Legislature(2007 - 2008)SENATE FINANCE 532
05/12/2007 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HCR6 | |
| HB113 | |
| HB162 | |
| HB90 | |
| HB166 | |
| HB90 | |
| SB178 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 177 | TELECONFERENCED | |
| + | HCR 6 | TELECONFERENCED | |
| + | HB 113 | TELECONFERENCED | |
| + | HB 90 | TELECONFERENCED | |
| += | HB 162 | TELECONFERENCED | |
| + | HB 166 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
May 12, 2007
9:16 a.m.
CALL TO ORDER
Co-Chair Bert Stedman convened the meeting at approximately
9:16:39 AM.
PRESENT
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Senator Fred Dyson
Also Attending: REPRESENTATIVE RALPH SAMUELS; REPRESENTATIVE
BILL THOMAS; REPRESENTATIVE BILL STOLTZ; TOM WRIGHT, Staff to
Representative John Harris; SIDNEY MORGAN, Staff to
Representative Ralph Samuels; MARK DAVIS, Director, Division of
Banking & Securities, Department of Commerce, Community and
Economic Development; JESSE KIEHL, Staff to Senator Kim Elton;
RICK SNOBODNY, Chief Assistant Attorney General, Legal Services
Section-Juneau, Criminal Division, Department of Law; DAVID
GREISEN, Staff to Senator Bert Stedman; KACI HOTCH, Staff to
Representative Bill Thomas; JERRY BURNETT, Director,
Administrative Services Division and Legislative Liaison,
Department of Revenue; EDDY JEANS, Director, School Finance and
Facilities Section, Department of Education and Early
Development; BOB LOESCHER; DR. MICHAEL BENNETT, Optometrist and
President, Alaska Optometric Association; DR. JILL MATHESON,
Optometrist and Chair, Alaska State Board of Optometry
Attending via Teleconference: From Offnet Locations: DAVID
SCHADE, Director, Division of Statewide Services, Department of
Public Safety; DR. DAVID CHAMBERLAIN, Ophthalmologist; DR. ERIC
COULTER, Ophthalmologist; DR. CARL ROSEN, Ophthalmologist and
President, Alaska Society of Ophthalmology; From Mat-Su: CHRIS
SKINNER, Owner, Kelstar Alaska Mortgage Company and President,
Alaska Association of Mortgage Brokers
SUMMARY INFORMATION
HCR 6-CIVICS EDUC/ CITIZENS ADVISORY TASK FORCE
The Committee heard from the resolution's sponsor and reported
the resolution from Committee.
HB 113-OPTOMETRISTS' USE OF PHARMACEUTICALS
The Committee heard from the bill's sponsor and took public
testimony. The bill was held in Committee.
HB 162-MORTGAGE LENDING
The Committee heard from the Department of Commerce, Community
and Economic Development and took public testimony. A committee
substitute and two amendments were adopted and the bill reported
from Committee.
HB 90-CRIMES/CRIM PROCEDURE/SENTENCING
The Committee heard from the bill's sponsors, the Department of
Law, and the Department of Public Safety. A committee substitute
was adopted and the bill reported from Committee.
HB 166-CONTRIBUTIONS FROM PERM. FUND DIVIDENDS
The Committee heard from the bill's sponsor and the Department
of Revenue. A committee substitute was adopted and the bill was
held in Committee.
SB 178-EDUCATION FUNDING
The Committee heard an overview of the bill from the Department
of Education and Early Development. The bill was held in
Committee.
9:17:05 AM
Co-Chair Stedman reviewed the day's agenda.
9:17:48 AM
SENATE CS FOR CS FOR HOUSE CONCURRENT RESOLUTION NO. 6(SED)
Relating to civics education and a citizens' advisory task
force.
This was the first hearing for this resolution in the Senate
Finance Committee.
9:18:04 AM
TOM WRIGHT, Staff to Representative John Harris, the bill's
sponsor by request of the Alaska Association of School Boards,
explained that this resolution would establish a six person task
force to review the findings of the 2006 Alaska Civic Learning
Assessment Project (ACLAP) which had been conducted at the
direction of the Legislature. The proposed task force, which
would consist of two individuals appointed by the Speaker of the
House, two appointed by the Senate President, one appointed by
the Governor and one member of the Department of Education and
Early Development, would develop a list of recommendations that
would be provided to the Legislature within the first 30 days of
the 2008 Legislative Session.
Mr. Wright reminded the Committee that the ACLAP was conducted
the prior year to discuss how the State's education system
"could improve civics learning among K-12 students". A copy of
the ACLAP "Final Report and Policy Brief" dated November 2006
[copy on file] had been included in Members' packets.
9:19:23 AM
In response to a question from Senator Thomas, Mr. Wright
affirmed that civics was currently taught in schools. However,
the Alaska Association of School Boards (AASB) asked
Representative Harris to sponsor this legislation in an effort
"to enhance and encourage curriculum development in order to
help better prepare students as far as civics education is
concerned".
9:19:51 AM
Senator Huggins, a member of the Senate Education Committee,
disclosed that one issue discussed during that Committee's
hearings on this resolution was whether "this would manifest
itself as a mandatory curriculum" component. The determination
was that it would not: AASB assured the Committee that it would
be viewed as "a convincing argument" rather than a mandate.
9:20:39 AM
Co-Chair Hoffman moved to report the resolution from Committee
with individual recommendations and accompanying fiscal notes.
9:20:59 AM
Without objection, SCS CS HCR 6(SED) was REPORTED from Committee
with two previous fiscal notes: $18,500 fiscal note #1 from the
Legislative Affairs Agency and $3,000 fiscal note #2 from the
Department of Education and Early Development.
9:21:47 AM
SENATE CS FOR CS FOR HOUSE BILL NO. 113(L&C)
"An Act relating to the prescription and use of
pharmaceutical agents, including controlled substances, by
optometrists; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
9:22:08 AM
REPRESENTATIVE RALPH SAMUELS, the bill's sponsor, identified the
State's geography and small population base as factors that
limit access to health care in the State. This bill would
enhance health care services by extending prescriptive authority
to optometrists. Alaska would join 45 other states that allow
similar practice.
Representative Samuels declared that expanding the ability of
optometrists, who far outnumber ophthalmologists in the State,
"to do more" would benefit Alaskans.
Representative Samuels stated that the experience of states that
allow optometrists to have prescriptive authority has been
positive.
9:24:02 AM
Senator Thomas understood that college level optometry training
programs include instruction on the use of needles as a matter
of routine. Thus, the seven hours of training identified in this
legislation would be in addition to that training.
9:25:07 AM
Representative Samuels could not speak to that matter, but was
confident it could be addressed by one of the medical
professionals who would be testifying on the bill.
9:25:15 AM
Senator Olson asked how the bill before the Committee differed
from the original bill.
9:25:44 AM
Representative Samuels stated that changes were made to the
education requirements.
9:25:57 AM
In response to a follow-up question from Senator Olson, Co-Chair
Stedman and Representative Samuels advised that the seven hour
training requirement for injecting nontopical therapeutic
pharmaceutical agents, specified in Section 2 subsection (d)(2)
on page 2 lines 16 and 17, was added to the bill.
Representative Samuels also noted that language pertaining to
the use of Botox was added as specified in Section 3 subsection
(a)(1)(E) page 3 lines 2 through 4.
9:26:14 AM
SIDNEY MORGAN, Staff to Representative Ralph Samuels, further
discussed the various provisions that had been added to the bill
to address concerns about injectibles including the provision
that would specify a January 1, 2009 effective date for their
use.
Ms. Morgan also noted that numerous changes had been made by the
House Health, Education & Social Services (HES) Committee, so
much so that the bill increased from two to four pages. The HES
amendments addressed such things as the types of types of
narcotics that could be prescribed and limited the duration of a
prescribed medication to four days.
9:28:37 AM
Co-Chair Stedman asked whether the bill's sponsor was confident
that the zero fiscal note from the Department of Commerce,
Community and Economic Development was a true reflection of the
costs associated with the bill.
9:28:58 AM
Representative Samuels affirmed the accuracy of the fiscal note.
In response to a question from Senator Olson, Co-Chair Stedman
disclosed that numerous ophthalmologists and optometrists had
signed up to testify on the bill.
9:29:48 AM
DR. DAVID CHAMBERLAIN, Ophthalmologist, testified via
teleconference from an offnet location and informed the
Committee that he has practiced in the State for more than ten
years.
Dr. Chamberlain sought to correct misstatements made by a
[unspecified] testifier before another committee of referral
regarding access to health care. Contrary to that testimony,
ophthalmologists do travel to small communities in the State
such as Klawock and Craig.
Dr. Chamberlain stressed that this correction is important as
supporters of the bill tout lack of access as "a big problem"
and thus, reason to support this bill. This is not true. For
example, either he or his practice partner conducts eye clinics
in Klawock once or twice a year. Furthermore, he also regularly
conducts clinics through his job with the Alaska Native Medical
Center, in other small communities including Barrow, Nome,
Kotzebue, Bethel, Dillingham, and Kodiak, and Sitka. The clinics
are conducted in a cooperative effect with optometrists in those
areas.
Dr. Chamberlain pointed out that the Alaska Native Medical
Center also employs optometrists throughout the State. They
serve both their community and its surrounding area.
Dr. Chamberlain continued. When a person with an eye problem "is
sick enough to require an oral or an injectible medicine", the
community's optometrists or village health aide or physician or
nurse practitioner call an ophthalmologist. The State typically
has two ophthalmologists or medical doctors on call at all
times. The point was that this bill "does not increase access to
an optometrist, and actually it may decrease access to an
ophthalmologist, accidentally."
Dr. Chamberlain professed that this bill would reduce training
requirements pertaining to injecting and prescribing medicines.
It would also force a redefinition of the role between
ophthalmologists and optometrists.
9:33:34 AM
Dr. Chamberlain declared that he has a good working relationship
with optometrists throughout that State and that a good system
is in place to address the State's eye care needs.
Dr. Chamberlain advised that medical issues concerning eye-care
are complex. Oftentimes, an eye problem is associated with
another medical issue such as diabetes; few medicines "treat
just the eye". A topical medication applied by an optometrist in
a remote area would allow for sufficient eye examination.
