Legislature(2003 - 2004)
02/25/2003 10:02 AM Senate FIN
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MINUTES
SENATE FINANCE COMMITTEE
February 25, 2003
10:02 AM
TAPES
SFC-03 # 9, Side A
SFC 03 # 9, Side B
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately 10:02 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice-Chair
Senator Ben Stevens
Senator Lyman Hoffman
Also Attending: DAN SPENCER, Director, Division of Administrative
Services, Department of Administration; DAVE STEWART, Personnel
Manager, Division of Personnel, Department of Administration; JERRY
BURNETT, Director, Division of Administrative Services, Department
of Corrections; KATHRYN DAUGHHETEE, Director, Administrative
Services Division, Department of Law;
Attending via Teleconference: From Anchorage: BRANT MCGEE, Public
Advocate, Office of Public Advocacy, Department of Administration;
BARBARA BRINK, Director, Public Defender Agency, Department of
Administration
SUMMARY INFORMATION
SB 75-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
SB 76-SUPPLEMENTAL APPROPRIATIONS
The Committee received overviews of the supplemental budget
requests from the Department of Administration, the Department of
Corrections and the Department of Law. The bills were held in
Committee.
SENATE BILL NO. 75
"An Act making supplemental and other appropriations; amending
appropriations; and providing for an effective date."
SENATE BILL NO. 76
"An Act making supplemental and other appropriations; amending
appropriations; making appropriations to capitalize funds; and
providing for an effective date."
Department of Administration
SB 76
Section 1(a)(1)
Finance Budget Request Unit (BRU)
$400,000 general funds
The Division of Finance is incurring substantially more costs
for accounting and payroll data processing charges, due to
conversion from ADABAS to DB2. (Savings in general relief
program offsets $300,000.)
DAN SPENCER, Director, Division of Administrative Services,
Department of Administration, delineated $300,000 of this amount is
"general processing costs" of the accounting and payroll systems
and $100,000 is related to converting the payroll system into a
"new platform", which requires additional time and subsequently
incurs a higher cost. He informed that these "charges" are "due" to
the Division of Information Technology Group for mainframe
processing.
SB 76
Section 1(a)(2)
Pioneers' Homes BRU
$390,700 general funds
Cost of the certified nurse aide and assisted living aide
reclassifications which were effective December 1, 2002. The
classification study found that the positions were underpaid
by one range compared to other similar positions. Affects 323
positions at approximately $175 per month per position.
Mr. Spencer emphasized that this is a classification study rather
than a salary study. He reminded of a salary study conducted
several years prior to review Pioneer Home nurses' salaries and
noted that salary adjustments were made as a result. In contrast,
he explained this study reviewed the duties assigned to the
Certified Nursing Aides (CNA) and Pioneer Home Aides in relation to
other employees in the State of Alaska system and found that the
Aides perform duties equivalent to other employees paid at one
salary range higher. Therefore, he said the CNA salaries were
increased from Range 9 to Range 10, and Pioneer Home Aides were
reclassified as Assisted Living Aides at Range 9, increased from
Range 7. He qualified that some individual positions did not change
and others were "classed down", although the employee's salaries
would not change for two years.
Mr. Spencer noted that as a result of these changes, the Department
would incur approximately $700,000 additional payroll expenses
annually. The amount requested in this supplemental, he said is for
the salary increases effective December 1, 2002 through the
remainder of the fiscal year.
Co-Chair Green recalled a determination that "No money appropriated
in this Act may be used to pay costs for personnel due to job
reclassification." She asked the difference between a
classification study and a salary study.
Mr. Spencer explained the classification study examines the nature
of specific duties performed, compared to other duties to ensure
that employees are compensated "appropriately" in comparison to
other positions within State government. He characterized this as
"equal pay for equal work". A salary study, by contrast, he said
examines a specific type of position and compares the salary to
similar positions in the public and private sectors within a
certain geographical area.
Mr. Spencer then informed that the Attorney General under the
Knowles Administration found that the statutory language Co-Chair
Green referred to, infringed upon the "administration of
administering government." Mr. Spencer explained that the
classification of State employees is an administrative matter and
not subject to a legislative appropriation.
Mr. Spencer stressed the statutory and constitutional obligation to
classify State employees appropriately.
Co-Chair Green asked when the study began.
Mr. Spencer replied the study commenced during the summer of 2002
and was completed with reclassifications enacted on December 1,
2002.
