Legislature(2013 - 2014)SENATE FINANCE 532

04/04/2013 02:30 PM FINANCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ HB 22 BOARD OF MARINE PILOTS TELECONFERENCED
+ HB 26 EXTEND BOARD OF PUBLIC ACCOUNTANCY TELECONFERENCED
+= SB 88 ALASKA NATIVE MEDICAL CENTER HOUSING TELECONFERENCED
+= SB 18 BUDGET: CAPITAL TELECONFERENCED
Moved Out of Committee 4/4/13 9:00 a.m. Meeting
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                       April 4, 2013                                                                                            
                         2:43 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
2:43:50 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 2:43 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Angela  Rodell,  Deputy   Commissioner,  Treasury  Division,                                                                    
Department   of  Revenue;   William  Streur,   Commissioner,                                                                    
Department of Health and  Social Services; Valerie Davidson,                                                                    
Alaska  Native  Tribal  Health Consortium  (ANTHC);  Heather                                                                    
Shattuck,  Staff,   Senator  Pete  Kelly;   Patrick  Gamble,                                                                    
President, University  of Alaska;  Kit Duke,  Associate Vice                                                                    
President  for   Facilities,  University  of   Alaska;  Anna                                                                    
Latham,  Staff,  Representative  Kurt  Olsen;  Kris  Curtis,                                                                    
Division  of  Legislative   Audit;  Cecile  Elliott,  Staff,                                                                    
Representative Mike Hawker;                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 74     UNIVERSITY OF ALASKA BUILDING FUND                                                                                    
                                                                                                                                
          SB 74 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 88     ALASKA NATIVE MEDICAL CENTER HOUSING                                                                                  
                                                                                                                                
          SB 88 was REPORTED out of committee with a "do                                                                        
          pass" recommendation and with a fiscal impact                                                                         
          note from the Department of Administration, a                                                                         
          fiscal impact note from Department of Health and                                                                      
          Social Services, and a fiscal impact note from                                                                        
          the Department of Revenue.                                                                                            
                                                                                                                                
CSHB 22(L&C)   BOARD OF MARINE PILOTS                                                                                           
                                                                                                                                
          CSHB 22 (L&C) was REPORTED out of committee with                                                                      
          a "do pass" recommendation and with a previously                                                                      
          published fiscal impact note from the Department                                                                      
          of Commerce, Community and Economic Development.                                                                      
                                                                                                                                
                                                                                                                                
HB 26     EXTEND BOARD OF PUBLIC ACCOUNTANCY                                                                                    
                                                                                                                                
          HB 26 was REPORTED out of committee with a "do                                                                        
          pass" recommendation and with a fiscal impact                                                                         
          note from the Department of Commerce, Community                                                                       
          and Economic Development.                                                                                             
SENATE BILL NO. 88                                                                                                            
                                                                                                                                
     "An Act  authorizing the state bond  committee to issue                                                                    
     certificates   of   participation    to   finance   the                                                                    
     construction  and equipping  of residential  housing to                                                                    
     serve  the  Anchorage  campus   of  the  Alaska  Native                                                                    
     Medical  Center;  and  authorizing  the  Department  of                                                                    
     Administration   to   enter   into   a   lease-purchase                                                                    
     agreement for  the benefit of the  Alaska Native Tribal                                                                    
     Health Consortium."                                                                                                        
                                                                                                                                
2:44:46 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  noted that  the  bill  had been  previously                                                                    
discussed in  committee. He believed that  the question that                                                                    
remained  before  the  committee  was  whether  the  project                                                                    
should be paid for up  front with capital dollars, or should                                                                    
it be bonded  for, with interest being paid on  the bond. He                                                                    
admitted  that  the  state  was   short  funds  for  capital                                                                    
projects, but  that the project proposed  in the legislation                                                                    
was financially feasible because of solid revenue sources.                                                                      
                                                                                                                                
2:46:37 PM                                                                                                                    
Co-Chair Meyer  queried whether  the department  assigned to                                                                    
fiscal note number  1, for $35 million  in estimated capital                                                                    
costs, should  be the Department of  Administration (DOA) or                                                                    
the Department of Revenue (DOR).                                                                                                
                                                                                                                                
