Legislature(2019 - 2020)SENATE FINANCE 532
05/21/2019 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB1001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB1001 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
FIRST SPECIAL SESSION
May 21, 2019
9:05 a.m.
9:05:07 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:05 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Peter Micciche
Senator Donny Olson
Senator Mike Shower
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman
ALSO PRESENT
Senator Chris Birch; Senator Gary Stevens; Senator Mia
Costello; Cori Mills, Senior Assistant Attorney General,
Department of Law; Heidi Teshner, Administrative Services
Director, Department of Health and Social Services; Lacey
Sanders, Budget Director, Office of Management and Budget;
Norm Wooten, Executive Director, Association of Alaska
School Boards, Juneau; Megan Wallace, Director, Legislative
Legal Services, Alaska State Legislature.
PRESENT VIA TELECONFERENCE
Marilyn Menish-Meucci, Self, Petersburg; Chris Reitan,
Superintendent, Craig School District, Craig; Shawn Arnold,
President Elect, Alaska Superintendents Association, Valdez
City Schools, Valdez; Dan Polta, Superintendent, Denali
Borough School District, Healy; Vikki Jo Kennedy, Self,
Juneau; Dave Jones, Assistant Superintendent, Kenai School
District, Soldotna; Patrick Mayer, Superintendent, Yakutat
School District, Yakutat; Herman Morgan, Self, Aniak.
SUMMARY
SB 1001 APPROP: 2020 EDUCATION FUNDING/REPEAL
SB 1001 was HEARD and HELD in committee for
further consideration.
Co-Chair Stedman relayed that Senator Hoffman was absent
and that Senator Shower would be joining the committee
shortly.
SENATE BILL NO. 1001
"An Act making appropriations for public education and
transportation of students; repealing appropriations;
and providing for an effective date."
9:05:49 AM
Co-Chair Stedman relayed that there would be public
testimony after the presentation.
9:06:53 AM
CORI MILLS, SENIOR ASSISTANT ATTORNEY GENERAL, DEPARTMENT
OF LAW, discussed the presentation, "SB 1001 - Approp:
FY2020 Education Funding" (copy on file).
Co-Chair Stedman asked that testifiers provide clarity for
the public on the subject of the bill and avoid acronyms if
possible. He reminded that the hearing was geared for the
benefit of the public.
Ms. Mills recounted that budgets released by former
Governor Bill Walker and Governor Mike Dunleavy had both
had education funding included. She noted that operating
budget legislation introduced by the governor in February
had also had education funding for FY 20. She described
that as the budget went through the legislative process,
the FY 20 education funding had been removed with an
assertion that there was a valid appropriation through the
passage of HB 287 [legislation passed in 2018 that funded
K-12 schools in FY 19 and FY 20].
Ms. Mills continued that the attorney general had been
asked to evaluate HB 287 and had opined that the
appropriations were not valid and violated the Dedicated
Funds Clause and the constitutional annual appropriation
process in the state constitution. The governor had since
introduced SB 1001, which provided for full funding for
education. The bill was the same appropriation from the
previous year, including the additional $30 million
appropriation.
9:10:06 AM
HEIDI TESHNER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, spoke to slide 2, "SB1001
Appropriation: FY2020 Education Funding":
? Section 1 appropriates $30,000.0 as one-time
funding to be distributed as grants to school
districts based on the adjusted average daily
membership
? Section 2
? (a) appropriates the amount necessary,
estimated to be $1,172,603.9, for the Foundation
Program
? (b) appropriates the amount necessary,
estimated to be $77,214.6, for the Pupil
Transportation Program
? Under both subsections, funds are appropriated
from the general fund to the public education
fund
? Section 3 repeals the FY2020 appropriations made
under HB287 (Ch. 6, SLA 2018)
? Section 4 appropriations made in Section 2
capitalize the public education fund and do not lapse
? Section 5 Section 3 is effective June 30, 2019
(FY2019)
? Section 6 Remaining sections are effective July 1,
2019 (FY2020)
9:11:12 AM
LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, spoke to slide 3, "SB1001 Appropriation: FY2020
Education Funding":
? Education is one of the most important obligations
of the State, and it is vital that we have
constitutionally valid funding to send out to school
districts come July 1. As it stands right now, that
does not exist, and we cannot rely on an
unconstitutional appropriation. This bill provides the
appropriation necessary to ensure the State can
legally distribute funds for education.
