Legislature(2001 - 2002)

04/05/2001 09:18 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 05, 2001                                                                                      
                              9:18 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-01 # 69, Side A                                                                                                             
SFC 01 # 69, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  9:18 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Lyda Green                                                                                                              
                                                                                                                                
Also  Attending:    WENDY  HALL,  Staff  to  Co-Chair  Kelly;  ELMER                                                          
LINDSTROM,   Special   Assistant,   Office  of   the  Commissioner,                                                             
Department of Health and  Social Services; WALTER MAJAROS, Director,                                                            
Division   of  Mental   Health   and  Developmental   Disabilities,                                                             
Department  of Health  and  Social Services;  GARTH  HAMBLIN,  Chief                                                            
Financial Officer,  Bartlett Regional  Hospital; PAT CLASBY,  Alaska                                                            
State  Hospital and  Nursing  Home Association;  LENORD  ABEL,  PHD,                                                            
Program Administrator,  Mental Health  Services, Division  of Mental                                                            
Health  and Developmental  Disabilities,  Department  of Health  and                                                            
Social Services;                                                                                                                
                                                                                                                                
Attending  via  Teleconference:    From  Fairbanks:   KARL  SANFORD,                                                          
Assistant  Administrator,  Fairbanks  Memorial  Hospital;  R.  DUANE                                                            
HOPSON, MD,  Medical Director of Mental  Health, Fairbanks  Memorial                                                            
Hospital;  LIZ WOODYARD,  Registered  Nurse and  Manager,  Inpatient                                                            
Unit, Fairbanks Memorial Hospital;                                                                                              
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 154-REPEAL SUNSET OF MENTAL HEALTH ASSISTANCE                                                                                
                                                                                                                                
The Committee  heard from the sponsor, the Department  of Health and                                                            
Social Services,  and representatives  from  the Fairbanks  Memorial                                                            
Hospital  and  Bartlett  Regional  Hospital.  The  bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 136-RESOURCE DEVELOPMENT: BD./GRANTS/FUND                                                                                    
                                                                                                                                
The  Committee  heard  from  the sponsor  and  adopted  a  committee                                                            
substitute. The bill was held in Committee.                                                                                     
                                                                                                                                
HB 103-APPROP: OPERATING BUDGET                                                                                                 
HB 104-APPROP:  MENTAL HEALTH BUDGET                                                                                            
                                                                                                                                
The  Committee  adopted  a  committee  substitute   for  each  bill,                                                            
considered amendments and moved the bills from Committee.                                                                       
                                                                                                                                
SB 123-FEDERALLY FUNDED PROJECTS OF RAILROAD                                                                                    
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 154                                                                                                        
     "An  Act  relating  to  mental  health  treatment  facilities;                                                             
     repealing  the termination date of the mental  health treatment                                                            
     assistance program; and providing for an effective date."                                                                  
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
WENDY  HALL, Staff  to  Co-Chair Kelly  read  a statement  into  the                                                            
record as follows.                                                                                                              
                                                                                                                                
     The  designated  evaluation  treatment  program  is a  critical                                                            
     component  to  the  continuum  of  mental  health  services  in                                                            
     Alaska, particularly  for indigent persons with  mental illness                                                            
     who are being civilly  committed or meet the criteria for civil                                                            
     commitment.                                                                                                                
     Through this  program, many poor people with  mental illnesses,                                                            
     who do not  qualify for Medicaid, are able to  receive services                                                            
     in  community  hospitals  across  the  state  closer  to  their                                                            
     families and local  support systems. Without [this] program, it                                                            
     would  necessary  to  transport  many consumers  in  crisis  to                                                            
     Alaska   Psychiatric  Institute   to  receive  evaluation   and                                                            
     treatment services.                                                                                                        
                                                                                                                                
Ms. Hall  then  stated that  this bill  repeals the  sunset date  of                                                            
existing statute to allow continuation of this program.                                                                         
                                                                                                                                
ELMER  LINDSTROM, Special  Assistant,  Office of  the Commissioner,                                                             
Department  of  Health  and  Social  Services,  testified  that  the                                                            
department  is in  full  support of  the  bill and  appreciates  the                                                            
legislature's adoption of the original legislation.                                                                             
                                                                                                                                
Co-Chair Kelly inquired about the fiscal note.                                                                                  
                                                                                                                                
Mr. Lindstrom  replied that although the fiscal note  shows the full                                                            
cost  of the  program in  FY 02,  these costs  are  included in  the                                                            
Senate  version of the  FY 02 operating  budget.  He noted that  the                                                            
program has increased over  time, as expected. He shared that a non-                                                            
general fund  source has been used  to fund the bulk of the  program                                                            
over the past year. He  pointed out that this fund source expires at                                                            
the end of the current fiscal year but that an alternate non-                                                                   
general  fund  source has  been  identified  and  would be  used  to                                                            
continue the program.                                                                                                           
                                                                                                                                
Co-Chair Kelly  clarified that the  fiscal note represents  the full                                                            
cost  to  operate  the program  rather  than  the  increase  of  the                                                            
previous year, due to the sunset date.                                                                                          
                                                                                                                                
Mr. Lindstrom affirmed.                                                                                                         
                                                                                                                                
Co-Chair  Kelly asked the  increased general  fund cost compared  to                                                            
the previous year.                                                                                                              
                                                                                                                                