2:47:25 PM                                                                                                                    
                                                                                                                                
ANGELA  RODELL,  DEPUTY   COMMISSIONER,  TREASURY  DIVISION,                                                                    
DEPARTMENT  OF REVENUE,  replied that  the state  would sell                                                                    
certificates of participation by  DOR through the State Bond                                                                    
Committee. She relayed that  the certificate represented the                                                                    
sale of  participation in a  lease agreement.  She furthered                                                                    
that DOA  would then  take the  proceeds of  the transaction                                                                    
and hold them; the department  would receive invoices as the                                                                    
project was under construction and  would be in contact with                                                                    
the Department of Health and  Social Services to ensure that                                                                    
the expenses  were what  had been agreed  upon in  the lease                                                                    
agreement. She  stated that once  the facility was  open DOR                                                                    
would lease  the building from  DOA for 15 years;  the lease                                                                    
payments made  would be  used to  repay the  certificates of                                                                    
participation.  She stressed  that  the  amount of  Medicaid                                                                    
savings generated through use  of the facility would reflect                                                                    
positively on the state's general fund.                                                                                         
                                                                                                                                
2:49:20 PM                                                                                                                    
                                                                                                                                
WILLIAM  STREUR,  COMMISSIONER,  DEPARTMENT  OF  HEALTH  AND                                                                    
SOCIAL SERVICES, commented that  approximately 40 percent of                                                                    
the services currently provided  to Alaska Natives were done                                                                    
through a  native run system,  which left 60 percent  on the                                                                    
table. He  said that assuming  that 20 percent  of specialty                                                                    
services were not available within  the tribal system, or in                                                                    
Alaska, a 40 percent doubling  of services could be provided                                                                    
by  the tribal  system. He  thought that  by moving  as many                                                                    
services as  possible over to  the tribal system,  the state                                                                    
would  receive   a  100  percent  match   from  the  federal                                                                    
government,  resulting  in  less spending  of  general  fund                                                                    
dollars.  He noted  that that  the bill  was a  step towards                                                                    
getting  tribal  members  medical  help  within  the  tribal                                                                    
system.  He  shared  that  receiving  services  consistently                                                                    
within the tribal system would  result in continuity of care                                                                    
for  recipients.  He  pointed  out that  there  was  a  $1.1                                                                    
million  projected  savings  for general  child  health.  He                                                                    
relayed that many surgeries  currently being performed could                                                                    
be  done through  the  tribal system,  and  would allow  for                                                                    
better  care  prior to  and  immediately  after surgery.  He                                                                    
noted that ear, nose, and  throat problems were prevalent in                                                                    
rural  communities. He  thought that  the expanded  capacity                                                                    
could  result  in  a  savings   of  $650,000.  He  spoke  to                                                                    
telemedicine, which  he believed was underutilized.  He said                                                                    
that travel expenses  were ever increasing in  the state and                                                                    
that  the memorandum  of understanding  had  to include  the                                                                    
continued development of telemedicine capabilities.                                                                             
                                                                                                                                
2:54:51 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  queried what was included  in the memorandum                                                                    
of understanding.                                                                                                               
                                                                                                                                
Commissioner  Streur listed  the  items  in the  memorandum:                                                                    
cost based  reimbursement for Medicaid recipient's  room and                                                                    
board,  preferential  status   for  Medicaid  recipients  to                                                                    
assure priority  access, required necessary  transport, pre-                                                                    
maternal  Medicaid  services.  He  believed  that  the  best                                                                    
Benefit  to the  state  would  be to  ensure  that the  next                                                                    
generation received the best possible care.                                                                                     
                                                                                                                                
2:55:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer inquired  if the committee had a  copy of the                                                                    
memorandum of understanding.                                                                                                    
                                                                                                                                
Commissioner  Streur  replied  that  he  could  provide  the                                                                    
document to the committee.                                                                                                      
                                                                                                                                
2:55:43 PM                                                                                                                    
                                                                                                                                
Commissioner Streur  continued to discuss the  memorandum of                                                                    
understanding.  He  said  that  the designated  use  of  the                                                                    
facility must  be maintained  for the term  of the  bond. He                                                                    
stated  that access  and utilization  of  the services  must                                                                    
continue to be developed under the terms of the bond.                                                                           
                                                                                                                                
2:57:39 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer reiterated  his  desire for  a  copy of  the                                                                    
memorandum   of   understanding.    He   requested   further                                                                    
clarification concerning  the $35  million in  capital funds                                                                    
under  DOA, rather  than  DOR, as  reflected  in the  fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
2:57:54 PM                                                                                                                    
                                                                                                                                