? Appropriations are law, and like all laws can be
repealed at a future date if priorities or
circumstances change. The constitution, however, makes
it clear that no law can dedicate a future revenue
stream for a specific purpose. The ability to repeal
such a law at a future date does not make it any less
a violation of the prohibition against the dedication
of funds.
9:12:05 AM
Ms. Sanders referenced slide 4, "SB1001 Appropriation:
Appendix/Definitions":
SLA 2006* Began "Forward-Funding" Education by
appropriating two years of funding into the Public
Education Fund (PEF)
SLA 2007 - SLA 2017 Continued "Forward-Funding"
Education by annually appropriating current year
revenue into the PEF
SLA 2015** Ended "Forward-Funding" Education by not
appropriating any funding into the PEF and using the
balance of the fund
SLA 2018*** Attempted to re-start "Forward-Funding" of
Education using a future effective date to earmark
future revenue
*During SLA 2006:
?Ch. 33, SLA 2006 Sec. 25(m)Deposited FY2006
surplus revenue into the PEF
?Ch. 82, SLA 2006 Sec. 20(a)Deposited FY2007
revenue into the PEF for FY2007 K-12 Foundation
and Pupil Transportation
**During SLA 2015:
?Ch. 1, SSSLA 2015 Sec. 16 Repealed the deposit
for FY2015 and brought the fund balance to a
single year available for distribution in FY2016
***During SLA 2018:
?Ch. 6, SLA 2018 Sec. 5(a)-(b) Deposited FY2019
revenue into the PEF for FY2019 K-12 Foundation
and Pupil Transportation
?Ch. 6, SLA 2018 Sec. 5(c)-(d) Earmarked FY2020
revenue into the PEF for FY2020 K-12 Foundation
and Pupil Transportation
Ms. Sanders thought there had been much public discussion
regarding forward funding.
9:14:12 AM
Ms. Sanders showed slide 5, " SB1001 Appropriation:
Appendix/Definitions":
? Multi-Year Appropriation operating appropriation
of current year revenue with authority to expend over
multiple fiscal years.
? Capital Project capital appropriation of current
year revenue with authority to expend over multiple
fiscal years.
? Fund Capitalizations appropriation of current year
revenue into fund to be distributed without further
appropriation for a purpose stated in statute.
Examples include the Community Assistance and Disaster
Relief Funds.
Ms. Sanders noted that slide 5 and slide 6 had definitions
for the committee. She thought there had been other
definitions used to describe forward funding.
9:15:21 AM
Ms. Sanders turned to slide 6, " SB1001 Appropriation:
Appendix/Definitions":
Examples of Forward Funding Appropriations:
? Community Assistance Program Fund capitalization
made each year, from available revenue, to ensure
balance of the fund in the subsequent year is
sufficient for the desired statutory distribution.
? Temporary Increments (IncT) Programs with a set
duration, requires appropriation in each subsequent
year. IncT designation provides clarity of temporary
nature of program and anticipated duration.
Ch. 171, SLA 1984 Continuing appropriations from
the general fund to the Power Cost Equalization fund,
Susitna River Hydroelectric project, and Bradley Lake
Hydroelectric project to occur on July 1 each year.
Struck down as unconstitutional by the superior court.
(Trustees for Alaska v. State, 3AN-84-12053.)
Ms. Mills stated that the bill was a simple appropriation
bill.
9:16:29 AM
Co-Chair von Imhof went back to slide 4 and recalled that
there had been 3-year education funding outside the formula
through grants in 2014, 2015 and 2016. She further recalled
that after the first year the grants had been rescinded.
She thought that while the legislature had forward funded
education in the past, it also had the ability to
reconsider the funding each year to decide if it made
sense. There had been cases in the past where the forward
funding had been rescinded. She noted that the current body
had decided to move forward with the funding plan from HB
287. She thought that the process of forward funding and
subsequent reconsideration of the funding to be within the
legislature's purview.
Ms. Sanders clarified that each of the examples on the
slide in prior years had associated revenues. If the
legislature had decided to take an additional draw from the
ERA or CBR (in the instance of HB 287) there would have
been revenue associated with the appropriation.
