Legislature(2001 - 2002)

04/15/2002 04:07 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 15, 2002                                                                                      
                              4:07 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 58, Side A                                                                                                             
SFC 02 # 58, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Dave Donley convened  the meeting at approximately 4:07 PM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Alan Austerman                                                                                                          
Senator Donald Olson                                                                                                            
Senator Loren Leman                                                                                                             
Senator Gary Wilken                                                                                                             
                                                                                                                                
Also Attending:   SUE ANN  BEIERLY, staff  to Senator Ward;  LORETTA                                                          
BROWN, staff to Senator Ward                                                                                                    
                                                                                                                                
Attending  via  Teleconference:     There  were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 403-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
SB 289-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
HB 404-APPROP: MENTAL HEALTH BUDGET                                                                                             
SB 288-APPROP: MENTAL HEALTH BUDGET                                                                                             
                                                                                                                                
The Committee  heard budget subcommittee reports for  the Department                                                            
of  Administration,   Department   of  Environmental  Conservation,                                                             
Department  of Corrections,  Department  of Community  and  Economic                                                            
Development, Department  of Fish and Game, Department  of Health and                                                            
Social  Services, Department  of  Education and  Early Development,                                                             
Department of  Law, and Department of Revenue. No  action was taken.                                                            
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 403(FIN) am(brf sup maj fld)(efd fld)                                                                
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize funds."                                                                                                  
                                                                                                                                
     SENATE BILL NO. 289                                                                                                        
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
     CS FOR HOUSE BILL NO. 404(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."                                                                             
                                                                                                                                
     SENATE BILL NO. 288                                                                                                        
     "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 Donley announced no public testimony would be taken at                                                                 
this meeting.                                                                                                                   
                                                                                                                                
[Note: The budget subcommittee reports cited are on file.]                                                                      
                                                                                                                                
Department of Administration                                                                                                  
                                                                                                                                
Senator Ward, Chair                                                                                                             
Senator Taylor                                                                                                                  
Senator Elton                                                                                                                   
                                                                                                                                
SUE ANN BEIERLY, staff to Senator Ward, presented the subcommittee                                                              
report as follows.                                                                                                              
                                                                                                                                
     The  FY  03 General  Fund  allocation  for  the  Department  of                                                            
     Administration  is $156,029,900.  The  Subcommittee began  with                                                            
     the  Senate  Intro  Bill and  made  the  following decrements,                                                             
     increments  and fund  source changes to  meet our General  Fund                                                            
     (GF) allocation.                                                                                                           
                                                                                                                                
          The  largest unallocated reduction was  initially included                                                            
          in  the  Senate Intro  bill  for $1,316,900.  This  entire                                                            
          amount  has been spread  back to the components  that have                                                            
          General Funds in Personal Services.                                                                                   
                                                                                                                                
          The  House had taken an additional $85,000  in unallocated                                                            
          travel  reductions. The Senate Subcommittee did not accept                                                            
          this  unallocated reduction;  instead, the $85,000  GF cut                                                            
          was  spread  between  Personnel  travel  ($9,000),  Public                                                            
          Broadcasting   -  Radio  ($69,900),  and  Public  Defender                                                            
          Agency travel ($6,100).                                                                                               
                                                                                                                                
          Senior Services:                                                                                                      
                $364,300 - Assisted Living Rate Increase (GF)                                                                   
                $ 39,500 - Eligibility Position for General Relief                                                              
                           & Medicaid Clients (GF)                                                                              
                $491,000 - Fund switch to GF for General                                                                        
                           Relief/Assisted Living Program with a                                                                
                           subsequent reduction in MHTAAR funds                                                                 
                $ 75,500 - Non-Permanent Position for Coordinated                                                               
                           Pubic Awareness & Education                                                                          
                          (MHTAAR Funds)                                                                                        
                                                                                                                                
          Retirement  & Benefits: $792,300 (Other Funds) - Additions                                                            
          to  the Division  of Retirement  and Benefits for  various                                                            
          systems  enhancements  and  increases due  to retiree  and                                                            
          benefit programs.                                                                                                     
                                                                                                                                
          Leases:  $3,684,800 (GF  and Other Funds ) - Full  funding                                                            
          for  the  Anchorage Jail  Lease  and increases  for  lease                                                            
          obligations  ($1,500,000  GF) and  increased authority  to                                                            
          receive  receipts from tenant  agencies ($2,184,800  Other                                                            
          Funds)                                                                                                                
                                                                                                                                
          State  Owned Facilities:  $680,700  (Other Funds)  - State                                                            
          Owned Facilities Public Building Operations Costs                                                                     
                                                                                                                                
          Information  Technology Group: $12,650,000 (Other Funds) -                                                            
          Increased  expenditure  authority  to handle pass-through                                                             
          moneys  from other state agencies for services provided by                                                            
          the state's new telecommunications partner                                                                            
                                                                                                                                
          Risk  Management:  ($1,064,400)(Other  Funds) -  Increased                                                            
          Cost   of  Risk  for  Workers'   Compensation   and  Other                                                            
          Insurance                                                                                                             
                                                                                                                                