Co-Chair Green then asked the timeframe of implementation after
such a study is completed.
DAVE STEWART, Personnel Manager, Division of Personnel, Department
of Administration, testified to the personnel rules adopted under
the State Personnel Act as well as contractual agreements reached
with employee bargaining units. He stated that these rules provide
that the effective date of a classification study is the first day
of the pay period following completion of the study.
Co-Chair Green pointed out this was implemented during the final
week of the prior gubernatorial administration.
Senator Hoffman spoke of the difficulties in hiring and retaining
qualified nursing staff and asked whether this applies to CNA
positions as well.
Mr. Spencer responded that a salary study conducted several years
prior resulted in salary increases for nurses, which has partially
alleviated the problem. However, he stated the State has not
encountered significant difficulties in recruiting and retaining
CNAs. He remarked this issues was not the "driving force behind"
the recently conducted classification study.
Co-Chair Wilken did not oppose the outcome of the reclassification;
however, he opposed the method considering Section 6, Chapter 94 of
the FY 03 operating budget. He asked the consequences if this
request were not funded.
Mr. Spencer responded that funds appropriated to the Pioneers'
Homes operations would be transferred.
Mr. Spencer informed that classification and salary adjustments are
done regularly, resulting in both increases and decreases. He
stated that most of these changes are not brought to the attention
of the legislature because the number of positions and amount of
funds involved is usually negligible and therefore absorbed within
the affected division's budget. The study in question he noted
involved over 340 positions and is therefore unusual in its scope.
He cautioned that if this item were not funded, additional space in
the Pioneers' Homes must be held vacant.
Co-Chair Green commented that she has never seen a supplemental
request for this purpose of this amount.
Co-Chair Green asked if all the positions impacted in the study are
filled or whether the Department is budgeting for positions that
would be filled before June 30, 2002.
Mr. Spencer replied that all the positions are not filled and that
the request represents the current payroll needs with no funds for
any additional staff.
Senator Bunde questioned the on-going reclassification review, as
he understood an employee hired for a certain position at a defined
salary range could be reclassified and paid a different salary.
Mr. Spencer spoke to the usual six-week time period involved and
how adjustments must be made to reflect new duties assigned to some
positions, etc. He stated that in some instances, duties are
reassigned or classification changes are made at the time of
employee turnover. He also pointed out an appeal process is
provided according to collective bargaining unit agreements.
Senator Bunde surmised this effort would require significant work.
Mr. Spencer assured the Department has a "long range plan"; but
stressed the obligation to compensate employees appropriately for
the duties performed.
Senator Bunde did not disagree, but suggested the matter should be
addressed differently.
Co-Chair Green informed this topic should be discussed in the
budget subcommittee.
SB 76
Section 1(a)(3)
Alaska Oil and Gas Conservation Commission (AOGCC) BRU
$14,300 federal funds
Increased federal grant for the Underground Injection Control
Program.
Mr. Spencer stated this request is for authorization to receive
federal funds that supplement an existing grant.
SB 76
Section 1(a)(4)
Office of Public Advocacy BRU
2,473,500 general funds
Program shortfunding was estimated to be $2,200,000 in May.
Caseload growth has added an additional $1,100,000. An
additional $826,500 is requested in the fast track
supplemental bill to meet the total need of $3,300,000.
AND
SB 75
Section 1
Office of Public Advocacy BRU
$826,000 general funds
Program shortfunding was estimated to be $2,200,000 in May.
Caseload growth has added an additional $1,100,000. An
additional $826,500 is requested in the fast track
supplemental bill to meet the total need of $3,300,000.
Mr. Spencer pointed out the initial FY 03 appropriation was less
than the amount expended the prior year. At that time, he said it
was estimated that $2.2 million supplemental funds would be
necessary, based on the caseload and the "intensity of the
caseload". He reported that the caseload has continued to increase
as well as amount of "legal activity" required for those cases,
which accounts for the $3.3 million actual request.
Mr. Spencer commented that supplemental funding has been necessary
for the Office of Public Advocacy (OPA) for several years. He
detailed the process of monthly reporting of expenses and informed
that the requested amount would be adjusted accordingly.
Co-Chair Green calculated the total supplemental request represents
approximately one-fifth of the annual budget.