9:19:16 AM
Co-Chair von Imhof suggested that every budget anticipated
future revenue. She emphasized that the legislature created
a budget in the present and things could change as the
influencing factors (such as the price of oil) changed over
the course of the year. She referenced the example of 2014
and 2015, when revenues changed, and the legislature made
different decisions. She thought it was not entirely
accurate to say that previous appropriations had revenue
that matched. She reiterated that every single year revenue
was based on current information and was then subject to
change over the following year.
Senator Wielechowski considered slide 4 and recalled four
different governors and attorney generals during the time
period considered on the slide. He wondered if any other
attorneys general had issued an opinion about whether
forward funding was constitutional.
Ms. Mills considered the scenario of HB 287, and was not
aware of any opinion regarding earmarking of future funds.
She mentioned Co-Chair von Imhof's comments and referenced
the 2003 case of Myers vs. Alaska Housing Finance
Corporation, in which the Alaska Supreme Court had found
that the anti-dedicated funds clause would prohibit the
legislature from appropriating a revenue stream for more
than the immediately forthcoming fiscal year. She thought
the other examples listed on the slide were appropriating
money that was coming in the immediately forthcoming fiscal
year; which was a different situation than that enacted by
HB 287.
Senator Wielechowski wondered if the Supreme Court might
rule differently in the case at hand since the legislature
had a constitutional obligation to provide for education.
He thought that the court would require the legislature to
provide funds for education if the funds were not
appropriated.
Ms. Mills agreed that there was a mandate in the
constitution to "establish and maintain a system of public
schools." She acknowledged that the mandate was a
constitutional requirement, just like the constitutional
appropriation process. She questioned whether the court
would stipulate how much to fund or whether it would just
direct the legislature to appropriate money. She referenced
the separation of powers. She asserted that while the
legislature was required to appropriate money for
education, it was necessary to do so within the
constitutional framework set forth.
9:22:44 AM
Co-Chair Stedman discussed the legislative process. He
pondered whether the process of bill review for HB 287 had
questioned the issue at hand. He asked Ms. Mills to provide
a copy of any associated documents or information.
Ms. Mills was happy to share the bill review letter but did
not have it at hand. She could not recall the language
regarding any bill review but recalled that the Department
of Law's (LAW) review did not raise the same issues that
were bring raised in the opinion by the attorney general.
She thought it was a matter of not looking at the issue
closely at the time the bill was being considered. When LAW
was asked a specific question about the constitutionality
of the appropriation as proposed in HB 287, it had gone
through a much longer vetting process.
Senator Wielechowski asked if Ms. Mills would consider it
constitutional if the 2018 legislature had made the
appropriation effective June 30, 2019.
Ms. Mills answered in the affirmative, if there was the
money to transfer to the Public Education Fund. If there
were not revenues available at the time, the money could
not have been transferred. If the legislature had made the
appropriation in the FY 19 (which went through June 30), it
would have been a current appropriation.
Co-Chair von Imhof informed that the Senate passed a budget
on the floor with a $3000 Permanent Fund Dividend (PFD),
which yielded an approximately $1.2 billion deficit. She
asked where the state was going to get the money.
Ms. Sanders stated that the question was before the
legislature, and it would need to decide where the funding
would come from to support the appropriations.
Co-Chair von Imhof stated that the legislature would decide
how it would forward fund education. The legislature could
either decide to take a draw from the CBR, which had funds
in it; or from the ERA, which had a lot of money in it. She
thought regardless of whether the legislature funded
something that the administration or the legislature found
favorable, there was money to do so. She referenced two
bills sponsored by the governor that would forward fund the
dividends and assumed the funds would come from the ERA.
She emphasized that there was a great deal of funds in the
ERA, which could change if the market took a downturn. She
thought there were many unknowns at any given time, and it
was not accurate to say that there were not sufficient
funds the previous year.
9:25:46 AM
Senator Olson asked if the remainder of the FY 20 operating
budget was funded by FY 19 revenues or funded by revenues
expected to be received in FY 20.
Ms. Sanders stated that the appropriations for the FY 20
budget were funded with revenue received during the FY 20
year unless drawn from savings.
