Legislature(1999 - 2000)

04/14/2000 06:22 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
MINUTES                                                                                                                         
SENATE FINANCE COMMITTEE                                                                                                        
April 14, 2000                                                                                                                  
6:22 PM                                                                                                                         
                                                                                                                                
TAPES                                                                                                                           
                                                                                                                                
SFC-00 # 89, Side A and Side B                                                                                                  
     90, Side A and Side B                                                                                                      
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 6:22 PM                                                                                                           
                                                                                                                                
PRESENT Co-Chair John Torgerson, Senator Al Adams, Senator                                                                      
Lyda Green, Senator Loren Leman, Senator Randy Phillips,                                                                        
Senator Gary Wilken                                                                                                             
                                                                                                                                
Also Attending: REPRESENTATIVE FRED DYSON; REPRESENTATIVE                                                                       
ALAN AUSTERMAN; JIM NORLAND, Director, Division of Public                                                                       
Assistance, Department of Health and Social Services;                                                                           
KRISTEN BOMENGEN, Assistant Attorney General, Human                                                                             
Services Section, Civil Division, Department of Law; KATHY                                                                      
GELLISPY, Legislative Co-Chair, Anchorage School Board;                                                                         
CARL ROSE, Executive Director, Association of Alaska School                                                                     
Boards; PEGGY ROBINSON, President, Anchorage School Board;                                                                      
CHARLIE BOLLY, Vice-President, Governmental Relations,                                                                          
Usibelli Coal Mine, Incorporated; SCOTT MCALLISTER, salmon                                                                      
seining fisherman, Member, United Salmon Association,                                                                           
United Fisherman of Alaska, Southeast Seiners Association;                                                                      
CHRIS NORRIS, Icicle Seafoods; BRET FREID, Economist,                                                                           
Department of Revenue                                                                                                           
                                                                                                                                
Attending via Teleconference: From Anchorage: BARBARA                                                                           
NICKLOS, Director, Division of Child Support Enforcement,                                                                       
Department of Revenue; JIM POSEY; ANTHONY HUSSY, Chair,                                                                         
Academic Policy Council, Walden Pond Charter School; MARY                                                                       
CARTER, Board Member, Walden Pond Charter School; LORNA                                                                         
REECE; STEPHANIE MADSEN, Vice-President, Pacific Seafood                                                                        
Processors Association; From Fairbanks: DON SHIRCEL,                                                                            
Director, Family Services Division, Tanana Chiefs                                                                               
Conference; GAIL MCCANN; KITTY MATHERS; JOHN TIEMESSEN;                                                                         
MISSY LIEBERMAN; MIKE FISHER, Assistant Superintendent,                                                                         
Fairbanks North Star School District; From Mat-Su: BARBARA                                                                      
GERARD; From Kodiak: TOM WISCHER, Member, United Salmon                                                                         
Association; VIRGINA ADAMS; From Cordova: HERB JENSEN,                                                                          
representing, United Salmon Association, Cordova District                                                                       
Fishermen United, Copper River Salmon Producers                                                                                 
                                                                                                                                
SUMMARY INFORMATION                                                                                                             
                                                                                                                                
HB  98-PUB.ASSISTANCE: PROGRAMS/GRANTS/CONTRACTS                                                                                
                                                                                                                                
The Committee heard from the Department of Health and                                                                           
Social Services, the Department of Law and the Department                                                                       
of Revenue. The bill was held in Committee.                                                                                     
                                                                                                                                
HB 191-CHARTER SCHOOLS                                                                                                          
                                                                                                                                
The Committee heard from the sponsor and members of the                                                                         
public. Four amendments were considered and adopted. The                                                                        
bill moved from Committee.                                                                                                      
                                                                                                                                
HB 344-HARDROCK LAND EXCHANGE/HEALY RR LEASE                                                                                    
                                                                                                                                
The Committee heard from a representative of the mining                                                                         
industry. The bill moved from Committee.                                                                                        
                                                                                                                                
HB 363-SALMON PRICE REPORTS/SALE OF FISH                                                                                        
                                                                                                                                
The Committee heard from the sponsor, the Department of                                                                         
Revenue and members of the public. One amendment was                                                                            
considered and adopted and the bill moved from Committee.                                                                       
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 98(HES) am                                                                              
"An Act relating to contracts for the provision of                                                                              
state public assistance to certain recipients in the                                                                            
state; providing for regional public assistance plans                                                                           
and programs in the state; relating to grants for                                                                               
Alaska Native family assistance programs; relating to                                                                           
assignment of child support by Alaska Native family                                                                             
assistance recipients; to paternity determinations and                                                                          
genetic testing involving recipients of                                                                                         
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate                                                                          
Finance Committee.                                                                                                              
                                                                                                                                
JIM NORLAND, Director, Division of Public Assistance,                                                                           
Department of Health and Social Services, testified that                                                                        
this bill would help to continue the progress of welfare                                                                        
reform in the State Of Alaska.                                                                                                  
                                                                                                                                
Mr. Nordland stated the authority to run the federal                                                                            
programs at the state government level is one of the main                                                                       
reasons for welfare reform's success in Alaska and other                                                                        
states. He explained that state governments have been able                                                                      
to use this power to dramatically reduce caseloads, help                                                                        
families return to work and out of poverty. In exchange for                                                                     
the flexibility, he said states are receiving a specific                                                                        
amount of money from the federal government, known as a Cap                                                                     
Block Grant. He attested this arrangement between the                                                                           
federal government and Alaska's government has worked very                                                                      
well to reduce welfare dependency.                                                                                              
                                                                                                                                
In addition to granting ownership of welfare programs to                                                                        
the states, Mr. Nordland stated the federal law allows                                                                          
tribes in the Lower 48 and the 13 regional Alaska Native                                                                        
non-profit organizations to run their own welfare programs                                                                      
as well. He shared that funding for the Native-operated                                                                         
programs is taken from the amount allocated to the state.                                                                       
                                                                                                                                
Mr. Nordland noted that while states are required to                                                                            
participate in funding the state-operated welfare programs,                                                                     
there is no requirement in federal law for any entity to                                                                        
contribute to the funding of Native-operated programs.                                                                          
However, he said that the state contributes approximately                                                                       
fifty percent of the funds needed to operate the Native-run                                                                     
programs.                                                                                                                       
                                                                                                                                
Mr. Nordland then explained that this bill allows for the                                                                       
expenditure of state funds for Native-operated welfare                                                                          
programs. He stressed that the only eligible organizations                                                                      
that can receive these funds are the 13 regional non-profit                                                                     
Native organizations.                                                                                                           
                                                                                                                                
Mr. Nordland added that the intention is to transfer from                                                                       
the state, the amount of money needed to pay for benefits,                                                                      
administration, child care, work services, etc. He said                                                                         
this money is currently being paid by the state to serve                                                                        
the same participants in programs that would now be run by                                                                      
Native organizations. He pointed out this is the reason for                                                                     
the bill's zero fiscal note.                                                                                                    
                                                                                                                                
Mr. Nordland shared that the Tanana Chiefs Conference                                                                           
(TCC), an Interior Alaska organization operating under the                                                                      
Doyon Native Corporation is currently operating a welfare                                                                       
program. He said that the state could appropriate federal                                                                       
funding to this organization so long as the program it                                                                          
operates is the same as the one operated by the states'                                                                         
Alaska Temporary Assistance Program (ATAP). However, he                                                                         
stated that TCC had planned to run its program differently                                                                      
than the state, and without this legislation, would be                                                                          
unable to receive funding. He deferred to a representative                                                                      
from the TCC to detail the culturally relevant approach of                                                                      
the Native-operated program.                                                                                                    
                                                                                                                                
