seeing. MEDICAID FACILITIES AND NON-FACILITY: This was a request for $7,770.1 general funds. She explained the request was due to the Federal match rate not being as high as originally anticipated. DFYS/BLOCK GRANT: This request was for $119.3 in general funds. The request was due to a reduction in Federal Title XX block grants. These monies were used to fund the Child Protection workers. YOUTH FACILITIES: This was a request for $290.0 in general funds to help alleviate overcrowding at the Johnson Center in Juneau and the McLaughlin facility in Anchorage. GEORGE BUHITE, Director, McLaughlin Youth Center testified via teleconference from Anchorage. In response to a question from Senator Phillips he indicated that McLaughlin presently house one hundred ninety-eight juveniles when they were equipped for only one hundred fifty. He also explained that the Johnson Youth Center was only an eight-bed facility but they were presently housing twenty-two to twenty-three juveniles. As a general rule all the facilities were operating at approximately one hundred thirty-eight percent of capacity. Senator Torgerson asked what the increase was over last year. Mr. Buhite explained that at McLaughlin they were running approximately ten juveniles per day more than last year and at Johnson they were up about four juveniles per day. The significant part, he noted, especially for McLaughlin was that for approximately every eight to ten juveniles per day in the facility they needed to add one staff per shift to meet the safety and administrative code requirements. FOSTER CARE: Ms. Clarke called the committee's attention to an amendment in the department's packet regarding this item. She said the initial request had been in the amount of $355.6 general funds. The amendment requested the addition of Federal funds in the amount of $404.2. She noted a significant increase in the number of foster care augmentation requests. She said this augmentation rate was necessary to pay for a number of items that are above the base foster care rate. This may include transportation to visit physicians, special foods, laundry, in-home assistance, childcare and etc. The department had seen an increase in children with special needs over the past year. Co-chair Pearce asked what the Federal receipts were. Ms. Clarke indicated they were Title IV (3) receipts and are available for children who meet the eligibility criteria. The Federal government pays for the same the department provides as long as they are eligible for those same services. ALASKA CHILDREN'S TRUST FUND: She noted the item did actually go into Revenue because that's the department that manages that item. The $2.0 million is a request for a deposit into the Children's Trust Fund. She explained that fund was created in 1988 by the Legislature and there was currently a balance of $6.5 million. Proceeds would be available for grants made by the Children's Trust board for child protection, child abuse services, etc. Senator Phillips asked if there was an emergency situation? Ms. Clarke said she was not familiar with why it was a supplemental request and perhaps someone from OMB would be better qualified to provide any answers. LAURA BAKER, Budget Analyst, Office of Management and Budget was invited to join the committee. She explained the $2.0 million deposit was put into the supplemental because it was an item being used in a reallocation. MISCELLANEOUS CLAIMS: This was a request for $4,200 for bills older than two years that have been submitted for payment. RECORDS STORAGE: There was no explanation given. SUBSIDIZED ADOPTION PROGRAM: This was a new request for $257,000 general funds for the subsidized adoption program. She explained that this particular program was a subsidy payment for many children who have been in State custody for special needs who are then adopted. Ninety percent of the children in this program who receive a subsidy have come from the foster care component. The department had originally estimated the program would grow by eleven point four percent in FY 98. Actually, they have seen a growth of eighteen percent, which is considerable above what they had budgeted for and requested of the Legislature. Ms. Clarke advised the committee that was the last departmental request. Co-chair Pearce thanked Ms. Clarke. She then called the Department of Law. BRENDA MARKEY, Director, Division of Administrative Services, Department of Law was invited to join the committee. She noted that Dean Guaneli, Chief Assistant Attorney General was present to identify and explain the next item. She noted that most of the additional costs were due to a change in venue. DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section-Juneau, Criminal Division, Department of Law was invited to join the committee. CRIMINAL DIVISION/EXTRAORDINARY EXPENSES: He explained briefly for the committee that the State bears the burden in criminal cases to prove the case beyond a reasonable doubt. What that means is witnesses have to be brought to Court and get them on the stand. In Alaska it is often found that the witnesses do not live in the area where the Court proceeding occurs. Two-thirds of the department's travel budget is to bring witnesses to Court. The other third is to get attorneys out to the places where the Court proceedings are held. He advised the