Legislature(1995 - 1996)
04/11/1996 09:50 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 11, 1996 9:50 a.m. TAPES SFC-96, #73-B, Side 1 (000-575) SFC-96, #73-B, Side 2 (575-395) CALL TO ORDER Senator Rick Halford, Co-chairman, convened the meeting at approximately 9:50 a.m. PRESENT In addition to Co-chairmen Halford and Frank, Senators Rieger, Sharp, and Zharoff were present. Senators Donley and Phillips arrived as the meeting was in progress. ALSO ATTENDING: Senator Green; Commissioner Shirley Holloway, Dept. of Education; Dr. James Elliott, Acting Director, School Finance, Dept. of Education; Chris Christensen, Staff Counsel, Alaska Court System; Jay Livey, Deputy Commissioner, Dept. of Health and Social Services; Curt Lomas, Welfare Reform Program, Division of Public Assistance, Dept. of Health and Social Services; Glenda Straube, Director, Child Support Enforcement Division, Dept. of Revenue; Jim Nordlund, Director, Division of Public Assistance, Dept. of Health and Social Services; Mike Tibbles, aide to Senator Green; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 98 - PERSONAL RESPONSIBILITY ACT A draft CSSB 98 (Fin) (Version "N," dated 4/10/96) was distributed. Review of pages 1 through 12 was had with Senator Green and Mike Tibbles. The bill was held in committee for continued review at the next meeting. SB 167 - DAY FINES & INFO FOR COLLECTING FINES Discussion was had with Chris Christensen from the Alaska Court System. Senator Donley explained proposed Amendments 3 and 4. The bill was subsequently held in committee for further work by Senator Donley. SB 244 - CALCULATION OF STATE AID TO EDUCATION Discussion was had with Mr. Elliott from the Dept. of Education. A draft CSSB 244 (Fin) (Version "F," dated 4/4/96) was adopted. Amendment No. 1, by Co-chairman Frank, (removing subsection (b) from page 2 of the draft) was adopted. Amendment No. 2, by Senator Zharoff, (Restoring Sec. 4 (single-site schools) of the original bill) failed on a vote of 1 to 5. CSSB 244 (Fin) was REPORTED OUT of committee with a fiscal note from the Dept. of Education showing a cost of $311.7 for FY 96 and $20.2 in subsequent years. SENATE BILL NO. 244 An Act relating to state foundation aid and supplementary state aid for education; and providing for an effective date. Co-chairman Halford directed that SB 244 be brought on for discussion. Co-chairman Frank distributed a draft CSSB 244 (Fin) (9-GS2043\F, Ford, 4/4/96) and said the intent was to solve the disparity problem in a manner similar in concept to the department's proposal but to make it revenue neutral and applicable to FY 96. The draft does not include single- site districts, with the recognition that they will be dealt with as they have, in the past, through supplemental funding. A hold harmless provision within the bill ensures that no district will lose money this year because of the increase in the deduct from 90 to 96 percent. Co-chairman Frank voiced need for an updated fiscal note from the department, to accompany the bill. JAMES ELLIOTT, Acting Director, School Finance, Dept. of Education, came before committee. He advised of no opposition to the proposed draft with the exception of the single-site issue. The department has received several notifications from the federal government, in administrative appeals of Alaska's standing as an equalized state, that "They consider this to be a circumvention of the formula." Mr. Elliott expressed the department's preference for retention of single sites within the formula. Speaking to the new fiscal note, Mr. Elliott advised that hold harmless provisions for FY 96 would total $311.7. The cost for FY 97 should approximate $20.0. Senator Rieger voiced his understanding that, exclusive of the hold harmless, the bill "causes a $20.0 per year increase in foundation expense." Mr. Elliott concurred. Co-chairman Frank noted that the hold harmless cost of $311.7 for FY 96 reflects a one-time only cost. He further attested to the neutrality gained by increase of the deduct from 90 to 96 percent and reduction of FY 96 costs from $1.2 million to $300.0. In response to a question from Senator Zharoff regarding the single-site issue, Mr. Elliott explained that any 874 recipient district can challenge the department's standing as an equalized state. One is currently ongoing. The administrative law judge hearing the appeal noted that this appeared to be a circumvention of the formula and that it had been repetitive, year after year. An issue has not been made beyond that. Funding has been provided in this manner in the past, and the state still passed the disparity test. With single sites out of the formula, the state will continue to pass the disparity test. The department was attempting to place itself in the best position in case of subsequent challenges to Alaska's equalized standing. Senator Rieger voiced his understanding that the basic "change of shape of state aid because of this bill is to increase aid to districts which do not have a local contribution." Mr. Elliott concurred, advising that it provides an additional $500.00 per instructional unit. Further discussion of the disparity test and local contributions followed. Co-chairman Halford directed attention to Page 2, lines 17- 19, and questioned need for the bill in light of regulation authority within subsection (b). Mr. Elliott advised that the department