          Alaska  Longevity  Programs Management:  ($50,000)  (Other                                                            
          Funds)  - Partial Funding  for Geriatric Nurse  Consultant                                                            
                                                                                                                                
          Alaska  Oil  and  Gas Conservation   Commission:  $680,600                                                            
          (Other   Funds)  -  Increases   for  additional   drilling                                                            
          activity  costs and  for salary  adjustments and  position                                                            
          reclassification costs                                                                                                
                                                                                                                                
     Summary                                                                                                                    
     Reductions  in General Fund expenditures necessary  to meet the                                                            
     Department's General  Fund allocation of $159,026,900 were met.                                                            
     Approving  the Department's other requested changes  in funding                                                            
     and  authorization  brings  the  Department's  total  operating                                                            
     budget for FY 03 to $300,514,400.                                                                                          
                                                                                                                                
Senator  Austerman informed  the Committee  that  the Department  of                                                            
Military  and  Veterans Affairs  and  the  Department  of Labor  and                                                            
Workforce  Development budget  recommendations  would return  to the                                                            
subcommittees for reconsideration.                                                                                              
                                                                                                                                
Department of Environmental Conservation                                                                                      
                                                                                                                                
Senator Leman, Chair                                                                                                            
Senator Torgerson                                                                                                               
Senator Olson                                                                                                                   
                                                                                                                                
Senator Leman  testified the subcommittee  recommendation  is within                                                            
the  general fund  spending  limitation  established  by the  Senate                                                            
Majority. He listed  the Governor's request of $55,059,300  compared                                                            
to  $53,303,600  allocated  in FY  02. He  stated  the subcommittee                                                             
recommendation  "generally disallowed  most of the increments",  did                                                            
not provide  increased funding for  travel, and in most components,                                                             
reduced  the appropriation  for travel.  He noted  the Department's                                                             
travel budget  would be $2.8  million, which  is $200,000 more  than                                                            
allocated in FY 02.                                                                                                             
                                                                                                                                
Senator Leman stated the  subcommittee's directive to the Department                                                            
is to  plan travel  as far in  advance whenever  possible to  obtain                                                            
lower fares.                                                                                                                    
                                                                                                                                
Senator  Leman noted the  subcommittee recommends  holding  harmless                                                            
the  Industry   Preparedness   and  Pipeline   Response   component,                                                            
recommends  increased   travel  funding  and  recommends   continued                                                            
appropriation  of $600,000  from the BP/ARCO  charter agreement  for                                                            
increased North Slope oversight.                                                                                                
                                                                                                                                
Senator  Leman commented  that the Department  "targeted" its  water                                                            
program  several years  ago, although  not at the  direction  of the                                                            
Legislature.  As  a result,  he stated  that  neither  the House  of                                                            
Representatives   nor  the   Senate  Finance   budget  subcommittee                                                             
recommends unallocated  budget reductions for this  program in FY 03                                                            
to avoid the complications incurred earlier.                                                                                    
                                                                                                                                
Senator  Leman  noted   the  Food  Safety  and  Sanitation   program                                                            
continues  to  be  "problematic".   He  informed  the  subcommittee                                                             
recommended  utilizing a portion of  the homeland security  funds to                                                            
replace  general funds  for this program,  but was  informed  by the                                                            
Department  this  is not  possible.  However,  he noted  the  Budget                                                            
Request  Unit  (BRU)  is funded  at  approximately  70  percent  not                                                            
including homeland  security funds,  and if it were confirmed  these                                                            
funds could  not be utilized, he would  recommend receipt-supported                                                             
services to fund  the remainder of the program. He  expressed intent                                                            
in the  future to  transfer these  duties in  larger communities  to                                                            
local governments.                                                                                                              
                                                                                                                                
Department of Corrections                                                                                                     
                                                                                                                                
Senator Ward, Chair                                                                                                             
Senator Cowdery                                                                                                                 
Senator Therriault                                                                                                              
Senator Lincoln                                                                                                                 
                                                                                                                                
LORETTA  BROWN, Staff to  Senator Ward,  presented the subcommittee                                                             
report as follows.                                                                                                              
                                                                                                                                
     The  FY  03 General  Fund  allocation  for  the  Department  of                                                            
     Corrections  is $148,268,500.  The Subcommittee began  with the                                                            
     Senate   Intro  Bill   and  made  the   following  decrements,                                                             
     increments  and  fund changes  to meet  our  General Fund  (GF)                                                            
     allocation.                                                                                                                
                                                                                                                                
          The  unallocated reduction associated  with GF labor costs                                                            
          in  the  Commissioner's  Office  was  distributed  to  all                                                            
          components affected.                                                                                                  
                                                                                                                                
          Lost  Federal Violent  Offenders  Incarceration (VOI)  and                                                            
          State  Criminal  Alien Assistance  Program  (SCAAP)  funds                                                            
          were  replaced with GF. We replaced 2.9  million VOI funds                                                            
          and 1.1 million SCAAP funds.                                                                                          
                                                                                                                                
          The   new  Anchorage  Jail  received   a  1.8  million  GF                                                            
          increment   to  fund  the  start  up.  The   Sixth  Avenue                                                            
          Correctional   Center  budget   was  transferred   to  the                                                            
          Anchorage Jail.                                                                                                       
                                                                                                                                