Dr. Chamberlain declared that safeguards must be in place to
protect patients from eye injuries due to "inadvertent intra-
ocular injections". This "accidental perforation of the eyeball"
can occur even when the procedure is conducted by
ophthalmologists and anesthesiologists. However, the highest
percent of this incidence occurs when an injection is
administered by someone other than an ophthalmologist.
9:35:17 AM
Dr. Chamberlain contended that access to quality medical "care
would be reduced" under this bill. Furthermore, "the complexity
of the human organism is such that we need to listen to the
best" medical advice including that of the Controlled Substance
Advisory Committee and the State Medical Board.
"Ophthalmologists are uniquely qualified to provide medical
information, particularly in regards to when it would be
acceptable for a non-ophthalmologist to perform a medical
procedure.
9:36:10 AM
DR. ERIC COULTER, Ophthalmologist, testified via teleconference
from an offnet location to voice concern about the legislation.
He rebuffed the argument that this legislation would assist in
addressing the "lack of care" in the State. He also thought that
adopting this legislation would reduce the quality of eye care
in the State as allowing optometrists "to delve into greater
therapeutic options without proper training" would likely delay
referral to an ophthalmologist.
Dr. Coulter pointed out that topical eye drops and other
therapeutic medicines currently utilized by optometrists are the
standard medical response to eye problems even by
ophthalmologists. The need for injectibles is relatively ""rare"
and, when administered, is typically in the form of an
intravenous antibiotic. A person requiring that level of care is
likely receiving in-patient hospital care.
Dr. Coulter contended that a medical situation occurring in a
remote area that required more than topical treatment would
likely require more extensive medical care than an optometrist
could provide.
Dr. Coulter advised the Committee that he had submitted written
remarks [copy on file] which outlined many of his concerns. It
also overviewed the optometry field's attempt to broaden their
scope of practice nationwide. One of their arguments is that
Alaska is behind the times because it has not passed similar
legislation. To that point, he thought that each state should
address its needs independently.
Dr. Coulter shared that the American Academy of Ophthalmology's
research department considered this legislation to be "a more
loosely written" and broader bill than any but five of the 45
States that have adopted legislation on this issue.
Dr. Coulter urged the Committee to conduct a thorough review of
the bill before taking action on it; specifically in that
passage of the bill in its current form might have" unintended
consequences". The argument that "a lack of care in the State
warrants expanded pharmacologic privileges, in my mind, is just
misleading". He urged the Committee to seek supporting evidence
to that claim, particularly in respect to rural areas of the
State.
Dr. Coulter argued that many communities experience regular eye
care service and referrals to ophthalmologists are readily
available.
Dr. Coulter shared that an ophthalmologist who practiced on the
Kenai Peninsula for more than 30 years found very little use for
injectibles and even let his narcotics license expire.
9:41:38 AM
Dr. Coulter urged the Committee to respect "the historical
validity of our medical system and try not to rewrite what
constitutes competent medical care in our communities." He
reminded the Committee that the Alaska State Medical Board, the
Alaska State Medical Association, the Alaska Ophthalmology
Society, and the American Academy of Ophthalmology did not
support this bill.
9:42:14 AM
Senator Thomas would have expected the American Academy of
Ophthalmology to be against the bill. Continuing, he asked
whether the concern is that "some obscure eye diseases would not
be diagnosed properly based on" a patient being treated solely
by an optometrist and that the patient would not seek further
care because they had been treated by an eye doctor,
irrespective of the fact the eye doctor was not an
ophthalmologist.
9:43:00 AM
Dr. Coulter stated that the concern goes beyond that
circumstance; it includes the complete evaluation of such things
as "whose training is more adequate."
Dr. Coulter affirmed there was a good working relationship
between the two professions as evidenced by the fact that he
refers patients to optometrists and they refer patients to him.
The concern "is not so much a turf battle" as it is the
misconception that expanded pharmacologics is somehow going to
improve the care in rural areas if it is delivered by people
that are more accessible.
Dr. Coulter agreed that there were more optometrists than
ophthalmologists' practicing in the State, but that is true in
every State in the nation "because of the different training
requirements". The concern is not that optometrists are
incapable of utilizing pharmacologics, it is to the "casual
comments about the lack of care in communities because there are
so few ophthalmologists". This is a misguided argument.
Dr. Coulter reiterated that a person who does not respond well
to the topical medications currently available to optometrists
is likely a person with a serious medical condition. Thus, if
the intent is to enhance the quality of care in communities, the
Committee should consider the fact that this legislation might
be "counter-intuitive" to the goal: it might actually delay a
referral to a specialist.
9:45:03 AM
DR. CARL ROSEN, Ophthalmologist and President, Alaska Society of
Ophthalmology, testified via teleconference from an offnet
location. He reviewed his extensive medical background and noted
that as a result of his experience he had "a unique vantage
point" regarding eye injections.
Dr. Rosen stated that the Society considers this a bad bill for
a number of reasons. "One is that it is so extremely difficult
to acquire acceptance into a medical school"; ophthalmology
programs are very selective and once admitted, students are
subjected to six years of rigorous training.
Dr. Rosen also pointed out that, unlike optometrists,
ophthalmologists have hospital privileges and are on-call in
case of an emergency. This has been the practice for more than
30 years.
9:47:15 AM
Dr. Rosen informed the Committee that ophthalmologists typically
undergo 24,000 hours of clinical training; optometrists however
typically undergo 2,000 hours of such training.
Dr. Rosen declared that this bill would expand optometrists'
"scope of practice enormously," specifically their prescriptive
authority. They would be authorized to prescribe Class III, IV,
and V medications, including codeine, pain medications, valium,
cardiac, diabetic, and anti-seizure medications to children,
pregnant women, infants, and the elderly.
Dr. Rosen recommended the formation of a committee to determine
"exactly what is needed". Their task should include a review of
current health care services, timetables, limitations, and even
what diseases should be addressed. He was confident that such a
committee could develop workable solutions to the issues, with
"better limits and boundaries that the ophthalmology and medical
community can live with".
9:49:45 AM
REPRESENTATIVE BILL THOMAS declared that this bill is about the
availability of adequate eye care, specifically for people
living in rural communities. A person living in Haines, for
example, would be required to spend approximately $1,000 dollars
to get their child to Juneau or Anchorage for treatment. Such
costs would be alleviated where there an opportunity to be
treated by an optometrists in their community.
Representative Thomas observed that the Legislature routinely
strives to allow those in the medical field to "maximize their
abilities". Rather than this being "a turf war", the effort
should be on taking care of people.
Representative Thomas discussed a problem a family member had
with treatment provided by an ophthalmologist. It was
exacerbated by the fact that she had to travel from a rural
community to Juneau for treatment.
Representative Thomas respected the services provided by
ophthalmologists and urged them to respect the abilities of
optometrists. The on-going challenge of attracting medical
professionals to the State could be lessened by allowing them to
perform duties they were trained for.
Representative Thomas urged the Committee to pass the bill. "It
is important to small communities."
9:53:05 AM
BOB LOESCHER testified in Juneau and informed the Committee that
as a legally blind man, he has received treatment from both
optometrists and ophthalmologists.
Mr. Loescher, on behalf of health care consumers, questioned the
reason the bill was not accompanied by a fiscal note that
addressed whether this legislation would increase costs or risks
to consumers.
Mr. Loescher provided a list of questions [copy on file] that
should be asked on behalf of consumers. He contended that the
legislation would impact the Department of Commerce, Community
and Economic Development since they administer and assist boards
pertinent to this legislation such as the State Medical Board
and the Board of Optometry Examiners. New regulations, testing
and monitoring pertaining to the expanded scope of practice for
optometrists would be required.
Mr. Loescher agreed that the bill would increase service to
people living in rural Alaska. However, there is concern that
this expanded service might increase the cost of Medicaid for
young people and the elderly. This should be addressed in a
fiscal note.
Mr. Loescher has spent considerable time tracking this bill
during its progression through the Legislature. The questions he
has provided have been well-researched and should be addressed.
For instance, this bill would require optometrists to undergo
continuing education; the question is where and who would
provide that training. This might require the involvement of the
Department of Labor and Workforce Development. Other State
agencies and departments might also be affected by this bill.
9:58:46 AM
Mr. Loescher summarized his goals. One is that adequate consumer
protection be provided. This would require State boards and
agencies to be involved in certifying and monitoring doctors.
The other goal would be to ensure that the State has the
"highest qualify medical care for all Alaska citizens performed
by the most qualified persons." State government is responsible
for insuring these standards.
Mr. Loescher concluded that these responsibilities must be
addressed in a fiscal note and reviewed by the Committee.
9:59:56 AM
Senator Elton informed the Committee he had previously met and
discussed this bill with Mr. Loescher, who is one of his
constituents. During that discussion, Mr. Loescher asked Senator
Elton to read his list of questions to the Committee, however,
Senator Elton did not deem that necessary now as it was part of
the record and each Member of the Committee had received a copy
of it.
Senator Elton stated that the list of questions was quite
extensive and an immediate response was unlikely. Therefore, he
committed to being responsible for getting the appropriate
entities to respond.
Co-Chair Stedman acknowledged. Time would be available to
further address concerns since the intent was to hold the bill
in Committee.
10:00:54 AM
Senator Huggins addressed the concern raised in a May 11, 2007
letter [copy on file] from Mr. Loescher that optometrists would
be allowed to administer Botox: optometrists would not be
allowed to administer that drug under the Senate Labor and
Commerce version of the bill before the Committee.
Mr. Loescher appreciated the clarification. Optometrists had
been allowed to administer Botox in an earlier version of the
bill.
10:02:01 AM
DR. MICHAEL BENNETT, Optometrist and President, Alaska
Optometric Association testified in Juneau on behalf of the
Association's 107 members and their patients.
Dr. Bennett considered the scope of the bill to be "far more
limited" than it was being portrayed. Nine states have approved
legislation allowing optometrists to utilize injectibles with
zero requirements and limitations. At least ten states do not
impose limits on the length of time a drug could be prescribed.
The variety of approaches taken by states on this type of
legislation makes comparisons difficult.
Dr. Bennett expressly clarified that this bill "does not grant
surgical privileges" to optometrists. Such privileges were not
being sought by optometrists. There was no desire "to usurp the
position" of ophthalmologists.