Mr. Spencer explained how the requested amount was determined. He
stated the OPA currently has funds adequate to pay expenses to the
beginning of May and that $826,500 contained in the fast track
supplemental request would fund operations through the month of May
with the balance included in the regular supplemental adequate to
sustain operations through the month of June. He referenced a
"longstanding" opinion issued by the Attorney General, allowing
access to funds once a supplemental budget has passed the
Legislature, providing there is no indication that the governor
would veto the legislation.
Mr. Spencer told of the significant number of invoices from private
attorneys received by the OPA for services rendered the previous
fiscal year. He reported that the OPA normally remits over $700,000
during the months of July and August for expenses incurred before
June 30 of that calendar year.
Co-Chair Green opined, "That's bizarre," and instructed the
Department provide an accounting of the cost to operate the OPA for
12 months, with the "July and August" invoices included. She
furthered this should include "late billings and early billings".
She requested similar accounting for the Public Defenders Agency
(PDA) as well.
Senator Hoffman assured he would not object to fully funding the
anticipated budget initially. He noted that several years prior,
supplemental appropriations were necessary to cover cost overruns,
but that in recent years the budget was deliberately under-funded
with the expectation that supplemental appropriations would be
requested. He expressed concern about the increasing costs of the
OPA.
Mr. Spencer expounded that the causes of the cost increases include
an increase in the number of Child in Need of Aid cases assigned
and he reminded of guideline changes instituted a few years prior
that shortened the timeframes these cases must be resolved. This,
he said has increased the average amount of time spent on cases. He
stressed the difficulty in accurately predicting the number and
types of cases that would be assigned to the OPA, and subsequently,
the limited ability to in project the needed funding amount.
Senator Hoffman referenced the 20,000 new cases assigned in the
current year, which appeared substantially higher than average. He
surmised there must be a reason for this and asked if this is an
anomaly or a change in the manner in which judges assign cases.
Co-Chair Green noted Senator Hoffman's comments pertain to the PDA
and that she shared the questions.
Mr. Spencer informed that the increased caseload pertains to the
number of new cases assigned each year, and applies to both the OPA
and the PDA. He commented that the number of new cases assigned
annually continues to increase.
BRANT MCGEE, Public Advocate, Office of Public Advocacy, Department
of Administration, testified via teleconference from Anchorage,
that the "ever larger" supplemental budget appropriations are not
included in the amounts initially appropriated the following fiscal
year. He reiterated that caseload increase and the increased costs
of Child in Need of Aid cases are responsible for the increased
expenses. He furthered that because of shorter timeframes, "a
stronger adversarial context" exists because "people are much more
likely to fight about things as they're facing deadlines", although
this incurs higher costs. He noted he supports the stricter
deadlines.
Mr. McGee next pointed out that the OPA has a "corollary" statutory
responsibility to provide representation in cases in which the PDA
has a conflict of interest. He stated that in these instances, the
OPA contracts with private attorneys to represent one parent in
Child in Need of Aid proceedings; this is in addition to OPA
representation of the child's best interest.
Mr. McGee "welcomed the opportunity" to prepare a budget that would
cover all anticipated expenses for FY 04. He noted this was the
historical practice until the first year of the Hickel
Administration.
Co-Chair Green directed the Department of Administration Budget
Subcommittee to address the role of the OPA with senior citizen
matters.
SB 76
Section 1(a)(5) and (6)
Public Defender BRU
$1,157,000 general funds
Program shortfunding was estimated to be $1 million in May.
Caseload has added an additional $157,000. Funding is also
included to continue the mental health court attorney.
Mr. Spencer commented this situation is similar to the OPA matter.
Co-Chair Green asked for affirmation that the PDA was assigned
20,000 new cases in the past fiscal year.
BARBARA BRINK, Director, Public Defender Agency, Department of
Administration, testified via teleconference from Anchorage that
the number is accurate and noted the prior fiscal year the Agency
was assigned 19,400 new cases. She listed one reason as the
increase in Child in Need of Aid cases, in which the PDA is ordered
to represent one of the parents. She also noted that serious
felonies have increased 15 percent and because of the severity of
penalties for conviction of such crimes, these cases are costly to
defend. She added that changes to the minor consuming and Driving
Under the Influence statutes have resulted in more of these cases
being tried before a jury. She stated that the closure of pulp
mills in Ketchikan has influenced the caseload by over 80 percent.
Ms. Brink stressed that the PDA must provide these services.
Co-Chair Wilken calculated 20,000 in one year as 80 cases assigned
per day, which he had difficulty understanding. He asked for a
breakdown of these assignments ask well as a comparison with
Washington State and other larger states, surmising that these
states could not possibly address the issue in same manner as
Alaska.