Senator Olson asked why there was repeal language within SB
1001if the administration considered the appropriation
language in HB 287 to be invalid.
Ms. Mills stated that the bill language was reflective of
good bill drafting in order to prevent an existing law that
was unconstitutional.
Senator Wielechowski referenced Co-Chair Stedman's inquiry
about the bill review for SB 1001; and asked about the
period of time from 2006 to 2015 during which there had
been five or six attorney generals. He asked if there had
been previous bill reviews that had found forward funding
to be unconstitutional.
Ms. Mills relayed that there had been bill reviews that the
department was happy to provide. She reminded that the past
forward funding scenarios were different than that included
in HB 287. Former scenarios had put surplus revenues had
been put into the Public Education Fund, after which the
fund was "overfunded" for two years' worth of education
funding using revenues that came in the forthcoming fiscal
year. It had not been the case where there was a future
effective date taking future revenues past the forthcoming
fiscal year.
Senator Wielechowski was trying to understand why the
scenarios were different.
Ms. Mills asserted that the constitution envisioned an
annual process where the legislature considered revenues
that would come in the forthcoming fiscal year. She
suggested it would be fine if the legislature wanted to
overfund the Public Education Fund and have the money
available for multiple years. She maintained that the
legislature could not tie the hands of a future legislature
and a future governor for revenues that would come in past
the forthcoming fiscal year. She considered the forward
funding to be taking revenues that were "not on the table
yet" and setting them aside.
Co-Chair Stedman thought Co-Chair von Imhof had brought up
a concern dealing with previous dividends. He thought there
appeared to be a correlation.
9:29:30 AM
Senator Micciche did not see a clear definition of "tying
the hands of this legislature." He stated that the
legislature had known it could change the appropriation
from the previous year. He did not think the bill
specifically discussed tying the hands of the legislature
rather than tying the hands of the governor. He asked if
Ms. Mills was asserting that there was a definition in law
that required the legislature to act on it in a positive
sense every year.
Ms. Mills referenced the Meyers case and the anti-
dedication clause, which would prohibit the legislature
from appropriating a revenue stream for more than the
immediately forthcoming fiscal year. She stated that the
case showed how the courts had interpreted the state's
annual appropriation process. The other case that was found
to be relevant was a superior court case (not binding) from
1985 that specifically had continuing appropriations for
four years, eight years, and for an indefinitely ongoing
period of time. She recalled that the appropriations could
have been reversed by the legislature at any time, yet the
court had struck the appropriations down as
unconstitutional. She pointed out that it was true to stay
any statute could be reversed by the legislature.
Ms. Mills continued her remarks. She discussed the
Permanent Fund, and the argument that the PFD calculation
could be changed by the legislature. She thought the courts
had interpreted the law to say that the legislature
affirmatively needed to consider Permanent Fund revenues
each year.
9:32:06 AM
Senator Micciche wondered how to separate capital when
money was tied up for years from one legislature to
another. He discussed federal matching funds for education
and asked why Ms. Mills was separating the two topics.
Ms. Mills reminded that capital expenditures were done with
revenues from the forthcoming fiscal year. The revenues
might be used for multiple years, but the legislature was
determining how to use the money in the forthcoming fiscal
year. She continued that just because the money was being
used for multiple years, the department did not see a
constitutional issue.
Co-Chair Stedman OPENED public testimony.
Co-Chair Stedman asked that testifiers would be succinct
and speak to the bill before the committee.
9:33:24 AM
MARILYN MENISH-MEUCCI, SELF, PETERSBURG (via
teleconference), was strongly opposed to the bill. The
previous year the legislature had made a big step and
forward-funded education for two years; which she thought
would ensure quality teachers and thriving schools. She
thought it was wrong for the governor to want to change
what the legislature did the previous year. She did not
think school funding should be impacted by a political
fight. She urged the committee to vote "no" on the bill,
disburse the promised money to schools, and use a
supermajority vote to override a potential veto by the
governor.
9:34:42 AM
CHRIS REITAN, SUPERINTENDENT, CRAIG SCHOOL DISTRICT, CRAIG
(via teleconference), spoke in opposition to the bill. He
testified to the importance of forward funding education
for the operation of Alaska's schools. He thanked the
legislature for its intention of forward-funding schools.