10:04:27 AM
Dr. Bennett reviewed the education received by optometrists. The
"four rigorous years" of training beyond that required for a
bachelors' degree, qualified them as a "doctoral level
profession". The 200 hours of pharmacological training enables
them to be well-qualified for the prescriptive rights provided
in this bill. Other training they receive is closely aligned
with that required of doctors and dentists.
Dr. Bennett stated that the 2,000 hours of "supervised direct
patient contact" optometrists undergo is not limited to healthy
young individuals. A large number of eye care problems "arise in
people who are older or have other debilitating diseases." This
is reflected in the patient contact training. Optometrists also
participate in hospital-based training.
Dr. Bennett informed the Committee that optometrists conduct a
complete medical background, including a review of the patient's
medications, on each patient's initial visit. Optometrists are
also trained to spot signs of such things as high blood pressure
during an eye examination. Optometrists also work closely with
patients' primary care doctors on a variety of health issues.
Dr. Bennett clarified that the course work identified in this
bill, such as the seven hour training requirement pertaining to
the injection of nontopical therapeutic pharmaceutical agents,
should be viewed as "refresher" training, as that training is
conducted in optometry school.
Dr. Bennett stated that the use of these new privileges would be
rather limited and would not be utilized on a day to day basis.
Typical infection treatment would tend to be an oral antibiotic
or a topical medication. Extreme cases would continue to be
referred to another doctor.
10:08:44 AM
Senator Olson asked the Board of Optometry's position on the
bill.
Dr. Bennett deferred to the next testifier, who was the Chair of
that Board.
Senator Olson, a medical doctor, asked regarding the training an
optometrist would have in respect to treating a person who had
an anaphylactic shock response to an injection.
Dr. Bennett clarified that the most common cause of an
anaphylactic reaction in an optometrist's office is from
dilating agents. This risk is ever-present to him since he
conducts an average of ten dilations a day in his practice.
Current law prohibits him from even using an EpiPen to address
an anaphylactic situation even though "anyone with a bee string
allergy" can. This could be considered one of "the most critical
aspects" of this bill.
10:10:22 AM
Senator Olson inquired to the number of optometrists who possess
an Advanced Cardiac Life Support (ACLS) certification, as that
would allow them to administer to an anaphylactic individual.
Dr. Bennett did not know.
Senator Olson spoke to the testimony proclaiming that this
legislation would provide optometrists in Alaska the authorities
granted them in other states. Oklahoma, which is considered to
have some of "the most liberal" regulations in this regard, has
experienced some negative repercussions.
Senator Olson asked Dr. Bennett to compare the prescriptive
authority this bill would provide to those of other states. Even
though the sponsor statement indicates that marijuana use would
not be allowed under this legislation, he understood that
marijuana is reportedly effective in treating glaucoma.
Dr. Bennett affirmed that marijuana has been used to treat
glaucoma; however, other medications are more effective.
Senator Olson asked how this legislation compared to legislation
adopted by other states.
Dr. Bennett noted that Alaska currently ranks around 48th of 50
states in the authority granted to optometrists. This
legislation would place Alaska in the fifteenth to twentieth
place range.
Senator Olson asked how the State would rank in terms of the
prescriptive authority granted in this legislation.
Dr. Bennett would provide that information.
10:12:26 AM
DR. JILL MATHESON, Optometrist and Chair, Alaska State Board of
Optometry, addressed a question asked earlier by Senator Olson
by stating that the Board, which consists of four optometrists
and one member of the public, was in unanimous support of the
bill.
Dr. Matheson next addressed some of the fiscal concerns that
have been raised. The Board of Optometry is self-sufficient in
that any expenses incurred to it by this bill or any other
function it undertakes, are covered by optometrists' licensing
fees. Therefore any expense incurred by the Department of Labor
and Workforce Development or the Department of Commerce,
Community and Economic Development as a result of this
legislation would be addressed in that manner.
Dr. Matheson also clarified that no expense would be incurred to
the State for any continuing education programs as optometrists
pay those themselves.
Dr. Matheson informed the Committee that current regulations
mandate that any continuing education program utilized by
optometrists be from an accredited school of optometry. Since no
such school is located in State, the Board would search for a
national program that could provide the continuing education
courses required by this bill.
10:15:09 AM
Dr. Matheson addressed the expense this legislation might incur
to patients, insurance companies, and to Medicaid. Some of those
costs might be reduced. For example, expanding the scope of what
an optometrist could do would negate costs a patient might incur
by having to undergo another exam when referred to another
provider.
10:15:52 AM
Senator Olson asked the level of disciplinary action the Board
has taken during Dr. Matheson's tenure on it.
10:16:08 AM
Dr. Matheson stated that no disciplinary action has occurred in
the two and a half to three years she has been on the Board. The
open cases currently under review primarily deal with failure to
renew a license.
Senator Olson observed that the lone fiscal note accompanying
the bill is a zero fiscal note from the Department of Commerce,
Community and Economic Development. He asked whether expanding
the scope of what optometrists could do might increase the
number of disciplinary actions coming before the Board.
Dr. Matheson expressed that the Board would be billed for any
legal expenses incurred by the Department of Law's involvement
in a disciplinary case.
Senator Olson directed attention to language in Section 4
subsection (a)(2)(B), page 3 lines 9 through 13 of the bill,
which references a licensee's federal Drug Enforcement
Administration registration number for controlled substances. He
asked how many optometrists currently have such a license.
Dr. Matheson responded that no such license is held by any
optometrist in the State because they currently do not have the
authority to prescribe controlled substances.
Senator Olson next directed attention to Section 3 subsection
(a)(1)(E), page 3 line 2, which specifically excludes the
prescription of a certain type of drug. The question was whether
this language could be expanded to also exclude "synthetic
Botox-type drugs".
Dr. Matheson was unsure.
Senator Olson expressed that this could be further investigated
since the bill would be held in Committee.
There being no further questions or testimony to come before the
Committee, Co-Chair Stedman ordered the bill HELD in Committee.
AT EASE 10:18:40 AM / 10:19:02 AM
CS FOR HOUSE BILL NO. 162(L&C)
"An Act relating to mortgage lenders, mortgage brokers,
mortgage originators, state agents who collect program
administration fees, and other persons who engage in
activities relating to mortgage lending; relating to
mortgage loan activities; relating to an originator fund;
relating to fees for mortgage loan transactions; making
certain violations unfair trade practices; relating to
persons who are licensed under the Alaska Small Loans Act;
and providing for an effective date."
This was the third hearing for this bill in the Senate Finance
Committee.
Co-Chair Stedman acknowledged the significant amount of
testimony this bill has generated. The Committee has worked with
the bill's sponsor Representative Bob Lynn, and the Division of
Banking and Securities in the Department of Commerce, Community
and Economic Development as well as Senator Elton's office to
develop a new committee substitute. The committee substitute
primarily corrects drafting errors as opposed to making
substantive changes.
Senator Huggins moved to adopt Finance committee substitute
Version 25-LS0070\T, Bannister, dated May 11, 2007, as the
working document.
There being no objection, the Version "T" committee substitute
was ADOPTED as the working document.
10:21:14 AM
JESSE KIEHL, Staff to Senator Kim Elton, advised that Senator
Elton's office had worked with the Division of Banking and
Securities in the Department of Commerce, Community and Economic
Development to make technical and stylist revisions to the bill.
This would include such things as removing extraneous,
duplicative provisions and provisions not required under current
law as well as conforming language in the bill to the
Legislative drafting manual.
Mr. Kiehl affirmed that no substantive policy changes were made
in the Version "T" committee substitute.
[NOTE: Amendment #1 was not offered.]
Amendment #2: This amendment makes the following additions and
deletions to the bill.
The phrase "and licensee under AS06.60; in this paragraph,
'licensee under AS 06.60' has the meaning given to 'licensee' in
AS 06.60.990" in Section 1, AS 06.01.050(3) on page 1 line 13
through page 2 line 2 is deleted and replaced with the following
language.
"a licensee under AS 06.60, a small mortgage lender
under AS 06.60, and an originator under AS 06.60 who is
employed by or works under exclusive contract for a small
mortgage lender; in this paragraph,
(A) "licensee under AS 06.60" has the meaning
given to "licensee" in AS 06.60.990;
(B) "originator under AS 06.60" has the meaning
given to "originator" in AS 06.60.990;
(C) "small mortgage lender under AS 06.60" has
the meaning given to "small mortgage lender" in AS
06.60.990;"
Language on page 2 line 10 of subsection (b) of Section
06.60.010. License required. in Article 1. Licensing., added to
Section 2 by the addition of a new chapter, Chapter 60. Mortgage
Lending Regulation Act., is revised to read as follows.
(b) Except as provided by AS 06.60.017, a person may
not operate as an originator in this state unless the
person is a natural person who is
A new section is also added to Article 1 of Section 2, as
amended by the addition a Chapter 60, following line 30 on page
3, as follows.
"Sec. 06.60.017. Small mortgage lenders and
originators. (a) Notwithstanding AS 06.60.010, the
department may register
(1) a person to operate as a small mortgage
lender;
(2) a natural person to operate as an originator
for a small mortgage lender if the person is an employee
of, or working under exclusive contract for, the small
mortgage lender.
(b) To qualify for registration as a small mortgage
lender, a person shall
(1) submit an application on a form established
by the department;
(2) pay a fee of $150;
(3) certify that all money used in the operation
of the person's business as a small mortgage lender belongs
to the person and is not borrowed or received from another
person; and
(4) be approved by the department under (d) of
this section.
(c) To qualify for registration as an originator under
this section, a person shall
(1) submit an application on a form established
by the department;
(2) pay a fee of $75;
(3) be approved by the department under (d) of
this section.
(d) Before approving an application of a person under
this section, the department shall determine that
(1) if the person is applying for registration as
a small mortgage lender, the financial responsibility,
experience, character, and general fitness of the person,
and of the person's directors, officers, members, owners,
and other principals, and the organization and operation of
the applicant indicate that the business will be operated
efficiently and fairly, in the public interest, and under
the law; and
(2) the person has not
(A) been enjoined by a court of competent
jurisdiction from engaging in an aspect of the
business of providing financial services to the
public; and
(B) within the previous seven years,
(i) been prohibited by a federal or
state regulatory agency from engaging in,
participating in, or controlling a finance-
related activity that involves providing
financial services to the public;
(ii) been convicted, including a
conviction based on a guilty plea or a plea of
nolo contendere, of a felony or a misdemeanor
involving fraud, misrepresentation, or
dishonesty;
(iii) committed an act, made an
omission, or engaged in a practice that
constitutes a breach of a fiduciary duty;
(iv) made a false material statement on
an application submitted under this chapter; or
(v) violated a provision of this
chapter, a regulation adopted under this chapter,
or an order of the department under this chapter.