Mr. Nordland stressed that the department supports giving                                                                       
flexibility to the Native organizations so that the                                                                             
programs can be run with more local control and with better                                                                     
cultural relevancy.                                                                                                             
                                                                                                                                
Mr. Nordland qualified there are limits as to how different                                                                     
the Native-operated programs could be from the state-                                                                           
operated program. He stated that Alaska's congressional                                                                         
delegation inserted language into federal law requiring                                                                         
Native programs to be comparable to the state program. He                                                                       
said the department has worked with the Native                                                                                  
organizations to design the comparability criterion, which                                                                      
have been approved by the US Secretary of Health and Human                                                                      
Services.                                                                                                                       
                                                                                                                                
Mr. Nordland summarized that if this legislation passes,                                                                        
there would be a Native-operated program comparable to the                                                                      
state program but somewhat different in order to meet local                                                                     
and cultural circumstances.                                                                                                     
                                                                                                                                
Senator Green then asked if this legislation requires                                                                           
federal "blessing" before the funds could be allocated.                                                                         
                                                                                                                                
Mr. Nordland affirmed the plan does need to get federal                                                                         
approval.                                                                                                                       
                                                                                                                                
Mr. Nordland concluded his presentation saying that the                                                                         
department supports the legislation because it is believed                                                                      
the welfare reform efforts could be more successful if the                                                                      
Native organizations are allowed to operate their own                                                                           
programs. He attested that the organizations know the needs                                                                     
of their region and the people and that the programs could                                                                      
be run more effectively than the state could.                                                                                   
                                                                                                                                
Senator Leman asked if federal law allows allocations to                                                                        
other organizations besides Native organizations. He                                                                            
referred to earlier discussion he had with the witness on                                                                       
this matter where he shared his desire to broaden the                                                                           
localization of the welfare reform programs.                                                                                    
                                                                                                                                
Mr. Nordland replied there is a specific provision in                                                                           
federal law applying only to tribes in the Lower 48 and                                                                         
Native Alaskan organizations. He advised however, that                                                                          
there is no reason the state cannot contract the programs                                                                       
out to municipalities or other entities. In fact, he said                                                                       
many states have privatized the services to for-profit                                                                          
organizations.                                                                                                                  
                                                                                                                                
Senator Green asked if privatization or shifting the                                                                            
programs to the local level would require federal approval                                                                      
as well.                                                                                                                        
                                                                                                                                
Mr. Nordland answered federal approval would not                                                                                
necessarily be required.                                                                                                        
                                                                                                                                
Amendment #1: This amendment inserts a new subparagraph on                                                                      
page 11, line 22 to read as follows.                                                                                            
                                                                                                                                
(4) establish the same maximum number of                                                                                        
months of benefits as is established for the                                                                                    
state program under AS 47.27.015 (a)(1); and                                                                                    
(5)                                                                                                                             
                                                                                                                                
[This amendment was not offered at this meeting but was                                                                         
discussed.]                                                                                                                     
                                                                                                                                
Senator Adams requested the department comment on the                                                                           
proposed amendment. He described it sets uniform standards                                                                      
for the maximum amount of benefits that could be collected                                                                      
by participants of either the state or Native-operated                                                                          
welfare programs.                                                                                                               
                                                                                                                                
Mr. Nordland stated that the department supports the                                                                            
amendment, referring to his earlier statement about the                                                                         
comparable criterion between the two programs. He noted                                                                         
that the issue of consistent benefit eligibility was                                                                            
overlooked when the criterion was developed. He told the                                                                        
Committee that federal law allows the Native organizations                                                                      
to negotiate with the federal government on the length of                                                                       
time benefits could be collected by participants. He said                                                                       
the reason for this allowance is to give some Indian                                                                            
reservations an exemption from the 60-month lifetime                                                                            
benefits limit. He stressed that this exemption was outside                                                                     
the bounds of the comparability arrangement between the                                                                         
state and Alaska Native organizations. He said the                                                                              
department supports holding Native-operated programs to the                                                                     
60-month limit just as the state-operated program is. He                                                                        
commented that this amendment "plugs a loophole in this                                                                         
bill."                                                                                                                          
                                                                                                                                
Mr. Nordland stressed that villages with an unemployment                                                                        
rate of over 50 percent would be exempt from the 60-month                                                                       
limit whether the residents participate in a state-operated                                                                     
or Native-operated program. He expressed that this                                                                              
amendment does not apply to specific communities but rather                                                                     
the operator of the program. This is to prevent                                                                                 
participants of a Native-operated program who do not live                                                                       
in a community with more than 50 percent unemployment to                                                                        
receive more than 60 months of benefits, according to Mr.                                                                       
Nordland. In this manner, he said, the exemption would be                                                                       
based on the community itself rather than the operator of                                                                       
the program serving it and possibly other communities as                                                                        
well.                                                                                                                           
                                                                                                                                
Co-Chair Torgerson asked for an explanation of Section 5.                                                                       
                                                                                                                                
Mr. Nordland replied that this section was part of changes                                                                      
made to the bill by the House of Representatives relating                                                                       
to child support payments. He believed the language to be                                                                       
conforming to other child support enforcement statutes.                                                                         
                                                                                                                                
KRISTEN BOMENGEN, Assistant Attorney General, Human                                                                             
Services Section, Civil Division, Department of Law,                                                                            
testified that this section is the result of a                                                                                  
comprehensive review of the child support provisions. The                                                                       
purpose, she said is to ensure that child support payments                                                                      
that are collected on behalf of participants who are                                                                            
receiving public assistance under Native-operated programs                                                                      
are distributed to that Native organization. She stated                                                                         
that the intent is to remove any possible barriers to                                                                           
making appropriate distributions.                                                                                               
                                                                                                                                
Co-Chair Torgerson asked if the child support payments only                                                                     
included those collected under court order.                                                                                     
                                                                                                                                
Ms. Bomengen replied all child support payments are subject                                                                     
to distribution to the program's operator.                                                                                      
                                                                                                                                
Co-Chair Torgerson wanted to know if "petitioning the                                                                           
court" in the language relating to enforcement of child                                                                         
support orders could include tribal courts.                                                                                     
                                                                                                                                
Ms. Bomengen confidently stated that is not the intent to                                                                       
petition any tribal court.                                                                                                      
                                                                                                                                
Co-Chair Torgerson wanted assurance.                                                                                            
                                                                                                                                
Ms. Bomengen expressed it is not a function of the Division                                                                     
of Child Support Enforcement to operate in tribal court.                                                                        
Instead, she said the agency follows the rulings of state                                                                       
court. She said there is no intention to expand the                                                                             
agency's efforts into tribal courts.                                                                                            
                                                                                                                                
Co-Chair Torgerson acquiesced, but asked about the recent                                                                       
Supreme Court ruling in John v. Baker, which authorizes                                                                         
tribal courts to issue child support orders.                                                                                    
                                                                                                                                
Ms. Bomengen needed an opportunity to review the court case                                                                     
before giving a specific opinion on the matter.                                                                                 
                                                                                                                                