WALTER   MAJAROS,   Director,   Division   of  Mental   Health   and                                                            
Developmental   Disabilities,  Department   of  Health  and   Social                                                            
Services,  stated  that the  fiscal  note  contains a  general  fund                                                            
increment  of $100,000 and  a Mental Health  Trust Authority  (MHTA)                                                            
fund  increment   of  $200,000.  He  expanded  on  Mr.  Lindstrom's                                                             
comments, noting the non-general  fund source is available through a                                                            
"creative use of a federal self-insurance program."                                                                             
                                                                                                                                
Co-Chair Kelly surmised  that in a normal situation, the fiscal note                                                            
amount would  be approximately $100,000.  He again pointed  out that                                                            
the  appearance  of  a higher  amount  is  because  the  program  is                                                            
otherwise  concluded at the  end of the current  fiscal year  unless                                                            
extended through this legislation.                                                                                              
                                                                                                                                
KARL SANFORD, Assistant  Administrator, Fairbanks Memorial Hospital,                                                            
testified  via  teleconference  from  Fairbanks  in support  of  the                                                            
legislation.  He  listed the  decrease  in  the number  of  patients                                                            
transported  out of  the community  over the past  two and  one-half                                                            
years. He  surmised this  program has resulted  in cost savings  for                                                            
the state due  to quicker access to  care for mentally ill  patients                                                            
as well as  a continuity of providers  for these patients.  He spoke                                                            
of the quality  of care provided,  which is possible because  of the                                                            
provider's   familiarity  with  their   situations  and   needs.  He                                                            
asserted, "The health of the community is better off for that."                                                                 
                                                                                                                                
Mr. Sanford  added that the reduced  number of patients transported                                                             
to the Alaska  Psychiatric Institute  (API) has increased  the level                                                            
of service provided at that facility as well.                                                                                   
                                                                                                                                
Co-Chair  Kelly asked the  number of patients  transported  from the                                                            
Fairbanks Memorial Hospital  to API during the last year compared to                                                            
the number the year prior.                                                                                                      
                                                                                                                                
Mr. Sanford  answered  approximately  70 transfers  occurred in  the                                                            
year 1999, reduced to five in 2000.                                                                                             
                                                                                                                                
R. DUANE HOPSON,  MD, Medical Director  of Mental Health,  Fairbanks                                                            
Memorial Hospital,  testified via  teleconference from Fairbanks  in                                                            
favor  of  the  bill.  He  spoke  of  the consequences   of  delayed                                                            
treatment for  mental illness, which he noted increases  the cost to                                                            
the patient  and sometimes increases  the necessary hospitalization                                                             
time.                                                                                                                           
                                                                                                                                
LIZ  WOODYARD,  Registered   Nurse  and  Manager,  Inpatient   Unit,                                                            
Fairbanks  Memorial  Hospital  testified   via teleconference   from                                                            
Fairbanks  to  emphasize  the  benefits  of  family  involvement  in                                                            
treatment of mentally ill patients.                                                                                             
                                                                                                                                
GARTH HAMBLIN, Chief Financial  Officer, Bartlett Regional Hospital,                                                            
testified  in Juneau  in support  of the  bill,  stressing that  the                                                            
program  allows  treatment  of the  mentally  ill within  their  own                                                            
communities.                                                                                                                    
                                                                                                                                
PAT CLASBY,  Alaska  State Hospital  and Nursing  Home Association,                                                             
testified in  Juneau in favor of the  legislation. She gave  history                                                            
of the  previous two years  of the program.  She listed the  primary                                                            
providers   as  Fairbanks  Memorial   Hospital,  Bartlett   Regional                                                            
Hospital,  the  Kodiak  hospital,  and  the Yukon-Kuskokwim   Health                                                            
Center in Norton  Sound. She added that other smaller  facilities in                                                            
the state also provide  services to patients in the civil commitment                                                            
process prior  to transport to a regional treatment  facility of the                                                            
API. She opined this program  is "the modern approach to care at the                                                            
local hospital"  and avoids transports  to the state-facility  in as                                                            
many cases as possible.  She stressed that if this program continues                                                            
it would  become  the primary  aspect  of continuing  mental  health                                                            
care.                                                                                                                           
                                                                                                                                
Senator  Ward commented  that  he fully  supported  the program  and                                                            
noted that members of his  family benefited from it. He asked if the                                                            
state  receives  reimbursement   for  services  provided  to  Native                                                            
Alaskan patients.                                                                                                               
                                                                                                                                
LENORD ABEL,  PHD, Program  Administrator,  Mental Health  Services,                                                            
Division   of  Mental   Health   and  Developmental   Disabilities,                                                             
Department  of  Health  and  Social  Services,  responded  that  the                                                            
federal  government,  "truly  is  the  payer  of  last  resort."  He                                                            
explained these funds are  used only after it is determined that the                                                            
patient is not eligible for any other services.                                                                                 
                                                                                                                                
Senator  Ward stressed  that  many people  are not  receiving  these                                                            
services  because the  funds  run out.  He emphasized  that  Alaskan                                                            
Natives have a right to  this service. He asserted that the MHTA has                                                            
a responsibility  to Natives to provide  services and informed  that                                                            
if the Trust  does not pay, the state  must pay. He opined  that the                                                            
federal government should pay this cost.                                                                                        
                                                                                                                                
Co-Chair  Kelly asked  Senator  Ward to  assist in  monitoring  this                                                            
legislation as  it progresses through the House of  Representatives.                                                            
                                                                                                                                