does not currently have the authority provided by the subsection. Co-chairman Frank acknowledged that authority granted by the subsection appears to be broad and suggested that the subsection be removed in order to keep the issue of school funding within the legislative arena. He then formally MOVED to delete subsection (b). Senator Zharoff OBJECTED. Co-chairman Frank REMOVED his MOTION and MOVED instead for adoption of CSSB 244 (Fin). Senator Zharoff again OBJECTED, noting deletion of single- site schools. He then said he would withdraw his objection and offer reinstatement of single-site schools as an amendment. No further objection having been raised, CSSB 244 (fIN) was ADOPTED. Co-chairman Frank then replaced his MOTION for removal of subsection (b) at Page 2, lines 17-19. Mr. Elliott explained that authority provided by subsection (b) was the main purpose of "having the bill in the first place." It would give the department the ability to make necessary adjustments to ensure that the state meets the disparity test. The department presently has parallel authority to restrict or lower local contributions for cities and boroughs. That proved to be unpalatable for districts like Juneau, Ketchikan, and Kenai, which are at the cap. Provisions within subsection (b) are viewed as a mechanism by which the department could adjust the floor and the ceiling. Removal would entail a major change from what the department intended. Co-chairman Halford commented that the bill, as introduced by the administration, reflects a major change in existing law. Co-chairman Frank voiced his understanding that the $500.00 per instructional unit allotment would solve the problem for the current year. Mr. Elliott noted that the variable is the amount of local contributions. That will not be known until late in the spring. If there are no changes in local revenues, the $500.00 (the department's best estimate of what would be needed) should serve as a place-holder. Co-chairman Frank suggested that the subsection be removed, and, as the bill moves through the process and better numbers are available, the department notify the legislature if the $500.00 figure needs to be changed. Senator Zharoff voiced OBJECTION to the proposed amendment, advising that it appears to remove the "heart" of the administration's legislation. Co-chairman Halford called for a show of hands. The AMENDMENT was ADOPTED on a vote of 4 to 1. Senator Sharp said he continued to have difficulty with "the logic and the fairness of this application." He noted that the Alaska Gateway district will gain $25.0 (the average ADM is $9,178.00) while Annette Island (with an ADM of $4,100.00) loses $28.0. It appears that the lower the ADM, the more a district loses; the higher the ADM, the more a district gains. He suggested that the bill makes "a bad situation worse." Mr. Elliott explained that since Annette Island is part of a reservation, it receives over half of its budget as 874 funds. The Gateway district has very few federally-connected students. The $500.00 per instructional unit will mean that districts with a greater number of units will receive more money. Senator Sharp cited the reduction for the Lower Yukon District and the increase at Yukon Flats District as a further example of funding that does not make sense in terms of educating children. He expressed frustration over federal mandates and bureaucracy and suggested that the legislation adds "fuel to the fire." Discussion followed between Co-chairman Frank and Senator Sharp regarding elimination of the $1.2 million in supplemental funding, the $311.7 for FY 96 hold harmless, and the ongoing additional $20.2 commencing in FY 97. Co- chairman Frank shared in Senator Sharp's frustration regarding changes in funding for individual districts. He advised that the proposed bill "makes it somewhat revenue neutral in totality." He acknowledged that "It doesn't make it neutral with regard to each district." [Senator Phillips arrived at the meeting at this time.] Senator Sharp expressed need for development of a new foundation formula that is fair to all districts. Senator Zharoff said the proposed bill represents an opportunity to "take care of the single-site question" so that it is not raised year after year. He then offered Section 4 (single-site funding) from the original bill as an AMENDMENT to CSSB 244 (Fin). He noted support for the funding by the department, educational-related entities, and rural legislators. He then formally MOVED for adoption and requested unanimous consent. OBJECTION was raised. Senator Randy Phillips noted an opportunity within SB 7 to deal with the single site/duel site question. Co-chairman Halford called for a show of hands on adoption. The motion FAILED on a vote of 1 to 5. [Senator Donley arrived at the meeting at this time.] Co-chairman Frank MOVED for passage of CSSB 244 (Fin) with individual recommendations and a new Dept. of Education fiscal note to show costs of $311.7 in FY 96 and $20.0 "per year into the future." No objection having been raised, CSSB 244 (FIN) was REPORTED OUT of committee with the above- noted Dept. of Education fiscal note. Co-chairman Frank signed the committee report with a "do pass" recommendation. Co-chairman Halford and Senators Donley, Phillips, Rieger, and Sharp signed "no recommendation." Senator Zharoff signed, "No recommendation. (No