Legislature(1993 - 1994)

01/24/1994 09:00 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                        January 24, 1994                                       
                            9:00 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #11, Side 1 (000-510)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Steve  Frank,  Co-chair, convened  the  meeting  at                 
  approximately 9:00 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chairs Frank  and Pearce, Senators Rieger,                 
  Sharp,  Kerttula,  and Jacko  were  present.   Senator Kelly                 
  joined committee after the meeting was in progress.                          
                                                                               
  ALSO ATTENDING:                                                              
                                                                               
  Senator Mike  Miller,  Senator Robin  Taylor; Randy  Welker,                 
  Legislative  Auditor,  Legislative  Audit   Division;  Nancy                 
  Slagle,  Director,  Division  of  Budget  Review,  Office of                 
  Management & Budget; Tracy Cramer, Budget Analyst, Office of                 
  Management  &  Budget;  Mike Greany,  Director,  Legislative                 
  Finance Division; and  aides to committee members  and other                 
  members of the legislature.                                                  
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 135:   An Act  making  a  special  appropriation  to  the                 
            Department of Transportation and Public Facilities                 
            to determine the cost  of acquiring real  property                 
            within the right-of-way of  the proposed extension                 
            of the Alaska Railroad from Eielson Air Force Base                 
            to the Alaska-Canada border; and providing for  an                 
            effective date.                                                    
                                                                               
            Senator  Mike  Miller testified  in support  of SB
            135.  The committee voted to adopt amendment #1 by                 
            Senator  Sharp.  The  appropriation bill  CSSB 135                 
            ($10.0) was REPORTED OUT of committee as amended.                  
                                                                               
  SB 160:   An Act relating to memorial scholarship loans.                     
                                                                               
            Senator Robin  Taylor testified  in support of  SB
            160.   SB 160 was  REPORTED OUT of  committee with                 
            individual  recommendations   with  updated   zero                 
            fiscal notes from the Department of Public  Safety                 
            and the Department of Education.                                   
                                                                               
                                                                               
  SB 243:   An  Act  relating to  the  four dam  pool transfer                 
            fund.                                                              
                                                                               
            Senator Robin Taylor and Randy Welker, Legislative                 
            Auditor testified in support of SB  243.  The bill                 
            was HELD in committee for additional review.                       
                                                                               
  SB 246:   An Act relating to reimbursable service agreements                 
            and  other agreements  between state  agencies for                 
            the purchase of services.                                          
                                                                               
            Randy  Welker,  Legislative Auditor,  testified in                 
            support  of  SB  246.    Nancy  Slagle,  Director,                 
            Division of Budget Review,  Office of Management &                 
            Budget, and  Tracy Cramer, Budget  Analyst, Office                 
            of  Management  &  Budget,  voiced their  concerns                 
            regarding SB  246.    In  addition,  Mike  Greany,                 
            Director, Legislative Finance Division, listed his                 
            concerns.    The bill  was  HELD in  committee for                 
            additional review.                                                 
                                                                               
  SENATE BILL NO. 135:                                                         
                                                                               
       An Act making a special appropriation to the Department                 
       of Transportation  and Public  Facilities to  determine                 
       the   cost  of  acquiring   real  property  within  the                 
       right-of-way of  the proposed  extension of  the Alaska                 
       Railroad   from  Eielson   Air   Force  Base   to   the                 
       Alaska-Canada  border; and  providing for  an effective                 
       date.                                                                   
                                                                               
  (Due  to machine malfunction,  this part of  the meeting was                 
  not taped.)                                                                  
                                                                               
  CO-CHAIR FRANK announced  that SB  135 was before  committee                 
  and  invited Senator  Mike Miller, sponsor  of the  bill, to                 
  join the committee at the table.                                             
                                                                               
  SENATOR MIKE MILLER testified in support of SB 135.                          
                                                                               
  Discussion was held by Senators  Jacko, and Miller regarding                 
  the  possibility  of  a  Canadian  link  with  the  proposed                 
  extension of the  Alaska Railroad.  In  response to Co-chair                 
  Pearce's question of  why the Alaska Railroad  or Department                 
  of Natural Resources were not  involved, Senator Miller said                 
  that Department of Transportation  & Public Safety  (DOT&PF)                 
  had originated  the study.   Again,  in response  to Senator                 
  Pearce, Senator Miller believed that DOT&PF could do this in                 
  house but it would probably be contracted out.                               
                                                                               
                                                                               
  (Minutes  from this  point  reflect  transcription  of  tape                 
  recorded portion of the meeting.)                                            
                                                                               
  SENATOR  SHARP MOVED  for  adoption  of  amendment #1.    No                 
  objection being raised, amendment #1 was ADOPTED.                            
                                                                               