Ms. Rodell replied that once  the bonds were sold, DOR would                                                                    
not administer  the proceeds; the  proceeds would  be turned                                                                    
over to  DOA because  DOA would be  entering into  the lease                                                                    
agreements on the state's behalf.                                                                                               
                                                                                                                                
2:59:05 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  welcomed   Senator  Bishop  and  Vice-Chair                                                                    
Fairclough to the committee table.                                                                                              
                                                                                                                                
2:59:33 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly inquired whether  Alaska Native Tribal Health                                                                    
Consortium  (ANTHC)  would be  able  to  pay for  additional                                                                    
costs if the project ran over budget.                                                                                           
                                                                                                                                
Ms.  Rodell referred  the  question  to representation  from                                                                    
ANTHC.                                                                                                                          
                                                                                                                                
3:00:03 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough queried  how the  state would  ensure                                                                    
that contractors received their payments.                                                                                       
                                                                                                                                
Ms. Rodell replied  that the invoices of  payment would come                                                                    
to  DOA,  which  she  expected  would  coordinate  with  the                                                                    
Department of Health and Social Services (DHSS).                                                                                
                                                                                                                                
3:01:14 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  wondered how  the cost  estimation of                                                                    
the  project   had  been   determined  before   the  project                                                                    
contractor had been selected.                                                                                                   
                                                                                                                                
Commissioner Streur referred the question to ANTHC.                                                                             
                                                                                                                                
3:01:59 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Fairclough  asked   if  the   commissioner  had                                                                    
reviewed  the cost  estimate documents  associated with  the                                                                    
project.                                                                                                                        
                                                                                                                                
Commissioner  Streur   replied  yes.   He  added   that  the                                                                    
department  would continue  to  review  blueprints and  cost                                                                    
estimates along with DOR and DOA.                                                                                               
                                                                                                                                
3:02:37 PM                                                                                                                    
VALERIE  DAVIDSON, ALASKA  NATIVE  TRIBAL HEALTH  CONSORTIUM                                                                    
(ANTHC), testified  that the ANTHC would  be responsible for                                                                    
operation and maintenance of  the facility once construction                                                                    
was complete.  She shared that the  facility design included                                                                    
six floors; 5 of the floors  would be financed by the state,                                                                    
but ANTHC would finance the  6th floor for patient education                                                                    
with  a particular  emphasis  on  well-baby and  well-mother                                                                    
care. She  relayed that tele-medical services  would be made                                                                    
available in  order to help homesick  patients during longer                                                                    
hospital  stays  far  from  home.   She  stated  that  ANTHC                                                                    
recognized the  need for a  meaningful partnership  with the                                                                    
state and was currently financing  part of the facility. She                                                                    
highlighted  that  ANTHC  had a  positive  track  record  of                                                                    
building  facilities on-time  and under  budget. She  shared                                                                    
that she had negotiated a  number of agreements for services                                                                    
that had  been clear  and effective. She  noted Commissioner                                                                    
Streur  had  been  a  diligent advocate  for  the  state  in                                                                    
negotiations. She  stated that the  issue of access  to care                                                                    
came up at every board meeting;  the key to better access to                                                                    
healthcare  for  people  living  outside  of  Anchorage  was                                                                    
housing.                                                                                                                        
                                                                                                                                
3:08:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  restated the  question raised  by Vice-Chair                                                                    
Fairclough concerning  the fiscal noted for  $35 million. He                                                                    
asked how the contracts would be awarded.                                                                                       
                                                                                                                                
Ms.  Davidson replied  that in  addition to  co-managing the                                                                    
Alaska  Native Medical  Center, the  consortium had  a large                                                                    
construction sector  of its organization. She  said that the                                                                    
consortium had  a short  list of  contractors that  would be                                                                    
meeting in  the future  to examine opportunities  and review                                                                    
proposals.                                                                                                                      
                                                                                                                                
3:09:49 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  queried  if  ANTHC  would  cover  any  cost                                                                    
overruns.                                                                                                                       
                                                                                                                                
Ms.   Davidson  replied   that   cost   overruns  were   not                                                                    
anticipated; however,  if additional funds  became necessary                                                                    
to finish  the project,  ANTHC would  not request  the funds                                                                    
from the state.                                                                                                                 
                                                                                                                                
3:10:24 PM                                                                                                                    
Co-Chair  Meyer  inquired  if language  pertaining  to  cost                                                                    
overruns   had   been   included  in   the   memorandum   of                                                                    
understanding.                                                                                                                  
                                                                                                                                