Co-Chair Torgerson stated he wanted an understanding of the                                                                     
impact of the court decision on this legislation. He then                                                                       
referred to Section 21 that allows the department to adopt                                                                      
program standards that vary by region. He wanted to know                                                                        
why standard practices would not be adopted so all Alaskans                                                                     
are treated equally.                                                                                                            
                                                                                                                                
Mr. Nordland responded that the language in Section 21                                                                          
conforms to other sections of the bill to allow regional                                                                        
public assistance programs to be established by the                                                                             
department. He shared that the motivation is to prevent the                                                                     
department from having to create a separate program for the                                                                     
few non-Native residents of a Native village, served by a                                                                       
Native-operated welfare program. He stated that this                                                                            
provision allows the non-Natives to be served by Native                                                                         
organizations.                                                                                                                  
                                                                                                                                
Co-Chair Torgerson understood the intent but claimed the                                                                        
language instead allows the department to vary program                                                                          
standards by region. He thought this provision was too                                                                          
broad-based.                                                                                                                    
                                                                                                                                
Mr. Nordland responded that the intent is to adopt the                                                                          
program standards of the Native-operated plan, which would                                                                      
be comparable yet different than the state-operated                                                                             
program. In doing this, he said, all residents of a                                                                             
community could be served by the Native-operated plan.                                                                          
                                                                                                                                
Ms. Bomengen addressed a concern raised in other committees                                                                     
regarding a potential equal protection question. She                                                                            
detailed that the bill contains a requirement that in any                                                                       
area in which a Native corporation is operating a welfare                                                                       
program, eligible Alaska Natives must seek their services                                                                       
from that program and not from a state-operated program.                                                                        
She spoke of funding for the participant as well as the                                                                         
Native program in these cases. She suggested the approved                                                                       
Native-operated programs should be identical to one that                                                                        
the state would operate if it were to do so.                                                                                    
                                                                                                                                
Ms. Bomengen then explained how the Alaska court applies a                                                                      
"sliding scale test" to any equal protection challenge.                                                                         
This test, she said is used to determine whether a greater                                                                      
or lesser burden is placed on the state to justify a                                                                            
classification of individuals to be served by one plan or                                                                       
another, depending on the importance of the individual                                                                          
rights involved. She detailed how the court determines what                                                                     
kind of weight should be given to the constitutional                                                                            
interest impaired by the legislation, examines the purpose                                                                      
of the legislation, and evaluates the state's interest in                                                                       
the means employed to further the goals of the state.                                                                           
                                                                                                                                
Ms. Bomengen stressed that an equal protection challenge to                                                                     
this legislation would probably claim there to be an                                                                            
impermissible classification based on the race of the                                                                           
individual. She said the state's response would then be                                                                         
based on other equal protection cases that have addressed                                                                       
the same distinction. She explained this distinction was                                                                        
created by a federal act, which is born out of the federal                                                                      
government's trust relationship and responsibilities to                                                                         
American Indians and Alaskan Natives. Therefore, she                                                                            
surmised the distinction would be a quasi-political issue                                                                       
based on the unique political status of indigenous peoples                                                                      
and not considered a racial classification.                                                                                     
                                                                                                                                
Ms. Bomengen continued detailing why an equal protection                                                                        
challenge would not succeed saying that, regardless of                                                                          
whether the state or a Native organization operated the                                                                         
program, the participant's benefits would not be affected,                                                                      
services would not be denied and the subsequent impact on                                                                       
the family would be insignificant. She said this is because                                                                     
of the comparability requirements for both programs under                                                                       
state and federal law.                                                                                                          
                                                                                                                                
Ms. Bomengen relayed a suggested amendment to the bill made                                                                     
to the House of Representatives that would allow an                                                                             
individual who is directed to the Native-operated program                                                                       
to request service under the state-operated program. A                                                                          
successful request, she said would demonstrate a compelling                                                                     
interest to receive services from the state rather than the                                                                     
Native organization. She added that the Department of                                                                           
Health and Social Services would develop standards for this                                                                     
exception in regulation.                                                                                                        
                                                                                                                                
Senator Phillips asked if there was a legal opinion on this                                                                     
matter from the Division of Legal and Research Services.                                                                        
                                                                                                                                
Co-Chair Torgerson said there was not but noted a request                                                                       
would be submitted.                                                                                                             
                                                                                                                                
Co-Chair Torgerson acknowledged the fiscal note was zero                                                                        
but wanted information about the federal grant funds and                                                                        
necessary general fund money to implement the new programs.                                                                     
                                                                                                                                
Mr. Nordland first commented that not all of the 13                                                                             
regional Native corporations are interested in operating                                                                        
welfare programs. He noted that there is already one                                                                            
Native-operated program established and that the Tlingit-                                                                       
Haida Corporation and the Association of Village Council                                                                        
Presidents have expressed interest in establishing their                                                                        
own program. He then explained that the department would                                                                        
transfer not only the benefits portion of the welfare                                                                           
programs to participating Native corporations, but also a                                                                       
portion of the administrative funds as well. He admitted                                                                        
this was not easy for the department to do because of the                                                                       
impact on its administrative abilities. However, he said in                                                                     
the long run the programs would be run more effectively                                                                         
with higher caseload reductions.                                                                                                
                                                                                                                                
Mr. Nordland stressed this bill has no impact on the                                                                            
general fund, either positive or negative.                                                                                      
                                                                                                                                
Senator Wilken wanted to understand the flow of the funding                                                                     
from the federal level to the beneficiary.                                                                                      
                                                                                                                                
Mr. Nordland detailed that the Native-operated program must                                                                     
first have a plan approved by the federal government, which                                                                     
requires some state funding to make the plan comparable to                                                                      
the state-operated plan.  Once the Native-operated plan is                                                                      
approved, he said a portion of the federal funds provided                                                                       
to the state go directly to the Native organization. He                                                                         
expressed that the intent of this legislation is to allow                                                                       
the state funds to be allocated to the Native organizations                                                                     
so those programs can be operated at the same level as the                                                                      
state-operated program.                                                                                                         
                                                                                                                                
Senator Wilken wanted to know how the distribution of                                                                           
federal funds between the state and the Native                                                                                  
organizations was calculated.                                                                                                   
                                                                                                                                
Mr. Nordland responded that the amount of federal money                                                                         
spent on Native clients during the federal fiscal year                                                                          
1994, in the specified region, is reported to the federal                                                                       
government as the percentage of the state's block grant to                                                                      
be allocated to the Native organization. He qualified that                                                                      
the amount could change in the future when the Temporary                                                                        
Assistance for Needy Families (TANF) law changes, but would                                                                     
not change before then.                                                                                                         
                                                                                                                                
Mr. Nordland continued that the general funds provided to                                                                       
the organization are separate from the block grant funds.                                                                       
He explained further how the TANF program is funded with a                                                                      
fixed federal block grant, of which the state must expend                                                                       
at least 80 percent of what was spent in 1994 to                                                                                
participate in the TANF program without severe penalty. He                                                                      
shared that the state is currently meeting the required                                                                         
expenditure amount.                                                                                                             
                                                                                                                                
Senator Wilken asked how many families this legislation                                                                         
would affect.                                                                                                                   
                                                                                                                                
Mr. Nordland listed the TCC program currently serves                                                                            
approximately 500 families, the Tlingit/Haida organization                                                                      
serves about 500 families and ABCP would serve                                                                                  
approximately 900 families if it takes over the welfare                                                                         
program in their area. He said this represents about 20                                                                         
percent of the entire caseload in the state.                                                                                    
                                                                                                                                