Senator Ward agreed to do so.                                                                                                   
                                                                                                                                
Senator Green asked if this program is related to Medicaid.                                                                     
                                                                                                                                
Mr. Abel  replied  that it  is not,  and explained  this program  is                                                            
intended  to  help  indigent  persons,  who  do  not  have  Medicaid                                                            
coverage or private insurance.                                                                                                  
                                                                                                                                
Senator  Hoffman  wanted to  know  how this  program  impacts  other                                                            
communities in the state not mentioned.                                                                                         
                                                                                                                                
Co-Chair  Kelly answered  that because patients  from Fairbanks  and                                                            
Juneau are  not occupying beds at  API, more space is available  for                                                            
patients from other communities.                                                                                                
                                                                                                                                
Senator Green  offered a  motion to move SB  154, 22-LS 0748\A  from                                                            
Committee  with   accompanying  $2,652,100  fiscal   note  from  the                                                            
Department of Health and Social Services.                                                                                       
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                
AT EASE 9:37 AM / 9:48 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 136                                                                                                        
     "An Act relating to resource development and to grants for the                                                             
     purpose of promoting resource development from appropriations                                                              
     of a portion of the revenue derived from the extraction of                                                                 
     certain state natural resources."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Austerman moved  for adoption of CS SB 136, 22-LS0083\S as a                                                            
work draft.                                                                                                                     
                                                                                                                                
PAT CARTER,  staff to Senator  Pearce, detailed  the changes  in the                                                            
committee substitute  made to address concerns voiced  by the Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Mr. Carter pointed  out the Resource Development Fund  and oversight                                                            
board  of  directors  were moved  from  the  Department  of  Natural                                                            
Resources   into   the  Department   of   Community   and   Economic                                                            
Development.  He explained  this would  reduce  the cost  associated                                                            
with administrating  and processing the grants since  the Department                                                            
of Community  and Economic  Development is  regularly involved  with                                                            
grant activities.                                                                                                               
                                                                                                                                
Mr. Carter informed that  in the committee substitute, 20 percent of                                                            
the  Resource  Development  Fund  would  be  allocated  to  the  New                                                            
Business Incentive  Fund, which he described as an  unfunded program                                                            
created several  years prior. He reminded  the Committee  the intent                                                            
of  the New  Business  Incentive Fund  is  to attract  companies  to                                                            
Alaska to "build on our resource base."                                                                                         
                                                                                                                                
Mr. Carter stated  that in an attempt to increase  the efficiency of                                                            
the Board,  the membership  is reduced from  seven to five  seats in                                                            
the committee  substitute.  He listed  the membership  seats as  one                                                            
held  by  the  commissioner  of  the  Department  of  Community  and                                                            
Economic   Development,    and   the   remaining   seats   held   by                                                            
representatives  of the resource industry,  one each from  forestry,                                                            
mining, oil and gas, appointed by the governor.                                                                                 
                                                                                                                                
Mr.  Carter  next told  of  a requirement  added  in  the  committee                                                            
substitute  stipulating  that  grants  are awarded  in  a  "matching                                                            
format". He explained  the grants would require matching  funds from                                                            
the recipient  to demonstrate that industry would  help support this                                                            
program.  He  noted  that  a  particular  match  percentage  is  not                                                            
established  in  the committee  substitute  because  some  companies                                                            
could contribute more then could others.                                                                                        
                                                                                                                                
Mr. Carter continued that  a grant limit of $500,000 is contained in                                                            
the committee  substitute. He commented this is because  of concerns                                                            
voiced that  any grant above this  amount should receive  a separate                                                            
legislative appropriation.                                                                                                      
                                                                                                                                
Mr. Carter  pointed  out that a  preference was  granted to  Alaskan                                                            
non-profit corporations in the committee substitute.                                                                            
                                                                                                                                
Mr.  Carter   also  noted  the  committee   substitute  includes   a                                                            
stipulation  that  the  funds could  not  be  used for  election  or                                                            
campaign purposes  or for specific lobbying efforts  at the state or                                                            
local level.                                                                                                                    
                                                                                                                                
Without  objection   the  committee  substitute,   version  "S"  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Senator Austerman  stated that his earlier concerns  were alleviated                                                            
with the changes made in the committee substitute.                                                                              
                                                                                                                                
Senator Green  asked if the grants could be awarded  to a for-profit                                                            
organization.                                                                                                                   
                                                                                                                                
Mr. Carter answered they could not under the current language.                                                                  
                                                                                                                                
Senator Green requested  an example of a non-profit corporation that                                                            
would receive the grants.                                                                                                       
                                                                                                                                
Mr. Carter  gave an  example of  the Miners  Association that  might                                                            
wish to perform a public  relations campaign to promote the industry                                                            
and   educate   about   substantial   improvements   to   production                                                            
procedures.                                                                                                                     
                                                                                                                                
Senator  Green  asked if  this  program  in any  way  duplicates  or                                                            
conflicts  with activities  of  the  Alaska Science  and  Technology                                                            
Foundation (ASTF) or other organizations.                                                                                       
                                                                                                                                
Mr. Carter  replied he  did not believe  so. He  shared that  it was                                                            
originally  considered  whether  the grants  would  be administered                                                             
through  the  ASTF. However  the  intent  of  this program  is  that                                                            
participants would not  be required to hire a grant writer, which is                                                            
required of most organizations currently working with the ASTF.                                                                 
                                                                                                                                