  Co-chair Frank  pointed out  that the  fiscal note  received                 
  from the Department of Transportation  & Public Safety would                 
  not be moved with SB 135 since it is an appropriations bill.                 
                                                                               
  Senator  Sharp  MOVED  that  SB 135  as  amended  pass  from                 
  committee  with individual  recommendations.   No objections                 
  being raised, CSSB 135  was REPORTED OUT of committee.   Co-                 
  chairs Pearce and  Frank, Senators  Rieger, Jacko and  Sharp                 
  signed the committee report with a "do pass" recommendation.                 
                                                                               
  SENATE BILL NO. 160:                                                         
                                                                               
       An Act relating to memorial scholarship loans.                          
                                                                               
  Co-chair Frank directed  that SB 160  be brought before  the                 
  committee and invited Senator Taylor to speak to the bill.                   
                                                                               
  SENATOR ROBIN TAYLOR explained that SB 160 was introduced at                 
  the  request  of  Kathleen Niles,  admissions  clerk  at the                 
  University Alaska Southeast, Sitka.   This bill would modify                 
  the eligibility requirements  for the Alaska State  Troopers                 
  under   the  Murphy   scholarship  fund   to   include  this                 
  certificate in the program.  He went on to explain  the loan                 
  forgiveness if the graduate remains in Alaska and said  that                 
  63 percent  of Sitka program  graduates are employed  in the                 
  state as law enforcement personnel.  He pointed out the bill                 
  carried a zero fiscal note and  had received a unanimous due                 
  pass recommendation from the Senate HESS committee.                          
                                                                               
  Co-chair  Pearce MOVED that SB  135 pass from committee with                 
  individual recommendations.  No  objections being raised, SB
  160  was REPORTED OUT  of committee  with zero  fiscal notes                 
  from  the  Department  of Education  and  the  Department of                 
  Transportation & Public Safety.  Co-chairs Pearce and Frank,                 
  Senators Rieger, Jacko and Sharp signed the committee report                 
  with a "do pass" recommendation.                                             
                                                                               
  SENATE BILL NO. 243:                                                         
                                                                               
       An Act relating to the four dam pool transfer fund.                     
                                                                               
  Co-chair Frank  directed that SB  243 be brought  before the                 
  committee and invited Senator Taylor to speak to the bill.                   
                                                                               
  Senator Taylor  said that SB  243 was  introduced by  Senate                 
  Rules Committee at the request of Legislative Budget & Audit                 
                                                                               
                                                                               
  after it approved  a specific motion reaffirming  the intent                 
  of the  legislature to  appropriate from  the Four  Dam Pool                 
  Transfer  fund  to  the  Southeast Energy  Fund.    He cited                 
  letters from the  Department of Law  and maintained that  if                 
  the legislation  retains current  language, the  needed fund                 
  transfer cannot be accomplished in the current fiscal year.                  
                                                                               
  Senator Sharp voiced his surprise at the overview from DC&RA                 
  showing  a  new  general fund  requirement  for  $525,000 to                 
  administer the electrical division.   Discussion followed by                 
  Senators  Rieger  and Taylor  whether  SB 243  would address                 
  Senator Sharp's concern.                                                     
                                                                               
  Co-chair Frank invited Randy Welker, Legislative Auditor, to                 
  speak to  SB 243.  RANDY WELKER explained that when the Four                 
  Dam   Pool  Transfer  Fund   was  established  the  language                 
  accompanying it  directed sub-accounts  for that  money into                 
  the  three   different  funds  including   the  "subject  to                 
  appropriation" language.   The corresponding  appropriations                 
  were  then written  directly out  of the  sub-funds and  the                 
  appropriation link between  the Transfer  Fund and the  sub-                 
  funds was inadvertently left out.  He  said that SB 243 is a                 
  technical amendment to accomplish the legislature's original                 
  intent and would not cause any inter-fund problems since all                 
  sub-accounts are within the general fund.                                    
                                                                               
  Co-chair  Frank  asked   for  a   flow  chart  prepared   by                 
  Legislative Finance to  be included  in the members'  files.                 
  Senator  Sharp  requested  the  Department  of  Community  &                 
  Regional Affairs to give the committee  an update on the new                 
  energy division.   It was decided  that on January 28,  1994                 
  during the  budget overview,  the energy  division would  be                 
  reviewed.  Senator  Kerttula asked  that Donald Harris  from                 
  McGrath be invited  to come  before committee  and speak  to                 
  these issues.                                                                
                                                                               
  Co-chair Frank  announced  that  SB 243  would  be  HELD  in                 
  committee.                                                                   
                                                                               
  SENATE BILL NO. 246:                                                         
                                                                               
       An Act  relating to reimbursable service agreements and                 
       other  agreements   between  state  agencies   for  the                 
       purchase of services.                                                   
                                                                               