Senator Wilken asked why the transfer of these 1900                                                                             
families would not make the department's operating costs                                                                        
smaller.                                                                                                                        
                                                                                                                                
Mr. Nordland responded that the department still                                                                                
administers Medicare, Food Stamps, Adult Public Assistance                                                                      
and other programs. It was difficult for him to say exactly                                                                     
how the department would manage the reduction in                                                                                
administrative funds and still operate these other                                                                              
programs. He used Bethel as an example where over 95                                                                            
percent of welfare clients are Native and the department                                                                        
would therefore reduce department staff.                                                                                        
                                                                                                                                
Senator Wilken thought the fiscal note should show a                                                                            
reduction in state bureaucracy.                                                                                                 
                                                                                                                                
Mr. Nordland responded that there is a reduction in the                                                                         
state bureaucracy but not a reduction in the budget. He                                                                         
stated that the general funds would be paid to employees of                                                                     
the Native corporations to operate the program rather than                                                                      
to state workers. He stressed that the amount of spending                                                                       
stays the same.                                                                                                                 
                                                                                                                                
Senator Wilken then asked the purpose of the legislation.                                                                       
                                                                                                                                
Mr. Nordland answered the reason for transferring welfare                                                                       
programs to Native organizations is for many of the same                                                                        
reasons for having local school districts across the state.                                                                     
That, he expressed is to have some local control with the                                                                       
programs "closer to home."                                                                                                      
                                                                                                                                
Senator Wilken asked if there would ever be an instance of                                                                      
a non-Native family not provided with services that a                                                                           
Native family is provided or visa-versa.                                                                                        
                                                                                                                                
Mr. Nordland assured that one entity or another would serve                                                                     
everyone who is eligible for public assistance.                                                                                 
                                                                                                                                
BARBARA NICKLOS, Director, Division of Child Support                                                                            
Enforcement, Department of Revenue, testified via                                                                               
teleconference from Anchorage that she was available to                                                                         
answer questions regarding the disbursement of child                                                                            
support payments to the Native organizations who operate a                                                                      
public assistance program. She assured that the language                                                                        
pertaining to this allowance does not relate in any way to                                                                      
tribal court.                                                                                                                   
                                                                                                                                
DON SHIRCEL, Director, Family Services Division, Tanana                                                                         
Chiefs Conference testified via teleconference from                                                                             
Fairbanks listing his education and experience                                                                                  
qualifications. As a social service professional, he                                                                            
strongly supported both SB 80 and HB 98.                                                                                        
                                                                                                                                
Mr. Shircel spoke in great detail of the early success of                                                                       
the TCC operated public assistance program and the                                                                              
satisfaction it has given Native leaders.                                                                                       
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #89, Side B    7:09 PM                                                                                           
                                                                                                                                
                                                                                                                                
Mr. Shircel read a letter to TCC from a former client as                                                                        
follows. [Copy not provided.]                                                                                                   
                                                                                                                                
Hello,                                                                                                                          
I'm writing this letter to everyone to let you know                                                                             
that I have a new permanent job and I'm going to be                                                                             
O.K. from here on out. I'm also writing to thank each                                                                           
person for all they have done for my family and I. I                                                                            
know that there's a lot of work that's put into each                                                                            
individual case and I really want to thank you for all                                                                          
that you've done to help me become more self                                                                                    
sufficient. This letter is not only a letter to thank                                                                           
you for all your hard work, but it's also a letter to                                                                           
request that I have my case closed. I do realize that                                                                           
all my benefits will stop and I feel I'm prepared for                                                                           
this. Once again, thank you and may Lord Jesus bless                                                                            
you for what you do to help others.                                                                                             
                                                                                                                                
Mr. Shircel expressed that he could not think of a better                                                                       
way to convey to the Committee what the legislation is                                                                          
trying to accomplish than this letter could. He believed                                                                        
that with the passage of the bill, his organization could                                                                       
have an even greater impact and get more "bang out of each                                                                      
welfare buck."                                                                                                                  
                                                                                                                                
Senator Adams asked what does TCC do for a Caucasian                                                                            
individual living in a rural community in the region, who                                                                       
otherwise qualifies for the TANF-based program.                                                                                 
                                                                                                                                
Mr. Shircel responded that currently the individual must                                                                        
apply for services through the state because TCC does not                                                                       
have the authority to serve him or her.                                                                                         
                                                                                                                                
Senator Adams asked if that qualified Caucasian has a                                                                           
choice between the Native-operated or the state-operated                                                                        
public assistance program.                                                                                                      
                                                                                                                                
Mr. Shircel answered that without this legislation, that                                                                        
person does not have a choice but must be served through                                                                        
the state-operated program.                                                                                                     
                                                                                                                                
Senator Green commented that four years ago during                                                                              
deliberations of SB 98, relating to welfare reform,                                                                             
suggestions were made to address alcohol, drug abuse,                                                                           
parent's involvement with children, and possible domestic                                                                       
violence issues conditional on receiving benefits. She                                                                          
recalled that on every count it was deemed this was a                                                                           
violation of individual freedom. She stressed that if                                                                           
allowances for these issues to be combined in the public                                                                        
assistance for the Native-operated programs, then the same                                                                      
allowances should be made for every public assistance                                                                           
program in the state.                                                                                                           
                                                                                                                                
Co-Chair Torgerson requested an improved sectional analysis                                                                     
from the department and a legal opinion on the equal                                                                            
protection clause from the Division of Legal and Research                                                                       
Services.                                                                                                                       
                                                                                                                                
Senator Green also requested a side-by-side comparison of                                                                       
the current role of the Division of Child Support                                                                               
Enforcement and the proposed interaction with the Native-                                                                       
operated programs, as it relates to TANF and how the funds                                                                      
circulate. She wanted to know if any funds would be lost if                                                                     
the legislation passed.                                                                                                         
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.                                                                          
                                                                                                                                
SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE                                                                            
FOR HOUSE BILL NO. 191(HES)                                                                                                     
"An Act relating to charter schools."                                                                                           
                                                                                                                                
                                                                                                                                
REPRESENTATIVE FRED DYSON recounted legislation passed in                                                                       
1995 that established Alaska's first charter school                                                                             
statutes. He told of a wide movement across the country to                                                                      
allow parents to participate in creating a school that fits                                                                     
their needs.                                                                                                                    
                                                                                                                                
Representative Dyson relayed conversations he had with                                                                          
Representative Bettye Davis shortly after he was first                                                                          
elected in which he was told he needed to revisit the                                                                           
charter school statutes. Representative Davis asserted to                                                                       
him that the existing statutes would not work. He added                                                                         
that national experts on the subject have stated that                                                                           
Alaska's laws are amongst the weakest in the nation.                                                                            
                                                                                                                                
Representative Dyson stressed that the charter schools in                                                                       
the state are struggling and that his office along with the                                                                     
Anchorage School District have been working with charter                                                                        
schools to craft legislation to allow charter schools to                                                                        
survive an possibly to prosper.                                                                                                 
                                                                                                                                
Representative Dyson highlighted some minor points of the                                                                       
bill that he said everyone could agree on. These, he said                                                                       
include provisions to double the number of charter schools                                                                      
allowed to operate and the elimination of the geographical                                                                      
distribution of the school's locations. He added the bill                                                                       
also extends the sunset provision of the exiting statute                                                                        
and allows occupation of public buildings by charter                                                                            
schools.                                                                                                                        
                                                                                                                                