single/dual sites--!!!)" SENATE BILL NO. 167 An Act relating to day fines in certain criminal cases and release of employment information for use in the collection of criminal judgments. Co-chairman Halford directed that SB 167 be brought on for discussion and noted that Senator Donley had been working on the bill since the previous hearing. Senator Donley referenced Amendment No. 4 and reiterated inherent problems with earlier passed legislation, relating to day fines, which made it inapplicable to high volume crimes such as drunk driving, driving without a license, etc. He explained that those particular crimes were not covered by earlier legislation because they require mandatory jail time. The concept of day fines is that they serve as a substitute for jail. To address the problem and increase revenues, the day fine concept must be changed to create a flexible fine apart from mandatory jail time. Amendment No. 4 expands the scope of day fines to include all misdemeanors and run parallel to misdemeanors that require jail as well. Those convicted of drunk driving would continue to serve the mandatory three days in jail, but the fine assessed against them would be flexible, based on the offender's income. The amendment sets parameters for fines between $50.00 and $25,000.00 for a class-A misdemeanor; and $50.00 to $5,000.00 for a class-B misdemeanor. The maximum for a felony is $50,000.00. CHRIS CHRISTENSEN, General Counsel, Alaska Court System, came before committee. He explained that the proposed amendment would not resolve problems with earlier day fines legislation, due to difficulty in collecting fines and incarceration of offenders. The purpose of day fines is to reduce the number of people going to jail and the resulting overcrowding. The proposed amendment does not do that since mandatory jail terms would continue to be served. Further, the fine collection unit within the Dept. of Law does not have adequate resources to collect fines. That will not be changed by the proposed amendment. Additional problems with the bill turn it from a potential money maker to a money loser. The day fine was to be a substitute for jail. Imposing both jail and the day fine, in effect, doubles the penalty for the crime. Increased penalties have historically resulted in increased trial rates. At the present time, only 10 percent of felonies and misdemeanors go to trial. In the 1970s when the Dept. of Law abolished plea bargaining, the trial rate doubled in the first year and tripled in the second. While continuing its ban on plea bargaining, the department thereafter began engaging in "charge bargaining." When presumptive sentencing laws were enacted, the trial rate also increased. A further problem is associated with the fact that day fines apply to state misdemeanors but not municipal ordinances. Most of the offenses to be covered by the new bill have equivalent municipal ordinances. The legislation would thus double the penalty for an offender apprehended by a trooper while the penalty would remain unchanged for those charged for the same offense by a municipality. A serious equal protection problem will be created. Mr. Christensen reiterated that while Amendment No. 4 attempts to address a problem, it does not solve overcrowding and collection problems. It also creates potential for substantial new costs to the state through dramatically increased trial rates. Senator Donley countered the suggestion that increased penalties would increase the number of trials by advising that the penalty will only be substantially increased if the offender is in the upper income level. These are the individual who presently have the ability to litigate. Further, language could be added to the amendment to make the law applicable to municipal ordinances as well. Mr. Christensen advised that the six offenses are of a level where they would involve the maximum day fine. For a typical defendant, that would be 30 days of disposal income. That would be a substantial "hammer." The bill would not only impact a small percentage of wealthy offenders but all offenders equally. Comments followed by Senator Rieger regarding application of numbers set forth on the court system's income conversion chart. He noted that since the day fine is based on income, there is great disparity between what is paid by individual offenders convicted of the same crime. One individual could pay 100 times more than another. Under the proposed amendment, that disparity would widen to 500 times. The range is too great. Equal protection becomes a factor. Co- chairman Halford suggested that a 10 to 1 ratio would probably be appropriate. Senator Donley voiced need to provide a sufficient deterrent. Co-chairman Halford suggested that two issues are involved: The first is a day fine approach that replaces jail time. The other is day fines that supplement incarceration. He suggested that $1,500 and three days as well as $5,000 for ten days would provide a deterrent. Senator Rieger voiced his understanding that earlier discussion involved expanded application of day fines to misdemeanor crimes against people and those involving alcohol. He noted that misdemeanors are often not prosecuted because offenses do not involve jail, jails are overcrowded, and prosecutors are too busy. The intent of day fines was to provide a practical means of prosecution and accrual of