Legislature(1999 - 2000)
04/15/2000 09:11 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 15, 2000
9:11 AM
TAPES
SFC-00 # 91, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:11 AM
PRESENT Co-Chair John Torgerson, Senator Al Adams, Senator
Dave Donley, Senator Lyda Green, Senator Loren Leman,
Senator Gary Wilken
Also Attending: TAMERA COOK, Director, Division of Legal
and Research Services; DEVEN MITCHELL, Debt Manager,
Treasury Division, Department of Revenue; JIM BALDWIN,
Assistant Attorney General, Governmental Affairs Section,
Civil Division, Department of Law; KAREN REHFELD, Director,
Education Support Services, Department of Education and
Early Development; ANNALEE MCCONNELL, Director, Office of
Management and Budget;
Attending via Teleconference: From Anchorage: BARBARA
MIKLOS, Director, Division of Child Support Enforcement,
Department of Revenue
SUMMARY INFORMATION
SB 207-MEDICAL SUPPORT ORDERS FOR CHILDREN
The Committee heard from the Division of Child Support
Enforcement. The bill was reported out of Committee.
SB 310-G.O.BONDS: SCHOOLS & UNIVERSITY
The Committee heard from the Division of Legal and Research
Services, the Department of Law, the Department of Revenue
and the Office of Management and Budget. Three amendments
were considered but none were adopted and the bill was held
in Committee.
SENATE BILL NO. 207
"An Act relating to the establishment and enforcement
of medical support orders for children; and providing
for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
BARBARA MIKLOS, Director, Division of Child Support
Enforcement, Department of Revenue, testified via
teleconference from Anchorage to tell the Committee that
the division believed that it would help all parties,
including those who are paid child support, those who pay
child support and the agency. She stated that the bill
would eliminate confusion.
Ms. Miklos explained that under existing statutes, an order
for medical support could only be established in
conjunction with a financial support order. This bill, she
stated changes the provision so that a medical support
order might be established on its own. She stressed that
this is important in the case of Medicaid recipients
because the division is required to submit an order of
medical support anytime a client goes on Medicaid. Current
statue, she noted ties medical support together with
financial support, thus requiring the division to submit
the financial support order even if the parents did not
want it. She elaborated that in these instances, the
financial order is issued, but not enforced. However, she
pointed out, the debt continues to accumulate and if the
parent goes on public assistance, the division begins to
collect on that debt. Under this bill, she said the debt
would not accumulate.
Ms. Miklos continued that the bill establishes a medical
support statute to provide that either parent, not simply
the obligor parent, may be required to provide health
coverage. Currently, she detailed Alaska statute only
places that responsibility on the obligor parent, although
the courts have ruled in Civil Rule 90.3 that either parent
could be responsible. She pointed out that this legislation
makes the statute and the court order consistent. She noted
that the division follows the civil rule and requires that
either parent may have to provide health insurance.
Ms. Miklos stated that the bill also amends the law to
require that a medical support order be issued regardless
of whether health care coverage is currently available. She
explained this is a clarification to make the statute clear
that the division can issue the order to require health
care coverage be provided to the child if it becomes
available to either parent. She said this is in place of
waiting until the health care coverage is available before
pursuing the matter.
Senator Phillips asked what other states have this
provision.
Ms. Miklos answered that the division did a survey of all
states and had 24 responses. Of those responses, she said
16 states could issue separate medical and financial orders
and three states could not. In the five remaining states
that responded, she said the court issues all these orders.
Senator Phillips asked why the practice of only allowing
the courts to issue medical and financial orders was not
implemented in this legislation.
Ms. Miklos responded that it is a simpler process and less
costly for the division to establish child support orders.
She pointed out that if the court issued the order, every
change would require the parties to return to court. She
added that most states allow the divisions to issue the
orders.
Senator Phillips remarked that the child support
enforcement office was not the most popular of state
agencies.
Senator Green asked how the Denali KidCare program fit into
this legislation.
Ms. Miklos replied Denali KidCare is a Medicaid program and
therefore requires a medical support order.
Senator Phillips asked which states require the court to
issue the orders.
Ms. Miklos listed Washington D.C., Massachusetts,
Louisiana, Virginia and Maryland. Most of the West Coast
states, she noted have a provision to allow the agency to
issue the orders
Co-Chair Torgerson asked about the mechanics of the
language contained on page 5 lines 5 through 8, "The
hearing officer shall allocate equally the cost of the
health care coverage between the parents unless the hearing
officer finds good cause to order a different allocation of
these costs."