He relayed that the Alaska Council of School Administrators
considered timely, reliable, and predictable school funding
to be its first priority. He asserted that early
notification of funding was crucial to sound financial
management.
9:35:52 AM
SHAWN ARNOLD, PRESIDENT ELECT, ALASKA SUPERINTENDENTS
ASSOCIATION, VALDEZ CITY SCHOOLS, VALDEZ (via
teleconference), spoke in support of forward-funding of
education. He emphasized that it was extremely important to
have timely, reliable, and predictable revenue for K-12
schools. He noted that the matter was a key component of
the association's joint position statement. The school
districts could not operate efficiently and effectively
without knowing what revenue would be available. He asked
the legislature to take the issue seriously. He emphasized
that early stable funding was necessary for sound fiscal
management, recruitment and retention of quality educators.
He thought stabilizing districts budgetarily would improve
student achievement.
9:37:15 AM
DAN POLTA, SUPERINTENDENT, DENALI BOROUGH SCHOOL DISTRICT,
HEALY (via teleconference), spoke in opposition to the
bill. He stated that the known, reliable funding allowed
the school district to ensure that students had teachers
committed and contracted to serve educational needs the
following school year.
9:37:52 AM
VIKKI JO KENNEDY, SELF, JUNEAU (via teleconference),
expressed her mixed feelings about the bill. She thought
she had heard the bill in a House committee. She thought
the bill was confusing. She questioned why HB 287 had been
passed if forward funding was illegal. She thought
education funding was important. She did not want stupid
students to become legislators. She expressed frustration
about the lack of progress during the special session. She
appreciated the work of the legislature.
9:39:37 AM
DAVE JONES, ASSISTANT SUPERINTENDENT, KENAI SCHOOL
DISTRICT, SOLDOTNA (via teleconference), testified in
support of continued forward-funding of education. He
thought there was the opinion that the amount of the
governor's proposed cuts was based on the amount of money
that school districts had within fund balances and that the
districts would withstand the cuts. He had emailed members
of the committee with a copy of the school district's end-
of-year fund balances; and a copy of fund balance
classifications. At the end of the previous year, the
available funds to be spent was $5,960,000. The governor
proposed to cut $20,957,000 from the Kenai School District
budget.
9:41:37 AM
PATRICK MAYER, SUPERINTENDENT, YAKUTAT SCHOOL DISTRICT,
YAKUTAT (via teleconference), spoke in opposition to the
bill. He was the president of the Alaska Council of School
Administrators (ACSA), and president of the Alaska
Superintendents Association. He appreciated the
legislature's intent to fund education through HB 287. He
pointed out that ACSA and Alaska Association of School
Boards had commissioned a study that indicated overwhelming
public support for public education. He referenced a survey
by the Senate that showed 67 percent of people that felt
education was funded "about right or too low." He
emphasized that adequate, predictable, timely and reliable
funding was the first priority of ACSA. He discussed PFD
payments, and reminded that Article 7, Section 1 of the
constitution placed education in a preeminent position. He
stated that superintendents were concerned about late
funding, which created an environment of uncertainty.
9:43:38 AM
HERMAN MORGAN, SELF, ANIAK (via teleconference), was in
support of the bill. He thought forward funding seemed
illegal. He discussed a petition in Aniak. He discussed the
state's low test scores in rural areas and alleged that
there were unqualified teachers. He referenced the loss of
accreditation by UAA's School of Education program. He
asserted that many students saved PFD's for further
education. He read from the petition. He thought certain
teachers were not teaching their assigned subject. He
thought unqualified teachers were not being monitored. He
thought that the concerns of parents had not been
addressed. He thought there was a lack of monitoring of
teachers. He mentioned racism. He did not support forward-
funding. He planned to pray for the legislature to make
correct decisions.
9:47:50 AM
NORM WOOTEN, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA
SCHOOL BOARDS, JUNEAU, testified in opposition to the bill.