(e) A registration issued under this chapter remains
in effect for two years after the registration is issued.
(f) A small mortgage lender may renew a registration
by submitting to the department 30 days before the
expiration of the registration
(1) a renewal application in the form and manner
established by the department;
(2) a biennial registration fee of $150; and
(3) a report identifying any changes in the
information provided under (b) of this section.
(g) An originator may renew a registration as an
originator by submitting to the department 30 days before
the expiration of the licensee's registration
(1) a renewal application in the form and manner
established by the department;
(2) a biennial registration fee of $75; and
(3) a report identifying any changes in the
information provided under (c) of this section.
(h) An application under this section is considered
granted unless, within 30 days after the department
determines it has received a complete application, the
department notifies the applicant that the department has
denied the application because of the applicant's
noncompliance with this section.
(i) The department may adopt regulations to implement
this section
(j) In this section,
(1) "registration" means registration under this
section;
(2) "small mortgage lender" means a person who is
registered under this section.
Changes made to Article 4. Discipline and Investigation., added
to Section 2 by the addition of Chapter 60, are as follows.
The language "or a registration under AS 06.60.017" is inserted
following "license" in subsection (a) of Section 06.60.200.
Disciplinary action., page 16 line 22 and "or small mortgage
lender" is inserted following "licensee" on page 16, line 23.
The phrase "or small mortgage lender" is inserted following
"licensee" in Section 06.60.200 subsection (a)(2) on page 17,
line 4 and in subsection (a)(2)(C) on page 17, line 8.
The language "or a registration under AS 06.60.017" is inserted
following "license" in Section 06.60.200 subsection (a)(2)(E) of
on page 17 line 10.
Furthermore, the words "or the registration under AS 06.60.017"
are added following "license" in Section 06.60.200 subsection
(a)(2)(F), page 17 line 13. Also on lines 14 and 15 of
subsection (F), the phrase "is not fit to engage in the
activities for which that licensee was licensed" is deleted and
replaced with "or small mortgage lender is not fit to engage in
the activities for which the licensee was licenses or small
mortgage lender was registered".
In addition, the phrase "or the small mortgage lender's
business" is inserted following "business" in Section 06.60.200
subsection (a)(2)(G) on page 17, lines 18 and 19.
The phrase "or the registration under AS 06.60.017" is inserted
following "license" in Section 06.60.200, subsection (a)(3) page
17, line 22.
The language ", or the registration of a small mortgage lender,"
is inserted following "licensee" on page 17, line 24 of Section
06.60.200, subsection (b). Also in subsection (b), the language
". A person whose license" is deleted and replaced with "or
registered under AS 06.60.017. A person whose license or
registration under AS 06.60.017" on page 17, line 27.
Furthermore, the words "or another registration under AS
06.60.017" are inserted following "license" in subsection (b) on
page 17, line 28.
The words "or a registration of a small mortgage lender" are
inserted following "license" in Section 06.60.230. Divestment.
of Article 4, page 18 line 11.
Also in Section 06.60.230, the phrase "or the small mortgage
lender" is inserted following "licensee" on page 18, line 12 and
the words "or small mortgage lender" are inserted following
"licensee" on page 18, line 13.
The words "of revoked license" are deleted from the title of
Section 06.60.240. Reinstatement of revoked license" on page 18
line 15 of Article 4. The revised heading would therefore read
Section 06.60.240. Reinstatement.
Also in Section 06.60.240, the words "if the licensee" on page
18, line 16 are deleted and the words "or registration under AS
06.60.017 if the licensee or small mortgage lender" are
inserted.
On page 18 line 18 of that same section the words ", the
licensee" are deleted and replaced with "or registration under
AS 06.60.017, the licensee or small mortgage lender".
The words "or a small mortgage lender" are inserted following
"chapter" in subsection (a) of Section 06.60.250. Investigation
and examination. of Article 4, page 18, line 22. That same
language is inserted in that same subsection following
"licensee" on page 18, line 27.
Furthermore, the words "or small mortgage" are inserted
following "licensee" in Section 06.60.250., subsection (b)(1) on
page 18, line 31 and in subsection (b)(2) on page 19, line 1.
A new paragraph is added following language on page 17, line 3
of Article 4 as follows.
"(2) the small mortgage lender has violated a
provision of this chapter applicable to the small mortgage
lender;"
Changes to Article 5. Business Duties and Restrictions., added
to Section 2 by the addition of Chapter 60, are as follow.
The phrase ", including a small mortgage lender," is inserted
following "person" on page 20, line 9 in Section 06.60.320.
False, misleading, or deceptive advertising prohibited.
Also added to Section 06.60.320 is the phrase ", including a
small mortgage lender," following "person" on page 20, line 13.
Added to Section 06.60.340. Prohibited activities. of Article 5
on page 20, line 26 following the word "chapter," is the
language "a person who is a small mortgage lender,".
In addition, the word "registration," is inserted following
"license," on page 22, line 10, of Section 06.60.340 subsection
(10).
The phrase "or small mortgage lender" is inserted following
"licensee," on page 24, line 1 in subsection (a) of Section
06.60.370. Criminal liability of licensee.
Also, in subsection (b) of Section 06.60.370, the words ",
including a small mortgage lender," are inserted following
"person" on page 24, line 5.
Furthermore, in subsection (c) of Section 06.60.370, the words
", person who is a small mortgage lender," are inserted
following "licensee" on page 24, line 7.
In subsection (d) of Section 06.60.370, the words "or a small
mortgage lender" are inserted following "licensee" on page 24,
line 11.
Finally, in subsection (e) of Section 06.60.370, the words " or
without being registered under AS 06.60.017," are inserted
following "license" on page 24, line 14.
Changes made to Article 6. Enforcement., added to Section 2 by
the addition of Chapter 60, are as follows.
The words ", including a small mortgage lender," are inserted
following "person" in Section 06.60.400. Cease and desist
orders. on page 24, line 21.
In subsection (a) of Section 06.60.410. Censure, suspension, or
bar. of Article 6, the phrase "suspend the registration of a
small mortgage lender for a period not to exceed 12 months," is
inserted following "months," on page 24, line 25. In addition,
the words "or a small mortgage lender" are inserted following
"licensee" on page 24, line 26.
The words ", to the small mortgage lender," are inserted
following "licensee" in subsection (a)(3) of Section 06.60.410
on page 24, line 30
In subsection (b) of Section 06.60.410, the phrase "or
registration as a small mortgage lender" is inserted following
"license" on page 25, line 3.
Furthermore, in subsection (c) of Section 06.60.410, the words
"or a small mortgage lender" are added following "licensee" on
page 25, line 6. Also in subsection (c), the words "licensee is
conducting the licensee's business" are deleted and replaced
with "licensee or small mortgage lender is conducting the
licensee's or small mortgage lender's business", on page 25 line
7.
Finally in subsection (c) the words "or a small mortgage lender"
are inserted following "licensee" on page 25, line 9.
Language in subsection (a) of Section 06.60.420. Civil penalty
for violations. of Article 6 is also changed. The words ",
including a small mortgage lender," is added following "person"
on page 25, line 10.
Language in subsection (a) of Section 06.60.430. Additional
enforcement provisions, actions, and rights. of Article 6 is
also changed. The words "or a small mortgage lender" are
inserted following "licensee" on page 25, line 17.
Also in subsection (c) of Section 06.60.430, the words ", a
small mortgage lender," are inserted following "licensee" on
page 25, line 21. In addition, "or small mortgage lender" is
inserted following "licensee" on page 25, line 22.
A new section is inserted into Article 6 following line 30, page
25 as follows.
"Sec. 06.60.440. Definition. In AS 06.60.400 -
06.60.440, "small mortgage lender" includes a natural
person who is an employee of, or working under exclusive
contract for, a small mortgage lender."
Changes made to Article 10. Miscellaneous Provisions., added to
Section 2 by the addition of Chapter 60 are as follows.
The phrase ", including a small mortgage lender," is inserted
following the first occurrence of "person" in Section 06.60.890.
Application to Internet activities. on page 32, line 23.
In addition, the words ", including a small mortgage lender to
the extent this chapter applies to a small mortgage lender," are
added following "person" in Section 06.60.905. Untrue,
misleading, or false statements. on page 33 line 3.
Finally, the last change made by the amendment is to Article 11.
General Provisions., added to Section 2 by Chapter 60, is the
insertion of the phrase "(26) "small mortgage lender" means a
person registered under AS 06.60.017" following "purposes"
following line 7 on page 37.
Senator Huggins moved Amendment #2.
Co-Chair Stedman objected for discussion.
10:22:39 AM
MARK DAVIS, Director, Division of Banking & Securities,
Department of Commerce, Community and Economic Development
explained that this amendment would, in essence, establish an
exemption for persons who make six or less mortgage loans a
year. "This is essentially a private banking exemption."
Mr. Davis clarified however, that the person would still be
subject to the examination and enforcement provisions specified
in the bill. This is important because activities in the private
banking category are currently unregulated.
Mr. Davis considered the exemption provided by the amendment to
be "a workable solution" in regards to these individuals. While
this limited exemption would allow these persons to continue
their commercial and residential lending activities, it would
now require them to meet both federal and State regulations, be
subject to examinations, and to be held liable for civil
penalties if they violate the Act. This would prevent predatory
lending activities from occurring.
10:24:17 AM
Senator Thomas asked the definition of "person" in this case.
Mr. Davis clarified that the reference to "person" would apply
to "either a legal entity or a natural person".
Senator Thomas understood therefore that this exemption could
apply to an entity other than a person.
Mr. Davis affirmed. For instance, it could apply to a limited
liability company provided certain terms were met. The entity
being exempted must be putting its "own money at risk", not
money that had been borrowed. This is a very important element
in the amendment.
10:25:06 AM
Senator Thomas understood that the maximum number of
transactions that could occur would be six.