Senator  Hoffman asked  if there  was a  requirement  that the  non-                                                            
profit organizations expend  the grant funds to only promote generic                                                            
products.  Specifically,  he wanted to  know if  a grant to  promote                                                            
fish products could be used to promote salmon only.                                                                             
                                                                                                                                
Mr. Carter replied that  the language was drafted to be as simple as                                                            
possible.  He stated that  he had not considered  different  fishing                                                            
user groups.                                                                                                                    
                                                                                                                                
Senator  Austerman  asked if  this  legislation  excludes  fisheries                                                            
resources.                                                                                                                      
                                                                                                                                
Mr. Carter replied that  it does not. He explained that this program                                                            
is  not  specifically  intended  for  fisheries-related   industries                                                            
because  the Alaska  Seafood Marketing  Institute  (ASMI)  addresses                                                            
this resource.  He qualified  that the proposed  grant program  does                                                            
not exclude fisheries.                                                                                                          
                                                                                                                                
Senator Austerman  asked if  the revenue  from the fishing  industry                                                            
would be used to fund this program.                                                                                             
                                                                                                                                
Mr. Carter assured it does not and that general funds are used.                                                                 
                                                                                                                                
AT EASE 9:59 AM / 10:00 AM                                                                                                      
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
AT EASE 10:00 AM / 6:00 PM                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 103(FIN)(brf sup maj fld)                                                                            
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; and providing for an effective date."                                                            
                                                                                                                                
     CS FOR HOUSE BILL NO. 104(FIN)                                                                                             
     "An Act making appropriations for the operating and capital                                                                
     expenses of the state's integrated comprehensive mental health                                                             
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
Co-Chair  Kelly moved  to  adopt SCS  CS HB  103,  22-LS0410\T as  a                                                            
working draft.                                                                                                                  
                                                                                                                                
There was no objection and the committee substitute was ADOPTED.                                                                
                                                                                                                                
Co-Chair  Kelly moved  to  adopt SCS  CS HB  104,  22-LS0411\O as  a                                                            
working draft.                                                                                                                  
                                                                                                                                
Without objection the committee substitute was ADOPTED.                                                                         
                                                                                                                                
Co-Chair  Kelly  detailed  the  changes  in  the  HB  103  committee                                                            
substitute.  He stated it "adopts  something that we've had  in many                                                            
bills that  have passed  through this  Committee  over the last  few                                                            
years."  He  explained  this  as  comparable  to  the  federal  Hyde                                                            
Amendment  language  that restricts  the use  of  federal funds  for                                                            
abortion  services.  He  noted  the language  is  contained  in  the                                                            
Department  of Health and Social Services  portion of the  budget as                                                            
well  as  in a  special  provision  for  the Constitutional   Budget                                                            
Reserve (CBR) fund.                                                                                                             
                                                                                                                                
Senator  Hoffman   referenced  Section  32  relating   to  the  non-                                                            
severability clause.  He asked what the legislature  would do of the                                                            
court  finds this  provision unconstitutional   but the legislature                                                             
maintains that it is constitutional.                                                                                            
                                                                                                                                
Co-Chair  Kelly  detailed  the history  of  bringing the  matter  of                                                            
funding for  abortion services before  the court and the  subsequent                                                            
court  actions   ruling   against  the  methods   utilized   by  the                                                            
legislature.  He noted that the court  left leeway in each  decision                                                            
it  issued, by  finding  that the  legislature  did  not handle  the                                                            
matter in the proper manner  and that by changing the way the budget                                                            
was funded, it could possibly  be found constitutional. He stressed,                                                            
however, that  each time a different  approach was attempted  by the                                                            
legislature, the court continued to rule it as unconstitutional.                                                                
                                                                                                                                
Co-Chair  Kelly informed  that the  manner in  which this  committee                                                            
substitute  is structured,  the  courts may  or may  not "strike  it                                                            
down".  He  opined   that  if  the  court  does  rule   against  the                                                            
legislature  in this budget,  "they'll have  to show pretty  blatant                                                            
disregard for  the constitution, at  least the separation  of powers                                                            
that exists  in the constitution."  He predicted the court  would be                                                            
"reluctant to strike down  the entire HESS (Department of Health and                                                            
Social Services) budget over this issue."                                                                                       
                                                                                                                                
Senator  Hoffman  asked  if the  budget  is struck  down  whether  a                                                            
special legislative session would be necessary.                                                                                 
                                                                                                                                
Co-Chair Kelly answered yes.                                                                                                    
                                                                                                                                
Co-Chair Kelly  offered a motion to authorize the  Division of Legal                                                            
and Research  Services and  the Division  of Legislative Finance  to                                                            
make non-substantial technical  and conforming changes to the budget                                                            
bills where necessary.                                                                                                          
                                                                                                                                
There was no objection and the motion PASSED.                                                                                   
                                                                                                                                
Statewide                                                                                                                     
                                                                                                                                
STWIDE   #2:  This   amendment   reduces  the   appropriation   from                                                            
$39,578,400 in Section  24, subsection (c) on page 53, lines 8 and 9                                                            
of the version "S" committee  substitute. The amended language reads                                                            
as follows.                                                                                                                     
                                                                                                                                
          (c) The sum of $32,578,400 is appropriated from the                                                                   
     general   fund  to   the  Alaska  debt   retirement  fund   (AS                                                            
     37.15.011).                                                                                                                
                                                                                                                                