committee that this year they faced the extraordinary situation of having four separate murder trials; two from Yakutat that had to be moved to Juneau; and two from Bethel arising out of the shooting at the high school. One had to be moved to Dillingham and the other to Anchorage. Those kinds of expenses cannot be anticipated in any fiscal year. The Dillingham trial had over thirty witnesses that had to be subpoenaed from Bethel to Dillingham. Many were juvenile, high school students who witnessed the shooting. Further expenses that had to be borne were having a parent or guardian accompany the minors, hotels and meals. Due to the Judge's strict time schedule for the trial it was necessary to charter the witnesses from Bethel to Dillingham. He explained the same costs were being entailed in the trial of the other juvenile in Anchorage. Senator Donley asked why the two were not being tried together. Mr. Guaneli advised that they were severed because the evidence in one would not have been admissible against the other defendant. Also, one was tried as an adult and the other as a juvenile. Senator Donley further asked if the department was able to make any comments as to how to save money on prosecutions next year? Mr. Guaneli said there were several bills that had been introduced to make changes to criminal law. He said the changes proposed for Evidence Rule 403 and 404 would certainly help. Another change that would help the particular problem is a change in rules regarding telephonic testimony. In further response to Senator Donley, Mr. Guaneli advised that the Governor had introduced these bills, but he did not know their status. Senator Donley believed that appropriate questions should be asked today in order to look at reforms the Legislature could advocate to hold down future costs. Mr. Guaneli further referred to a memorandum requesting an additional $100,000 to cover travel expenses; also the sex- offender registration program. Senator Donley asked again about the Bethel murder trial and why it was so difficult. Mr. Guaneli explained the change of venue and the need to bring forward so many witnesses due to the fact that the State had charged the defendant with First Degree Murder. This takes a lot. JUDGMENTS AND CLAIMS: Ms. Martin explained the revised numbers for this item is in the memorandum from OMB dated 17 April and received late yesterday. That amount was $695,602 general funds and $327,760 AHFC corporate receipts. BARBARA RITCHIE, Deputy Attorney General, Department of Law was invited to join the committee. She responded to Senator Sharp's question and advised that the claim was listed in with the Cleary case. (Tape #127, Side B switched to #128, Side A at approximately 2:45 p.m.) There was some discussion amongst the committee members regarding the department's monthly report. Senator Torgerson asked for a brief review on claim number five under Judgments and Claims. (Hackett and Groom vs. Commerce) Ms. Ritchie explained that this was a lawsuit filed against the State with regards to the Americans with Disabilities Act. The employee claimed the right to certain work place modifications. She advised that she did not have much information regarding the case because most of it was protected and confidential. In further response to Senator Torgerson she said that this was an area of increasing litigation. Co-chair Pearce advised Ms. Ritchie that the department's back up was incomplete and would it please be provided the committee. She said this made it difficult to know anything about the cases. Ms. Ritchie said she would provide the committee with the requested back up. TRUSTEES FOR ALASKA GOVERNMENTAL COORDINATION: Ms. Ritchie explained that this was a claim for a judgment at the Superior Court level. The case involved an administrative appeal from the State's concurrence with the EPA as required by the Federal Coastal Zone Management Act regarding renewal of the Clean Water Permit for discharges from the Cook Inlet offshore oil platforms. It was required that this be consistent with the Alaska Coastal Management Program. The Native village of Port Graham appealed this decision. The amount sought in the judgement is approximately $24,000. Co-chair Pearce asked the status of the decision. Ms. Ritchie said it was not entirely clear and that she would provide information by Monday that would explain the status. Senator Torgerson asked if we were paying all the legal fees? Ms. Ritchie indicated that was correct. PETRIE CASE: Ms. Ritchie explained this was a case brought against the State of Alaska and the Department of Community and Regional Affairs. It arose out of events back in 1993 involving the merger of the Alaska Energy Authority. She explained that the Legislature had passed legislation, which split the existing programs between AIDEA and the Department of Community and Regional Affairs. After offering continued employment to Mr. Petrie shortly thereafter he was advised that he was going to be laid off. He in turn filed suit because he felt he was laid off due to prior involvement in the investigation of the former Energy Authority director. Mr. Petrie alleged that Representative Ramona Barnes, then Speaker of the House, insisted that during the transition he not be retained. There was substantial evidence that this was correct. The case was