Mr. Davis responded that the requirement of "six or less" was
deemed appropriate.
Co-Chair Stedman asked whether the Department was in support of
the amendment.
Mr. Davis responded in the affirmative.
10:25:25 AM
Senator Olson asked whether anyone from the industry was
available to address the amendment as the nine page amendment
appeared to be a complicated one.
10:26:04 AM
Co-Chair Stedman asked whether anyone from the industry wished
to testify to the amendment.
No one came forward.
Senator Olson considered that to indicate there was no industry
concern to the amendment.
Co-Chair Stedman removed his objection.
Without further objection, Amendment #2 was ADOPTED.
10:27:27 AM
Amendment #3: The amendment deletes the entirety of language in
subsection (8)(B) of Section 06.60.340. Prohibited activities.
under Article 5. Business Duties and Restrictions, on page 21,
line 30 through page 22, line 1, added to Section 2 of the bill
by Chapter 60. Mortgage Lending Regulation Act. The language
being deleted reads as follows.
(B) the person funds the loan at the rate,
terms, and costs state in the good faith estimate provided
to the borrower at the time the prequalification letter was
issued or the loan commitment was made;
The amendment also allows for technical changes in subsection
(8) resulting from the removal of subsection (B).
Senator Elton moved Amendment #3.
Co-Chair Stedman objected for discussion.
AT EASE: 10:27:51 AM / 10:29:09 AM
Mr. Davis explained that this amendment would remove language
that allowed a person to provide a "cure" for a falsehood they
made in a commitment letter. The Division supported the
amendment.
Co-Chair Stedman removed his objection.
There being no further objection, Amendment #3 was ADOPTED.
10:29:54 AM
CHRIS SKINNER, Owner, Kelstar Alaska Mortgage Company and
President, Alaska Association of Mortgage Brokers, testified via
teleconference from Mat-Su and informed the Committee that she
had provided written testimony [copy not on file] in support of
the bill provided it did not contain any language recommended by
the American Financial Services Association (AFSA).
10:31:01 AM
Senator Thomas asked what was referred to under Alaska Statute
(AS) 06.20, as referenced in the definition of a "covered
person" on page 24 line 16 of the bill.
Mr. Davis stated that AS 06.20 referred to the State's Small
Loan Act.
Senator Thomas acknowledged.
10:32:05 AM
Co-Chair Hoffman moved to report Senate Finance committee
substitute for HB 162, Version 25-LS0070\T from Committee with
individual recommendations and accompanying fiscal notes. [NOTE:
The motion did not include a reference to the two amendments
adopted by the Committee; however, that was the Committee
intent.]
There being no objection, SCS CS HB 162(FIN) was REPORTED from
Committee with three previous fiscal notes: zero fiscal note #1
from the Department of Law, indeterminate fiscal note #2 from
the Department of Administration, and $377,500 fiscal note #3
from the Department of Commerce, Community and Economic
Development.
AT EASE 10:32:37 AM / 10:34:40 AM
SENATE CS FOR CS FOR HOUSE BILL NO. 90(JUD)
"An Act relating to the purchase of alcoholic beverages and
to access to licensed premises; relating to civil liability
for certain persons accessing licensed premises; requiring
driver's licenses and identification cards to be marked if
a person is restricted from consuming alcoholic beverages
as a result of a conviction or condition of probation or
parole and relating to fees for the marked license or card;
relating to the information contained on driver's licenses;
requiring the surrender and cancellation of driver's
licenses and identification cards under certain
circumstances; relating to the reporting of certain crimes;
relating to prostitution; relating to the DNA registration
system; relating to credit toward service of a sentence of
imprisonment; relating to violation of probation and parole
conditions by sex offenders; relating to bail; relating to
distribution of certain materials to minors; relating to
time limitations for prosecution of certain crimes;
relating to sex offender registration; relating to the
maximum time for probation; relating to certain post-
conviction relief applications; relating to good time; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Stedman expressed that this bill proposes a fairly
substantial policy change.
10:35:21 AM
REPRESENTATIVE RALPH SAMUELS, co-sponsor of the bill, considered
the majority of the changes proposed in the bill as small policy
changes. Most were proposed by the Governor Sarah Palin
Administration to address loopholes in the State's criminal
justice system. The Department of Law would provide more in-
depth information on the more substantive changes included in
the bill
10:36:33 AM
Representative Samuels reviewed the key components of the bill.
It would allow a sex offender who violated certain conditions of
their probation or parole to be charged with a class A
misdemeanor. This provision was requested by the law enforcement
community.
Representative Samuels stated that the bill would also expand
the penalty for sending indecent material to minors. Currently
this is only a crime if the material being sent portrays minors.
This bill would expand that to include pornographic material
depicting adults.
Representative Samuels stated that the bill would also allow for
the forfeiture of property such as computers that might be used
to electronically distribute indecent material to minors.
Representative Samuels advised that the bill would also add
murder, attempted murder, and kidnapping to the list of crimes
exempted from the State's statute of limitations.
10:37:34 AM
Representative Samuels stated that expanding the list of crimes
exempted from the statute of limitations would assist the
State's cold case investigative unit's activities. This unit,
which has received increased funding from the Legislative in
recent years, has had success in solving several old murder
cases including the "infamous case" about the murder of a woman
named Bonnie Craig.
Representative Samuels stated that other changes include further
defining what would be considered "new information" as it
relates to bail hearings and disallowing electronic monitoring
time in a private residence from qualifying as a credit toward a
person's sentencing time.
10:38:56 AM
Representative Samuels continued his review of the bill. It
would increase the maximum time a person convicted of a sex
offense could be on probation to 25 years. This would allow
conformity with sex offender legislation adopted the previous
year.
Representative Samuels also pointed out that the bill would
change current law to require individuals convicted of
distributing indecent materials to minors electronically to
register as a sex offender.
10:39:35 AM
Representative Samuels stated that a new provision of the bill
also addressed post-conviction relief. This refers to the
situation where a person would "go to court yet again to try and
get" their conviction mitigated after they had been convicted
and the appeals they filed failed.
Representative Samuels explained that this provision resulted
from a victims' rights movement that started after a 1985 murder
in Anchorage that was "perpetrated by a 15 year old girl and a
19 year old man". The daughter of a woman who was involved in
that case, and who has since died, is still "being dragged into
court 22 years later" due to continuing post-conviction relief
proceedings. This legislation would further efforts to tighten
up post-conviction relief hearings.
10:40:31 AM
Representative Samuels stated that the bill also specifies that
a person could not receive "good time" sentencing deductions for
time spent in a treatment program. This would apply to programs
outside of the Department of Corrections programs which are
conducted in house.
10:40:56 AM
Representative Samuels advised that the changes he would now
address might be more appropriately addressed by the Department
of Law or by Senator Dyson's staff as they had assisted in their
development.
Representative Samuels continued. Changes were made to statutes
through which individuals accused of victimizing women and
children by forcing them into prostitution, are prosecuted. This
provision, which had been proposed in a separate bill, had been
"rolled in" to this bill by the Senate Judiciary Committee. He
and the bill's co-sponsor, Representative Bill Stoltze, support
that provision's addition.
Representative Samuels advised that the Senate Judiciary
Committee also added language to the bill that would allow for
deoxyribonucleic acid (DNA) genetic testing collection at the
time of arrest. The DNA language in this bill mirrors that of
legislation enacted a few years prior which has allowed the
State's cold case prosecutors to use DNA evidence to arrest a
man in the case of Bonnie Craig, an 18-year old University of
Alaska Anchorage student who was murdered.
Representative Samuels informed the Committee that this bill
"would allow DNA to be collected like a fingerprint" at the time
of arrest. This could be further addressed by the Department of
Law.
Representative Samuels qualified that the DNA sample would be
destroyed if there was no conviction.
10:42:37 AM
Representative Samuels continued. The Senate Judiciary Committee
also added a provision to the bill, referred to as Kiva's Law,
which would require a person who witnesses a crime against a
child to report it.
10:43:01 AM
Representative Samuels informed the Committee that the Senate
Judiciary Committee also rolled in language from HB 14-RESTRICT
ACCESS TO ALCOHOL which had recently passed the House, into this
bill. This language would require the driver's license or other
legal identification of a person who was ordered by the court
not to purchase alcohol to be marked with some identifying
color. This would alert an establishment not to sell alcohol to
that individual. This language would not hold an establishment
liable and would in fact, allow the establishment to bring a
$1,000 civil penalty case against such a person.
Representative Samuels concluded his review. The Department of
Law would review the more legal and technical nature of the
bill. Other than the DNA testing, the majority of the bill could
be considered an effort to clean up the laws.
10:44:24 AM
REPRESENTATIVE BILL STOLTZ, co-sponsor of the bill, communicated
that the primary goal of this bill was to close existing
loopholes in sex offender laws and further victim's rights. The
bill was expanded to assist with such things as cold case
investigations. He and Representative Samuels consider the bill
"a pretty good omnibus measure".
10:45:23 AM
RICK SVOBODNY, Deputy Attorney General, Legal Services Section-
Juneau, Criminal Division, Department of Law, informed the
Committee that the Department supported the bill with one
exception. That being Sections 5 through 9, page 4 line 27
through page 7, line 13 which pertain to the Kiva's Law
provisions. This language would "criminalize" an innocent
bystander were they to witness a crime against a child and not
report it.
Mr. Svobodny stated that incorporating this requirement into the
bill "is not necessarily a bad change" since people should be
"socially responsible" particularly in regards to situations
incurring serious harm to children. However, there is concern
that this provision would create "difficult problems" for the
prosecutor who tries the murderer or a rapist in that case in
court. This is because a witness not reporting the crime would
themselves be charged with a crime and would thereby "have the
Fifth Amendment privilege not to testify".
Mr. Svobodny clarified however that this could be accommodated
because the Legislature has provided the Attorney General "the
authority to grant immunity to a witness".
Mr. Svobodny informed the Committee that he had once been the
person designated by the Attorney General to make the witness
immunity decisions. In his 30 years as a prosecutor, that "was
the hardest thing to do".
10:48:04 AM
Mr. Svobodny explained that the problem was not "that the person
witnessed a crime but didn't call"; it is because determining
whether to grant immunity to a witness with Fifth Amendment
privileges is "a guess". The system established in this State
allows the witness to tell the court, in secret, information
specific to their involvement in the case. The judge in turn
tells the Department of Law designee whether the witness's
action was "a serious felony, a felony, a misdemeanor, or the
person doesn't have the privilege".