          638.8  thousand  in  new PFD  funds  was allowed  for  the                                                            
          continuation  of the Department's MIS development program.                                                            
                                                                                                                                
          The  subcommittee honored the second year  of a three-year                                                            
          commitment  with the  Mental Health  Trust to fund  a sub-                                                            
          acute   and  juvenile  offender   unit  at  Spring   Creek                                                            
          Correctional  Center by switching 25 thousand  MHTAAR with                                                            
          State GF.                                                                                                             
                                                                                                                                
          A  weighted reduction in  general funds was taken  in each                                                            
          component  with  the exception  of  Community Residential                                                             
          Centers   (CRC)  in  order   to  meet  the  general   fund                                                            
          allocation.                                                                                                           
                                                                                                                                
          Other  changes  in  authority  and  funding that  did  not                                                            
          affect   GF  were  accepted   and  incorporate   into  the                                                            
          Subcommittee's Proposed Operating Budget                                                                              
                                                                                                                                
     Summary                                                                                                                    
                                                                                                                                
     Reductions  in General Fund expenditures necessary  to meet the                                                            
     Department's General  Fund allocation of $148,268,500 were met.                                                            
     Approving  the Department's other requested changes  in funding                                                            
     and  authorization  brings  the  Department's  total  operating                                                            
     budget for FY 03 to $174,274,000.                                                                                          
                                                                                                                                
Co-Chair Donley noted the  Senate Majority target funding is several                                                            
million   dollars   greater   than   approved   by  the   House   of                                                            
Representatives.                                                                                                                
                                                                                                                                
Senator Ward explained  the House of Representatives  version of the                                                            
budget  relies  on  funding  community  jails with  funds  from  the                                                            
permanent fund as stipulated  in HB 20. He stated the Senate Finance                                                            
budget  subcommittee  recommends funding  the community  jails  with                                                            
general funds.                                                                                                                  
                                                                                                                                
Department of Community and Economic Development                                                                              
                                                                                                                                
Senator Kelly, Chair                                                                                                            
Senator Phillips                                                                                                                
Senator Torgerson                                                                                                               
Senator Lincoln                                                                                                                 
                                                                                                                                
Co-Chair Kelly testified  the Senate Majority general fund limit for                                                            
FY  03 is  $2,601,300  less  than  the  FY 02  Management  Plan.  He                                                            
described  how this  was  accomplished  by citing  the subcommittee                                                             
report as follows.                                                                                                              
                                                                                                                                
     There  has been an updating of  the DCED cost allocation  plan.                                                            
     This  has resulted  in $22,400  in Receipt  Supported  Services                                                            
     from Investments  and $13,700  in Commercial Fishing  Revolving                                                            
     Loan  funds from  Banking,  Securities and  Corporations  being                                                            
     transferred  to  the  Commissioner's   Office  component.  This                                                            
     allows for  a reduction of $36,100 in GF. This  also results in                                                            
     $108.200  in Receipt  Supported Services  from Investments  and                                                            
     $138,900   in  Commercial  Fishing  Loan  Fund   receipts  from                                                            
     Banking,  Securities and Corporations being transferred  to the                                                            
     Admin  Services  component.  This  allows  for a  reduction  of                                                            
     $247,100 in GF.                                                                                                            
                                                                                                                                
     In an  attempt to have programs  that bring in revenue  pay for                                                            
     themselves  and  others  that benefit  them.  Business  License                                                            
     Receipts  (BLR) will  be used  in three  different components.                                                             
     There is a fund source  switch of $546,600 from GF/PR to BLR in                                                            
     Occupational  Licensing.  There  is  a fund  source  switch  of                                                            
     $300,000 from International  Trade and Development funds to BLR                                                            
     in International  Trade and Market Development.  And there is a                                                            
     fund   source  switch   of  $1,053,400   from  GF  to   BLR  in                                                            
     International Trade and Market Development.                                                                                
                                                                                                                                
     In  the   Qualified  Trade  Association   Contract,   there  is                                                            
     recommended  a decrement of $600,000 in general  funds. This is                                                            
     to bring  the contract to $4,005,100,  the state funding  level                                                            
     called  for  in  statute  and  recommended  by  the  Governor's                                                            
     budget.                                                                                                                    
                                                                                                                                
     In the Department  of Community and Economic  Development State                                                            
     Rent component,  there is a $188,900 increment  in I/A Receipts                                                            
     coming  in to pay for  state rent. These  funds are $74,700  in                                                            
     receipt   supported  services   from  Occupational   Licensing,                                                            
     $57,600   in   receipt  supported   services   from   Insurance                                                            
     Operations,   $42,600  in  receipt   supported  services   from                                                            
     Banking, Securities  and Corporations and $14,300 in Commercial                                                            
     Fishing Revolving Loan funds from Investments.                                                                             
                                                                                                                                
     In the Commissioner's  Office there has been  a department wide                                                            
     unallocated  reduction of $284,100 that was necessary  to reach                                                            
     our allocation.                                                                                                            
                                                                                                                                
Co-Chair Donley surmised the subcommittee recommends fully funding                                                              
tourism marketing.                                                                                                              
                                                                                                                                