This amendment  also increases  the appropriation  from $100,000  in                                                            
Section 24,  subsection (d) on page  53, lines 10 through  13 of the                                                            
version  "S" committee  substitute.  The amended  language reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
          (d) The sum of $1,100,000 is appropriated from the                                                                    
     lapsing balance  of the appropriation made in  sec. 1. ch. 133,                                                            
     SLA  2000,  page 13,  line 29,  and  allocated  on lines  30-31                                                            
     (public   assistance-Alaska   temporary   assistance   program-                                                            
     $66,112,800)   to   the  Alaska   debt  retirement   fund   (AS                                                            
     37.15.011).                                                                                                                
                                                                                                                                
This amendment  also changes the funding  source from AHFC  Dividend                                                            
funds in  Section 17 on page  50, lines 3  through 7 of the  version                                                            
"S" committee substitute. The amended language reads as follows.                                                                
                                                                                                                                
          Sec. 17. OFFICE OF THE GOVERNOR. The sum of $947,700 is                                                               
     appropriated  from  the  general  fund  to the  Office  of  the                                                            
     Governor,   division   of   elections,   for   reapportionment                                                             
     implementation costs  for the fiscal year ending June 30, 2002.                                                            
                                                                                                                                
This amendment  also inserts a new subsection to Section  24 on page                                                            
54, following  line 10 of  the version "S"  committee substitute  to                                                            
read as follows.                                                                                                                
                                                                                                                                
          (m) The sum of $6,000,000 from the fiscal year 2002                                                                   
     dividend  that is  declared by  the board of  directors  of the                                                            
     Alaska Housing Finance  Corporation is appropriated from Alaska                                                            
     Housing  Finance Corporation  corporate receipts to  the Alaska                                                            
     debt retirement fund (AS 37.15.011).                                                                                       
                                                                                                                                
Accompanying explanatory language reads as follows.                                                                             
                                                                                                                                
     Reduce   general  fund  capitalization   of  the  Alaska   Debt                                                            
     Retirement  Fund  by $7,000,000.  Capitalize  the  Alaska  Debt                                                            
     Retirement  Fund with  the remaining  $6,000,000 AHFC  Dividend                                                            
     funds and  an additional $1,000,000 reappropriation  of surplus                                                            
     FY  01  Alaska  Temporary  Assistance  Program  (ATAP)  general                                                            
     funds.                                                                                                                     
                                                                                                                                
Co-Chair Kelly  moved to rescind the Committee's action  of adopting                                                            
the amendment for the purpose of amending the amendment.                                                                        
                                                                                                                                
The action adopting  the amendment was RESCINDED without  objection.                                                            
                                                                                                                                
Co-Chair Donley detailed  a conceptual amendment to the amendment to                                                            
specify  that  the lapsing  balance  pertains  to general  funds  in                                                            
Section 24, subsection  (d). The amended language  reads as follows.                                                            
                                                                                                                                
          (d) The sum of $1,100,000 is appropriated from the                                                                    
     lapsing general fund  balance of the appropriation made in sec.                                                            
     1. ch. 133, SLA 2000,  page 13, line 29, and allocated on lines                                                            
     30-31 (public assistance-Alaska temporary assistance program-                                                              
     $66,112,800) to the Alaska debt retirement fund (AS                                                                        
     37.15.011).                                                                                                                
                                                                                                                                
Co-Chair Kelly moved to amend the amendment.                                                                                    
                                                                                                                                
Senator  Hoffman  requested  the  Division  of  Legislative  Finance                                                            
explain.                                                                                                                        
                                                                                                                                
DAVID  TEAL, Director,  Division  of Legislative  Finance  responded                                                            
that as written, Section  24 appropriates a lapsing balance of up to                                                            
$1.5 million but  does not specify the fund source.  Since there are                                                            
both  general funds  and  Temporary  Assistance For  Needy  Families                                                            
(TANF)  funds  that  are  lapsing,  he  stated,  clarification  that                                                            
general funds would be used in this appropriation is necessary.                                                                 
                                                                                                                                
There was no objection and the amendment was AMENDED.                                                                           
                                                                                                                                
Without objection the amended amendment was ADOPTED.                                                                            
                                                                                                                                
The  remaining   amendments  are   to  the  version  "T"   committee                                                            
substitute.                                                                                                                     
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
H&SS #30:  This amendment  changes the funding  source from  general                                                            
funds to General Fund/Mental  Health of $600,000 in the Institutions                                                            
and Administration  Budget  Request Unit  (BRU), Alaska Psychiatric                                                             
Institute component on page 45 lines 16, 20 and 21.                                                                             
                                                                                                                                
Co-Chair Kelly moved for adoption.                                                                                              
                                                                                                                                
Senator Hoffman objected for an explanation.                                                                                    
                                                                                                                                
Mr. Teal explained  that STWIDE #1, adopted by the  Committee in the                                                            
previous hearing,  replaced a significant  amount of Alaska  Housing                                                            
Finance  Corporation (AHFC)  appropriations  with general funds.  He                                                            
noted the  funds appropriated  to the Alaska  Psychiatric  Institute                                                            
should  be  specifically  General  Fund/Mental  Health,  which  this                                                            
amendment accomplishes.                                                                                                         
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
AT EASE 6:10 PM / 6:10 PM                                                                                                       
                                                                                                                                
Department of Education and Early Development                                                                                 
                                                                                                                                
E&ED #13: This amendment  changes the language in Section 18 on page                                                            
51, lines 17 through 22 to read as follows.                                                                                     
                                                                                                                                
