Legislature(2013 - 2014)SENATE FINANCE 532
04/02/2013 06:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB47 | |
| SB57 | |
| HB30 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 30 | TELECONFERENCED | |
| += | SB 47 | TELECONFERENCED | |
| += | SB 57 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 2, 2013
6:05 p.m.
6:05:10 PM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 6:05 p.m.
MEMBERS PRESENT
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
Senator Pete Kelly, Co-Chair
ALSO PRESENT
Christine Marasigan, Staff, Senator Kevin Meyer; Michael
Hanley, Commissioner, Department of Education and Early
Development; Elizabeth Sweeney Nudelman, Director, School
Finance and Facilities, Department of Education and Early
Development; Representative Mike Chenault, Sponsor; Sharon
Kelly, Staff, Representative Mike Chenault; Kris Curtis,
Legislative Auditor, Division of Legislative Audit.
SUMMARY
SB 47 STIPEND FOR STATEWIDE BOARDING SCHOOL
CSSSSB 47(FIN) was REPORTED out of committee with
a "do pass" recommendation and with a fiscal
impact note from the Department of Education and
Early Development.
SB 57 LITERACY, PUPIL TRANSP, TEACHER NOTICES
CSSB 57(FIN) was REPORTED out of committee with a
"do pass" recommendation and with one new fiscal
impact note from the Department of Education and
Early Development and two previously published
fiscal impact notes: FN2 (EED) and FN3 (EED).
CSHB 30(FIN)
STATE AGENCY PERFORMANCE AUDITS
CSHB 30 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 47
"An Act increasing the monthly stipend available for
students attending a statewide boarding school
operated by a school district; and providing for an
effective date."
6:06:35 PM
Vice-Chair Fairclough MOVED to ADOPT the proposed committee
substitute for SB 47, Work Draft 28-LS0408\G (Mischel,
4/1/13), as a working document.
Co-Chair Meyer OBJECTED for discussion.
6:07:13 PM
CHRISTINE MARASIGAN, STAFF, SENATOR KEVIN MEYER, relayed
that the only change was the insertion of a July 1, 2013
effective date (Section 5, page 2). The Department of
Education and Early Development (DEED) had indicated that
the change would remove $1,681 from Fiscal Note 1.
MICHAEL HANLEY, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, confirmed that the change to the
effective date would remove the need for supplemental
funding, while maintaining funding for the next school
year.
Co-Chair Meyer asked if DEED supported the legislation.
Commissioner Hanley replied in the affirmative. The
department was particularly supportive of the funding that
would enable it to continue existing programs.
Senator Dunleavy inquired how the legislative budget
subcommittees would interact with the process related to
the legislation. Co-Chair Meyer replied that Co-Chair Kelly
could answer the question at a later time.
6:10:04 PM
Co-Chair Meyer WITHDREW his OBJECTION. There being No
further OBJECTION, Work Draft 28-LS0408\G was ADOPTED.
Vice-Chair Fairclough pointed to a DEED fiscal note that
included a general fund cost of $3,321,300 for FY 14;
additional operating funds would be distributed through FY
19.
Vice-Chair Fairclough MOVED to REPORT CSSSSB 47(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSSSB 47(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal impact note
from the Department of Education and Early Development.
Senator Dunleavy retracted his earlier question and noted
that it had been related to another piece of legislation.
SENATE BILL NO. 57
"An Act relating to parental involvement in education;
adjusting pupil transportation funding; amending the
time required for employers to give tenured teachers
notification of their nonretention; and providing for
an effective date."
6:12:22 PM
Vice-Chair Fairclough MOVED to ADOPT the proposed committee
substitute for SB 57, Work Draft 28-LS0474\P (Mischel,
3/29/13).
Co-Chair Meyer OBJECTED for discussion.
CHRISTINE MARASIGAN, STAFF, SENATOR KEVIN MEYER, explained
that the fiscal years 2014, 2015, and 2016 had been added
to Section 4, page 2, line 14. The change maintained the
Consumer Price Index (CPI) language, but placed a three-
year time limit on the provision.
Co-Chair Meyer asked for verification that the bill version
before the committee was "P." Ms. Marasigan replied in the
affirmative. Co-Chair Meyer asked Ms. Marasigan to repeat
where the change occurred in the bill. Ms. Marasigan
replied that the fiscal years were inserted in Section 4,
page 2, lines 15 through 16.