Ms. Miklos explained the appeals process, which begins with
an administrative review by the division and then a review
conducted by a hearing officer outside the division but
within the Department of Revenue. She said the rulings are
made based on which parent has health insurance available
at a reasonable cost.
Co-Chair Torgerson asked if currently, the courts normally
determine which parent is the obligor for the health
insurance coverage.
Ms. Miklos replied that it depended upon who established
the order. If the courts issued the order, she said the
court would use the same procedure to make the
determination. She qualified that the hearing officer is
involved only when the order was issued by the agency. In
both cases, she stressed appeals could be made to the
court.
Co-Chair Torgerson then wanted to know how the financial
obligor was established.
Ms. Miklos answered that it usually depended upon which
parent has custody of the child, or in cases of joint
custody, which parent has the greater income. She stated
that the obligator is usually determined strictly by
financial circumstances. By allowing the division to issue
medical support orders separately from financial support
orders, the decision of medical obligator could be
determined based on which parent has reasonable health care
coverage.
Ms. Miklos stressed that the state benefits from the
children having independent health care insurance, because
there is less need for public assistance.
Senator Adams offered a motion to report from Committee, SB
207 with accompanying zero fiscal note from the Department
of Revenue.
Senator Phillips objected. He stated that he would rather
the courts made the decision on the support orders.
Senator Green asked if there were any instances where both
parents are required to carry health care insurance on a
child.
Ms. Miklos responded the parents are not being required to
have health care coverage unless it is available at a
reasonable cost. She added that in some cases, insurance
may not be available at all.
Ms. Miklos then commented on Senator Phillips's concerns
saying that this legislation does not change how the courts
or the division determines the support orders other than to
separate the two orders. This bill, she stressed does not
give any more power to the child support enforcement
agency.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Donley, Senator Leman,
Senator Adams, Senator Wilken, Senator P. Kelly, Co-Chair
Parnell and Co-Chair Torgerson
OPPOSED: Senator Phillips
The motion PASSED (8-1)
The bill MOVED from Committee.
AT EASE 9:25 AM / 9:37 AM
SENATE BILL NO. 310
"An Act providing for and relating to the issuance of
general obligation bonds for the purpose of paying the
state cost of school, University of Alaska, and port
and harbor capital projects; and providing for an
effective date."
TAMERA COOK, Director, Division of Legal and Research
Services, testified that this legislation consists of
typical language for a general obligation (GO) bond bill.
She shared that GO bonds have the full faith and credit of
the State Of Alaska and that the state constitution
requires approval by the voters. She noted that the bonding
language was devised by Bond Council with assistance for
the Attorney General and the (previously named) Division of
Legal Services, and has remained virtually unchanged for 30
years. She stressed that the language is rigid and that
Bond Council requires a GO bond bill must be drafted in
this precise format. This legislation, she pointed out has
no deviation from the established format.
Mr. Cook relayed earlier conversations between Co-Chair
Torgerson, Jim Baldwin of the Department of Law and herself
related to the "single subject" question. She opined that
proposing the issuance of bonds for schools, roads and
other capital projects within one bill follows the
provisions of the single-subject rule. She stressed that
although the courts have made "mumblings" to the contrary,
no ruling has ever been issued against this. She noted that
most of the comments made stating that different types of
projects in the same bill do not meet the single subject
rule, are issued in the form of dissenting opinions.
Ms. Cook told the Committee that Mr. Baldwin recommends
dividing the capital projects into two separate bills, one
for education projects and the other for transportation
projects, to avoid the problem. She also stated that most
attorneys feel that it is a matter of time before the court
finally issues an adverse ruling on the single subject
question and that Mr. Baldwin did not want that to happen
on a GO bond bill. She added that Mr. Baldwin also thought
that Bond Council might decide that the risk of litigation
might hamper the marketability of the bonds. She qualified
that she was not in a position to weigh this matter,
although she recognized the arguments on both sides.
Senator Adams asked what change could made to the bill's
title that would insure against a single subject rule
challenge.
Ms. Cook responded that no title change for this bill would
avoid the single-subject challenge, because the title
requirement and the single subject requirement are
completely separate constitution issues. The title
requirement, she explained relates to notice of what is
contained in the bill. She noted that this bill gives
appropriate notice that the bill includes school projects,
university projects and port and harbor projects. The
issue, she said is whether the bond proposal could be
placed before the voters as a package, requiring them to
"take it or leave it" on all the projects. She attested
that although the bill complies with the single subject
rule as established in the past, the courts are waiting for
a vehicle to issue an adverse ruling to change the
requirements.
Ms. Cook stressed that just the potential litigation on the
question of the single subject rule may be enough to
drastically delay the issuance of the bonds and the
subsequent funding for the projects.
Senator Adams asked about the impact on the ability for
municipal participation in the school capital projects.
Ms. Cook replied that municipalities could not participate
in the issuance of GO bonds with the full state backing.
However, she noted that additional school-related capital
projects could be added to the bonds.
Senator Phillips asked of the bonds that previously passed,
if any maintenance and operations were included or if all
the projects were for capital improvements.
Ms. Cook was unsure and would research the question. She
did stress that bonds could not be issued for operation
functions according to the state constitution. She
qualified that if a maintenance project was substantial,
such as a building addition or a new roof, it would qualify
as a capital project. Day to day or year to year
maintenance, she said would not qualify.
Ms. Cook continued that the court has looked at the issue
of what qualifies as a capital project for bond purposes as
well and found a capital project is something that has
historically been financed with GO bonds. Secondly, she
said the courts also consider whether the improvement will
have a substantial life span of at least as long as the
bond repayment.
Senator Phillips listed some of the proposed projects as
heating ventilation, gym floor replacement, heating coil
replacement, fire alarms, carpeting, district-wide major
maintenance for the Anchorage School Board, and deferred
maintenance for the University of Alaska. He wanted to know
it these projects qualify as capital improvements under the
GO bond criterion.
Ms. Cook did not know what those maintenance items would
be, but noted that the shorter the life span of the
project, the more problematic the question of whether GO
bonds can be used to fund them. She added that she knew of
some municipalities that have issued GO bonds for such
items as computer equipment, which she thought has a
relatively short life span. She said those types of uses of
the bonds have not yet been challenged, so there is not a
specific court ruling on the matter.
Senator Phillips indicated that he would research the
included projects in the GO packages approved between the
late 1960s through 1980.
DEVEN MITCHELL, Debt Manager, Treasury Division, Department
of Revenue added his assessment to the debate of whether
the proposed projects qualify for GO bonds and whether the
package fits the single subject. He agreed with Ms. Cook
that there is room for interpretation and that the
potential is there for problems.
Mr. Mitchell addressed the concern that marketing the bonds
would be difficult because of the perception of the
litigation risk. He stated that buyers would still want to
purchase bonds, but that there could be higher interest
rates. He noted that if litigation were introduced prior to
the issuance of bonds the department would not want to
proceed with a market effort until the matter was decided.
Senator Phillips asked if deferred maintenance items
legally qualify for GO bond funding.
Mr. Mitchell deferred to the Department of Law but
qualified that previous municipal bonds that he has dealt
with have included maintenance projects.
JIM BALDWIN, Assistant Attorney General, Governmental
Affairs Section, Civil Division, Department of Law
responded to the same question saying he needed to do
research before giving an opinion. He did point out that
the constitution states, "capital improvements" and noted
that the Attorney General's Office has issued past opinions
where the term is strictly construed. He interpreted the
meaning of capital improvement to include "concrete and
steel and not repair". He stated that major roof repair
would probably be considered for GO bonds.
Co-Chair Torgerson had understood the criterion to include
a project that extends the life of the building regardless
of the size of project. However, he thought the witness was
saying something different. He requested the witness
research the matter.
Senator Adams remarked that he wanted to make the title as
broad as possible to avoid this problem. He suggested, "An
Act providing for and related to the issuance of general
obligation bonds for the purpose of capital improvement
projects in the State Of Alaska."
Mr. Baldwin cautioned of the need to take care not to
confuse the descriptive rule, dictating how the title must
accurately describe the contents of the legislation, with
the single subject rule.
Co-Chair Torgerson commented that the title isn't really
the problem. He stated that the only connection between the
school projects and the ports and harbor projects is the
bond package and the provisions stipulating how those bonds
would be issued and managed. The projects themselves are
not interrelated, he remarked.
Mr. Baldwin shared that the court has ruled that a bill has
to follow a general theme.
Senator Adams asked if the witness felt it would be better
to separate the bonding into two bills, one for education
projects and the other for ports and harbors. He voiced a
concern about garnering public support for either one.
Mr. Baldwin thought it would be better to have separate
bills for legal reasons. He could not speak on the
political reasons for having one or two bills.
Co-Chair Torgerson asked if the bond package approved in
1978 was one bill or if it was split.
Mr. Baldwin believed the projects were separated.
Co-Chair Torgerson asked if the witness thought the
relationship between the university and schools was close
enough to remain together on one bill.
Mr. Baldwin recalled a similar instance involving the
university and schools. He did not remember the outcome but
believed the court would not find a great distinction
between primary, secondary or post-secondary type schools.
Mr. Baldwin stated that he could research the question and
return an opinion to the Committee later in the day.
Co-Chair Torgerson asked the witness to review the
relationship between the university and schools and comment
on the appropriateness of bonding major maintenance items.
AT EASE 10:00 AM / 10:19 AM
Amendment #1: This amendment inserts a new item on page 4,
after line 6.
University of Alaska - 7,642,600
Southeast Egan Building
Classroom Addition
Senator Adams moved for adoption. Co-Chair Torgerson
objected.
Senator Adams explained that design was completed in 1995
for this project, but no funding has been provided to cover
construction costs. He detailed the plan for 16 new
classroom spaces, including a lecture hall that would seat
150 students.
Senator Adams expressed that the applications for first-
time students are up 39 percent this year and the campus
lacks adequate classroom space. This inhibits the growth of
the student bases, which he stressed is needed to become a
financially sound, self-supporting institution.
A roll call was taken on the motion.
IN FAVOR: Senator Adams
OPPOSED: Senator Leman, Senator Wilken, Senator Green, Co-
Chair Parnell and Co-Chair Torgerson
ABSENT: Senator Phillips, Senator Donley and Senator P.
Kelly
The motion FAILED (1-5-3)
The amendment FAILED to be adopted.
Amendment #2: This amendment inserts new bill sections on
page 5, line 10 to read:
Sec. 4. AS 14.11.100(a) is amended by adding a new
paragraph to read:
(10) subject to (h), (i), (j), and (p) of
this section and after projects financed by the
bonds, notes, or other indebtedness have been
approved by the commissioner, 70 percent of
payments made by a municipality during the fiscal
year for the retirement of principal and interest
on outstanding bonds, notes, or other
indebtedness authorized by the qualified voters
of the municipality on or after July 1, 1997, to
pay the costs that exceed $200,000 of school
construction projects and major maintenance
projects that are approved under AS
14.07.020(a)(11).
Sec. 5. AS 14.11.100 is amended by adding a new
subsection to read:
(p) The total amount of public school
construction projects approved for reimbursement
by the department under (a)(10) of this section
may not exceed $150,000,000.
Senator Adams moved for adoption. Co-Chair Torgerson and
Senator Green objected.
Senator Adams stated this language would assist school
districts in funding their capital projects, including
major maintenance items. He explained that the state would
reimburse municipalities to retire 70 percent of the
bonding debt incurred for specific school capital projects.
He stressed that it is important to adopt this amendment so
that schools that do not have projects included in the
state's bond package would have the ability to issue their
own bonds to pay for the necessary projects.
Senator Green remarked that she would have to support this
amendment.
Co-Chair Torgerson pointed out that the amendment adds $150
million to the bond total.
A roll call was taken on the motion.
IN FAVOR: Senator Adams and Senator Green
OPPOSED: Senator Leman, Senator Wilken, Senator Donley, Co-
Chair Parnell and Co-Chair Torgerson
ABSENT: Senator P. Kelly, Senator Phillips,
The motion FAILED (2-5-2)
The amendment FAILED to be adopted.
Amendment #3: This amendment makes the following changes to
the bill.
Page 1, line 9, page 2, line 10, page 4, line 3, and
page 5,line 9:
change the numbers to reflect the additional
schools
Page 3, after line 27, add the following project:
Noorvik K- 12 Improvements 17,528,378
Page 3, line 30, following "Elim":
insert:
"Bering Strait"
Page 3, after line 30 add:
Bering Strait-Golovin School 9,609,516
Phase Ill
Bering Strait-Koyuk K-12 School 14,059,664
Page 4 after line 1 add the following project:
Togiak School Replacement 25,027,049
Yupiit Schools (ED 39)
Akiachak Elementary Replacement 14,370,287
& Secondary Renovation
Senator Adams moved for adoption. Co-Chair Torgerson and
Senator Donley objected.
Senator Adams explained the purpose for this amendment is
to include the projects identified by the Department of
Education and Early Development as the ten most necessary.
He feared that by not repairing the schools in greatest
need, the entire bond package is jeopardized by threatened
lawsuits against the state claiming that rural students are
not treated equally. He said that although forty schools
are identified as needing improvements, he suggested at
least including the first ten.
Co-Chair Torgerson pointed that this amendment adds over
$80 million to the total bond package.
Senator Adams reiterated that by approving the additional
projects, the risk to the remainder of the project is
minimized.
Senator Wilken remarked that his support of the bond
package has nothing to do with the Kasayulie vs. State Of
Alaska case. This case, he emphasized, would be decided in
court.
Senator Wilken referred to the process to determine the
priority of school capital projects. He stated that the
department issues a list each year in December, the latest
of which, he said was consulted when drafting this bill.
However, he noted, another list was published in March 2000
that had different figures. He wanted the department to
answer to the changes.
KAREN REHFELD, Director, Education Support Services,
Department of Education and Early Development explained the
list generated in March is the list that the Board of
Education uses to take final action based on the
department's negotiated agreements. This latter list she
explained contains the final results of any appeals. Other
differences, she continued reflected projects initially
recommended for phased funding that have since been
approved for full construction funding.
Senator Adams noted one of the projects has a ten-percent
match.
Senator Wilken asked if a second project list is issued
every year or if the December list is usually the only one
generated.
Tape: SFC - 00 #91, Side B 10:28 AM
Ms. Rehfeld replied that a final agency list is issued
following the appeals that are settled during a March or
April board meeting.
There was conversation between the witness and Senator
Wilken establishing the changes and appeals for the Togiak
and the Koyuk school projects.
A roll call was taken on the motion.
IN FAVOR: Senator Adams
OPPOSED: Senator Donley, Senator Leman, Senator Wilken,
Senator P. Kelly, Senator Green, Senator Phillips, Co-Chair
Parnell and Co-Chair Torgerson
The motion FAILED (1-8)
The amendment FAILED to be adopted.
Amendment #4: This amendment makes the following changes to
the bill.
Page 1, line 9, page 2, line 10, page 4, line 3, and
page 5,line 9:
change the numbers to reflect the additional
schools
On page 4 after line 1, add the following project:
Akiachak Elementary Replacement 14,370,287
& Secondary Renovation
Yupiit Schools (ED 39)
Senator Adams moved for adoption. Co-Chair Torgerson
objected.
Senator Adams noted this project was the tenth highest
priority on the department's issued list of critical
projects. He said he submitted the request on behalf of the
Senator from Bethel.
A roll call was taken on the motion.
IN FAVOR: Senator Adams
OPPOSED: Senator Phillips, Senator Donley, Senator Leman,
Senator Wilken, Senator P. Kelly, Senator Green, Co-Chair
Parnell and Co-Chair Torgerson
The motion FAILED (1-8)
The amendment FAILED to be adopted.
ANNALEE MCCONNELL, Director, Office of Management and
Budget gave Administration's position on the bill, saying
she was pleased the effort for the bond package for highest
priority items was beginning.
Ms. McConnell asserted that the overall amount for the
school projects should address more schools than are
included in the current proposed bond package. She spoke of
considerable needs that have accumulated and the school
that have been waiting for attention for several years. She
said these projects should be undertaken, not because of
the pending litigation, but because it is "the right thing
to do."
Ms. McConnell had concerns with how the included projects
were selected. She stressed that the integrity of the
system requires the projects be included down the list in
the priority order established through the process in state
law and then approved by the Board of Education.
Ms. McConnell allowed the first five projects on the
priority list are included in the bond package, but that
the approved projects skip down to number 24 on the list.
Ms. McConnell recommended the legislation avoid the gray
area of whether major maintenance projects can be funded
under GO bonds by using the financing plan proposed by the
Administration. She explained this plan would take care of
the problem because other funding methods are not under the
same constraints as GO bonds. She told the Committee the
plan proposes using Alaska Housing Finance Corporation
(AHFC) bonds or tobacco settlement bonds.
Ms. McConnell stated the state would have the opportunity
to address the insecurity of year-to-year amount or the
total payment from the tobacco companies by shifting the
risk from the state to the bondholders.
Co-Chair Torgerson noted the education projects and the
ports and harbors projects would be separated into two new
bills that would be introduced at the upcoming Senate floor
session.
Senator Donley commented that the Administration's position
"is all well and good but first of all, begs the question
of whether we even bother to have a legislature. If we're
going to turn over to a bunch of bureaucrats in Juneau, the
authority to appropriate money, the constitution doesn't
need to exist. We might as well not have a legislative
branch of government to make sure that the people elected
to represent the people [indiscernible] some sort of
statewide parody when we do things."
Senator Donley continued that no mention was made about
budget reductions in the Administration's fiscal plan. "We
need to continue to reduce state spending to try to close
the fiscal gap," he asserted.
Senator Adams rebutted that no bureaucrat has stated the
Administration is taking away the legislature's
appropriation powers. The administration only makes
suggestions, he stressed. He expounded that it is hard for
the public to understand the fiscal gap when there is $2.6
billion in the Constitutional Budget Reserve that could
address problem areas.
Co-Chair Torgerson ordered the bill HELD in Committee.
ADJOURNED
Senator Torgerson adjourned the meeting at 10:37 AM.
SFC-00 (16) 04/15/00
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