Co-Chair Kelly affirmed and clarified the funding would be provided                                                             
at the "agreed upon statutory level".                                                                                           
                                                                                                                                
Department of Fish and Game                                                                                                   
                                                                                                                                
Senator Kelly, Chair                                                                                                            
Senator Austerman                                                                                                               
Senator Cowdery                                                                                                                 
Senator Halford                                                                                                                 
Senator Hoffman                                                                                                                 
                                                                                                                                
Co-Chair  Kelly  noted  the  subcommittee  recommended  eliminating                                                             
certain services.  He read from the subcommittee report  as follows.                                                            
                                                                                                                                
     Commercial Fisheries                                                                                                       
     In the Westward Region  Fisheries Management component, general                                                            
     funds   of  $741,000  for  the   Bering  Sea/Aleutian   Islands                                                            
     Shellfish  Management Program  have been eliminated.  The State                                                            
     is  not statutorily  required to  manage this  program and  has                                                            
     been  doing it under  delegation from  the federal government.                                                             
     There  is  almost  $2  million  in  federal  funding  for  this                                                            
     program,   although  the  expectation   is  that  the   federal                                                            
     government  will probably  begin  to hire their  own people  to                                                            
     manage it.                                                                                                                 
                                                                                                                                
     In  the Headquarters  Fisheries Management  component,  general                                                            
     funds  of  $744,700  for  the  Commercial  Fisheries   Genetics                                                            
     Program   have  been  eliminated.  In  weighing   the  possible                                                            
     programs  for elimination, this was lower on  the priority list                                                            
     for the Department.  There is $815,000 in non-GF  funds in this                                                            
     program.                                                                                                                   
                                                                                                                                
     Wildlife Conservation                                                                                                      
     In  the  Wildlife  Conservation  Restoration  Program,  general                                                            
     funds of  $223,700 for Wildlife Conservation  Non-Game Programs                                                            
     have been  reduced. This will result in a reduction  in federal                                                            
     funds  into this  program.  However,  there may  be options  to                                                            
     replace the  match with other funds and still  receive the same                                                            
     level  of federal  funding.  This  reduction was  necessary  to                                                            
     reach our allocation for the department.                                                                                   
                                                                                                                                
Co-Chair  Kelly  commented  it was  determined  to  eliminate  these                                                            
programs rather than reduce funding for all programs.                                                                           
                                                                                                                                
Senator  Austerman voiced  concern about reducing  funding  for this                                                            
Department because  it involves natural resources.  He stressed that                                                            
in order  to assert rights  to manage these  resources, Alaska  must                                                            
have the ability  to manage them. He also emphasized  the importance                                                            
of  managing renewable  resources  for  the time  when nonrenewable                                                             
resources are  depleted. He warned that by eliminating  the Westward                                                            
Region   Fisheries   Management  component,   the   Legislature   is                                                            
eliminating the State's  ability to manage the crab fisheries in the                                                            
Bering Sea.                                                                                                                     
                                                                                                                                
Senator Olson  asked if the programs  would be eliminated  entirely.                                                            
                                                                                                                                
Co-Chair  Kelly  affirmed  the  aforementioned   programs  would  be                                                            
eliminated with the exception  of the Wildlife Conservation Non-Game                                                            
Programs, which  would be reduced. He qualified that  the Department                                                            
indicated  eliminating  these programs  is the  preferred method  to                                                            
operate with the proposed budget reductions.                                                                                    
                                                                                                                                
Senator Olson  asked if other "mechanisms" were available  to assume                                                            
management of the shellfish.                                                                                                    
                                                                                                                                
Co-Chair Kelly answered  yes, the federal government could undertake                                                            
these duties.                                                                                                                   
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
Senator Green, Chair                                                                                                            
Senator Kelly                                                                                                                   
Senator Therriault                                                                                                              
Senator Davis                                                                                                                   
                                                                                                                                
Senator  Green   presented  the  subcommittee   recommendations   as                                                            
follows.                                                                                                                        
                                                                                                                                
     After  netting  out the  FY  02 supplementals  and  the  double                                                            
     counted  "fair-share"  and "pro-share"  money in Medicaid,  the                                                            
     total  real new  spending  for Health  and Social  Services  is                                                            
     around  $105 million.   Most of this  increase is in  Medicaid,                                                            
     much  of  the  increase  in  Medicaid  is  in  community  based                                                            
     services  for  older  Alaskans  and Disabled  Alaskans.    This                                                            
     increase  will result  in hundreds  of new  healthcare  related                                                            
     jobs  throughout   Alaska.    Over  the  past  ten  years,  the                                                            
     population  of  Alaska has  increased  by about  20% while  the                                                            
     number  of jobs  in the healthcare  industry  has increased  by                                                            
     about 60%.                                                                                                                 
                                                                                                                                
     The Subcommittee budget  supports efforts of the Legislature to                                                            
     provide  regional   youth  corrections  facilities   throughout                                                            
     Alaska.    Full  operating  funding  for  these  facilities  is                                                            
     provided,  including   a full  year  of  funding  for  the  new                                                            
     facility in Ketchikan.                                                                                                     
                                                                                                                                