Co-Chair Meyer surmised that the insertion of the fiscal
years equated to a three-year sunset provision. Ms.
Marasigan replied in the affirmative.
Co-Chair Meyer mentioned a $45,000 fiscal note.
Vice-Chair Fairclough noted that the bill had three fiscal
notes. The first note was from DEED and had a fiscal impact
of $45,400.
6:15:21 PM
Co-Chair Meyer asked the department to explain Fiscal Note
3.
Senator Bishop remarked that the public comment on the
fiscal notes had been positive.
ELIZABETH SWEENEY NUDELMAN, DIRECTOR, SCHOOL FINANCE AND
FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
relayed that the bill had three fiscal notes. She addressed
one note that would deposit funds into the Public Education
Fund and provided for a 2.5 percent CPI increase for FY 14
through FY 16; costs included $736,300 for FY 14,
$1,502,000 for FY 15, and $3,435,800 for FY 16. The funds
would provide a CPI increase for three years for the pupil
transportation program.
Co-Chair Meyer WITHDREW his OBJECTION. There being No
further OBJECTION, Work Draft 28-LS0474\P was ADOPTED.
Vice-Chair Fairclough MOVED to REPORT CSSB 57(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 57(FIN) was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal impact note from the
Department of Education and Early Development and two
previously published fiscal impact notes: FN2 (EED) and FN3
(EED).
6:17:48 PM
AT EASE
6:19:10 PM
RECONVENED
CS FOR HOUSE BILL NO. 30(FIN)
"An Act relating to performance reviews, audits, and
termination of executive and legislative branch
agencies, the University of Alaska, and the Alaska
Court System; and providing for an effective date."
6:19:31 PM
REPRESENTATIVE MIKE CHENAULT, SPONSOR, stated that HB 30
was an investment in Alaska's future; it would implement a
review of departments and agencies over a 10-year period to
determine efficiencies and effectiveness through missions,
measures, and core services. He referred to legislation
from prior years that would have provided the Department of
Corrections (DOC) budget subcommittee with an audit to
reference during the current session. He believed it was
impossible for the House and Senate Finance Committees to
sufficiently review and approve a $10 billion budget during
a 90-day session. He noted that while budget hearings
during the interim allowed legislators to become more
familiar with departments, HB 30 represented an action plan
to make changes in the process. He stated that the
legislature's job was not to micromanage departments, but
to ensure that funding was the right amount for the right
service or project, at the right time, and within the
state's financial means.
Representative Chenault communicated that the bill would
implement a review of department operations and would
compare them to best practices from other states and
organizations (e.g. the National Council of State
Legislatures) in order for the state to efficiently and
effectively meet its constitutional mandates. He believed
the process would significantly enhance the legislature's
ability to responsibly handle the state's finances. He
thanked the committee for its time.
6:22:19 PM
SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT, directed
attention to back up documents contained in members files
(copy on file). She relayed that department staff was
available to answer questions pertaining to the
legislation. She shared that the authority for sunset
audits existed in current law under AS 44.66; the authority
for the sunset of boards and commissions existed under the
statute. She stated that unfortunately the audits related
to state agencies included dates and the last date was
1983. No cycle date had been included; therefore, there had
been no authority to continue the audits. She referred to
the sponsor's preparation of prior legislation (HB 166) and
cited advice from Legislative Legal Services related to the
legislative intent of the bill:
...that there was a need for an effective and regular
system of scrutiny of the programs and activities of
agencies and the establishment of periodic reviews
would help the governor and the legislature determine
the need for the continued existence of each of the
agencies.
Ms. Kelly relayed that HB 30 revised the process of
performance reviews. The sponsor and staff had referenced
the Texas Sunset Commission during the bill preparation (a
fact sheet was included in members' packets). She detailed
that the commission had been implemented 30 years earlier
and had staff of 32 including senior and regular analysts;
the commission had a budget of slightly above $2 million
per year plus reappropriations. She elaborated that the
commission had eliminated 58 agencies and had consolidated
12 agencies. The commission recommendations had saved Texas
approximately $800 million since its establishment.