Representative Dyson then shared that the most substantial                                                                      
portion of the legislation addresses funding. Most charter                                                                      
schools elsewhere in the country, he said are provided                                                                          
start-up funds, which he said Alaska does not provide. He                                                                       
did note that the Fairbanks school district has made                                                                            
attempts to secure funding for a charter school located in                                                                      
that community.                                                                                                                 
                                                                                                                                
Representative Dyson next talked about changes made to the                                                                      
bill in the committee process in attempt to meet criticisms                                                                     
of the Anchorage and Fairbanks school districts. He stated                                                                      
that the Senate Health, Education and Social Services                                                                           
Committee deleted two paragraphs of the original bill                                                                           
addressing financial requirements plus another provision                                                                        
stipulating that charter schools receive a share of the                                                                         
local contribution as well as state funding.                                                                                    
                                                                                                                                
Representative Dyson allowed that the resulting committee                                                                       
substitute addresses the necessary technical changes but                                                                        
does not provide additional funding for charter schools.                                                                        
                                                                                                                                
Representative Dyson spoke of the accounting procedures                                                                         
necessary to show how the charter school's funding is                                                                           
expended.                                                                                                                       
                                                                                                                                
Representative Dyson cautioned that Alaska's charter                                                                            
schools would not survive without much more help. He                                                                            
expressed, "I think it's cruel to string them along." He                                                                        
stated that the current version of the bill gives the                                                                           
schools no hope since it no longer contains the funding                                                                         
provisions.                                                                                                                     
                                                                                                                                
GAIL MCCANN testified via teleconference from Fairbanks                                                                         
asking the sponsor to not give up on charter schools. She                                                                       
wanted all public schools to secure more funding as the                                                                         
University of Alaska has in recent years.                                                                                       
                                                                                                                                
KITTY MATHERS testified via teleconference from Fairbanks                                                                       
to request the Committee vote in favor of the original                                                                          
version of the bill. She stressed that the current                                                                              
committee substitute allows the charter schools to exist,                                                                       
but not to survive.                                                                                                             
                                                                                                                                
JOHN TIEMESSEN, attorney and father of charter school                                                                           
student, testified via teleconference from Fairbanks about                                                                      
the need for work on the charter school structure and to                                                                        
fully fund schools.                                                                                                             
                                                                                                                                
MISSY LIEBERMAN, parent of a child in Chinook Charter                                                                           
School testified via teleconference from Fairbanks in                                                                           
support of the bill and the idea behind it to help charter                                                                      
schools get equal funding and not have to compete with                                                                          
other schools.                                                                                                                  
                                                                                                                                
BARBARA GERARD testified via teleconference from Mat-Su                                                                         
about a recent evaluation showing the positive impacts of                                                                       
charter schools. She stated that this bill strengthens the                                                                      
charter school process.                                                                                                         
                                                                                                                                
JIM POSEY testified via teleconference from Anchorage about                                                                     
the growth of the local charter school. He expressed the                                                                        
reduced assistance provided in the committee substitute                                                                         
"puts an dagger into the hearts" of those who work for                                                                          
public education.                                                                                                               
                                                                                                                                
ANTHONY HUSSY, Chair, Academic Policy Council, Walden Pond                                                                      
Charter School testified via teleconference from Anchorage                                                                      
about the school and some of the special needs of their                                                                         
students.                                                                                                                       
                                                                                                                                
MARY CARTER, mother and board member of Walden Pond Charter                                                                     
School, testified via teleconference from Anchorage about                                                                       
the growth she has seen in her daughter since attending                                                                         
this school.                                                                                                                    
                                                                                                                                
LORNA REECE, parent of student of Walden Pond Charter                                                                           
School, testified via teleconference from Anchorage. She                                                                        
spoke of her experiences in Anchorage schools and why she                                                                       
chose to send her son to a charter school.                                                                                      
                                                                                                                                
MIKE FISHER, Assistant Superintendent, Fairbanks North Star                                                                     
School District, testified via teleconference from                                                                              
Fairbanks about his concerns with Section 2 of the bill in                                                                      
subparagraph 5, requiring itemization of administrative                                                                         
costs, and subparagraph 14, stipulating that the charter                                                                        
school budget must be increased to reflect operating cost                                                                       
savings.                                                                                                                        
                                                                                                                                
KATHY GELLISPY, Legislative Co-Chair, Anchorage School                                                                          
Board testified in Juneau that the district could not                                                                           
support the bill. She suggested changing the provision                                                                          
dictating accounting methods for charter school related                                                                         
expenditures.                                                                                                                   
                                                                                                                                
Ms. Gellispy also requested deletion of subparagraph 14                                                                         
from page 2, lines 27-31 of the committee substitute. She                                                                       
argued that no school receives funding for services that                                                                        
are not provided.                                                                                                               
                                                                                                                                
Ms. Gellispy went into great detail of the various                                                                              
expenditures incurred by both charter schools and regular                                                                       
schools and the hardship the district would incur if the                                                                        
accounting and funding requirements of this legislation                                                                         
were imposed.                                                                                                                   
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #90, Side A    7:56 PM                                                                                           
                                                                                                                                
                                                                                                                                
Ms. Gellispy offered that the Anchorage School District                                                                         
wants to work with the legislature to make the charter                                                                          
school statutes stronger than they currently are.                                                                               
                                                                                                                                
Ms. Gellispy detailed the handout accompanying the                                                                              
district's April 14, 2000 memo to the Senate Finance                                                                            
Committee. [Copy on file] She explained how this list shows                                                                     
the budgeted cost per student for each of the district's                                                                        
schools. She pointed out that the average spent per charter                                                                     
school student is $4,264 compared to the average of $3,732                                                                      
spent for all other elementary students. She attested that                                                                      
the district is funding its charter schools in a fair and                                                                       
equitable manner.                                                                                                               
                                                                                                                                
CARL ROSE, Executive Director, Association of Alaska School                                                                     
Boards, testified in Juneau saying the organization is on                                                                       
record in support of charter schools.  He said the                                                                              
difficulty with this legislation is the inability to come                                                                       
to agreement on the appropriation. He surmised that by                                                                          
attaching charter schools to an already struggling system                                                                       
is not the way to ensure success for charter schools. He                                                                        
cautioned of the potential for charter schools to operate                                                                       
without any oversight of the local school boards, and thus                                                                      
being funded without requiring any accountability. He                                                                           
thought the possibility existed that some new charter                                                                           
schools would not get approval because of these funding                                                                         
issues. He suggested the legislature adequately fund all                                                                        
schools.                                                                                                                        
                                                                                                                                
Amendment #1: This amendment adds a new bill section on                                                                         
page 3, following line 7 of the committee substitute to                                                                         
read as follows.                                                                                                                
                                                                                                                                
"Sec. 4. AS 14.03.260 is amended by adding a new                                                                                
subsection to read:                                                                                                             
 (e) In addition to the amount provided to an                                                                                   
approved charter school in the annual program budget                                                                            
under (a) of this section, a charter school budget                                                                              
must include an allocation equal to the amount                                                                                  
determined by dividing the amount of local revenues                                                                             
contributed under AS 14.17.410(c) by the average daily                                                                          
membership of the district and multiplying that number                                                                          
by the average daily membership of the charter                                                                                  
school."                                                                                                                        
                                                                                                                                
Co-Chair Parnell moved for adoption. Senator Wilken                                                                             
objected.                                                                                                                       
                                                                                                                                