     The Subcommittee  budget supports  efforts to downsize  API and                                                            
     to  operate  API  at its  current  level  until  new  community                                                            
     support infrastructure is developed.                                                                                       
                                                                                                                                
     The   Subcommittee  budget   supports   the  efforts  of   this                                                            
     Legislature to provide  the necessary Social Workers to respond                                                            
     to reports of harm.                                                                                                        
                                                                                                                                
     The  Subcommittee   budget  supports  to  the  efforts  of  the                                                            
     Legislature  to respond to concerns  over the nursing  shortage                                                            
     by funding increases to nurses' salaries.                                                                                  
                                                                                                                                
     The  Subcommittee  budget  seeks  to  eliminate  the  need  for                                                            
     supplemental appropriations  by funding formula programs nearly                                                            
     at the  requested level.  Also  by funding the Balloon  Program                                                            
     the budget seeks to reduce future foster care costs.                                                                       
                                                                                                                                
     The  Subcommittee   budget  addresses  the  need   to  increase                                                            
     administrative    efficiencies    by   cutting   funding    for                                                            
     administrative functions in the Department by 3%-5%.                                                                       
                                                                                                                                
     The Subcommittee  budget reduces alcohol and  drug abuse grants                                                            
     by some 20%,  while protecting some specific  functions such as                                                            
     the dual diagnosis  program in Anchorage that helps keep people                                                            
     out  of API.   These  cuts need  to be  looked at  in light  of                                                            
     increased  direct federal  and private  foundation grants  that                                                            
     are  used  for these  same  clients  and  an increased  use  of                                                            
     Medicaid funding to address these clients medical needs.                                                                   
                                                                                                                                
     Tobacco  cessation  programs  are funded  at the  current  year                                                            
     level.  Additional  tobacco settlement funds are being directed                                                            
     to Medicaid  to help fill the gap in match money  that was left                                                            
     when the  Governor failed to  request funds to cover  the $10.8                                                            
     million FMAP change                                                                                                        
                                                                                                                                
Senator Austerman  asked about  a statute  passed the previous  year                                                            
that  stipulates  20 percent  of  the tobacco  settlement  funds  be                                                            
appropriated to  smoking cessation and tobacco prevention  programs.                                                            
                                                                                                                                
Senator Green replied the funding is the same as the year prior.                                                                
                                                                                                                                
Department of Education and Early Development                                                                                 
                                                                                                                                
Senator Wilken, Chair                                                                                                           
Senator Torgerson                                                                                                               
Senator Elton                                                                                                                   
                                                                                                                                
Senator  Wilken  stated  the  total  funding   for  this  Department                                                            
recommended   by  the  subcommittee   is   $992,500,000;  of   which                                                            
$748,523,000  is general funds, $179,000,000  is federal  funds, and                                                            
$65,000,000  is other  funds.  He compared  the general  funding  to                                                            
$723,804,000  in FY  01 and  $754,442,000  in FY 02.  He listed  the                                                            
funding target  established by the  Senate Majority is $748,523,400                                                             
and  includes  pupil  transportation   and  the foundation   funding                                                            
formula. He stated this  represents a .78 percent reduction in total                                                            
general funds  and a 5.4  percent reduction  in agency-only  general                                                            
funds. He  noted the Senate  Majority amount  is $465,000 more  than                                                            
approved by the House of Representatives.                                                                                       
                                                                                                                                
Senator Wilken  read from the subcommittee report,  specifically the                                                            
comments column of the  spreadsheet titled, "Department of Education                                                            
and Early Development,  Passed by the Finance Subcommittee  on April                                                            
10, 2002, General Purpose Fund Group Only".                                                                                     
                                                                                                                                
     K-12 Support BRU                                                                                                           
        Foundation Program component                                                                                            
          (1) Include $12,372,000 for Learning Opportunity Grants                                                               
          (LOG) (in language section)                                                                                           
          (2) Fund the Foundation Program at the FY 02 student                                                                  
          dollar level                                                                                                          
          (3) Reduction in GF due to increase required local                                                                    
          contribution and reduction of funding floor, an increased                                                             
          PL874 payments                                                                                                        
          (4) Increase in Public School Trust Fund revenues                                                                     
          ($665,700)                                                                                                            
          (5) Reduction of $500,000 GF to match the GF/PR amount                                                                
          for Alyeska Central School Summer Program                                                                             
                                                                                                                                
Senator Wilken cited Summer  2000 enrollment for the Alyeska Central                                                            
School  Summer Program  was 4,170  courses at the  beginning  of the                                                            
summer; however only 33  percent of those courses were completed. He                                                            
noted the  Department must  provide staff  and materials, whether  a                                                            
course  is  completed  or  not.  As  a  result,   he  informed,  the                                                            
subcommittee  proposes intent language  to authorize the  Department                                                            
to  collect  $100  per  course.  He  surmised   this  would  provide                                                            
financial incentive to complete courses.                                                                                        
                                                                                                                                
Senator Wilken next pointed  out the Tuition Students, Boarding Home                                                            
Grants,  Youth  in  Detention,  and  Schools   for  the Handicapped                                                             
components within the K-12  Support BRU are each funded at the FY 02                                                            
Management Plan level.  He noted the Community Schools component was                                                            
not  funded  in  the  House  of  Representatives  approved   budget,                                                            
although the Senate  Finance budget subcommittee includes  $300,000,                                                            
which is $200,000 less than appropriated in FY 02.                                                                              
                                                                                                                                