          Sec. 18. LEARNING OPPORTUNITY, INSTRUCTIONAL MATERIALS,                                                               
     VOCATIONAL  EDUCATION AND IN-SCHOOL NURSES GRANTS.  (a) The sum                                                            
     of  $6,187,100 is  appropriated  from the general  fund to  the                                                            
     Department  of Education and  Early Development for  the fiscal                                                            
     year ending June 30,  2002, for payment as learning opportunity                                                            
     grants  to school  districts  based  on the  school  district's                                                            
     average  daily  membership  to  pay  for supplemental   student                                                            
     instructional programs  intended to improve student performance                                                            
     on  the  high   school  graduation  examination   or  benchmark                                                            
     examinations.                                                                                                              
          (b) The sum of $6,187,100 is appropriated from the                                                                    
     general   fund  to  the  Department  of  Education   and  Early                                                            
     Development  for  the fiscal  year ending  June  30, 2002,  for                                                            
     payment  to school  districts  based on  the school  district's                                                            
     average daily membership, to pay for:                                                                                      
                (1) textbooks and other instructional materials                                                                 
     intended  to improve  student  performance on  the high  school                                                            
     graduation   examination    or  benchmark    examinations,   as                                                            
     instructional materials grants;                                                                                            
                (2) vocational education programs intended to assist                                                            
     the  district in  providing  vocational education  services  to                                                            
     students; and                                                                                                              
                (3) nursing services in schools.                                                                                
                                                                                                                                
Co-Chair Kelly moved for adoption.                                                                                              
                                                                                                                                
E&ED  #13(a):  This amendment  to  the  amendment  replaces  "school                                                            
district's  average   daily  membership"  with  "school   district's                                                            
adjusted average  daily membership" in the two places  it appears in                                                            
the amendment.                                                                                                                  
                                                                                                                                
Senator  Hoffman moved  to  amend the  amendment.  He asserted  this                                                            
would  provide  a "more  equitable  distribution"  of  funds to  the                                                            
vocational and technical  education programs. He reminded there have                                                            
been  many  discussions  on  this issue  and  that  "adjusted  daily                                                            
membership"  criteria would be fairer  to rural areas of  the state.                                                            
                                                                                                                                
Senator Green objected.                                                                                                         
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Olson, Senator Austerman and Senator Hoffman                                                                  
                                                                                                                                
OPPOSED:  Senator  Leman,  Senator  Ward,  Senator  Wilken,  Senator                                                            
Green, Co-Chair Kelly and Co-Chair Donley                                                                                       
                                                                                                                                
The motion FAILED (3-6)                                                                                                         
                                                                                                                                
The amendment FAILED to be amended by E&ED #13(a).                                                                              
                                                                                                                                
Senator Green  stressed the need for  clarification that  the school                                                            
districts have  authority to choose from the allowable  expenditures                                                            
for this appropriation listed in subsection (b).                                                                                
                                                                                                                                
Senator  Wilken  expanded  on the  clarification  stating  that  the                                                            
school districts could  determine its priorities in allocating these                                                            
funds  between  the  allowable  expenditures.   He  noted  that  the                                                            
districts are  not obligated to allocate  funds to all three  items.                                                            
                                                                                                                                
Co-Chair    Kelly   ascertained    subsection    (a)   appropriates                                                             
approximately  $6 million  for instructional  materials intended  to                                                            
prepare  students  for  the high  school  graduation  and  benchmark                                                            
examinations  and commented that he  intended for subsection  (b) to                                                            
appropriate  the remaining  $6 million for  purposes not related  to                                                            
the examinations. He objected  to the amendment as currently drafted                                                            
because   the   language  in   subsection   (b)(1)   specifies   the                                                            
examinations.                                                                                                                   
                                                                                                                                
Co-Chair  Kelly   recommended  amending  the  amendment   to  delete                                                            
"intended  to  improve  student  performance   on  the  high  school                                                            
graduation examination  or benchmark examinations,"  from subsection                                                            
(b)(1).                                                                                                                         
                                                                                                                                
Senator Hoffman  suggested the intent  should remain that  textbooks                                                            
and materials would be  purchased with the goal of improving student                                                            
performance.                                                                                                                    
                                                                                                                                
E&ED #13(b):  This amendment to the  amendment deletes "on  the high                                                            
school  graduation   examination   or  benchmark  examinations,   as                                                            
instructional materials grants."                                                                                                
                                                                                                                                
Co-Chair  Kelly moved  to amend  the amendment  to incorporate  E&ED                                                            
#13(b).                                                                                                                         
                                                                                                                                
Without objection the amendment was AMENDED.                                                                                    
                                                                                                                                
E&ED #13(c):  This amendment to the  amendment deletes "intended  to                                                            
assist the  district in providing  vocational education services  to                                                            
students".                                                                                                                      
                                                                                                                                
Senator Leman  moved to amend the amended amendment.  He stated that                                                            
the same goal  could be reached with the deletion  of this language.                                                            
                                                                                                                                
The amended amendment  was AMENDED without objection  to incorporate                                                            
E&ED #13(c).                                                                                                                    
                                                                                                                                
Senator Hoffman  asked why some of  the funds could not be  utilized                                                            
for additional teaching positions.                                                                                              
                                                                                                                                