Co-Chair Parnell explained this amendment requires the                                                                          
local school districts to share excess local contributions                                                                      
with the charter schools. He asserted that parents of                                                                           
charter school students pay property taxes that are used to                                                                     
fund all public schools except their child's. He said that                                                                      
this is an issue of equity.                                                                                                     
                                                                                                                                
Representative Dyson agreed with Co-Chair Parnell's                                                                             
statements.                                                                                                                     
                                                                                                                                
Co-Chair Parnell stated that all public schools should be                                                                       
funded.                                                                                                                         
                                                                                                                                
Senator Phillips referred to the Anchorage School                                                                               
District's list of budgeted funds spent per student of                                                                          
various schools in the district. He noted how more funds                                                                        
are spent for charter school students.                                                                                          
                                                                                                                                
Co-Chair Parnell responded that three of the listed charter                                                                     
schools included special needs students. Secondly, he said                                                                      
the issue was not about the amount of money spent per                                                                           
student, which is a red herring. Instead he asserted the                                                                        
issue is about getting equitable funding at the on-set with                                                                     
the ability for the school board to make adjustments later.                                                                     
                                                                                                                                
Senator Phillips thought all of the schools include the                                                                         
special needs expenditures in their budgets.                                                                                    
                                                                                                                                
[Ms. Gellispy affirmed, but out of range of the recording                                                                       
system.]                                                                                                                        
                                                                                                                                
Senator Green noted there may well be a comparability in                                                                        
the amount allotted to the per student calculation. She                                                                         
wanted to know if there is a difference in the expenditure                                                                      
allotted to the charter schools.                                                                                                
                                                                                                                                
Representative Dyson replied that several of those schools                                                                      
have to pay the costs to occupy a facility, whereas other                                                                       
schools don't have to pay rent.                                                                                                 
                                                                                                                                
Senator Wilken stated that in 1995, the funding for charter                                                                     
schools was clearly set forth. He quoted, "the amount                                                                           
generated by students enrolled in charter schools to be                                                                         
determined in the same manner as would be for a student                                                                         
enrolled in another public school in that school district."                                                                     
He stressed this agreement was reached with the intent that                                                                     
it would be adhered to for ten years.                                                                                           
                                                                                                                                
Senator Wilken noted the amount of money the Anchorage                                                                          
School District spends for charter school students. He                                                                          
thought the matter of paying leasing costs for charter                                                                          
schools is already addressed the organization and operation                                                                     
of a charter school chapter of state statute.                                                                                   
                                                                                                                                
Senator Wilken understood that the charter school laws were                                                                     
to allow parents to organize to provide an educational                                                                          
opportunity that they could not receive in a normal public                                                                      
school in that district. He stressed that these parents can                                                                     
negotiate a contract to define their school, which includes                                                                     
the facility the school will occupy. He added that while                                                                        
the charter school may have to address disabilities, there                                                                      
is no library, no band, no athletic program, transportation                                                                     
requirements, and are not required to have open enrollment,                                                                     
as a public school must.                                                                                                        
                                                                                                                                
Senator Wilken attested that although charter schools have                                                                      
approached the Fairbanks and Anchorage school districts                                                                         
with complaints that they don't receive enough money, they                                                                      
are getting more money than required in the 1995                                                                                
legislation.                                                                                                                    
                                                                                                                                
Senator Wilken stressed that this amendment, along with                                                                         
other proposed changes, "cements in place a 'must do' and a                                                                     
confrontation between the charter school proponents and the                                                                     
school board every budget season." He stated that the                                                                           
message this legislation sends to the school districts is                                                                       
that they don't know what they are doing and regardless of                                                                      
the needs of most students, the district must spend a                                                                           
specific amount on charter school students.                                                                                     
                                                                                                                                
Senator Phillips asked about the location of the Walden                                                                         
Pond Charter School in the Diamond Mall and other charter                                                                       
schools' lease agreements.                                                                                                      
                                                                                                                                
PEGGY ROBINSON, President, Anchorage School Board, talked                                                                       
about the charter school's five year lease. It was                                                                              
established that Walden Pond is the only charter school                                                                         
that pays rent. The others pay some combination of                                                                              
utilities.                                                                                                                      
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Donley, Senator Leman, Senator Green, Co-                                                                     
Chair Parnell and Co-Chair Torgerson                                                                                            
                                                                                                                                
OPPOSED: Senator Adams, Senator Wilken and Senator Phillips                                                                     
                                                                                                                                
ABSENT: Senator P. Kelly                                                                                                        
                                                                                                                                
The motion PASSED (5-3-1)                                                                                                       
                                                                                                                                
The amendment was ADOPTED.                                                                                                      
                                                                                                                                
Amendment #2: This amendment makes the following changes to                                                                     
page 2, lines 10 through 13 of the committee substitute as                                                                      
follows.                                                                                                                        
                                                                                                                                
Delete                                                                                                                          
  "(5) a statement of the charter school's                                                                                      
funding allocation from the local school board,                                                                                 
including the itemized costs of administrative or                                                                               
other services to be provided [AND COSTS ASSIGNABLE]                                                                            
to the charter school [PROGRAM BUDGET];"                                                                                        
                                                                                                                                
Insert                                                                                                                          
  "(5) a statement of the charter school's                                                                                      
funding allocation from the local school board and                                                                              
costs assignable to the charter school program                                                                                  
budget."                                                                                                                        
                                                                                                                                
New text underlined [DELETED TEXT BRACKETED]                                                                                    
                                                                                                                                
Senator Wilken moved for adoption. Senator Green objected.                                                                      
                                                                                                                                
Senator Wilken noted this amendment is connected to                                                                             
Amendment #3. He expressed that it would be difficult and                                                                       
expensive for school districts to account for these                                                                             
expenditures as required in the legislation. He thought                                                                         
that to require a separate accounting system for under 200                                                                      
students to keep track of itemized costs was unreasonable.                                                                      
He pointed out, for example, that the charter schools in                                                                        
Fairbanks uses the district's discipline system but the                                                                         
district does not charge the charter school for that                                                                            
service. He suspected there would be great difficulty in                                                                        
trying to establish an accounting method to itemize that                                                                        
particular service in addition to the multiple other                                                                            
similar services that are interrelated between the district                                                                     
and the charter schools.                                                                                                        
                                                                                                                                
Representative Dyson had no objection to the amendment                                                                          
since he thought the premise of the language would not                                                                          
change. He stated that the belief that the bill would                                                                           
require establishment of a separate accounting system was                                                                       
"either grossly misunderstood or a red herring." He noted                                                                       
that the district would still be responsible for showing an                                                                     
accounting of all expenditures.                                                                                                 
                                                                                                                                
Co-Chair Torgerson thought the word "itemize" was the                                                                           
difficulty.                                                                                                                     
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Amendment #3: This amendment deletes subparagraph (14) on                                                                       
page 2, line 27, through page 3, line 1 of the committee                                                                        
substitute.                                                                                                                     
                                                                                                                                
"a clause providing that the charter                                                                                            
school's budget shall be increased to reflect                                                                                   
operating cost savings achieved by the charter school;                                                                          
in this paragraph, "operating cost savings" means the                                                                           
estimated value of educational or related services                                                                              
provided by the district to all schools in the                                                                                  
district that are not provided to the charter school;                                                                           
(15)"                                                                                                                           
                                                                                                                                
Senator Wilken moved for adoption. Co-Chair Torgerson                                                                           
objected for an explanation.                                                                                                    
                                                                                                                                