He thought it had been a difficult session. He thanked the
committee for its work on behalf of Alaska's school
children. He acknowledged that the members had made
repeated references to the legislature's constitutional
obligation to provide education to the state's students,
which he thought showed the legislature's commitment to the
state's future. He referenced AASB's resolution urging
early, adequate, equitable and predictable funding of
education. The early adoption timeline would allow for
school boards and administration to plan instruction and
staffing. He asserted that forward-funding was critical for
school districts to compete with other districts for the
shrinking pool of teacher applicants. He reminded that the
problem was not only in rural areas, but in all of the
state. He could not comment on the constitutionality of
forward-funding.
9:50:23 AM
Co-Chair Stedman CLOSED public testimony.
Co-Chair Stedman commented that there was a difference of
opinion with the administration. He wanted to make clear to
the public that the committee had ample opportunity the
previous three months to change the funding mechanism for
FY 20. The committee had decided to let the forward-funding
stand.
9:51:15 AM
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE, affirmed that the administration had a
different opinion than that of the division of Legislative
Legal Services (LLS) with regard to the validity to the
previous year's appropriation of forward-funding for
education via HB 287. She relayed that it was LLS' opinion
that the appropriations made in HB 287 remained valid
binding appropriations unless overturned by a court. She
thought the governor likely had a constitutional obligation
to execute the appropriations on the effective date of July
1, 2019.
Ms. Wallace had reviewed the attorney general's opinion.
After conferring with her colleagues was confident that the
appropriations made in HB 287 were constitutional, did not
violate the dedicated fund prohibition, were consistent
with the legislature's appropriation power, and would
withstand any legal change that might come forth.
Senator Olson asked to have the director of the Office of
Management and Budget and the assistant attorney general at
the table.
Senator Olson thanked Ms. Wallace for her advocacy. He
asked how long she had been with the department.
Ms. Wallace stated she had been with legal services since
2013.
Senator Olson asked if Ms. Wallace had seen anything that
had called the forward funding of education into question.
Ms. Wallace stated that the legislature had a long history
of forward-funding through a variety of mechanisms. She had
not seen an opinion from the attorney general's office
calling into question any of the forward funding mechanisms
previously employed by the legislature. She thought the
question would be more appropriately directed to the
attorney general's office.
Senator Olson asked what Ms. Wallace would predict as an
outcome if the case were to be taken up by the Supreme
Court of Alaska.
Ms. Wallace thought that ultimately if a court were to
invalidate the appropriation made by the legislature the
previous year, the body would be forced to have a special
session to deal with the court's ruling.
Senator Olson thought the court would find part of the case
valid and part of it not valid.
Ms. Wallace thought it was difficult to predict how the
court would rule. It was her opinion that the legislature
would prevail if the validity of the previous year's
appropriations were challenged.
9:55:10 AM
Senator Wilson asked what would happen if the legislature
took no action on the bill.
Ms. Wallace stated that if the legislature took no action
on the bill, the appropriations made in HB 287 would remain
the valid for FY 20 education appropriations for student
transportation costs and a $30 million one-time funding
item.
Senator Micciche thought it sounded that the challenge was
not necessarily on forward funding, but rather the
difference between "deposited" and "earmarked." He asked if
Ms. Wallace had any comments on the difference and how it
could possibly be problematic.
Ms. Wallace informed that the state constitutional founders
had discussed the difference between earmarking and
dedication of funds; and specifically chose to prohibit the
dedication of taxes for a particular purpose. She saw a
difference between earmarking and the prohibition against
dedicated funds. She furthered that the appropriations made
in HB 287, which took effect July 1 for the FY 20 fiscal
year, competed with all the other appropriations that took
effect on July 1. The legislature had to consider the
appropriation when balancing anticipated revenues with all
of the FY 20 expenditures. In her opinion the
appropriations made the previous year in HB 287 were not
dedicated since the legislature considered whether to
reduce, amend or repeal the appropriation in the current
year as part of the annual budgeting process.
Senator Micciche pondered that if the administration's
position on the appropriation in HB 287 was correct, it
would make several other regular procedures of the
legislature unconstitutional as well.
Ms. Wallace stated that all budgeting was prospective, and
the state always budgeted before revenue was received. She
thought a strict reading of the administration's opinion
could call into question some of the previous forward
funding attempts.
9:58:58 AM
Senator Olson remarked on the fact that the attorney
general was not present, nor was the commissioner of DEED
and the OMB director. He wanted the opportunity to ask
questions of the attorney general. He recalled that Ms.