Mr. Svobodny stated that making the immunity determination,
particularly in the middle of a murder trial, is difficult. It
also delays trials and the issue often arises when a trial is
occurring. He recounted some of the scenarios he experienced
when having to make a witness immunity decision.
Mr. Svobodny restated the position that requiring someone to
report a crime against a child is a good social policy. It would
however, incur problems for prosecutors, for victims whose
trials might be delayed as a result of the process, and would
increase expenses to the public defenders office due to such
things as conflict of interest matters.
Mr. Svobodny suggested that "an easy solution" to the problem
could be to change the penalty from being a Class C felony to
being a violation. This would maintain the social obligation of
reporting the crime but would not incur Fifth Amendment
privileges. This is the recommendation of the Department of Law.
10:50:26 AM
Mr. Svobodny concluded by stating that the Department of Law
supports the bill with the exception of the witness reporting
provision.
Co-Chair Stedman asked whether Mr. Svobodny wanted to review in
more detail any other section of the bill.
Mr. Svobodny reiterated that the Department was in support of
other sections in the bill. He was more familiar with some
sections than others, specifically those proposed by Senator
Dyson and the two bill sponsors.
10:50:59 AM
Mr. Svobodny noted, for instance, that he was not very familiar
with the provision prohibiting a person on probation from
purchasing alcohol. Nonetheless, he would attempt to answer any
questions the Committee might have.
10:51:17 AM
Senator Elton directed attention to language in Section 24
subsection (d) page 13 lines 1 and 2 which would not allow the
time an individual spent being electronically monitored or in a
private residence to count toward their sentencing. During
Committee discussion on a separate bill regarding electronic
monitoring, testimony had touted electronic monitoring "in lieu
of incarceration". It was also "less expensive".
10:52:09 AM
Mr. Svobodny surmised that the bill being referenced related to
the electronic monitoring of gangs.
Mr. Svobodny informed the Committee that the State's appellate
courts have determined that people who are in the "functional
equivalent of jail" as a result of a court order "should get
credit for that time served". The provision in this bill would
establish a procedure through which the courts could make a
determination as to whether the circumstances of the electronic
monitored or restricted to home individual to whom this bill
applied met established "functionally equivalent" criteria; if
not, the time would not be credited.
10:53:35 AM
Mr. Svobodny shared that one such alcohol treatment program was
held in the Sergeant Preston Hotel bar outside of Anchorage. The
argument was that a person attending that program was stuck in
the hotel for the three days the program was being conducted.
Some judges allowed that time to be credited against the
sentence and some did not. The language in this bill would not
allow "good time credit" for attending that program. Good time
credit is a jail "administrative tool" in that if a person
behaves in jail they would receive one day off for every three
days served. "You aren't in jail if you're at home or on
electronic monitoring.
10:54:33 AM
Co-Chair Stedman asked Mr. Svobodny to address the drunk-driving
provisions in the bill.
Mr. Svobodny asked whether the provisions in question were those
in Sections 1 through 3 of the bill.
Co-Chair Stedman affirmed.
10:54:47 AM
Mr. Svobodny expressed that these sections were not necessarily
drunk driving provisions. They would, however, restrict a person
on probation or parole from drinking alcohol by prohibiting them
from being in a bar and purchasing alcohol. A mark on their
identification would identify them as a person prohibited from
drinking alcohol.
10:55:32 AM
Co-Chair Stedman asked for further information about the DNA
provisions.
10:55:38 AM
Mr. Svobodny noted that the State presently collects DNA from
individuals convicted of felony offenses or a crime against a
person. That action would not be altered by the provision
proposed in this bill. This bill would however, align Alaska
with other states that "have changed when they go through that
collection process," in that the DNA collection would be taken
at the time of arrest just as fingerprinting and photographing
the individual are currently done.
Mr. Svobodny noted that the DNA collection is a simple process
in which fluid is collected by swabbing the inside of a person's
mouth with a Q-tip. The sample is then sent to the State crime
laboratory where it is processed and stored in the national law
enforcement Combined DNA Index System (CODIS). If the person is
acquitted or the case dismissed, their DNA profile would be
removed from the database. He noted that this is not the case
with fingerprints: they are retained in the database.
Mr. Svobodny further noted that the national DNA collection
standard is specific to only 13 of the millions of DNA markings
that could be analyzed. Those 13 loci have been determined to
have "no known information other than identifiers". For example,
they could not provide information as to whether the individual
"was at greater risk of having breast cancer" than another. The
national standard was designed so that only identifying loci
could be captured for forensic purposes.
Mr. Svobodny informed the Committee that Alaska law makes it a
crime for someone to use DNA collected in this manner, for other
than forensic purposes. The limited loci collected, makes it
difficult to use for any other purpose anyway.
10:58:44 AM
Mr. Svobodny informed the Committee that the bill would add a
new provision to State law in that it would require DNA to be
processed and updated into CODIS within 90 days. Because this
will be a challenge to the State crime lab to accommodate, this
provision would not go into effect until 2009. The difficulty is
that in order to do DNA processing, the processor must undergo a
six month training period and then a six month supervised in the
field training period. The Department of Public Safety fiscal
note addressing this issue anticipates that four additional
staffers would be required to address the added workload this
provision would produce.
Mr. Svobodny specified that the Bonnie Craig murder case was
resolved due to DNA information maintained in the CODIS national
database. DNA taken at the crime scene was processed and stored
in CODIS. A hit was made in CODIS when another state, which
collects DNA from individuals when they are arrested, loaded an
arrested person's DNA to CODIS.
Mr. Svobodny stated that, as is standard practice, the State
then ran new DNA samples to verify the information.
11:00:58 AM
Senator Thomas supported the concept of the "good time"
administrative tool as well as the electronic monitoring tool,
particularly in regards to individuals with a history of gang
associations. Therefore, he was concerned that the opportunity
for early release would be affected by this legislation. He
inquired whether this restriction might have resulted from the
concern that individuals released early might have a tendency to
re-associate with gang-members.
11:01:52 AM
Mr. Svobodny considered the provisions in this bill to differ
from the concept of good time associated with individuals
convicted of gang-related crimes. Those individuals complete
their jail term and then are electronically monitored while on
probation. The process established in this bill would assist in
determining whether, for example, time a person spent being
electronically monitored should count toward their sentence. The
provisions in this bill would not have any affect on gang crime
sentencing.
Senator Thomas stated that the further questions he had
regarding the DNA provisions in the bill could be addressed
outside of this hearing.
Co-Chair Stedman ordered the bill HELD in Committee.
[NOTE: This bill was readdressed later in the hearing. See Time
Stamp 1:53:34 PM.]
11:03:35 AM
CS FOR HOUSE BILL NO. 166(FIN)
"An Act relating to contributions from permanent fund
dividends to community foundations, to certain educational
organizations, and to certain other charitable
organizations; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Stedman stated that the intent today was to discuss the
bill, consider a new committee substitute, and hold the bill in
Committee for further consideration.
11:04:13 AM
AT EASE 11:05:12 AM \ 11:05:14 AM
Co-Chair Hoffman moved to adopt committee substitute, Version
25-LS0678\L, Cook, dated May 9, 2007, as the working document.
Without objection, the Version "L" committee substitute was
ADOPTED as the working document.
11:05:50 AM
DAVID GREISEN, Staff to Co-Chair Stedman, informed the Committee
that the changes incorporated into the Version "L" committee
substitute were intended to reduce costs and assist the
Department of Revenue in administering the program proposed in
this legislation.
Mr. Greisen advised that the change in Section 2, subsection (f)
on page 4 lines 8 through 13 would allow the Department of
Revenue to charge a $50 fee to each non-profit entity applying
for inclusion on the authorized list of charities a person could
elect to donate a portion of their Permanent Fund Dividend (PFD)
to. The expectation is that 700 of the 2,000 applicants
anticipated to apply for inclusion on this list would be
approved. The application fee would assist in covering the costs
associated with the selection process.
11:07:02 AM
Mr. Greisen identified the next change as being in Section 2
subsection (j) page 4 lines 27 through 30. This section would
continue the previous committee substitute's requirement that
the Department provide an annual report depicting each
organization and the donations they garnered the previous year
as a result of this legislation; however, the requirement that
the report be provided to the Legislature was eliminated as a
cost-saving measure. The Department would now simply be required
to notify the Legislature that the report was available.
Mr. Greisen stated that the application requirements specified
in Section 2, subsection (d)(4) and (d)(8) on page 3 line 14 and
line 24, respectively, were revised to accommodate non-profit
organizations' internal accounting and federal filing
restrictions.
Mr. Greisen noted that in order to made the administration of
the program run efficiently, language in Section 2 subsection
(a)(1) on page 2 line 14 was altered to clarify that people
could not change the non-profit entities they had chosen to
donate to once they had submitted their PFD application.
11:08:53 AM
Mr. Greisen next addressed the two changes made in the bill at
the request of the Department of Revenue. The first, in Section
1 subsection (b) page 1 line 8, was the removal of the words
"and furnish" after the word "prescribe". This would reduce the
cost of mailing out hard copy PFD application forms to residents
of the State. He noted that the "vast majority of people" now
file their PFD application online. The revised language would
read as follows.
"(b) The department shall prescribe an application
form for claiming a permanent fund dividend. …
Mr. Greisen stated that the Department would continue to mail
out PFD application forms "to rural areas that don't have
internet penetration". Thus, people living in those areas would
not experience any negative affects.
Mr. Greisen stated that not conducting a bulk mailing of the PFD
application forms would save the State a significant amount of
money.
AT EASE 11:10:27 AM / 11:11:31 AM
Mr. Greisen noted that the second change requested by the
Department is depicted in Section 3 subsection (a)(2) page 5
lines 16 through 21. This language "would allow the Department
to set up an electronic system for civilian process servers to
garnish PFDs." An electronic system would significantly reduce
the amount of paperwork involved in this process as currently
all garnishing processing is conducted on paper and mailed.
Mr. Greisen informed the Committee that the two changes
requested by the Department are anticipated to save
approximately $100,000 each year.