eventually settled and the final total cost of damages was estimated at between $423,000 and $578,000. He also had claims for violation of constitutional rights and punitive damages. She explained a settlement worked out with retired Judge Ripley in the amount of $337,500. She pointed out that the Alaska Supreme Court recently ruled that the "Whistle-Blower Act" does not authorize awards of punitive damages against the State. Senator Torgerson asked if in the Gas for Votes settlement the correct amount was $65,000? Ms. Ritchie said it was the Supreme Court ruling in the amount of approximately $80,000. There will be no further bill. Co-chair Pearce indicated that if tallied together the Cleary matter would be $2,807,498. Ms. Ritchie concurred. Senator Sharp asked for identification of the AHFC case. Co-chair Pearce advised Senator Sharp where it was but noted that there was no back up for it. Ms. Ritchie said she would get it to the committee. KOYOKUK: Co-chair Pearce asked Ms. Ritchie to identify this item for the committee. Ms. Ritchie said it was in the packet transmitted late yesterday evening. She indicated it was in a memo from Carol Carroll to Annalee McConnell. This related to a case of flooding response and clean-up. The settlement was $1.6 million plus interest for a total amount of $1,695,735.64. She explained the settlement and mediation discussions with retired Judge Ripley. She said the result of entering renegotiations was the settlement and the State was able to maximize its recovery from FEMA. They were also able to reduce invoiced amounts by $1.3 million and reduce the interest on the date of settlement by twenty months. (A brief tape malfunction is noted at this time.) Mr. Guaneli spoke to the passed abortion legislation. He noted the problem for the civil division and that they had advised the Governor that both of the laws were unconstitutional. Due to the conflict of interest issue it was necessary to have two attorneys (who volunteered) from the criminal division handle the litigation. He noted that the case had taken considerable time and effort from the two prosecutors in Fairbanks in addition to the same effort by an Anchorage appellate attorney. Both of the laws were struck down by the Superior Court on summary judgments. The particular supplemental appropriation is to cover the cost the criminal division had to bear in filling a position to handle these cases. It was assumed the appeal would continue over a two-year period and therefore $300,000 with an extended lapse date is proposed. In response to a question by Senator Sharp, Mr. Guaneli said that even if the civil division had handled the case they would have had to come back with a supplemental request. OIL & GAS LITIGATION: Ms. Ritchie said there was an amendment in the memo presented last evening for a reduction from $2.5 million to $1.5 million. CIVIL DIVISION: She explained this was a reappropriation to the civil division of $200,000. She pointed out a memo in the packet addressing this issue. Co-chair Pearce asked what the funding source was. Ms. Ritchie said it would be the unexpended unobligated balance of longevity bonus grants. Co-chair Pearce asked the extraordinary situation in the civil division regarding this matter. Ms. Ritchie said it was addressed in the memo. She indicated that it was basically the same situation as outlined by Mr. Guaneli in the Criminal Division. She explained the most significant increase was in the Child Protection and Juvenile Delinquency case work they have been experiencing. She noted that since August 1997 the cases have been skyrocketing. The department is unable to cover the shortfall by other components as they are short in those areas as well. She outlined several areas they were running short in and the department has no control over incoming caseload. For example, she advised the committee that regarding campaign finance reform they have had four lawsuits filed. The most significant as to costs was the one filed by the ACLU. She also pointed out that they had been unable to meet the budgeted vacancy factor for the civil division and therefore were projecting a shortfall. She did say they were doing constant updates on their projections and also their timekeeping and billing system for the civil division. They were also trying to keep closer track of where their resources were going. With regards to the lawsuits involving campaign finance reform Senator Phillips asked if the four lawsuits could be combined? Ms. Ritchie said that would be a major undertaking. However, the Court had ordered a stay on three of the lawsuits pending the final outcome of the lawsuit filed by the ALCU. OIL & GAS: Co-chair Pearce noted that the amendment would reduce the amount to $1.5 million. Ms. Ritchie concurred and said this was because of the Exxon Valdez settlement. (Tape #128, Side A switched to Side B at approximately 3:30 p.m.) She gave a brief explanation on this settlement. She cautioned the committee, that even though there were areas they were able to reduce costs, there were other areas that some unanticipated events occur that may cause increases. Senator Sharp asked if the $1.5 supplemental was needed for all the oil and gas litigations or was it needed for other services under the umbrella of oil and gas litigations. TINA KOBAYASKI, Assistant