Ms. Brink stated she had data compiled to indicate the assignments
of new cases between 1988 and 2002 and would submit it to the
Committee.
SB 76
Section 1(a)(6)
Mr. Spencer commented this request would normally been presented to
the Legislative Budget and Audit Committee, but because the funds
were not immediately necessary, it is included in this legislation.
He noted that currently these services are performed and paid from
the existing budget appropriation.
SB 76
Section 1(a)(7)
Labor Relations BRU
$209,300 general funds
Arbitration settlement with ASEA union on Fair Labor Standards
Act (FLSA) residual claims including interest of $9,238,36.
Mr. Spencer told of the settlement of the claims and the potential
cost to the State of $700,000 to $1 million, plus legal expenses,
if those cases were not settled and subsequently the State lost.
SB 76
Section 1(b)
Senior Services BRU
($300,000) general funds
Caseload for general relief program is lower than anticipated.
(Funds to help offset Finance's supplemental.)
Mr. Spencer explained this pertains to the vulnerable adults
program and he reminded of the statutory obligation to assist those
in harmful situations. He stated that the increase has not been as
large as projected.
SB 76
Section 16(1)
Finance BRU
$44,900 general funds
Miscellaneous Claims and Stale-dated Warrants $44,916.88
Mr. Spencer explained these are to cover checks cashed two years or
longer since they were issued.
Co-Chair Green asked how the Department tracks uncashed warrants.
Mr. Spencer replied that no system currently tracks outstanding
checks not cashed, primarily due to the large volume of checks
issued each month.
Senator Bunde asked about certain checks recently cashed illegally
in Anchorage. He indicated precautions must be taken to ensure
against forgeries.
Mr. Spencer replied that he would research the matter.
Department of Corrections
SB 76
Section 3
Inmate Health Care BRU
$187,700 general funds
Prior year bill for dialysis services for an inmate in FY 02.
The vendor inadvertently billed a wrong party and recently
discovered the error. An appropriation is needed in order for
the department to pay the bill of $187,680.05.
JERRY BURNETT, Director, Division of Administrative Services,
Department of Corrections, testified this request is to cover a
medical bill for services rendered in FY 02 but not received until
November of 2002.
Co-Chair Green asked why this item was not included in the
Miscellaneous Claims section of the supplemental bill.
Mr. Burnett stated that the amount is too large for such
classification. However he noted it could not be paid without a
supplemental appropriation.
SB 75
Section 2(a)
Inmate Health Care BRU
$500,000 general funds
Costs incurred due to the November 19, 2002 accident involving
a prisoner transport van at mile 19.5 of the Seward Highway.
SB 75
Section 2(b)
Anchorage Jail BRU
$500,000 Statutory Designated Program Receipts (SDPR)
Due to increased negotiated contract amount with Municipality
of Anchorage, the department will realize increased mandatory
billings and needs receipt authority to utilize those
receipts.
Mr. Burnett spoke of the automobile crash in which one correctional
officer and four prisoners were killed and three prisoners were
injured. He stated that approximately $900,000 of the expenditure
is direct hospital costs of the three surviving prisoners.
Co-Chair Green asked the status of the investigation of the crash
and the liability of the other driver.
Mr. Burnett replied that as of the previous day, the investigation
was still ongoing. He said if damages were recovered from the other
driver the funds would be deposited into the general fund.
SB 76
Section 17(a)(2)(A)
$219.77
Ratification: AR 50981-01 (Noncust Fingerprints)
AND
Section 17(a)(2)(B)
$66.64
Ratification: AR 50982-01 (ADAM Pgm/Univ AK Anc)
Co-Chair Green understood the issue of inmate health care is under
investigation.
Mr. Burnett affirmed and noted lower insurance rates are being
negotiated and that a contract was negotiated with the Alaska
Regional Hospital for the remainder of the fiscal year.
SFC 03 # 9, Side B 10:49 AM
Department of Law
KATHRYN DAUGHHETEE, Director, Administrative Services Division,
Department of Law,
SB 75
Section 4(a)
Criminal Division BRU
$582,600 general funds
Criminal Justice Litigation - Outside counsel and experts for
the parental consent lawsuit $432,600 and the sex offender
registration lawsuit $150,000.
Ms. Daughhettee noted this item involves two major cases and she
updated the Committee on their status. She informed that a decision
is expected in the case involving Planned Parenthood and that
regardless of the outcome an appeal is expected. She stated that
$432,600 would cover the appeal expenses.