                                                                                                                                
SFC 01 # 69, Side B 06:19 PM                                                                                                    
                                                                                                                                
                                                                                                                                
E&ED #13(d): This  amendment to the amended amendment  deletes "and"                                                            
at  the end  of  subsection  (b)(2), inserts  "and"  to  the end  of                                                            
subsection  (b)(3)  and inserts  a  new subsection  (b)(4)  to  read                                                            
"teachers."                                                                                                                     
                                                                                                                                
Senator Hoffman moved to amend the amendment.                                                                                   
                                                                                                                                
Senator Green objected.                                                                                                         
                                                                                                                                
Senator Hoffman asked what was the basis for the objection.                                                                     
                                                                                                                                
Co-Chair  Kelly spoke  in favor of  the amendment.  He qualified  he                                                            
does not support  the use of Learning Opportunity  Grants for salary                                                            
increases.  However,  he supported  using  these funds  to hire  new                                                            
teachers if a school district  was in need of more teachers to lower                                                            
student-to-teacher   ratios  or  to  implement  a  new  program.  He                                                            
remarked  that the districts  should have the  ability to use  these                                                            
funds "at  it sees  fit" for  purposes intended  to improve  student                                                            
performance,  but  did  not  consider salary  increases  as  such  a                                                            
purpose.                                                                                                                        
                                                                                                                                
AT EASE 6:20 PM / 6:25 PM                                                                                                       
                                                                                                                                
Senator Leman  stated that  while he saw merit  in the proposal,  he                                                            
would vote against the  amendment to the amendment. He suggested pay                                                            
increases   to   those   teachers   that  demonstrate   exceptional                                                             
performance that  thereby helps students in meeting  the benchmarks.                                                            
                                                                                                                                
Senator Austerman  added that he too  would oppose the amendment  to                                                            
the amendment  saying that  he thought it  strayed too far  from the                                                            
intent of the  Learning Opportunity  Grants. He shared that  when he                                                            
visits schools, he is approached  by students showing him that their                                                            
textbooks  are the  same as  those used  by their  grandparents.  He                                                            
stated that if the goal  is to provide more money for teachers, that                                                            
matter should be addressed separately.                                                                                          
                                                                                                                                
Co-Chair  Donley   noted  the  recommendation   of  the   Governor's                                                            
Education  Funding  Task Force  to provide  additional  funding  for                                                            
books and  supplies.  He asserted  that the intent  of the  Learning                                                            
Opportunity Grants is to meet that recommendation.                                                                              
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman, Senator Olson and Co-Chair Kelly                                                                     
                                                                                                                                
OPPOSED: Senator  Ward, Senator Wilken,  Senator Austerman,  Senator                                                            
Green, Senator Leman and Co-Chair Donley                                                                                        
                                                                                                                                
The motion FAILED (3-6)                                                                                                         
                                                                                                                                
The amended amendment FAILED to be amended by E&ED #13(d).                                                                      
                                                                                                                                
Senator Hoffman  asked if the instructional  materials as  listed in                                                            
subsection (b)(1) could include computers.                                                                                      
                                                                                                                                
Co-Chair  Donley answered  that  although  it was  not his  original                                                            
intent,  nor the  intent of  the task  force, the  Committee  should                                                            
decide as  a whole on whether  to include  computer equipment  as an                                                            
allowable  expenditure. He  understood the  focus of the task  force                                                            
was  primarily  on  the  insufficient  textbooks  and  supplies.  He                                                            
recalled testimony  heard over the  years about teachers  purchasing                                                            
supplies with their own money.                                                                                                  
                                                                                                                                
Senator  Hoffman  asked if  Co-Chair  Donley, as  the  maker of  the                                                            
amendment, would support  the inclusion of computers and information                                                            
technology.                                                                                                                     
                                                                                                                                
Co-Chair Donley  replied that he would defer to the  recommendations                                                            
of the task force.                                                                                                              
                                                                                                                                
Senator Ward  understood the  language of the  amendment as  well as                                                            
the recommendations  of the task force,  as not including  computers                                                            
and other information  technology  as allowable expenditures  of the                                                            
Learning Opportunity Grants.                                                                                                    
                                                                                                                                
Senator Hoffman  suggested that the  entire $6 million did  not have                                                            
to be spent on computers.                                                                                                       
                                                                                                                                
Senator Ward disagreed  and was willing to vote on  the amendment as                                                            
he understood  it  to be.  He predicted  that some  districts  would                                                            
spend all available  funds on new technology rather  then textbooks,                                                            
if given the opportunity.                                                                                                       
                                                                                                                                
AT EASE 6:31 PM / 6:33 PM                                                                                                       
                                                                                                                                
Co-Chair  Donley shared  that the  task force  report lists  "proper                                                            
technology"  in  its recommendations  of  items  needing  additional                                                            
funding.                                                                                                                        
                                                                                                                                
E&ED #13(e): This  amendment to the amended amendment  deletes "and"                                                            
at  the end  of  subsection  (b)(2), inserts  "and"  to  the end  of                                                            
subsection  (b)(3)  and inserts  a  new subsection  (b)(4)  to  read                                                            
"appropriate technology."                                                                                                       
                                                                                                                                
Senator Hoffman moved to amend the amended amendment.                                                                           
                                                                                                                                
Senator Green objected  and listed the items recommended by the task                                                            
force:  up-to-date   textbooks,  appropriate   technology,   general                                                            
classroom  supplies.  However,  she  stressed,  new textbooks  is  a                                                            
higher priority then updated software.                                                                                          
                                                                                                                                