Attorney General, Oil, Gas and Mining Section, Department of Law was invited to join the committee. She said that most of the costs were for outside expert counsel. Senator Adams indicated that there had been a meeting conducted by Attorney General, Bruce Bothelo and Ms. Kobayashi about six weeks earlier. Even though it was a confidential meeting, all legislators had been invited and they had gone over all the cases and knew about the supplemental request at that time. Senator Sharp asked about some reappropriations or roll-over monies that was not going to be used by the department in the amount of a quarter-and-a-half million. He asked if there was an anticipated roll-over this year? Ms. Ritchie said that anything unspent will lapse. Co-chair Pearce noted for the committee that the Department of Law also had some stale dated warrant items and records storage costs. There were no questions. Ms. Markey explained that under the stale dated warrants this referred to an old claim from 1995. Co-chair Pearce called Public Safety, Domestic Violence. JAYNE ANDREEN, Executive Director, Council on Domestic Violence and Sexual Assault, Department of Public Safety was invited to join the committee. DOMESTIC VIOLENCE: The request was the result of a two-fold need in Alaska. Due to the Domestic Violence Act passed in 1996 there arose a significant need for training for human service workers and child abuse reporters. They have managed to obtain Federal funds to subsidize a significant part of that training, especially with the Criminal and Civil Justice systems. At a Governor's summit on Domestic Violence in December, it was recommended a central clearing house for all training materials and trainers in the State. It was also recommended that training be provided school teachers, personnel, health providers, etc. The requested funds would be used to begin the central clearing house through a web site as well as expanding on the existing training, developing more curriculums and making trainers available for human services providers. Ms. Andreen explained why it was presented as a supplemental rather than a budget request. She said that some of the process had been started in developing a curriculum. They made a commitment with the Domestic Violence summit to have the training up and running by the end of this calendar year. Co-chair Pearce noted that the Department of Public Safety had $2,100 in miscellaneous warrants and $800 for storage costs. Co-chair Pearce then called Department of Revenue, CSED. LAURIE PERKINS, Director, Division of Administrative Services, Department of Revenue was invited to join the committee. She noted there were six items to be brought before the committee. CSED: This was for non-reimbursable costs of collecting child support payments for children in State custody and to repay required reimbursements. She said in the past matching Federal funds had been used to collect child support. It was learned through a Federal audit that these expenditures do not qualify for Federal participation. The $140,000 request is the Federal share and the department is requesting a general fund appropriation for it. MISCELLANEOUS TELEPHONE CHARGES: Late last year it was admitted by the telephone vendor that the telephone billings had been in error and billed the department for $147,000. She advised that the fiscal year 1998 portion had been paid. The $82,000 is comprised of general funds match of $27,900 and under Federal receipts the amount of $54,205. RECORDS STORAGE CHARGE: This request was in the amount of $7,400. FIELD OFFICE RELOCATION, JUNEAU: This was a relocation requested by the Department of Administration to move from the existing location to a State leased facility. The move would reduce the overall State lease costs. Senator Adams asked once the relocation was accomplished what would be the costs savings on an annual basis to the State? Ms. Perkins said she did not know that amount but Dugan Petty could provide it. ALCOHOL BEVERAGE CONTROL BOARD: She said the administrative clerk, responsible for processing liquor licenses had an extended paid medical leave. In order to keep up with the statutory requirements to process liquor licenses it was necessary to hire a temporary clerk. The request was in the amount of $16,000 general funds to cover those costs. Ms. Perkins noted the final request was forwarded in the memo to OMB and provided late last evening. It was in the amount of $240,000 general funds. The appropriation was needed to augment the Federal incentives, which had been reduced as a result of ATAP collections decreasing. She explained that Federal incentives plus general fund matching to get their thirty-four percent State match which is matched by the Federal government for sixty-six percent. She said they had taken immediate steps to reduce costs by instituting a hiring freeze, renegotiated RSA's, reduced travel expenses and by doing this they had been able to reduce the shortfall from $1.189 million to $705,000. Senator Sharp indicated that when he served on LB&A they knew the Federal incentives would not last forever. The purpose of the incentives was to get programs up and running and not to last forever. Ms. Perkins said the law governing Federal incentives was changing. After the year 2000 it will be based on the amount of total collections