Ms. Davidson replied in the affirmative.                                                                                        
                                                                                                                                
3:10:34 PM                                                                                                                    
                                                                                                                                
Senator Bishop directed  the committee to Page 2,  line 8 of                                                                    
the bill. He requested assurances  on the record that Alaska                                                                    
hire would be at the forefront of the hiring process.                                                                           
                                                                                                                                
Ms. Davidson  responded that  hiring Alaskans  was important                                                                    
on all ANTHC  projects throughout the state.  She added that                                                                    
the consortium had  a tribal preference policy  as well. She                                                                    
stated  Alaskans  took pride  in  working  on projects  that                                                                    
would directly benefit Alaskans.                                                                                                
                                                                                                                                
3:12:49 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy inquired  if there had been  survey done to                                                                    
highlight  why patients  would use  the new  facility rather                                                                    
than  receive   services  at  already   established  medical                                                                    
centers.                                                                                                                        
                                                                                                                                
Ms.    Davidson    responded   that    conversations    with                                                                    
beneficiaries that had chosen  to receive care elsewhere had                                                                    
revealed several things: By  law, Medicaid required patients                                                                    
to be offered a choice as  to where they received care; many                                                                    
patients had  requested ANTHC centers  in order to  be close                                                                    
to  family.  She  added  that   ANTHC  centers  allowed  for                                                                    
patients to be  connected to their communities  in ways that                                                                    
other  places  could  not  provide.  She  pointed  out  that                                                                    
transportation issues  were one  of the  greatest challenges                                                                    
for people  traveling to Anchorage for  health services. She                                                                    
stressed that  ANTHC would  provide transportation  from the                                                                    
airport  to  the  housing  facility, and  that  all  of  the                                                                    
services the patient would need  could be provided under one                                                                    
roof.                                                                                                                           
                                                                                                                                
3:16:09 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  queried if  there had  ever been  a formal                                                                    
survey  conducted that  compared  the  services provided  in                                                                    
ANTHC facilities with services provided by other hospitals.                                                                     
                                                                                                                                
Ms.  Davidson stated  that  she  did not  know  of a  formal                                                                    
survey.  She  said  that the  consortium  conducted  regular                                                                    
customer  experience surveys,  which were  then compared  to                                                                    
surveys conducted by other facilities.                                                                                          
                                                                                                                                
3:16:46 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy appreciated  that  the federal  government                                                                    
required  that  a choice  be  given  to patients  concerning                                                                    
where they would receive their  medical care. He wondered if                                                                    
the people  would still chose  to go to  Providence Hospital                                                                    
if they were given the choice of the new facility.                                                                              
                                                                                                                                
Ms.  Davidson replied  that there  were services  that ANTHC                                                                    
was not  yet at capacity  to provide. She stated  that, even                                                                    
with all of the expansion  described in their business plan,                                                                    
the  ANTHC facility's  ability to  accommodate patients  was                                                                    
finite.  She noted  that there  was $30  million in  general                                                                    
funds  that went  to non-tribal  facilities in  Anchorage in                                                                    
order   to  provide   care   for   Alaska  Native   Medicaid                                                                    
beneficiaries.  She  estimated  that building  the  facility                                                                    
would  result in  an  annual savings  of  $8.8 million.  She                                                                    
pointed  out that  ANTHC operated  the only  level 2  trauma                                                                    
center in  Alaska and  was a "magnet  hospital" with  a high                                                                    
level of quality care provided by nursing staff.                                                                                
                                                                                                                                
3:20:05 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy wondered  if the facility would  be able to                                                                    
accommodate  patients   at  the  same  rate   as  Providence                                                                    
Hospital.                                                                                                                       
                                                                                                                                
Ms. Davidson replied yes.                                                                                                       
                                                                                                                                
3:20:37 PM                                                                                                                    
                                                                                                                                
Senator  Hoffman queried  how  long it  had  been since  Ms.                                                                    
Davidson had  been staff  to a  previous Senate  Finance Co-                                                                    
Chair.                                                                                                                          
                                                                                                                                
Ms. Davidson replied that it had been 27 years.                                                                                 
                                                                                                                                
3:21:23 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough opined that  more general fund dollars                                                                    
would expedite the process.                                                                                                     
                                                                                                                                
3:21:46 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly MOVED  to REPORT  SB 88  28-LS0629\N out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
3:22:06 PM                                                                                                                    
                                                                                                                                