11:12:09 AM
KACI HOTCH, Staff to Representative Bill Thomas, the bill's
sponsor, affirmed that this bill would allow individuals
receiving a PFD to contribute a portion of their PFD to a non-
profit organization. The goal of this effort is to increase the
amount of charitable donations made by Alaskans each year,
particularly as the level of charitable contributions made by
Alaskans who earn more than $100,000 a year is amongst the
lowest in the nation.
Ms. Hotch specified that this legislation would allow the State
to compile a list of approved non-profit 501(c)(3)
organizations. That list would be provided to PFD applicants who
could, at the time they submit their application, specify an
amount, if any, they would like to contribute to one or more of
the organizations.
Ms. Hotch pointed out that in order to be approved for the list,
the organization must meet criteria specified in the bill.
Ms. Hotch specified that while the bill contained a three year
termination date, but could be re-authorized by the Legislature.
There would be no fiscal impact to the State resulting from this
legislation as the Rasmussen Foundation has agreed to administer
the program and absorb any associated expenses.
11:13:40 AM
Senator Elton asked for further discussion regarding the
proposed change to how PFD application forms would be
distributed.
Co-Chair Stedman advised that that question would be addressed
by a representative from the Department.
Mr. Greisen agreed that the Department could best respond to the
question.
11:14:31 AM
In response to a question from Senator Thomas, Mr. Greisen
reiterated that the expectation is that 700 of the 2,000
organizations expected to apply for inclusion on the list of
non-profit entities would be approved.
11:15:00 AM
Senator Olson suggested that the approach proposed in this
legislation might also be considered as an avenue through which
the State, "as a larger body", might be able to provide Alaskans
an opportunity to purchase health insurance.
Ms. Hotch acknowledged having talked to Senator Olson's staff
about this suggestion. She had not had an opportunity to explore
the suggestion and was unsure how adding such language to this
bill might impact it. The sponsor would however support "the
concept" where it proposed in a separate bill at a later time.
11:15:38 AM
JERRY BURNETT, Director, Administrative Services Division and
Legislative Liaison, Department of Revenue, addressed Senator
Elton's question by expressed that the Department of Revenue and
the Department of Law have been actively discussing whether the
State is required by law to send a PFD application packet to
every household in the State as is current practice. In addition
to its expense, it is a wasted effort as more than 70 percent of
Alaskans apply for their PFD online and thereby, do not use the
mailed out paperwork.
Mr. Burnett specified that the proposed change would allow paper
application packets to be "selectively" mailed out to anyone who
requests them and to those who have applied for their PFD on
paper in the past. The intent is to stop bulk mailing the PFD
packets as has been past practice.
11:17:22 AM
Senator Elton asked how new applicants would be contacted,
particularly since it could be extrapolated from the
Department's statistics that one-third of the prospective
applicants would apply by mail. Legislators would be inundated
by questions if access for new applicants was not adequately
addressed. While filing electronically was a viable option, he
was "uncomfortable taking away the mandate that the Department
provide an application."
11:18:19 AM
Mr. Burnett acknowledged the concern and noted that, as
Legislative Liaison for the Department, any calls Legislators
receive ultimately get routed to him.
Mr. Burnett compared the proposed application changes to current
operations of the federal Internal Revenue Service (IRS) in that
as people transition from filing their tax returns on paper to
filing online, the IRS stops mailing those individuals paper
filing material.
Mr. Burnett thought it unlikely that newcomers to the State
would be unaware of the PFD program. The prospect of receiving a
$1,600 PFD check would prompt a newcomer to contact the State
about the PFD application process.
11:19:33 AM
Senator Elton asked whether language in the current appeal
process could be revised to accommodate an individual who
claimed to have been waiting for a paper application and thus
had not applied.
Mr. Burnett stated that the Department would be willing to work
with Senator Elton to address this concern. The Department does
not desire to "disenfranchise anyone or make it difficult for
people". The goal is to discontinue mailing out PFD application
packets because they are not being used.
11:20:38 AM
Senator Huggins voiced concern that the Department might be
inundated by requests from non-profits entities to be included
on the list of approved organizations.
11:21:04 AM
Mr. Burnett acknowledged that "the Department is very concerned
about the initial effects of this bill on the workload of the
Department" in regards to the donation element. To address that
concern, an "external organization" such as the United Way would
be hired to manage the donation aspect of the program. They
would be responsible for sorting the applications. The funds for
that entity would be provided by the Rasmussen Foundation.
11:22:00 AM
Co-Chair Stedman ordered bill HELD in Committee.
RECESS TO CALL OF THE CHAIR 11:22:13 AM / 1:53:34 PM
SENATE CS FOR CS FOR HOUSE BILL NO. 90(JUD)
"An Act relating to the purchase of alcoholic beverages and
to access to licensed premises; relating to civil liability
for certain persons accessing licensed premises; requiring
driver's licenses and identification cards to be marked if
a person is restricted from consuming alcoholic beverages
as a result of a conviction or condition of probation or
parole and relating to fees for the marked license or card;
relating to the information contained on driver's licenses;
requiring the surrender and cancellation of driver's
licenses and identification cards under certain
circumstances; relating to the reporting of certain crimes;
relating to prostitution; relating to the DNA registration
system; relating to credit toward service of a sentence of
imprisonment; relating to violation of probation and parole
conditions by sex offenders; relating to bail; relating to
distribution of certain materials to minors; relating to
time limitations for prosecution of certain crimes;
relating to sex offender registration; relating to the
maximum time for probation; relating to certain post-
conviction relief applications; relating to good time; and
providing for an effective date."
The bill was again before the Committee.
Co-Chair Stedman announced that a new committee substitute has
been developed for consideration.
1:53:54 PM
Co-Chair Hoffman moved to adopt Senate Finance committee
substitute, Version 25-LS0331\N, Luckhaupt, May 12, 2007, as the
working document.
Senator Dyson objected.
1:54:23 PM
Senator Dyson pointed out that the Version "N" committee
substitute eliminated [unspecified] language which had been
supported by two members of the Senate Bipartisan Working Group.
He considered that language to be a valuable component of the
bill.
1:54:34 PM
Co-Chair Stedman clarified that Sections 5 through 9 of SCS CS
HB 90(JUD) had been struck from the Version "N" committee
substitute.
1:54:56 PM
RICK SVOBODNY, Deputy Attorney General, Legal Services Section-
Juneau, Criminal Division, Department of Law, advised the
Committee that the deletion of this language "aids in the
prosecution of criminal cases." Language in Sections 5 through 9
would have hindered the Department's ability to prosecute cases.
While requiring people who witness a crime to report it, "sounds
good" and is essentially a "good social goal", the granting of
immunity to individuals charged for non-reporting would place
"the prosecution at a disadvantage because the defense can
always challenge a witness."
Mr. Svobodny explained that a person testifying in a case who
has been granted immunity means that that person has "done
something bad" and is "getting away with it". For instance, a
drug dealer testifying in a murder case might be granted
immunity because the murder was a worse crime that their drug
dealing. Retaining this language in the bill would also
"criminalize the average citizen."
Mr. Svobodny provided numerous arguments against retaining this
language in the bill, including such things as delays in trials
and allowing someone to go free who otherwise would be held
accountable for their deviant behavior.
1:58:48 PM
Senator Dyson considered legislators' actions in establishing
laws to reflect the values and conduct that communities in the
State support. The deletion of Sections 5 through 9 is contrary
to the behavior western civilization has supported for
centuries. That being that when someone sees someone in harms
way they "have either a responsibility to help or report".
Senator Dyson contended that the adoption of Version "N" would
be detrimental to that responsibility. This language,
particularly the legal ramifications, "was widely debated"
during hearings on this bill in the Senate Judiciary Committee.
Their decision was to retain the language in the bill.
Senator Dyson had particular respect for the Chair of the Senate
Judiciary Committee [Senator Hollis French] and his extensive
criminal law background. Since he "passionately believes in
this", Senator Dyson "would accede to his wisdom, knowledge,
values, and I want it to stay in."
2:00:56 PM
Mr. Svobodny did not "disagree with the philosophy". However, it
could be argued that if it was considered to be such "a good
policy", perhaps it should be expanded to all crimes. Thus, a
legislator witnessing something bad on the Chamber Floor would
have to report it immediately to federal authorities and a
mother who sees her 18 year old hit his 16 year old brother must
report it to the authorities.
2:01:45 PM
Co-Chair Stedman interjected to note that another bill in
Committee, SB 5-FAILURE TO REPORT CRIMES, would address the
issue being deleted from this bill. That bill would be a better
vehicle to address this issue than this bill.
2:02:40 PM
A roll call was taken on the motion.
IN FAVOR: Senator Elton, Senator Huggins, Senator Olson, Senator
Thomas, Co-Chair Hoffman and Co-Chair Stedman
OPPOSED: Senator Dyson
The motion PASSED (6-1)
Committee substitute Version "N" was ADOPTED as the working
document.
2:03:20 PM
Senator Thomas directed attention to language in Section 5, page
4 line 27 through page 5 line 8. He interpreted the language to
indicate that a person who was at least 18 years of age, who
transmitted a picture of a female breast to a minor could be
charged with a sexual offense. Furthermore, if that person was
convicted they would be required to register as a sexual
predator for 15 years.
2:04:43 PM
Mr. Svobodny affirmed that was correct. If it was the person's
first offense, they would be required to register for 15 years.
They would be required to register for life for a repeat
offense.
2:04:57 PM
Senator Thomas understood that this situation would be limited
to the transmittal of stated material via the internet.
Mr. Svobodny confirmed that Section 5 was specific to the
electronic transfer of such material. The determination was that
a person stalking or "grooming" a child would likely transmit
adult material as opposed to child pornography.
Mr. Svobodny had conferred with Anne Carpeneti, Assistant
Attorney General in his Division, about this. She informed him
that the issue of transmitting adult pornography to a child over
the internet had not specifically been addressed before.
2:06:05 PM
Mr. Svobodny understood that prosecuting a young adult for this
action might be of concern. To that point, he reminded the
Committee that the Legislature had separately enacted provisions
relating to "young offenders" and the sexual abuse of a minor.
Those provisions specified that the perpetrator be at least 18
years or older and be at least four years older than the person
they offended against. Such language could be incorporated into
this bill if deemed necessary.