rather than just ATAP. Co-chair Pearce said this concludes all the departments. In review she noted that Department of Labor had a miscellaneous claim; Department of Environmental Conservation had an expenditure ratification for $110,000; and the Governor's office had an overexpenditure. Co-chair Pearce took a five minute at ease. Committee was reconvened. MARLA GREENSTEIN, Executive Director, Commission on Judicial Conduct testified before the committee via teleconference. She explained they were the agency that handles ethical complaints against Judges. Last year they handled four big complaints; two very serious matters that required outside attorney fees. She said those were reflected in the supplemental request. The amended request was increased to $95,830. The reason was for an oversight on her part. She also realizes that they were consistently underfunded in their personal services line item. There being no questions, Co-chair Pearce returned to the Department of Transportation. NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities was invited to join the committee. ALASKA MARINE HIGHWAY FUND: This was a request for $1,741,199 in general funds for the Alaska Marine Highway System Fund. This would cover the direct extraordinary costs related to the Prince Rupert blockade and also the lost revenues incurred from refunds that were made for ticketed passengers specifically related to that incident. Section 18(b) is additional authority for the Marine Highway System to cover those extraordinary costs incurred during that incident. Senator Sharp asked if money collected from tickets went into the Marine Highway fund. Ms. Slagle indicated that was correct. The refunded tickets were paid from that fund. Senator Sharp further inquired if they were asking for the entire $1.7 million out of general funds. Again Ms. Slagle indicated that was correct. She clarified that it was the loss of revenues associated with the blockade. Senator Sharp said this fund always had a balance in it because ticket revenue goes into it and the Legislature supplements it from general funds. He wanted to know why they were being asked for general funds to make up the lost revenue. Ms. Slagle said that was because they had seen lost revenues decreasing and this was to help avoid depletion of the Marine Highway Fund itself. She also explained that their budget was based on a certain amount of revenue they anticipated receiving from the sale of tickets, food, etc. Senator Phillips asked how many days total the blockade was? What amount of revenue did this represent? BOB DOLL, General Manager, Ferry Operations, Southeast Region, Department of Transportation and Public Facilities was invited to join the committee. He responded to Senator Phillips question and said it represented the cumulative effects over the next two months of all of the tickets that had to be refunded. Senator Phillips asked what was the procedure if a boat unexpectedly broke down and had to be dry-docked. Mr. Doll explained that normally if they were dealing with a single ship and a limited amount of time, and depending on the time of year, probably the Alaska Ferry System could rebook those individuals in a number of different ways. When it occurs as did during the blockade and totally shuts off a major exit point, that creates a different problem. In further response to Senator Phillips, he said in the case of a vessel being broke down and put into dry-dock they would not normally ask the Legislature for a supplemental. This was a special case. Co-chair Pearce indicated the ship did not shut down the point of entry; the Governor did and then refused to reopen it. SENATOR ROBIN TAYLOR was invited to join the committee. He reiterated the same point as Co-chair Pearce. On the 19th of July there was a blockade situation while the Governor was floating down the river. He did nothing about it and then refused to take the vessel back south because he was going to litigate the matter. He said what was really lost here was suffered by the people of Southeast Alaska who were no longer interconnected with the road system. The overall cost of this incident is probably three times more the amount being requested before this committee. He said this would put the money back out of the general fund and into the Marine Highway Fund, which is essential to its operation. They were supposed to have recovered all of this amount plus more in litigation. Instead, the litigation has been resolved in the approximate amount of USD156,000 to be spent by the Canadians to encourage people to come to Prince Rupert. Senator Adams asked if there was litigation going on at this time to recover our losses from the Canadian government? Ms. Slagle said she believed the settlement was reached with the Canadian government and the department has received some money to pay claims and they have received some assistance in the lease costs for the Prince Rupert facility. Senator Adams asked the monetary figure. Ms. Slagle said it was approximately $90,000/year in lease cost assistance. Co-chair Pearce said she also recalled all the statements that we were going to sue and force the Canadians to pay us. She asked if the State ended up not having a good case? And why did the State settle for so much more less than they said they were going to? Ms. Slagle said