Legislature(1995 - 1996)

04/11/1996 09:50 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    SENATE FINANCE COMMITTEE                                   
                         April 11, 1996                                        
                            9:50 a.m.                                          
  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.                                                      
  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                 
  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                 
  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                 
  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                 
  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.                                               
  The meeting was adjourned at approximately 11:05 a.m.                        

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