SB  88  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and  with  a fiscal  impact  note  from  the                                                                    
Department  of Administration,  a  fiscal  impact note  from                                                                    
Department  of  Health and  Social  Services,  and a  fiscal                                                                    
impact note from the Department of Revenue.                                                                                     
                                                                                                                                
3:22:14 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:26:21 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 74                                                                                                            
                                                                                                                                
     "An  Act creating  the  University  of Alaska  building                                                                    
     fund for  the payment  by the  University of  Alaska of                                                                    
     the costs  of use, management,  operation, maintenance,                                                                    
     and   depreciation   of   space   in   buildings;   and                                                                    
     authorizing the  Board of Regents of  the University of                                                                    
     Alaska to designate buildings for  which the fund is to                                                                    
     be used."                                                                                                                  
                                                                                                                                
3:26:40 PM                                                                                                                    
                                                                                                                                
HEATHER SHATTUCK,  STAFF, SENATOR  PETE KELLY,  related that                                                                    
the bill would create a  University Building Fund (UBF) as a                                                                    
special account in  the General Fund. She  shared that there                                                                    
was  currently $1  billion in  backlog  maintenance for  the                                                                    
university's  7  million  square  feet  of  facilities.  She                                                                    
stated  that  the  university   was  shifting  to  long-term                                                                    
strategic  planning   to  adequately  address   the  ongoing                                                                    
maintenance issue.  She stressed  that the  fund would  be a                                                                    
tool  that the  university could  use to  do their  share in                                                                    
assuring that facilities were taken  care of properly, while                                                                    
bringing deferred  maintenance costs  down to  a responsible                                                                    
and  sustainable  level.  She relayed  that  the  university                                                                    
could  begin  charging  departments for  rent,  which  would                                                                    
encourage   improved  space   utilization  and   operational                                                                    
efficiency. She  explained that  before the  Public Building                                                                    
Fund,  which the  UBF was  based on,  state departments  had                                                                    
more space  than was needed.  The fund, along  with charging                                                                    
rent,  had forced  department's  reconsider  how much  space                                                                    
they  actually  needed. She  said  that  the intent  of  the                                                                    
legislation  was to  help the  university take  advantage of                                                                    
the same  process to ensure  that it was implemented  in the                                                                    
most effective  way possible.  She explained  that initially                                                                    
the university would  put buildings that were  new, or under                                                                    
15   years-old,   into   the   fund;   as   buildings   were                                                                    
rehabilitated they  would be added  to the fund in  order to                                                                    
prevent them from falling into disrepair.                                                                                       
                                                                                                                                
3:28:58 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly   thought  the  bill  would   alleviate  the                                                                    
university's deferred maintenance  problem. He believed that                                                                    
the  legislation would  highlight  that  space costs  money,                                                                    
which would  prompt managers to  give up space that  was not                                                                    
completely  necessary.  He  felt  that  significant  savings                                                                    
would  result  from   an  aggressive  space  reconfiguration                                                                    
program.                                                                                                                        
                                                                                                                                
3:30:24 PM                                                                                                                    
                                                                                                                                
PATRICK GAMBLE,  PRESIDENT, UNIVERSITY OF  ALASKA, testified                                                                    
in support of  SB 74. He understood that  the university had                                                                    
some catching up to do  after the previous decade of funding                                                                    
predominately  for the  purpose  of growth.  He shared  that                                                                    
growth began  to level off  in 2011, and he  understood that                                                                    
the  university  needed  to   take  responsibility  for  the                                                                    
maintenance  of its  infrastructure.  He  offered that  more                                                                    
funding  alone  would not  benefit  the  university at  this                                                                    
time.  He described  the legislation  as a  tool that  would                                                                    
give  the  university  the  ability  to  take  steps  toward                                                                    
further autonomy. He  believed that the UBF  would address a                                                                    
large  account in  the university  budget,  which was  where                                                                    
efficiencies and savings  would be found. He  noted that the                                                                    
university  was  the  largest real  estate  manager  in  the                                                                    
state.  He   said  that  the   facilities  managed   by  the                                                                    
university  were being  examined  on a  building-by-building                                                                    
basis  to   determine  whether  they  would   remain  or  be                                                                    
demolished,  which would  reveal information  concerning the                                                                    
entire building  array that had previously  been unknown. He                                                                    
reiterated  that the  legislation would  provide a  tool for                                                                    
the  university that  had already  proved  to be  successful                                                                    
when used by universities in  the Lower 48. He believed that                                                                    
the  legislation would  inspire  discipline in  the area  of                                                                    
space management.                                                                                                               
                                                                                                                                