Senator  Wilken stated  subcommittee  recommends  fully funding  the                                                            
Pupil Transportation  BRU at $3.69 million. He remarked  this amount                                                            
reflects the increases in negotiated contracts.                                                                                 
                                                                                                                                
Senator  Wilken then  addressed  the Executive  Administration  BRU,                                                            
directing attention  to the proposed $30,000 reduction  for personal                                                            
services  and travel  in  the Commissioner's  Office  component.  He                                                            
explained. "This is where  the unallocated reduction for salaries is                                                            
imbedded."  He summarized that the  total budget, as recommended  by                                                            
the  subcommittee,  contains a  reduction  of $710,600  in  personal                                                            
services and travel divided between all BRUs.                                                                                   
                                                                                                                                
Senator  Wilken  continued  that  the  subcommittee  recommends  the                                                            
Special  and Supplemental  Service  component  in the  Teaching  and                                                            
Learning  Support  BRU receive  the same  funding  as in  FY 02.  He                                                            
commented  the  Quality Schools  component  should  receive  partial                                                            
increment of $429,400 for  McGraw-Hill contract costs for assessment                                                            
and bookmarking  for the purposes of the high school  graduation and                                                            
benchmark  examinations.  In  addition,  he  said  the subcommittee                                                             
recommends  the  Education   Special  Projects  component   maintain                                                            
$50,000  funding  for  the  Alaska  Minerals  and  Energy  Resources                                                            
Education Fund (AMEREF) program.                                                                                                
                                                                                                                                
Senator  Wilken  spoke to  the  Early Development  BRU,  noting  the                                                            
subcommittee  recommends transferring  $350,000  general funds  from                                                            
the Child Care Assistance  and Licensing component to the Head Start                                                            
Grants component. He explained  these funds replace one-time funding                                                            
with the net result that  the Head Start Grants component remains at                                                            
the FY  02 Management  Plan level.   He furthered  the subcommittee                                                             
recommends  authorizing $3,859,100  Temporary  Assistance for  Needy                                                            
Families  (TANF) funds  from  the Department  of  Health and  Social                                                            
Services to the Child Care Assistance and Licensing component.                                                                  
                                                                                                                                
Senator  Wilken commented  the Children's  Trust  Programs BRU,  the                                                            
Alaska Community  Service BRU  and the Alaska  State Council  on the                                                            
Arts component in the Commissions  and Boards BRU are "insignificant                                                            
in  this  budget",  and that  the  Education  Support  Services  BRU                                                            
receives  a  reduction  of  $190,000  general   funds  for  personal                                                            
services and travel, according to the subcommittee report.                                                                      
                                                                                                                                
Senator Wilken told the  Committee that the subcommittee recommended                                                            
the House of  Representatives proposal  to replace $470,000  general                                                            
funds  with Alaska  Commission  on  Postsecondary  Education  (ACPE)                                                            
funds and deleted $130,000  general funds for the Kotzebue Technical                                                            
Center BRU, Kotzebue Tech Operations Grants component.                                                                          
                                                                                                                                
Senator  Wilken  continued  that  the  Alaska Vocational   Technical                                                            
Center  (AVTEC) BRU,  AVTEC  Operations  component  is suggested  to                                                            
receive $75,000  fewer general  funds from  the FY 02 appropriation                                                             
and  the  Mt.  Edgecumbe  Boarding   School  BRU  and  component  is                                                            
suggested  to receive a  reduction of $50,000  general funds;  these                                                            
are to be taken from personal services and travel.                                                                              
                                                                                                                                
Senator  Wilken stated  the State  Facilities  Maintenance BRU,  EED                                                            
State Facilities Rent component  would maintain the FY 02 Management                                                            
Plan level of funding under the subcommittee's proposed budget.                                                                 
                                                                                                                                
Senator  Wilken   pointed  out  the   subcommittee  recommends   the                                                            
elimination  of  the Statewide  Library  Electronic  Doorway  (SLED)                                                            
program  within   the  Alaska  Library  and  Museums   BRU,  Library                                                            
Operations  component. He stated  this could  result in the  loss of                                                            
one position at the University  of Alaska-Fairbanks; however, "given                                                            
the budget  constraints this may be  the time to find other  ways to                                                            
fund SLED".                                                                                                                     
                                                                                                                                
Senator  Wilken  noted  funding  for  the  Student  Loan  Operations                                                            
component  and  the  Washington,  Wyoming,  Alaska,  Montana,  Idaho                                                            
(WWAMI)  Medical Education  component  in the  Alaska Postsecondary                                                             
Education Commission BRU are transfers.                                                                                         
                                                                                                                                
Senator  Wilken  detailed  a handout  he  provided, which  reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
     FY 03 K-12 Public Education GF Requirement                                                                                 
          Change from FY 02 to FY 03                                                                                            
          Based on Per Student Value of $4,010 per student                                                                      
          (dollars expressed in 1000s)                                                                                          
                                                                                                                                
     FY 02 - Enrollment and Authorized Funding                                                                                  
        Total Average Daily Membership                         133,304                                                          
        Total K-12 Education General Fund State Support                                                                         
          (including LOGs)                                  $663,781.0                                                          
                                                                                                                                
     FY 03 - Projected Enrollment and Funding                                                                                   
        Projected Total Average Daily Membership                                                                                
          (Plus 151 New Students)                              133,455                                                          
        Projected K-12 Education General Fund State Support                                                                     
          (including LOGs)                                   656,921.9                                                          
                                                                                                                                
                Change from FY 02 to FY 03                  ($6,859.1)                                                          
                                                                                                                                
     FY 03 - K-12 Education Funding Formula                                                                                     
        Increased General Fund Requirement                                                                                      
          Increase State Support due to                                                                                         
             Increase Enrollment                                                                                                
             (151 Students)                     $764.4                                                                          
          Decrease in Federal Impact Aid                                                                                        
             Deductible                          $94.9                                                                          
          Increase of Quality School Grant                                                                                      
             due to New Student Enrollment        $7.8                                                                          
                Total Increased General Fund Requirement       $867.1                                                           
                                                                                                                                
     Decreased General Fund Requirement                                                                                         
          Increase in Required Local Taxpayer                                                                                   
             Effort                                                                                                             
             (4 mils/45% of Basic Need)    ($5,916.6)                                                                           
          Transition Supplemental Funding  ($1,143.9)                                                                           
          Increase in Public School Trust                                                                                       
             Fund Support                                                                                                       
             (Results in GF Savings)           ($665.7)                                                                         
                Total Decreased General Fund Requirement  ($7,726.2)                                                            
                                                                                                                                
     Net General Fund Requirement                         ($6,859.1)                                                            
                                                                                                                                
Senator Wilken suggested the fund savings reflected above should                                                                
remain in the K-12 Education BRU.                                                                                               
                                                                                                                                
Senator Wilken then addressed  the FY 02 Supplemental budget, noting                                                            
a  $498,000  request for  contractual  obligations  to  McGraw  Hill                                                            
relating to the  high school graduation and benchmark  examinations,                                                            
of which he is "fully supportive".                                                                                              
                                                                                                                                
Senator Wilken next spoke to proposed intent language to accompany                                                              
the following components and to read as follows.                                                                                
                                                                                                                                
     Teaching and Learning Support                                                                                              
     Teaching Certification                                                                                                     
          Conditional Language                                                                                                  
          The  amount appropriated  by this  appropriation  includes                                                            
          the  unexpended and unobligated balance  on June 30, 2002,                                                            
          of  the  Department  of Education  and  Early Development                                                             
          receipts   from  teacher   certification  fees   under  AS                                                            
          14.20.020(c).                                                                                                         
                                                                                                                                
     Alyeska Central School                                                                                                     
          Intent                                                                                                                
          It  is the intent of the legislature that  Alyeska Central                                                            
          School  adopt course  fees for its  summer school  program                                                            
          that  will  encourage  high school  students  to  complete                                                            
          required  course assignments  and to help offset  the cost                                                            
          of course materials and instruction.                                                                                  
          It  is also  the intent  of the legislature  that  Alyeska                                                            
          Central   School  provide   a  partial  fee  refund   upon                                                            
          successful course completion.                                                                                         
                                                                                                                                
     AK Vocational Technical Center                                                                                             
          Intent                                                                                                                
          It  is  the  intent  of the  legislature  that  the  $75.0                                                            
          personal  services and travel reduction  not result in the                                                            
          cancellation  or  delay of the  Certified Nurse  Assistant                                                            
          Training   Program  offered   by  the  Alaska   Vocational                                                            
          Technical Center.                                                                                                     
                                                                                                                                
Senator Wilken listed the  "head count of this budget" is "plus 12",                                                            
although  there  is  no  general  fund  increase.   He  stated  that                                                            
approximately 20 were requested  and all generally funded increments                                                            
were denied, with the approved  increases funded with federal funds.                                                            
                                                                                                                                
Senator Wilken  told of an error of $130,000 in the  FY 02 operating                                                            
budget  regarding  SB 133  and  relating  to assessment  of  special                                                            
education children. He  explained the 24-hour time lapse between the                                                            
budget closeout  and passage  of SB 133. He  referenced a letter  he                                                            
authored addressed  to Co-Chair Donley addressing  this matter [Copy                                                            
not provided] and informed  that the same amount is contained in the                                                            
subcommittee's  recommendation  for  FY  03.  He remarked  that  the                                                            
Division  of  Legislative  Finance  agrees  this  amount  should  be                                                            
included in the FY 03 operating budget.                                                                                         
                                                                                                                                
Department of Law                                                                                                             
                                                                                                                                
Senator Wilken, Chair                                                                                                           
Senator Taylor                                                                                                                  
Senator Ellis                                                                                                                   
                                                                                                                                
Senator  Wilken listed  the total  agency expenditures  in FY  01 at                                                            
$26,515,400;   $26,737,100  in  FY  02,  and  the  Senate   Majority                                                            
established amount for FY 03 of $25,132,900.                                                                                    
                                                                                                                                
Senator   Wilken  cited   recommended  funding   amounts  from   the                                                            
spreadsheet  titled "Department  of Law, Considered  by the  Finance                                                            
Subcommittee on April 12,  2002, General Purpose Fund Group Only" as                                                            
follows.                                                                                                                        
                                                                                                                                
     Office of the Attorney General              ($161,500)                                                                     
     Criminal Division                         $13,558,800                                                                      
     Civil Division                             $7,309,800                                                                      
     Statehood Defense                          $1,114,500                                                                      
     Oil &  Gas Litigation and Legal  Services  $2,721,300                                                                      
     Administration and Support                   $590,000                                                                      
                                                                                                                                
Senator Wilken  next referenced the Change Detail  spreadsheet [copy                                                            
on file],  indicating that  it summarizes  the Governor's  requested                                                            
amounts compared to the subcommittee recommendations.                                                                           
                                                                                                                                
Senator  Wilken  stated  the subcommittee  recommendations   include                                                            
three additional positions.                                                                                                     
                                                                                                                                
Department of Revenue                                                                                                         
                                                                                                                                
Senator Leman, Chair                                                                                                            
Senator Phillips                                                                                                                
Senator Ellis                                                                                                                   
                                                                                                                                
Senator  Leman appreciated  the  constructive assistance  from  this                                                            
Department in developing the subcommittee budget recommendation.                                                                
                                                                                                                                
Senator Leman  listed the Governor's proposed FY 03  budget for this                                                            
Department  is $12.7  million, the  FY 02 Management  Plan is  $12.4                                                            
million  and  the  FY  03  Senate  Majority  established  amount  is                                                            
approximately $11.7.                                                                                                            
                                                                                                                                
Senator Leman stated the  subcommittee recommendation "generally did                                                            
not fund the general fund increment requests".                                                                                  
                                                                                                                                
Senator  Leman suggested  that  the  full Senate  Finance  Committee                                                            
consider  the  Alcohol  Beverage  Control  (ABC)  Board  request  of                                                            
funding for additional  enforcement. He opined this  is a reasonable                                                            
request,  but  that given  the  budget limitations  imposed  by  the                                                            
Senate Majority,  the decision whether to fund it  could not be made                                                            
at the subcommittee level.                                                                                                      
                                                                                                                                
Senator Leman  continued that the subcommittee recommends  accepting                                                            
the $432,000  savings of the Permanent  Fund Corporation.  He stated                                                            
the subcommittee  also recommends authorizing allocation  of federal                                                            
receipts  as requested  by the  Alaska Housing  Finance Corporation                                                             
(AHFC)  for temporary  labor,  although  the subcommittee  does  not                                                            
recommend  the  additional   positions  and  instead   suggests  the                                                            
Department  employ  an  outside  contractor.   He  commented  he  is                                                            
"hesitant"  to increase staffing utilizing  non-continuing  funding.                                                            
                                                                                                                                
Senator Leman  next addressed the Long Term Care Ombudsman,  stating                                                            
the subcommittee recommends  fully funding this position and support                                                            
staff positions.                                                                                                                
                                                                                                                                
Senator  Leman pointed  out  the Division  of  Treasury,  Investment                                                            
Officer  salary increases  request  is  funded in  the subcommittee                                                             
recommendation as well.  He commented that a valid argument was made                                                            
to  maintain the  salaries  of these  positions  at  a level  close,                                                            
although not equal, to  counterparts in private industry; this is to                                                            
avoid "hemorrhaging" of the State's top investment officers.                                                                    
                                                                                                                                
Department of Law (cont.)                                                                                                     
                                                                                                                                
Senator  Wilken  clarified  the subcommittee  recommendation  of  an                                                            
unallocated  reduction   of  $506,300  to  the  Office  of  Attorney                                                            
General.  He explained this  includes funding  for salary  increases                                                            
plus an additional  $40,700 reduction. He summarized  the allocation                                                            
to this BRU would  be $344,800 according to the subcommittee  report                                                            
and  the reduction  of  $506,300  "would  be spread  throughout  the                                                            
budget,  which when  you net it  out, shows  the negative  $161,500"                                                            
reflected on the spreadsheet.                                                                                                   
                                                                                                                                
Co-Chair Donley noted a  large increment of this Department's budget                                                            
has traditionally been  for oil and gas litigation activities and he                                                            
noted the subcommittee  proposes reduced funding for  this. He asked                                                            
if the activities  are "winding down" and inquired  as to the nature                                                            
of Department testimony to the subcommittee on this matter.                                                                     
                                                                                                                                
Senator Wilken  stated the subcommittee  recommends the same  amount                                                            
as approved  by the  House of  Representatives.   He qualified  that                                                            
funding for  this BRU is estimated  each year and, if inadequate,  a                                                            
supplemental appropriation is made.                                                                                             
                                                                                                                                
                                                                                                                                
SFC 02 # 58, Side B 04:55 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Donley understood the same.                                                                                            
                                                                                                                                
Senator  Wilken stressed  this is an important  expenditure  because                                                            
these efforts  generate more than expended. He agreed  with Co-Chair                                                            
Donley that  the BRU requires less  funding since the resolution  of                                                            
the 1995 "tax issue".                                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Dave Donley adjourned the meeting at 04:56 PM                                                                          

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