Ms. Kelly detailed that a 15 percent cut to the current
budget would be approximately $600 million. The sponsor
believed HB 30 would significantly help the legislature as
it began examining necessary reductions. The bill would
establish a performance review process of Alaska's state
departments, which would measure a department's work,
efficiency, and effectiveness using objective criteria
including missions, measures, and core services; it laid
out a systematic 10-year continuing review of each
department, beginning with DOC.
Ms. Kelly addressed the sectional analysis (copy on file).
Section 1 required the Legislative Finance Division to
identify reductions as a result of the performance reviews.
Sections 2 through 4 reenacted the performance reviews
under the Division of Legislative Audit. Section 5
established the review order of departments. Section 6
outlined how the reviews would be conducted including the
establishment of the review team, working with the
departments, holding public hearings, completing the review
process, presenting a report confidentially to the
Legislative Budget and Audit Committee (LB&A), and lastly a
public report to the finance committees. Sections 7 through
12 set an effective date of July 1, 2013 and made technical
amendments including definitions and appropriate repeals.
6:26:08 PM
Senator Dunleavy asked for detail on what would occur in
the upcoming two years if the bill became law. Ms. Kelly
replied that the effective date of the bill was July 1,
2013. The Division of Legislative Audit would begin
preparing and beginning in January DOC would start
supplying information to the review team. A 10 percent cut
would be included in the process and a public review would
occur. Subsequently, the information would move through
LB&A in December and would be presented to the legislature
during the following session.
Senator Dunleavy asked if DOC would be the only department
to undergo the process in the first year. Ms. Kelly replied
in the affirmative. She elaborated that the Division of
Legislative Audit had requested that the process begin with
a smaller audit; the following year the Departments of
Education and Early Development and Health and Social
Services would undergo the process. Beginning with a
smaller department would provide a year to work out any
issues.
Senator Dunleavy surmised that the bill would implement an
ongoing process where departments were not all audited
simultaneously. He observed that decisions would be made
related to several departments per year. Ms. Kelly answered
in the affirmative. The bill included a 10-year period for
all departments to undergo reviews. She noted that the
departments were listed in Section 6 of the legislation.
Vice-Chair Fairclough pointed to page 4 related to the
review order. One department had indicated that a change in
the review order should be considered. She wondered how the
order had been determined. Ms. Kelly responded that a House
subcommittee had reordered the list in order to look at the
large departments near the beginning. The subcommittee
believed the most significant savings would occur in the
large departments.
Vice-Chair Fairclough asked whether departments would be
grouped together for efficiency in the event that
individuals were hired to assist with specific expertise.
Ms. Kelly replied in the affirmative. The Department of
Fish and Game, the Department of Environmental
Conservation, and the Department of Natural Resources had
been grouped together. Additionally, the Departments of
Revenue, Public Safety, and Law had all been grouped
together for review in 2022.
Senator Dunleavy pointed to page 4 and inquired about the
inclusion of the foundation formula under the Department of
Education and Early Development review. He surmised it
would not include a study of the state's 53 school
districts. He asked how the foundation formula would be
included. Ms. Kelly responded that the foundation formula
was put in statute approximately 10 to 12 years earlier.
She furthered that the formula would be reviewed to ensure
that it was working as intended.
6:30:43 PM
Senator Dunleavy believed that in order to include the
foundation formula discussions with all 53 school districts
would be necessary. Ms. Kelly responded in the affirmative.
Co-Chair Meyer believed that 1998 was the last time the
foundation formula had been reviewed.
Representative Chenault confirmed that the foundation
formula had been rewritten in 1998 under Senators Gary
Wilken and John Torgerson.
Senator Hoffman augmented that special committees of the
House and Senate had been appointed to examine the
foundation formula and substantial changes had been made.
There had been a look at cost differential, intensive
needs, and the Base Student Allocation.
Senator Dunleavy asked for verification that the
department, but not the school districts, would be audited.
Ms. Kelly replied that the school districts would not be
audited. She clarified that the process would be a review,
not an audit.
Co-Chair Meyer remarked on the bill's 30 cosponsors. He
CLOSED public testimony.
6:33:14 PM
Co-Chair Meyer asked the Division of Legislative Audit to
explain the fiscal note and the division's involvement in
the process.