Senator Wilken stressed that this language was a troubling                                                                      
inclusion in the bill. He predicted this would foster                                                                           
tensions each year between the charter schools and the                                                                          
school board. He suggested that this is giving credit for                                                                       
not doing something, which he remarked, is backward                                                                             
thinking.                                                                                                                       
                                                                                                                                
Co-Chair Torgerson removed his objection.                                                                                       
                                                                                                                                
Representative Dyson emphasized that this language is also                                                                      
misunderstood. He stressed that there would be no                                                                               
negotiations involved in this process. The school board is                                                                      
an advisory seat and the charter school can make no threats                                                                     
but must do what the board instructs. He shared that if a                                                                       
charter school can ease expenditures for the other schools,                                                                     
for example, by removing students from an over-crowded high                                                                     
school, the district can share a portion of the net savings                                                                     
with the charter school. He restated that if a district                                                                         
identifies savings as a result of the existence of a                                                                            
charter school, the savings could be passed along to the                                                                        
charter school.                                                                                                                 
                                                                                                                                
Senator Leman said Representative Dyson's comments make                                                                         
sense if the intent is interpreted to pass along some, but                                                                      
not all of the net savings.                                                                                                     
                                                                                                                                
Representative Dyson responded that "the school district is                                                                     
in the driver's seat" and could pass along all, none, or a                                                                      
portion, of the savings to the charter school.                                                                                  
                                                                                                                                
Co-Chair Torgerson noted the language "shall be increased"                                                                      
is not optional.                                                                                                                
                                                                                                                                
Senator Leman countered that the language does not                                                                              
stipulate what factor of the savings. He thought the                                                                            
language was poorly worded but that some of the money                                                                           
should be passed along to encourage further savings. He                                                                         
stressed that the legislature needs to provide a better                                                                         
incentive to quell the formula funding cost increases.                                                                          
                                                                                                                                
Representative Dyson offered to change "shall" to "may".                                                                        
                                                                                                                                
Senator Wilken commented that Amendment #1 set the baseline                                                                     
and this subparagraph increases that base by considering                                                                        
whether the charter school has a band, library and/or a                                                                         
transportation system.                                                                                                          
                                                                                                                                
Senator Green noted Representative Dyson's example did                                                                          
happen in the Mat-Su school district. She shared that the                                                                       
district's charter school does have a band and has a                                                                            
variety of students, but has also eased overcrowding in the                                                                     
other schools. She noted that most charter schools are                                                                          
filling a need, have a big waiting list and should be                                                                           
supported.                                                                                                                      
                                                                                                                                
Senator Green supported extending the sunset date of the                                                                        
existing charter school statute at the very least.                                                                              
                                                                                                                                
Senator Wilken moved to withdraw his motion to adopt                                                                            
Amendment #3.                                                                                                                   
                                                                                                                                
The amendment was WITHDRAWN without objection.                                                                                  
                                                                                                                                
Amendment #4: This amendment deletes "shall" and inserts                                                                        
"may" on page 2, line 27, of the committee substitute. The                                                                      
amended language reads as follows.                                                                                              
                                                                                                                                
(14) a clause providing that the charter                                                                                        
school's budget may be increased to reflect operating                                                                           
cost savings achieved by the charter school; in this                                                                            
paragraph, "operating cost savings" means the                                                                                   
estimated value of educational or related services                                                                              
provided by the district to all schools in the                                                                                  
district that are not provided to the charter school;                                                                           
                                                                                                                                
Co-Chair Parnell moved for adoption.                                                                                            
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
Senator Wilken commented that this is an important issue                                                                        
and that while he supports charter schools, he does not                                                                         
want their interest to be championed at the expense of the                                                                      
other 129,000 students in the public K-12 education system.                                                                     
He stressed that the original legislation was an experiment                                                                     
but that the agreement was to wait ten years to review its                                                                      
success before making changes.                                                                                                  
                                                                                                                                
Co-Chair Torgerson asked if the sponsor had reviewed the                                                                        
fiscal note.                                                                                                                    
                                                                                                                                
Representative Dyson had.                                                                                                       
                                                                                                                                
Co-Chair Torgerson asked if the sponsor believed it takes                                                                       
one to two people to run the program. He thought the                                                                            
estimated cost of the legislation was too high.                                                                                 
                                                                                                                                
Co-Chair Parnell offered a motion to move CS HB 191 (FIN)                                                                       
as amended from Committee with accompanying $161,300 fiscal                                                                     
note from the Department of Education and Early                                                                                 
Development.                                                                                                                    
                                                                                                                                
The bill was MOVED from Committee.                                                                                              
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 344(FIN)                                                                                
"An Act authorizing a land exchange between the                                                                                 
Department of Natural Resources and Alaska Hardrock,                                                                            
Inc.; approving a long-term lease of certain Alaska                                                                             
Railroad Corporation land at Healy; and providing for                                                                           
an effective date."                                                                                                             
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate                                                                          
Finance Committee.                                                                                                              
                                                                                                                                
CHARLIE BOLLY, Vice-President, Governmental Relations,                                                                          
Usibelli Coal Mine, Incorporated, testified to Section 3 of                                                                     
the bill, regarding the Alaska Railroad Corporation land                                                                        
currently under contract with his company. He gave a                                                                            
detailed history of how the company has developed and used                                                                      
that land.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson interjected to ask if the witness                                                                            
supports the bill.                                                                                                              
                                                                                                                                
Mr. Bolly affirmed he does.                                                                                                     
                                                                                                                                
Co-Chair Parnell offered a motion to report CS HB 344 (FIN)                                                                     
from Committee with accompanying Department of Natural                                                                          
Resources zero fiscal note.                                                                                                     
                                                                                                                                
Without objection the bill MOVED from Committee.                                                                                
                                                                                                                                
AT EASE to 8:41 PM                                                                                                              
                                                                                                                                
SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE                                                                            
FOR HOUSE BILL NO. 363(L&C)                                                                                                     
"An Act relating to salmon product reports and to the                                                                           
sale of fish; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate                                                                          
Finance Committee.                                                                                                              
                                                                                                                                
REPRESENTATIVE ALAN AUSTERMAN told the Committee the bill                                                                       
was introduced on behalf of salmon harvesters initially as                                                                      
an update of current statutes regarding canned and thermal                                                                      
salmon. He stated that the legislation also adds several                                                                        
other products currently handled by the salmon industry. He                                                                     
said the canned salmon reports addressed in the bill have                                                                       
existed since before statehood.                                                                                                 
                                                                                                                                
Representative Austerman continued that the bill adds fresh                                                                     
and frozen headed and gutted salmon products, fresh and                                                                         
frozen fillets and salmon roe to the reporting                                                                                  
requirements. It also adds a requirement for salmon                                                                             
processor to report production areas.                                                                                           
                                                                                                                                
Representative Austerman shared that the bill has been                                                                          
revised a number of times since its introduction. He                                                                            
pointed out that original statute requires any processor                                                                        
producing more than 1000 pounds of canned or thermal                                                                            
product to submit this report. An amendment to the bill, he                                                                     
said raises that amount to one million pounds.                                                                                  
                                                                                                                                
Senator Wilken wanted to know if the reports records the                                                                        
wholesale number of cans produced after the business tax is                                                                     
incurred. He asked what purpose the reports serve.                                                                              
                                                                                                                                
Representative Austerman surmised that the original intent                                                                      
was to provide wholesale price information to the state and                                                                     
any other interested parties.                                                                                                   
                                                                                                                                