revenue. Discussion followed regarding application of day fines to DWI offenses. Co-chairman Halford voiced a willingness to change incarceration requirements for two-thirds of the required sentence (because of costs to the system) as long as the day fine serves as strong a deterrent to the offender. He suggested that the judge be allowed to level the penalty that imposes the maximum deterrent effect on a particular offender. A day in jail and a substantial fine are likely to be as effective as the present three days served at a half-way house. Senator Donley acknowledged difficulties associated with the day fines issue. He suggested that if mandatory sentences are to be reduced and day fines substituted, groups with strong interests in mandatory sentences should be contacted and involved. Co-chairman Halford agreed and asked that Senator Donley propose the foregoing suggestions to those groups. The bill was thus held in committee. SENATE BILL NO. 98 An Act making changes related to the aid to families with dependent children program, the Medicaid program, the general relief assistance program, and the adult public assistance program; directing the Department of Health and Social Services to apply to the federal government for waivers to implement the changes where necessary; relating to eligibility for permanent fund dividends of certain individuals who receive state assistance, to notice requirements applicable to the dividend program; and providing for an effective date. Co-chairman Halford directed that SB 98 be brought on for discussion. SENATOR LYDA GREEN came before committee accompanied by her aide, MIKE TIBBLES. END: SFC-96, #73-B, Side 1 BEGIN: SFC-96, #73-B, Side 2 She directed attention to a work draft CSSB 98 (9-LS0692\N, Lauterbach, 4/10/96) and explained that the draft provides the option for waivers if federal legislation is not forthcoming. If federal law is enacted, the proposed bill provides the department the ability to go forward with new federal requirements. She suggested that time could be saved in review of the draft since Pages 2 through the top of Page 7 replicate HB 78 which was passed last year. Provisions of the Diversion Program set forth on Page 7 were in HB 78 and picked up by the Governor for inclusion within his bill. Pointing to provisions relating to Ineligibility for Assistance (set forth at Page 8 as Section 2), Senator Green advised that (a) language is from the Federal Code of Regulations. Subsection (b) is new language relating to individuals who intentionally transfer assets to other individuals so that the individual making the transfer can become eligible for benefits. Subsection (c) at Page 9 was included in the Governor's bill, SB 98, and HB 78. The same is true for provisions relating to Assistance to Minors with Children (Pages 9 through 11). Senator Rieger raised a question regarding reference to "other adult relative" at Page 9. Senator Green explained that provisions attempt to give latitude to situations in which a minor, with a child, does not wish to live at home with parents. The minor may choose to live with another relative. Directing attention to Page 11, line 6, Senator Green referenced the 3 percent deferred benefit and advised that she envisioned the benefit going directly to a child care grant which would follow an individual once the individual goes off benefits. It responds to complaints that recipients are often suddenly off benefits with no opportunity or funds to afford child care. It provides an extension following the two years during which the recipient prepared to go back to work. The department does not agree with this provision. In response to a question by Senator Rieger regarding funding for child care, Senator Green advised that it would be provided via a fiscal note to accompany the bill. The "shelter allowance" at Page 11, line 24, reflects new language incorporated within the Governor's bill. Those who qualify for shelter allowance may also qualify for 100 percent of the AFDC program. They would then receive benefits in excess of those received by other AFDC recipients. Language at Page 11 provides for accountability and a deduct based on the percentage of the subsidized housing. Page 12, subsection (i) at line 4, also contains a new concept. It relates to seasonal benefit reductions for those receiving unemployment. The provision was taken from the Governor's bill and incorporated as part of the legislature's waiver proposal. Section 6, at Page 12, addresses time limits on benefits. Language is a modification of that in HB 78. It provides that individuals are not eligible for more than 24 months of assistance during any 60 consecutive months. In HB 78 this requirement was tied to the Jobs Program. It is the standard in this legislation. There will no longer be a two-tiered approach. Section 7, on Page 13, is a modification of language from the Governor's bill. Senator Green noted an attempt within HB 78 to tie continuing family qualification to school attendance by dependent children. That became cumbersome. Modified language requires the minor parent to remain in school. Co-chairman Halford noted need to conclude the meeting for members' attendance at the Senate floor session. He announced that the next meeting would commence with continued discussion of SB 98. ADJOURNMENT The meeting was adjourned at approximately 11:05 a.m.