she was not privy to that information and it would be best to pose those questions to the Department of Law. Ms. Slagle explained the next item as being the actual cost that was incurred related to the Prince Rupert blockade incident. It covers legal costs as well as over time, travel and contractual services extraordinary to this incident. Co-chair Pearce asked that she explain what they were doing in pulling $518,000 from the Marine Highway Fund and what were they doing with it. Ms. Slagle said this was actual expenditures out of the Marine Highway System Fund. There were some crew overtime costs they had paid for, travel needs they covered, $325,000 legal expenses which included outside counsel as well as Department of Law. Co- chair Pearce asked if the department was asking they ratify funds they had already spent? Ms. Slagle indicated it was increasing their authorization level to cover those expenditures. Co-chair Pearce asked if the department had already RSA'd $325,000 to the Department of Law. Ms. Slagle said they had an RSA in place with them already. Their actual expenditures through the end of February was $302,000 they expected. Co-chair Pearce said she hoped the Commissioner for the Department of Transportation was not going to sign to send the money over to the Department of Law when they did not recover any money. She said, "that would be crazy". Ms. Slagle indicated that they were required to pay regardless of the outcome under the RSA agreement. Co-chair Pearce asked if there was not some sort of performance measure in the RSA agreement? She did not know why the Department of Transportation would be required to pay that under the circumstances. Ms. Slagle indicated the department had nothing in the memo that was sent over last evening. In response to a question by Senator Phillips, Mr. Doll said that it was his understanding the litigation was against the fishermen themselves as individuals. The Government of Canada made the agreement, which involved obtaining the agreement of the individuals who had participated in the blockade. He believed that has been accomplished and at that point the settlement would be effective. He noted that some of the money had been delivered. Senator Torgerson advised the committee that at the Co- chair's request he would try to close out at 4:00 p.m. on Monday the DOT budget. They would leave open only the Southeast Region and Marine Highway System. Co-chair Pearce called the Department of Labor. ARBE WILLIAMS, Director, Division of Administrative Services, Department of Labor was invited to join the committee. She referred to the memo of 17 April to OMB, page two and said the Department of Labor was requesting the amount of $88,000 in general funds. She said the need arose at their joint workshop with the U.S. Census Bureau. Software is required to continue the next phase of the census work. $50,000 is needed for FY '98 and $38,000 is needed for FY '99. She said the $50,000 would be used to complete Phase I which was to verify changes made in the last three years as to the boundaries was incorporated into the electronic census bureau's tiger line files. Monies would also be used to correct the 1990 tiger line files and to load the layers of all of the corrections made to the 1990 files up through the present date. She said this need for corrections was because the 1990 census was based on 1927 geodetic surveys. The year 2000 was going to be based on the 1983 geodetic survey. Phase II would allow the department to create precinct boundaries. Co-chair Pearce said it seemed like the Feds should have to pay since we do the census for them. Ms. Williams said the census bureau has never paid for that work. Co-chair Pearce called the University. WENDY REDMOND, University of Alaska was invited to join the committee. She explained that last year they were in negotiations with the United Academic a new faculty union. They had anticipated what the contract would be and the requested amount reflected the difference, which was a .5 percent difference for half a year. She said that OMB did not actually include any money but gave them a net zero from this year's budget. She said she did not know what that meant and the University would rather have the money. SETTLEMENT OF A CLAIM: This request was for $606,500 for a liability claim. It was directed to remain confidential by the Court. She is allowed to speak only executive session regarding this matter in order to secure the funding. Senator Parnell asked if the confidentiality extended only to the terms of the settlement or did it also include who the parties were and who the attorneys are. Ms. Redmond said she could handle this confidential matter very quickly with no need to keep anyone waiting. Senator Adams asked that the committee go into executive session in her office for the purpose of discussing this private matter. Co-chair Pearce said she has already been briefed regarding this matter and she did not need to attend. Senator Sharp indicated that his office could be used, which was agreed to by the committee. Co-chair Pearce outlined the committee schedule for Monday at 9:00 a.m. to begin full subcommittee closeouts. ADJOURNMENT Co-chair Pearce adjourned the meeting at approximately 4:40 p.m. SFC-98 -35- 4/18/98 -
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