  Co-chair Frank  directed that SB  246 be brought  before the                 
  committee  and invited Randy Welker, Legislative Auditor, to                 
  speak to the bill.                                                           
                                                                               
  Randy Welker said that SB  246 dealt with RSAs (reimbursable                 
  service  agreements).     The   primary  impetus   for  this                 
  legislation was an auditor's report released last interim on                 
  the  commissioner's  office in  the  Department of  Health &                 
                                                                               
                                                                               
  Social Services.  The audit objected  to the manner in which                 
  the commissioner's office was using RSAs to bring money into                 
  the commissioner's office appropriation increasing the level                 
  of  expenditure authority  for  the Commissioner  after  the                 
  legislature and Governor had established a lower expenditure                 
  authority amount.   He did not  want to apply that  all RSAs                 
  were troublesome or  invalid but felt this  legislation will                 
  provide  some clarification in statute.   He did not believe                 
  it would add  any additional requirements that do  not exist                 
  in the system  at present.   It provides focus and  emphasis                 
  from the legislature  on the  appropriate use of  RSAs.   He                 
  said the statute  as amended would  state that an RSA  could                 
  not be  used to  transfer money  between appropriations  and                 
  provides several rules for the use of RSAs.  First, it would                 
  require legal  authority to  request the service  requested,                 
  secondly, legal authority to provide the  service requested,                 
  and  finally,  when  that  service  has been  provided,  the                 
  billing  for the service  is based on an  actual cost of the                 
  service provided.                                                            
                                                                               
  Co-chair Frank asked if the service had to be provided.  Mr.                 
  Welker answered  that unless  a service  has been  provided,                 
  there is no executed agreement, and no basis for billing.                    
                                                                               
  In  answer   to  Senator  Rieger's   question  whether  LB&A                 
  routinely peruses RSAs, Mr. Welker said that they did not go                 
  out of the way but staff is aware of the potential for abuse                 
  or misuse of RSAs.  In answer to another question by Senator                 
  Rieger, Mr. Welker reiterated that  SB 246 will help clarify                 
  what  the legislature believes  to be the  legitimate use of                 
  RSAs.                                                                        
                                                                               
  Senator  Jacko  asked  if  OM&B  had  a  position  statement                 
  available.  Co-chair  Frank invited Nancy  Slagle, Director,                 
  Division of Budget  Review, Office  of Management &  Budget,                 
  and Tracy  Cramer, Budget  Analyst, Office  of Management  &                 
  Budget to join the committee at the table.                                   
                                                                               
  NANCY SLAGLE  explained that  until the  mid-80s there  were                 
  such statutory requirements  in the  purchasing area of  the                 
  statutes.    The  administration feared  that  under  SB 246                 
  instances may occur where there may be the lack of statutory                 
  authority but some expertise  may be needed to  be purchased                 
  from another  agency.   Another area  of concern  is if  the                 
  legislature in  their budget  process decided  to put  money                 
  into  a certain  component  for accountability  purposes and                 
  approved the transfer of those  funds to other components to                 
  provide  the services, it  may be questionable  under SB 246                 
  whether there is  an actual contractual arrangement  between                 
  those components.                                                            
                                                                               
  In  answer  to Senator  Rieger,  Ms. Slagle  replied  that a                 
  written   agreement  has   historically   been  used   as  a                 
  contractual agreement  between agencies.   The  only problem                 
                                                                               
                                                                               
  would be if  the money is  placed in a particular  component                 
  but  the services  are not  provided in  that component  but                 
  provided elsewhere.   She  said that  OM&B provides  written                 
  procedures for RSAs to  the agencies.  It provides  not only                 
  the procedures  but oversight for those RSA agreements.  She                 
  assured the committee  that the  department is very  careful                 
  about what it approves and disapproves.                                      
                                                                               
  Senator  Sharp asked if  OM&B had the  authority to prohibit                 
  RSAs between divisions or sections within a department.  Ms.                 
  Slagle  answered that  OM&B  was able  to  oversee all  RSAs                 
  between divisions or departments.   Senator Rieger wanted to                 
  know if there was a technical definition of agency and if an                 
  agency  could  move appropriations  within  an agency.   Ms.                 
  Slagle believed there  was a definition of  agency but would                 
  provide that information to the committee.                                   
                                                                               
  Co-chair Frank requested OM&B, Randy  Welker and Mike Greany                 
  to  propose a mutually agreed  upon amendment that would not                 
  unduly restrict but  eliminate potential for abuse  of RSAs.                 
  Mike Greany cautioned the committee  that any amendment made                 
  should  not  effect the  legislature's  ability to  build in                 
  transfers within the budgeting process.                                      
                                                                               
  Co-chair  Frank  announced  that SB  246  would  be HELD  in                 
  committee.                                                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:00 a.m.                        

Document Name Date/Time Subjects