Mills had served under several attorneys general. He asked
why the question of constitutionality had not come up
previously.
Ms. Mills relayed that the department had looked back
between 10 and 15 years and had not been able to identify
an example with the same circumstances considered in the
bill. The most similar case found was a 1984 appropriation
that sought to take revenues in succeeding fiscal years and
set aside for certain purposes. The case was struck down by
the superior court.
Senator Olson thought there would most likely be lawsuits
associated with the forward-funding of education and
thought the state would find itself in an expensive legal
situation. He considered the attorney general's opinion and
experience in the practice of law. He considered past
opinions of the attorney general and asked about the
outcome of past cases.
Co-Chair Stedman thought that Senator Olson was straying
from the subject matter of the bill. He thought the subject
was a point of interest.
Senator Olson wanted to know the odds of prevailing in a
potential lawsuit if the legislature was going to be
spending money to engage in a legal battle.
Co-Chair Stedman thought there was an honest disagreement
on the matter.
10:03:15 AM
Ms. Mills would not speak to the attorney general's
history. She reminded that the attorney general came from
private practice in which he advocated for the position of
clients. She emphasized that the attorney general's opinion
was completed by request and wholly within the department.
The attorney general's opinion was an interpretation of the
constitution.
Senator Wilson asked if the forward funding for education
in the upcoming budget was different that the forward
funding from the previous year.
Ms. Mills believed Senator Wilson was referring to the
recent Conference Committee's adoption of the House version
of some language that was similar to HB 287. The department
believed that the language would fall into the same
category as that of HB 287 and would not be a valid
appropriation.
Senator Wielechowski reiterated that there had been five
different attorneys general and four different governors
under which the forward funding of education had not been
questioned. He reminded of the constitutional obligation of
funding education. He thought the court would order the
legislature to fund education. He discussed the dedicated
funds clause, which stipulated that the proceeds of any
state tax or license shall not be dedicated to any special
purpose. He thought the court could rule that education was
a public purpose rather than a special purpose, and one
that the state was obligated to fund. He asked how long the
issue would take to resolve if the matter went to court.
Ms. Mills acknowledged that litigation was not timely, and
a superior court or supreme court would take time even if
expedited. She three months or even a year could be
considered a short time for the Alaska Supreme Court.
Co-Chair Stedman assured that funding for K-12 would not be
stopped.
10:07:04 AM
Senator Wielechowski asked what recommendations Ms. Mills
had for the legislature to ensure that education was
funded. He asked if the governor would release the funds
intended for K-12 education. He asked what sort of ideas
Ms. Mills had to ensure school districts received funding
on July 15th.
Ms. Sanders referenced legal guidance given to the governor
by the attorney general and understood that funding would
not be distributed on July 15th without a valid
appropriation. She thought there were many ways that could
be utilized to ensure that funding was distributed to
school districts. There had been conversations about
various options. She thought that the funding was not
necessarily contingent upon SB 1001 going forward. She
thought an appropriation for education could be included in
either the operating or capital budget. There had been
discussion about using contingency language to allow for
funding to go to school districts based on the decision of
the courts.
Co-Chair von Imhof thought the point was that the
government needed to make sure that education was being
funded. She referenced $20 million that was not being
funded for the current year, and she thought it was an
issue of choice rather than a constitutional issue. She
emphasized that the legislature had made the choice to fund
education. She mentioned the question of whether the
legislature wanted to do a biannual budget. She thought a
"friendly" lawsuit made sense to solve the issue. She
emphasized that there was no fiscal crisis, and if the
governor refused the appropriate the funds for education,
it was his choice. She was glad that the legislative body
had stuck to its guns and kept funding for education going
for FY 20. She hoped that the governor and the
administration did the right thing for education in Alaska.
Co-Chair Stedman thanked the testifiers.
SB 1001 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:11:35 AM
The meeting was adjourned at 10:11 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 052119 SB1001 Presentation to SFC 5.21.19.pdf |
SFIN 5/21/2019 9:00:00 AM |
SB1001 |
| SB 1001 Dept of Law response to SFIN with HB 287 Bill Review 5.23.19.pdf |
SFIN 5/21/2019 9:00:00 AM |
SB1001 |