Co-Chair Torgerson asked if these reports are confidential.                                                                     
                                                                                                                                
Representative Austerman affirmed and explained that more                                                                       
than three processors must be operating in a particular                                                                         
area before the reports on that area could be released to                                                                       
the public.                                                                                                                     
                                                                                                                                
TOM WISCHER, Kodiak area fisherman and Member, United                                                                           
Salmon Association, testified via teleconference from                                                                           
Kodiak that the bill fills a gap, eases mistrust between                                                                        
fishermen and processors, and would give good business                                                                          
information to fisherman across the state.                                                                                      
                                                                                                                                
VIRGINA ADAMS, Commercial Salmon Fisherman out of Kodiak,                                                                       
testified via teleconference from Kodiak.                                                                                       
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #90, Side B    8:50 PM                                                                                           
                                                                                                                                
                                                                                                                                
Ms. Adams continued recounting the efforts to obtain                                                                            
accurate accounting information on the status of the salmon                                                                     
industry. She approved on the one million-pound requirement                                                                     
saying it protects smaller processors.                                                                                          
                                                                                                                                
HERB JENSEN, representing, United Salmon Association,                                                                           
Cordova District Fishermen United, Copper River Salmon                                                                          
Producers, testified via teleconference from Cordova in                                                                         
favor of the bill and what it would provide to the state.                                                                       
                                                                                                                                
STEPHANIE MADSEN, Vice-President, Pacific Seafood                                                                               
Processors Association, testified via teleconference from                                                                       
Anchorage that the association opposed the bill saying it                                                                       
was not just revision of the report but a significant                                                                           
expansion of the report.  She detailed the additional pages                                                                     
required.                                                                                                                       
                                                                                                                                
She requested the frequency of the reports be reduced from                                                                      
three times annually to two, if the bill passes.                                                                                
                                                                                                                                
SCOTT MCALLISTER, salmon seining fisherman, Member, United                                                                      
Salmon Association, United Fisherman of Alaska, Southeast                                                                       
Seiners Association testified in Juneau about the efforts                                                                       
behind this bill to improve reporting procedures.                                                                               
                                                                                                                                
He answered Senator Wilken's question regarding the                                                                             
relationship between harvesters and processors, saying                                                                          
there is a relationship that shares the risks and results.                                                                      
                                                                                                                                
Senator Phillips asked where was the sunset provision in                                                                        
the bill.                                                                                                                       
                                                                                                                                
CHRIS NORRIS, Icicle Seafoods in Ketchikan and Norton                                                                           
Sound, testified in Juneau that she believed the bill is an                                                                     
intrusion and serves no purpose to private business.                                                                            
                                                                                                                                
Senator Wilken understood that this bill would increase                                                                         
reporting requirements by a factor of five to give better                                                                       
information, after the product has been sold and delivered,                                                                     
in order to return some of that revenue to the fishermen                                                                        
according to a pre-agreed upon arrangement.                                                                                     
                                                                                                                                
Ms. Norris gave her understanding of the reason for the                                                                         
report was to foster the idea that if fishermen have a                                                                          
better idea of the salmon market and prices paid, they                                                                          
would have a better leverage to negotiate prices. She noted                                                                     
that her company and fleet were not involved in the 1997                                                                        
strike. She believed the reporting system originated out of                                                                     
frustration of fishermen. She stressed it is unfair to                                                                          
paint the whole processing industry negatively.                                                                                 
                                                                                                                                
BRET FREID, Economist, Department of Revenue testified                                                                          
about the sunset clause currently in the statute. He                                                                            
explained that a previous version of the bill repealed the                                                                      
sunset, but that the repeal has been removed in the current                                                                     
committee substitute.                                                                                                           
                                                                                                                                
Mr. Freid stated that the department does not have a                                                                            
position on the collection of data because there is no                                                                          
direct link with taxation. He shared that the salmon is                                                                         
taxed at the price paid to the fisherman not the wholesale                                                                      
value or the profits.                                                                                                           
                                                                                                                                
Mr. Freid qualified that the department could do a good job                                                                     
preparing the reports and meeting the requirements of the                                                                       
bill. He spoke to the fiscal note that shows the need for                                                                       
three-quarters of one position to operate the program at a                                                                      
total operating cost of $38,000 for the first year with an                                                                      
additional $20,000 in capital funds to set up a database.                                                                       
                                                                                                                                
Co-Chair Torgerson asked that if the Department of Revenue                                                                      
does not oversee this program, what other agency could hold                                                                     
confidential information.                                                                                                       
                                                                                                                                
Mr. Freid suggested the Department of Fish and Game.                                                                            
                                                                                                                                
Co-Chair Torgerson commented that this is a good report and                                                                     
that if the legislation passes, the matter of which                                                                             
department has oversight could be revisited.                                                                                    
                                                                                                                                
Amendment #1: This amendment makes the following change to                                                                      
page 5, lines 23 and 24 of the committee substitute.                                                                            
                                                                                                                                
Delete                                                                                                                          
 "September 30, 2000, must cover the period of May                                                                              
1, 2000, through August 21, 2000"                                                                                               
Insert                                                                                                                          
 "January 31, 2001, must cover the period of                                                                                    
September 1, 2000, through December 31, 2000"                                                                                   
                                                                                                                                
The amended language reads as follows.                                                                                          
                                                                                                                                
 TRANSITION. The first report required by AS                                                                                    
43.80.050, as amended by secs. 3 - 5 of this act, is                                                                            
due January 31, 2001, must cover the period of                                                                                  
September 1, 2000, through December 31, 2000, and must                                                                          
be filed by a fish processor whose business sold more                                                                           
than 1,000,000 pounds of salmon products at first                                                                               
wholesale during the 12-month period ending August 31,                                                                          
2000.                                                                                                                           
                                                                                                                                
Senator Leman moved for adoption and explained that the                                                                         
implementation of the program would be delayed by one                                                                           
reporting period so the department would have an                                                                                
opportunity to set up a database. He spoke with interested                                                                      
parties and found concurrence from all sides of the issue.                                                                      
                                                                                                                                
Representative Austerman approved of the amendment saying                                                                       
the delay is better for both the processors and the                                                                             
department.                                                                                                                     
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
Senator Wilken asked if the portion of the report protected                                                                     
as confidential is the final average wholesale price report                                                                     
recipient.                                                                                                                      
                                                                                                                                
Mr. Freid corrected that the identification of a specific                                                                       
processor, the wholesale price and the total pounds of                                                                          
salmon should not be identifiable. He stated that only the                                                                      
summary of all information is published.                                                                                        
                                                                                                                                
Senator Leman relayed a suggestion he made when the bill                                                                        
was heard in the Senate Labor and Commerce Committee that                                                                       
electronic filing would be more efficient and cost-                                                                             
effective. He noted that while the initial set-up cost                                                                          
would be higher, the long-term costs would be lower for                                                                         
both the department and the processors.                                                                                         
                                                                                                                                
Senator Leman offered a motion to report from Committee,                                                                        
SCS CS HB 363 (L&C) as amended with $38,400 fiscal note                                                                         
from the Department of Revenue.                                                                                                 
                                                                                                                                
The bill was MOVED from Committee.                                                                                              
ADJOURNED                                                                                                                       
                                                                                                                                
Senator Torgerson adjourned the meeting at 9:15 PM.                                                                             
SFC-00 (1) 04/14/00                                                                                                             

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