KRIS CURTIS, LEGISLATIVE AUDITOR, DIVISION OF LEGISLATIVE
AUDIT, communicated that the division saw its role in the
process as a facilitator; the work group that compiled the
bill had assigned the review responsibility to a team that
would be facilitated by the division. She pointed to
language on page 4 of the legislation designating that the
division would annually ensure that the review team would
conduct a performance review of the appropriate programs.
Page 4, line 31 stated that the division "shall" hire
individuals and contract with individuals to form a review
team. The review team would be responsible for conducting
and reporting on the review and its results. The team would
be led by an expert in the field procured by the division
using the rules adopted by Legislative Council.
Ms. Curtis continued that the review team would be led by
an expert and would also be composed of division employees
to serve as support. The division would monitor the
contract to ensure that deliverables were met. The division
would also facilitate the reporting process by providing
support to the expert in the preparation and delivery of
the report to LB&A. She clarified that the reviews under HB
30 were not audits and would not be conducted in accordance
with auditing standards. The bill provided for
consultant/expert reviews, which was vastly different than
audits produced by the division. She communicated that the
scope of the review would be approved by LB&A; she relayed
that the committee would have a strong role in the process.
6:36:04 PM
Co-Chair Meyer observed that the reviews would be different
than audits conducted by the division. He asked whether the
reviews would conflict the division's current work. Ms.
Curtis answered that the difference between an audit and
the review was a different level of assurance (a higher
level of assurance would require more hours and resources).
The review under the bill was designed to be a leaner and
quicker, which she believed to be important. She stated
that the primary challenge for the division would be hiring
experts.
Co-Chair Meyer asked how the process would work if a
problem was located during the review. Ms. Curtis replied
that the bill specified that the scope of the review would
be approved and outlined by LB&A. She furthered that the
bill outlined what the department would be required to
produce and provide to the review team. She noted the
information required by the departments was extensive. She
detailed that the information built on what the departments
were currently required to provide legislative budget
subcommittees during session. Departments would provide
information detailing whether their programs were
authorized in statute and/or in the constitution;
departments would also prioritize their services and
recommend budget cuts to the review team. The review team
would analyze the data for best practices and would look
for areas where savings had been made in other states. The
report would include various aspects dictated by the bill
and would be seen first by LB&A; it would then become a
public document and would be provided to the legislature at
the beginning of session.
6:38:55 PM
Senator Hoffman asked whether the provision related to the
foundation formula had been included in the Texas model. He
observed that any changes to the formula would require
legislation. He was unsure how the formula fit in with the
review process unless school district input was included.
Ms. Curtis replied that during discussions on the
legislation there had been concern that the foundation
formula would be excluded in the review process. She
surmised that the formula had been included in response to
the concern.
Ms. Kelly supplemented that the foundation formula was one
of the largest budgets in the state; it had been included
by the House in response to concern that it should be
reviewed. The review team would determine how in depth the
formula would be examined. She believed the review team
would contact school districts. She furthered that the team
may look to other states as examples and would make
recommendations, which could be extensive or minimal.
Senator Hoffman asked whether states other than Texas had
been reviewed during the development of the bill. Ms. Kelly
responded that some other states had less extensive sunset
reviews; however, only Texas had been looked to as a model.
6:41:28 PM
Vice-Chair Fairclough spoke from her position as the LB&A
chair. The committee had recently reviewed agency
performances under the prior year's audit and had located
multiple places where departments had not addressed audit
findings. She stated that the bill would be another vehicle
to highlight information located by auditors. She wondered
whether the sponsor or auditor had questions about how the
items would be highlighted.
Ms. Curtis replied that the bill would require the review
team to consider the department's progress in addressing
findings. She stated that the bill could be considered as a
follow up to findings.
Ms. Kelly communicated that the provision had been included
in the bill in response to frustration by the prior
legislative auditor that the departments did not respond to
some findings.
Co-Chair Meyer discussed the schedule for the following
day.
HB 30 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
6:44:14 PM
The meeting was adjourned at 6:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 47 work draft version G.pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 47 |
| SB 57 work draft version P.pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 57 |
| CSSSSB047(FIN)-EED-K12-4-3-13 (2).pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 47 |