2:06:58 PM
Senator Thomas considered the majority of the offenses
identified in Section 5 substantial enough to warrant the
penalty. The lone area of concern however was the question of
whether "the offense" of transmitting an image of a female
breast over the internet "fit the crime".
2:07:22 PM
Mr. Svobodny understood the concern.
2:07:41 PM
Senator Dyson contended that historically, judges and juries in
our country "have been reasonably understanding about the
extenuating circumstances and I'm not worried about the overly
harsh penalties being levied against people that are trafficking
this kind of material on the internet." To that point, he
emphasized that the entirety of Section 5 dealt with the
distribution of the identified material "to minors, not to
adults."
Senator Dyson assumed that a person would not be prosecuted for
material that "inadvertently got to a minor". The act must be
intentional in order for someone to be prosecuted.
2:09:20 PM
Senator Olson asked whether people in the medical profession
would be exempt from the language in the bill.
2:09:44 PM
Mr. Svobodny affirmed that medical contact would be exempt.
"Sexual contact, including sexual penetration, "excludes
recognized medical treatment".
2:10:10 PM
Mr. Svobodny furthered clarified that Section 5 contains
language that currently exists under Alaska's Child Pornography
and Child Exploitation Statutes.
2:10:31 PM
Senator Olson pointed out that some of the language in Section 5
was new language as it was indicated as such.
2:10:42 PM
Mr. Svobodny clarified his remarks. While the language currently
exists under the aforementioned Statutes, it was new language
for the Statute addressed in this bill.
2:11:09 PM
Co-Chair Stedman asked the Department of Public Safety to speak
to their fiscal note.
DAVID SCHADE, Director, Division of Statewide Services,
Department of Public Safety, testified via teleconference from
an offnet location. The DNA collection provision specified in
this bill is new and would increase the workload of the
Department. The Department had previously utilized federal grant
money to support DNA collections from convicted offenders. Those
samples were sent to a federal laboratory.
Mr. Schade stated that the Department recently became pro-active
and began processing samples in-house. This enables them to get
results faster and allow "for earlier intervention into criminal
careers".
2:12:23 PM
Mr. Schade stated that in order to accommodate the increased
workload, the Department would be required to dedicate four
people to the program as a tremendous amount of time would be
required to track the samples. For example, if there was no
conviction, the samples must be removed from CODIS. He reviewed
the responsibilities of each of the four positions that would be
required.
Mr. Schade also noted that new computer programs and supplies
would be acquired. A 70 percent increase in samples is
anticipated.
2:14:12 PM
Co-Chair Stedman specified that the Department had submitted a
$540,000 fiscal note.
Senator Elton asked what would occur were a "hit" to occur on a
DNA sample that should have been destroyed due to a lack of a
conviction; specifically whether that hit would be admissible as
evidence in the other case.
Mr. Svobodny stated that the case would get litigated. This
issue is not addressed in the bill. Consideration could be given
to adding language to the bill that would hold the State
harmless in such an event.
2:15:58 PM
Representative Samuels voiced no objection to the adoption of
the Version "N" committee substitute. The deletion of the Kiva
Law language was done at the recommendation of the Department of
Law.
2:16:35 PM
Co-Chair Hoffman moved to report committee substitute, Version
25-LS0331\N from Committee with individual recommendations and
accompanying fiscal notes.
There being no objection, SCS CS HB 90(FIN) was REPORTED from
Committee with previous zero fiscal note #2 from the Department
of Law Administrative Services Division; indeterminate fiscal
note #3 from the Department of Administration Office of Public
Advocacy; indeterminate fiscal note #4 from the Department of
Administration Public Defender Agency; indeterminate fiscal note
#7 from the Department of Corrections; and new $540,000 fiscal
note from the Department of Public Safety, dated May 11, 2007.
RECESS TO CALL OF THE CHAIR 2:16:53 PM \ 5:19:19 PM
SENATE BILL NO. 178
"An Act relating to school funding, the base student
allocation, district cost factors, the local contribution,
and the intensive services adjustment for state funding of
public education; providing for an effective date by
repealing the delayed effective date of sec. 6, ch. 41, SLA
2006; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
AT EASE: 5:19:54 PM / 5:20:04 PM
EDDY JEANS, Director, School Finance and Facilities Section,
Department of Education and Early Development, conducted an
overview of the bill. He also provided a handout titled "Two-
Year Education Funding Proposal SB 178" [copy on file] which
provided a written analysis of the bill sections.
Mr. Jeans noted that Section 1 of the bill "adds a hold harmless
provision to the foundation program. It's there to assist school
districts that have decline enrollment." This section is
addressed in item number four on the aforementioned handout.
Mr. Jeans continued that the hold harmless provision in Section
1 would accommodate school districts that might be consolidated
for efficiency and those whose funding might change due to the
funding formula, specifically as this bill would specify that a
community with an enrollment of more than 100 students would
receive funding equivalent to two schools. A community whose
enrollment is below 100 would be funded as one school. "The
adjustment in that is pretty substantial" and Section 1 would
provide some "transition money for a three year period to allow
districts to adjust for that".
5:21:44 PM
Mr. Jeans directed attention to language in Section 1 subsection
(b)(2) on page 3 beginning on line 15. This provision would
change the local city or borough contribution to its school
district from a four mill tax levy to a three mill tax levy.
This provision would be further clarified in forthcoming
remarks.
Mr. Jeans then addressed the intensive needs funding for school
districts as specified in Section 2 subsection (a)(2)(A) on page
4 line 2. This provision would provide "a two percent block
funding approach for school districts with a student enrollment
of 1,000 or more." This calculation would involve "taking the
districts average daily membership" and multiply that by two
percent in order to determine how many students would be funded
under this component.
Mr. Jeans communicated that the funding level for this component
would continue as specified in current State Statute at "five
times the base student allocation".
5:23:06 PM
Senator Elton contended that a technical amendment would be
required in this regard as the current Statute does not specify
a two percent funding mechanism limitation on special needs
student funding; it specifies that anything over two percent
would be subject to an audit. The proposed language would be
problematic for some school districts. For example, the current
special needs student component in the Juneau School District is
2.9 percent. He would work with the Department to further the
original intent of this consideration.
5:23:59 PM
Mr. Jeans affirmed that Senator Elton's statement was correct.
Mr. Jeans stated that Section 3 beginning on page 4, line 7
through page 6 line 2 depicts districts' cost differentials as
recommended by the Institute of Social and Economic Reform
(ISER) report.
Mr. Jeans stated that the base student allocation would be
increased from $5,380 to $5,580 as specified in Section 4 page 6
lines 3 through 5 effective with Fiscal Year 2009 (FY 09).
Mr. Jeans noted that the handout also depicts the costs
anticipated for the changes proposed in the bill.
Mr. Jeans stated that Section 5 of the bill also instructs that
the local contribution equate to a minimum of three percent.
Mr. Jean continued. Section 6 would repeal the current provision
that requires the Department to only count 50 percent of the
increased property values since the year 1999. This would return
districts "to a level playing field of applying three mills
across the board for all municipalities in the State of Alaska
as their required contribution under the foundation program."
5:25:35 PM
Senator Dyson asked for clarification as to which section
repealed the 50 percent match.
Co-Chair Stedman specified that the provision in question is
addressed by Section 6 on page 6 line 14.
5:25:59 PM
Mr. Jeans directed attention to the bill's cost estimates as
depicted on the handout. Going to three mills in FY 2008 would
cost the State approximately $9,900,000. Going to the two
percent block funding for school districts with 1,000 or more
students would increase that component by approximately
$18,700,000. The implementation of 50 percent of a district's
cost factor would amount to approximately $48,600,000. Based on
current FY 08 student projections, the hold harmless provisions
would cost the State approximately $400,000. Thus the total
formula increase would be approximately $77,600,000.
Mr. Jeans noted that Governor Sarah Palin's FY 08 operating
budget included a one-time grant funding of $34,600,000. Thus,
once that amount is subtracted from the projected $77,600,000
total, the general fund increase in FY 08 would be approximately
$43 million.
Mr. Jeans noted that the FY 08 funding contribution for the
Teachers Retirement System (TRS) contribution is anticipated to
$77,500,000. That increased funding combined with the Total Two-
Year Education Funding proposed in this bill would amount to
approximately $120,500,000.
5:27:21 PM
Co-Chair Hoffman noted that the Committee and the Senate as a
whole had eliminated the aforementioned $34,600,000 proposed in
the Governor's Operating Budget. Therefore, that amount should
be added to the $120,500,000. Thus, the total affect to the
Operating Budget adopted by the Senate would be $155 million.
Mr. Jeans affirmed.
5:28:03 PM
Mr. Jeans noted that neither of these items has yet been
addressed by the Operating Budget Conference Committee.
Co-Chair Hoffman verified this to be true.
5:28:16 PM
Mr. Jeans noted that increasing the Base Student Allocation
(BSA) from the current $5,380 to $5,580 would result in a
$23,700,000 increase in the FY 2009 budget.
5:28:38 PM
Co-Chair Stedman deduced therefore that the BSA for FY 08 would
remain level.
Mr. Jeans confirmed that a BSA of $5,380 would remain in effect
for FY 08.
5:28:57 PM
Senator Dyson understood that eliminating the 50/50 match would
increase the Municipality of Anchorage's property tax obligation
by approximately $34 million and the Matanuska-Susitna Borough's
by approximately $40 million over the next five years.
Mr. Jeans could not speak to how this legislation might affect
an area's local tax base. "The required local effort within the
foundation program may change in those amounts that you've
suggested there."
5:29:53 PM
Mr. Jeans recalled having shared with the Committee, during a
separate presentation on the foundation funding program, that
the existing provision was "creating a disparity in the required
local contribution amongst our municipalities." This will "bring
uniformity back to that required local effort."
5:30:07 PM
Co-Chair Hoffman recalled that when that [unspecified]
legislation was being considered by the Legislature, the
Department had not been supportive of it.
Mr. Jeans could not recall the Department's position in that
regard.
Co-Chair Hoffman stated that he would research the matter.
There being no further questions from the Committee, Co-Chair
Stedman ordered the bill HELD in Committee.
5:31:03 PM
Co-Chair Stedman reviewed the Committee's forthcoming meeting
schedule.
ADJOURNMENT
Co-Chair Bert Stedman adjourned the meeting at 5:31:15 PM.
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