KIT   DUKE,  ASSOCIATE   VICE   PRESIDENT  FOR   FACILITIES,                                                                    
UNIVERSITY OF  ALASKA, believed  that the  legislation would                                                                    
instill discipline  in the university that  would ensure the                                                                    
future  care of  all of  its facilities.  She expressed  the                                                                    
desire  to provide  tools that  could  be used  in times  of                                                                    
lesser  revenue to  maintain buildings.  She noted  that new                                                                    
construction  was sometimes  necessary,  but maintenance  of                                                                    
older buildings was equally important.  She thought that the                                                                    
bill  would  generate a  cultural  change  in the  way  that                                                                    
academic  administrations  valued  physical  space  and  the                                                                    
costs  associated with  maintaining the  space beyond  first                                                                    
costs.                                                                                                                          
                                                                                                                                
3:40:00 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly wondered how the  legislation was useful when                                                                    
no funds  would be  distributed for  2013. He  asked whether                                                                    
the SBF was capitalized at when it was created.                                                                                 
                                                                                                                                
Ms.   Duke   replied  that   she   did   not  remember   the                                                                    
capitalization amount.                                                                                                          
                                                                                                                                
Co-Chair Kelly  asked if the  money that the  university was                                                                    
currently  spending on  building  maintenance and  operation                                                                    
would shift into the UBF.                                                                                                       
                                                                                                                                
Ms. Duke relied that that was the intent.                                                                                       
                                                                                                                                
3:42:53 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  understood that  in  the  future the  money                                                                    
could be capitalized upon through  donations or general fund                                                                    
dollars.                                                                                                                        
                                                                                                                                
Ms.  Duke related  that  the funding  could  come from  many                                                                    
sources  and that  the legislation  allowed  for almost  any                                                                    
type of deposit  to be made into the fund.  She related that                                                                    
the  money  would  still  need to  be  appropriated  by  the                                                                    
legislature from  the UBF,  which was  why she  believed the                                                                    
fund would  prove to be a  tool for the legislature  as well                                                                    
as the  university in  the long term.  She stressed  that it                                                                    
would  take some  time  to implement  the  plan, which  made                                                                    
immediate funding less of a concern.                                                                                            
3:44:47 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  wondered  why   the  university  could  not                                                                    
currently set  up a rent  charging system for  the different                                                                    
departments.                                                                                                                    
                                                                                                                                
Ms. Duke replied  that the issue was not  that rent charging                                                                    
could not be  set up, rather, whether a system  could be set                                                                    
up that  would survive long  enough to  do any real  good in                                                                    
the long term.                                                                                                                  
                                                                                                                                
3:45:16 PM                                                                                                                    
                                                                                                                                
Senator  Bishop  hoped  that the  funds  authorized  by  the                                                                    
legislature would remain in-state.                                                                                              
                                                                                                                                
President Gamble felt  that there was nothing  in the intent                                                                    
language  of the  bill  that would  prevent  the funds  from                                                                    
remaining in-state.                                                                                                             
                                                                                                                                
3:48:10 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly   asked  if  the  university   had  been  in                                                                    
discussion with  the Office of  Management and  Budget (OMB)                                                                    
concerning the shift of funds planned for 2014.                                                                                 
                                                                                                                                
President Gamble replied no.                                                                                                    
                                                                                                                                
Co-Chair  Kelly thought  that the  discussion should  happen                                                                    
soon  and   that  the   changes  should   be  made   at  the                                                                    
administrative  level as  the budget  was submitted,  rather                                                                    
than have the legislature make the changes after the fact.                                                                      
                                                                                                                                
3:48:36 PM                                                                                                                    
                                                                                                                                
President   Gamble   commented   that   extensive   internal                                                                    
discussions  had   occurred  at  the  university   with  the                                                                    
understanding  that whatever  the  legislature budgeted  for                                                                    
2013 would inform the expected numbers for 2014.                                                                                
                                                                                                                                
3:49:09 PM                                                                                                                    
                                                                                                                                
Ms.  Duke reiterated  that the  plan  laid out  in the  bill                                                                    
would provide  information concerning space  utilization and                                                                    
program cost,  which would  cause the  university to  take a                                                                    
more business approach to investment decisions.                                                                                 
                                                                                                                                