Ms. Daughhettee continued with the litigation defending the State's
sex offender registration statute, in which $150,000 in expenses
was already incurred and additional expenses are not expected. She
informed that a decision from the US Supreme Court is expected in
the fall of 2003 on the matter.
Senator Bunde asked if the requested amount is anticipated to be
the total cost to argue the parental consent issue.
Ms. Daughhettee responded this amount would cover the cost incurred
to date, including reinstating experts from retirement, hiring
other experts; and anticipates the expense of a post trial brief
and the appeal that would be handled by outside counsel. She was
unsure whether more expenses would be incurred.
Co-Chair Green commented that the Department decided to withhold
$250,000 of the FY 03 Department-wide unallocated reduction from
this section. She opined this is problematic knowing this
litigation was ongoing.
Ms. Daughhettee countered that the Legislature directed an
unallocated reduction to the Criminal Division. She qualified that
carry-over funds were appropriated, but were not sufficient to
offset the reduction.
SB 75
Section 4(b)
Oil and Gas Litigation BRU
$600,000 general funds
Oil and gas caseload shortfall. $500,000 is needed for the
reopener-specific casework and $100,000 for ongoing D.C.
casework primarily regarding Federal Energy Reserve (FERC) and
TAPS (utility) reopener. Extended lapse date thru June 30,
2004.
Ms. Daughhettee anticipated one case would begin shortly and would
proceed rapidly. She stressed that State must as prepared as the
oil companies.
SB 76
Section 9
Deputy Attorney General BRU
$1,064,300 general funds
$72,100 PERS funds
Judgments and Claims: $1,064,246.51 general funds, $72,053.97
PERS
Ms. Daughhettee noted this annual request is to pay judgments and
claims.
Co-Chair Green asked if Committee Members desired to review the
specific cases in this section.
No interest was expressed and it was determined that members would
review the cases individually and pose questions at a later date if
necessary.
Ms. Daughhettee indicated she would prepare information in the
event members wanted additional details.
Ms. Daughhettee pointed out that sufficient catastrophic reserve
funds, which historically paid expenses arising from settlements of
personal injury cases, were no longer available. She reminded this
fund is administered by the Department of Administration, Division
of Risk Management. She anticipated additional judgments of $4 to
$5 million during the current fiscal year.
Co-Chair Green and Ms. Daughhettee discussed the option of delaying
payment until FY 04, although after July 15, interest would begin
to accrue.
SB 76
Section 10
Fourth Judicial District BRU
$95,000 general funds
Fairbanks DA office had unexpected move and lease costs due to
the Department of Transportation and Public Facilities'
closure of Fairbanks court building.
Ms. Daughhettee stated that due to budget cuts, the Department of
Transportation and Public Facilities decided to close the old
courthouse and a move was necessary. She noted that while occupying
a State-owned facility, lease was not paid; however, the office now
occupies space in a privately owned facility. She noted that the
Department of Transportation and Public Facilities paid a portion
of the moving expenses utilizing funds saved from the closure of
the courthouse. She stated the requested funds are necessary for
the remainder of the moving expenses and the balance of the annual
lease at the new location.
Co-Chair Green asked if this is a one-time funding request.
Ms. Daughhettee replied that a request for approximately $200,000
is included in the FY 04 operating budget proposal for lease
expenses and moving expenses above the amount contributed by the
Department of Transportation and Public Facilities.
Co-Chair Green requested the budget subcommittee research this
matter further.
SB 76
Section 16(7)
$18,000 general funds
Miscellaneous Claims and Stale-dated Warrants $17,947.82
Ms. Daughhettee explained this request is to cover payment for
services rendered in FY 02 but not invoiced until after the closure
of FY 02 accounting.
Co-Chair Green commented that this item is not unusual and she
requested the Department implement a system to anticipate the
receipt of late invoices.
Ms. Daughhettee stated this is the largest claim of this type for
the Department. She explained the situation in which the
Legislature authorized transfer of unspent FY 02 funds to FY 03 to
cover large budget reductions. She reported that the maximum amount
of funds was transferred, resulting in insufficient funds to pay
the late invoices.
AT EASE 11:00 AM / 11:01 AM
Co-Chair Wilken asked the balance of the catastrophic reserve fund.
Ms. Daughhettee replied she would provide the information.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 11:02 AM
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