Senator  Hoffman  noted  that  the  trend  is  moving  toward  using                                                            
textbooks less and information  technology more. It therefore seemed                                                            
appropriate to him to "allow  our children to benefit by many of the                                                            
computers  that allow our  students to learn  at a faster rate."  He                                                            
warned that by  eliminating information technology  from the list of                                                            
allowable expenditure,  it appears "we want our kids  to stay in the                                                            
  th                                                                                                                            
20 Century."                                                                                                                    
                                                                                                                                
Senator Wilken  commented the  purpose of the  grants is to  improve                                                            
student  performance  and that  every  school district  has  elected                                                            
officials committed  to doing just  that. He suggested allowing  the                                                            
school  boards to  make  their own  decisions  as to  how the  funds                                                            
should be spent,  whether for textbooks or for computers.  He stated                                                            
the current  language should not be  changed with this amendment  to                                                            
the amendment.                                                                                                                  
                                                                                                                                
Senator Hoffman expressed  that based upon the interpretation of the                                                            
language stated  by Senator Wilken  he WITHDREW his motion  to amend                                                            
the amended amendment without objection.                                                                                        
                                                                                                                                
The amended amendment reads as follows.                                                                                         
                                                                                                                                
          Sec. 18. LEARNING OPPORTUNITY, INSTRUCTIONAL MATERIALS,                                                               
     VOCATIONAL  EDUCATION AND IN-SCHOOL NURSES GRANTS.  (a) The sum                                                            
     of  $6,187,100 is  appropriated  from the general  fund to  the                                                            
     Department  of Education and  Early Development for  the fiscal                                                            
     year ending June 30,  2002, for payment as learning opportunity                                                            
     grants  to school  districts  based  on the  school  district's                                                            
     average  daily  membership  to  pay  for supplemental   student                                                            
     instructional programs  intended to improve student performance                                                            
     on  the  high   school  graduation  examination   or  benchmark                                                            
     examinations.                                                                                                              
          (b) The sum of $6,187,100 is appropriated from the                                                                    
     general   fund  to  the  Department  of  Education   and  Early                                                            
     Development  for  the fiscal  year ending  June  30, 2002,  for                                                            
     payment  to school  districts  based on  the school  district's                                                            
     average daily membership, to pay for:                                                                                      
                (1) textbooks and other instructional materials                                                                 
     intended to improve student performance;                                                                                   
                (2) vocational education programs; and                                                                          
                (3) nursing services in schools.                                                                                
                                                                                                                                
A roll call was taken on  the motion to adopt the amended amendment.                                                            
                                                                                                                                
IN FAVOR: Senator  Ward, Senator Wilken, Senator Austerman,  Senator                                                            
Green, Co-Chair Kelly and Co-Chair Donley                                                                                       
                                                                                                                                
OPPOSED: Senator Hoffman, Senator Leman and Senator Olson                                                                       
                                                                                                                                
The motion PASSED (6-3)                                                                                                         
                                                                                                                                
The amended amendment was ADOPTED.                                                                                              
                                                                                                                                
AT EASE 6:38 PM / 6:38 PM                                                                                                       
                                                                                                                                
Co-Chair Donley thanked  the Director and staff from the Division of                                                            
Legislative  Finance,  the Senate  Finance Committee  Secretary  and                                                            
staff,  the   Committee  members'   Finance  Committee  aides,   and                                                            
especially  James Armstrong  from his  staff for  the work that  was                                                            
done on the FY 02 operating and mental health budgets.                                                                          
                                                                                                                                
Senator Hoffman  voiced concern with the unconstitutionality  of the                                                            
non-severability clause  and the possible special session that would                                                            
be required  to provide  funding for  the Department  of Health  and                                                            
Social  Services.  He  spoke  of  payments  that  must  be  made  to                                                            
providers for services such as Medicaid.                                                                                        
                                                                                                                                
Co-Chair  Kelly assured  that he  shared those  concerns and  stated                                                            
that he  hoped that  before the  judge "goes  traipsing through  our                                                            
constitution with impunity,"  the judge would measure those concerns                                                            
as well.                                                                                                                        
                                                                                                                                
Senator Hoffman  countered that the  judge is required to  interpret                                                            
the law and  that if the judge determines  this budget violates  the                                                            
constitution, the judge would have to rule accordingly.                                                                         
                                                                                                                                
Co-Chair Kelly  opined that the judicial branch is  filled with many                                                            
"hard-working,  talented  and  dedicated"  employees,  but that  "in                                                            
recent years,  they have done things that courts in  the rest of the                                                            
United States  have never done since  the inception of our  country;                                                            
things that other  courts would be aghast at." He  continued, "We as                                                            
legislators have a duty  to defend our branch of government. I think                                                            
we have to draw  a line at some point and stand up  to the judiciary                                                            
for our branch of government."  He asserted the committee substitute                                                            
"puts  us in the  best position  we  can be  in to stand  up to  the                                                            
judiciary. That's really the only intent."                                                                                      
                                                                                                                                
Co-Chair Kelly offered  a motion to move SCS CS HB 103, 22-LS0410\T,                                                            
as amended, from Committee.                                                                                                     
                                                                                                                                
Without objection the bill MOVED from Committee.                                                                                
                                                                                                                                
Co-Chair Kelly  offered a motion to move SCS CS HB  104 22-LS0411\O,                                                            
as amended, from Committee.                                                                                                     
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 06:43 PM.                                                                          

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