3:50:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer wondered  if federal  grant monies  could be                                                                    
used in the UBF.                                                                                                                
                                                                                                                                
Ms. Duke thought  that Co-Chair Meyer could  be referring to                                                                    
grants  allotted  for  deferred  maintenance  projects.  She                                                                    
imagined that there was a  possibility that the grants could                                                                    
be put into the UBF.                                                                                                            
                                                                                                                                
3:51:01 PM                                                                                                                    
                                                                                                                                
President  Gamble  offered that  there  were  many kinds  of                                                                    
grants,  some of  which had  very specific  restrictions. He                                                                    
added  that  the university  generally  liked  to use  grant                                                                    
dollars for their intended purpose.                                                                                             
                                                                                                                                
3:51:40 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  asked why language indicating  that a                                                                    
dedicated fund was not being created was not in the bill.                                                                       
                                                                                                                                
3:52:28 PM                                                                                                                    
                                                                                                                                
President Gamble referred the question the DOL.                                                                                 
                                                                                                                                
3:52:35 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough  turned to  Page  3,  line 13,  which                                                                    
contained  language specifying  that any  money in  the fund                                                                    
would stay  in the fund unless  it was allocated out  by the                                                                    
legislature.                                                                                                                    
                                                                                                                                
3:53:27 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough queried  how  much bonding  authority                                                                    
the university currently had.                                                                                                   
                                                                                                                                
President Gamble replied  about 2 percent. He  said that the                                                                    
goal  was  to stay  below  5  percent encumbered  with  debt                                                                    
service.  He asserted  that the  university was  comfortable                                                                    
with its ability to bond further.                                                                                               
                                                                                                                                
3:54:16 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough wondered  whether the university could                                                                    
qualify   for  the   Alaska   Housing  Finance   Corporation                                                                    
Revolving  Loan  Fund  to offset  the  deferred  maintenance                                                                    
costs  of   the  university's  engineering   buildings.  She                                                                    
understood that  $250 million  had been  capitalized through                                                                    
the  fund for  improvements  in weatherization,  and at  low                                                                    
interest  rates.  She  stressed  the  need  to  address  the                                                                    
deferred maintenance issue as soon as possible.                                                                                 
                                                                                                                                
Ms. Duke  replied that the  university was  taking advantage                                                                    
of some  of the  energy monies  available through  AHFC. She                                                                    
said that the university was  looking into accessing more of                                                                    
those funds for deferred maintenance work.                                                                                      
                                                                                                                                
3:56:24 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough  reiterated her  question  concerning                                                                    
the university's bonding authority limit.                                                                                       
                                                                                                                                
President  Gamble  replied that  he  was  not aware  of  the                                                                    
bonding authority limit.                                                                                                        
                                                                                                                                
3:57:23 PM                                                                                                                    
                                                                                                                                
Kit Duke  interjected that  additional information  could be                                                                    
provided to the committee at a later date.                                                                                      
                                                                                                                                
3:57:30 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  believed that the bond  limit was set                                                                    
in stature.                                                                                                                     
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
SB  74  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
3:58:59 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:21:19 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 22(L&C)                                                                                                 
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Marine Pilots; and providing for an effective date."                                                                       
                                                                                                                                
4:22:01 PM                                                                                                                    
                                                                                                                                
ANNA  LATHAM, STAFF,  REPRESENTATIVE  KURT OLSEN,  testified                                                                    
that the  legislation would extend  the termination  date of                                                                    
the  Board of  Marine Pilots  to June  30, 2014.  She shared                                                                    
that the Division of Legislative  Audit (LB&A) had concluded                                                                    
that the  board had been  running efficiently and  should be                                                                    
extended.    She  explained that  regulating  and  licensing                                                                    
qualified   marine  pilots   benefited  public   safety  and                                                                    
protected the marine environment.  She highlighted that LB&A                                                                    
had  recommended that  the marine  pilot coordinator  should                                                                    
improve  procedures over  the administration  of operational                                                                    
activities;    public   meeting    notification,   licensing                                                                    
documentation and oversight of  the pilot association's drug                                                                    
and  alcohol programs  were noted.  She said  that when  the                                                                    
audit was  conducted the Marine  Pilot Coordinator  had been                                                                    
in the position  for less than one-year, and  was unaware of                                                                    
the  operational  deficiencies  noted   by  the  audit.  She                                                                    
assured the  committee that the  coordinator was  working on                                                                    
developing  the  appropriate   documentation  to  ensure  an                                                                    
adequate oversight process. She  stated that the most recent                                                                    
version   of    the   legislation   was   the    result   of                                                                    
recommendations from LB&A.                                                                                                      
                                                                                                                                
4:24:33 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer observed  the fiscal  note  attached to  the                                                                    
bill.                                                                                                                           
                                                                                                                                
4:25:03 PM                                                                                                                    
                                                                                                                                
KRIS CURTIS,  DIVISION OF LEGISLATIVE AUDIT,  testified that                                                                    
the division  had recommended a  six-year extension  and the                                                                    
one recommendation of improving the operational activities.                                                                     
                                                                                                                                
4:25:18 PM                                                                                                                    
                                                                                                                                
Co-Chair   Meyer   understood   that  LB&A   supported   the                                                                    
extension.                                                                                                                      
                                                                                                                                
4:25:38 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough queried the  power structure of the of                                                                    
the board.                                                                                                                      
                                                                                                                                
Ms.  Curtis  replied  that  the board  had  a  Marine  Pilot                                                                    
Coordinator  that served  a similar  purpose to  that of  an                                                                    
Executive Director.                                                                                                             
                                                                                                                                
4:26:19 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough believed  that the  qualifications of                                                                    
the  people managing  various listened  boards needed  to be                                                                    
examined.   She pointed  out to  the committee  the personal                                                                    
services cost for the Marine  Pilot Coordinator was $110,000                                                                    
annually. She  wondered what the  board was doing  to ensure                                                                    
that  the coordinator  was compliant  in  all the  necessary                                                                    
qualifications for the position.                                                                                                
                                                                                                                                
4:26:59 PM                                                                                                                    
                                                                                                                                
Ms. Curtis explained that the  personal services line on the                                                                    
fiscal note  reflected the salary  of the position,  as well                                                                    
as health insurance and retirement contributions.                                                                               
                                                                                                                                
4:27:27 PM                                                                                                                    
                                                                                                                                
Senator Olson  stated that  the board  was important  in his                                                                    
district. He testified in support of the legislation.                                                                           
                                                                                                                                
4:27:59 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
4:29:00 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly MOVED  to REPORT HB 22 out  of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
4:29:31 PM                                                                                                                    
                                                                                                                                
CSHB  22 (L&C)  was REPORTED  out  of committee  with a  "do                                                                    
pass" recommendation and with  a previously published fiscal                                                                    
impact note: FN2(CED).                                                                                                          
AT EASE                                                                                                                         
                                                                                                                                
4:31:04 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 26                                                                                                               
                                                                                                                                
"An  Act extending  the  termination date  of  the Board  of                                                                    
Public Accountancy; and providing for an effective date."                                                                       
                                                                                                                                
4:31:21 PM                                                                                                                    
                                                                                                                                
CECILE   ELLIOTT,   STAFF,   REPRESENTATIVE   MIKE   HAWKER,                                                                    
testified that  HB 26 would  extend the termination  date of                                                                    
the  Board  of  Public  Accountancy to  June  30,  2021,  as                                                                    
recommended  by  LB&A.  She   relayed  that  the  audit  had                                                                    
concluded that  the board was serving  the public's interest                                                                    
by  effectively licensing  and  regulating certified  public                                                                    
accountants.                                                                                                                    
                                                                                                                                
4:32:31 PM                                                                                                                    
                                                                                                                                
KRIS CURTIS, DIVISION OF  LEGISLATIVE AUDIT, reiterated that                                                                    
LB&A had concluded  that the board was  serving the public's                                                                    
interest  in  licensing   and  regulating  certified  public                                                                    
accountants and public accounting  firms. She added that the                                                                    
board had successfully  monitored and regulated individuals,                                                                    
and  had  successfully   developed  and  adopted  regulatory                                                                    
changes  to  improve  the profession.  She  recommended  the                                                                    
maximum 8-year extension. She  concluded that the continuing                                                                    
recommendation was  associated with efficiencies  within the                                                                    
division   of   Corporations,  Business   and   Professional                                                                    
Licensing case management system.                                                                                               
                                                                                                                                
4:34:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer noted the fiscal note attached to the bill.                                                                      
                                                                                                                                
4:34:49 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly MOVED  to REPORT HB 26 out  of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
4:35:29 PM                                                                                                                    
                                                                                                                                
HB  26  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and  with  a fiscal  impact  note  from  the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
4:36:13 PM                                                                                                                    
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:36 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects