Legislature(2015 - 2016)SENATE FINANCE 532

03/04/2015 09:00 AM FINANCE

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Audio Topic
09:12:06 AM Start
09:12:15 AM SB27
09:14:15 AM Overview: Fy 16 Department of Administration
09:57:25 AM Overview: Fy 16 Department of Revenue
10:25:56 AM Overview: Fy 16 Alaska Court System
10:45:33 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 27 Presentation: Overview FY17 Operating Budget TELECONFERENCED
Departments: Environmental Conservation and
Departments:
Administration
Revenue
Alaska Court System
Bills Previously Heard/Scheduled
                 SENATE FINANCE COMMITTEE                                                                                       
                       March 4, 2015                                                                                            
                         9:12 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:12:06 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Kelly  called the Senate Finance  Committee meeting                                                                    
to order at 9:12 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Sheldon Fisher, Commissioner,  Department of Administration;                                                                    
John   Boucher,    Deputy   Commissioner,    Department   of                                                                    
Administration;  Randall Hoffbeck,  Commissioner, Department                                                                    
of   Revenue;   Dan  DeBartolo,   Director,   Administrative                                                                    
Services  Division, Department  of  Revenue; Jerry  Burnett,                                                                    
Deputy  Commissioner,   Treasury  Division,   Department  of                                                                    
Revenue;  Doug  Wooliver,  Deputy  Administrative  Director,                                                                    
Alaska Court System.                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 27:    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          SB 27 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
FY 16 BUDGET OVERVIEWS:                                                                                                         
                                                                                                                                
          DEPARTMENT OF ADMINISTRATION                                                                                          
          DEPARTMENT OF REVENUE                                                                                                 
          ALASKA COURT SYSTEM                                                                                                   
                                                                                                                                
9:12:15 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 27                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain    programs,    capitalizing   funds,    making                                                                    
     reappropriations, and making  appropriations under art.                                                                    
     IX, sec.  17(c), Constitution of  the State  of Alaska,                                                                    
     from  the  constitutional   budget  reserve  fund;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:13:18 AM                                                                                                                    
                                                                                                                                
^OVERVIEW: FY 16 DEPARTMENT OF ADMINISTRATION                                                                                 
                                                                                                                                
SHELDON FISHER, COMMISSIONER,  DEPARTMENT OF ADMINISTRATION,                                                                    
stated  that   he  would   address  the   previously  issued                                                                    
questions  from   Senator  Dunleavy   as  he   reviewed  the                                                                    
presentation.  He  turned  to  Slide  2,  "DOA  Mission  and                                                                    
Organization."  The  slide  provided   the  mission  of  the                                                                    
department: to  provide consistent and efficient  support to                                                                    
state agencies  so that they  may better serve  Alaskans. He                                                                    
stated  that  a portion  of  the  departments' efforts  were                                                                    
spent serving the  public, and a material  portion was spent                                                                    
serving other state agencies.                                                                                                   
                                                                                                                                
9:14:15 AM                                                                                                                    
                                                                                                                                
Mr. Fisher moved  to Slide 3, "DOA  Services Across Alaska."                                                                    
He relayed that the department  had a broad geographic reach                                                                    
across the state, driven primarily  by the Division of Motor                                                                    
Vehicles,  and  somewhat  by  the  Public  Defenders  Agency                                                                    
(PDA).                                                                                                                          
                                                                                                                                
9:14:30 AM                                                                                                                    
                                                                                                                                
Mr. Fisher moved  to Slide 4, "DOA Services  to the Public."                                                                    
He  noted   that  the   undesignated  general   funds  (UGF)                                                                    
associated with  each division  was shown  on the  slide. He                                                                    
said  that  as   part  of  the  2015   Management  Plan  the                                                                    
department  had  approximately  $88   million  in  UGF,  $50                                                                    
million of which  was associated with PDA and  the Office of                                                                    
Public Advocacy (OPA).  He stated that those  agencies had a                                                                    
constitutional mandate to provide  certain services and were                                                                    
already  stretched for  resources.  He  furthered that  both                                                                    
agencies had  seen an increased  workload over the  past few                                                                    
years, which they  had been managing with a  flat budget; in                                                                    
the current  budget exercise, substantial cuts  had not been                                                                    
made in  those agencies. He  relayed that not  cutting those                                                                    
agency budgets had resulted  in disproportionate cuts spread                                                                    
across other  agencies. He  referred to  the question  as to                                                                    
whether the department should make  cuts to PDA and OPA that                                                                    
corresponded with cuts that had  been made to the Department                                                                    
of Law (DOL); internal  discussions determined that it would                                                                    
be  inappropriate to  aggressively  cut  the departments  at                                                                    
this  time.  He  reiterated  that   the  agencies  had  been                                                                    
administering  their growing  caseload with  a flat  budget,                                                                    
and  added that  as a  result  the backlog  was growing.  He                                                                    
warned that  further cutting  their budgets  in FY  16 would                                                                    
lead to a  greater cost to the state in  term of ineffective                                                                    
assistance of  counsel, and  other challenges  pertaining to                                                                    
court trials. He believed that  funding for the two agencies                                                                    
needed to stay firmly intact.                                                                                                   
                                                                                                                                
9:17:26 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  asked whether  Alaskans could  request a                                                                    
public defender, or was it determined by income.                                                                                
                                                                                                                                
Mr.  Fisher replied  that the  court made  the determination                                                                    
based on income level.                                                                                                          
                                                                                                                                
9:18:20 AM                                                                                                                    
                                                                                                                                
Mr. Fisher  noted that  the Division  of Motor  Vehicles was                                                                    
funded entirely  by program receipts. He  continued that the                                                                    
Division  of  Retirement  and Benefits  was  funded  with  a                                                                    
modest amount of UGF.                                                                                                           
                                                                                                                                
9:18:45 AM                                                                                                                    
                                                                                                                                
Mr. Fisher moved  to Slide 5, "DOA Services  to the Public."                                                                    
He  categorized  the  four agencies  on  the  slide:  Alaska                                                                    
Public  Broadcasting  Commission  (APBC)  &  AIRRES  Grants;                                                                    
Alaska Oil and Gas  Conservation Commission (AOGCC); Violent                                                                    
Crimes  Compensation  Board  (VCCB); Alaska  Public  Offices                                                                    
Commission  (APOC), as  quasi-independent agencies.  He said                                                                    
that  APBC  was largely  funded  by  UGF,  but had  no  paid                                                                    
employees. He  stated that  AOGCC had no  UGF in  its budget                                                                    
but was  funded by  receipts from  the industry.  He related                                                                    
that VCCB  received a portion  of federal funding,  and some                                                                    
funding from  the Permanent Fund Dividend  (PFD) Felon Fund,                                                                    
but no UGF. He stated that APOC was mostly funded with UGF.                                                                     
                                                                                                                                
9:19:47 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher continued  to Slide  6, "DOA  Services to  State                                                                    
Agencies." He  said that  in the case  of each  agency, some                                                                    
UGF were  used to  subsidize and reduce  the fee  that would                                                                    
otherwise be  charged to  other agencies.  He said  that the                                                                    
Division  of  General  Services (DGS)  was  responsible  for                                                                    
administering  leases, managing  state  owned buildings  and                                                                    
the  centralized  portion  of  departmental  purchasing.  He                                                                    
continued with  Enterprise Technology Services  (ETS), which                                                                    
administered  the  centralized information  technology  (IT)                                                                    
functions  for the  state.  He noted  that  the Division  of                                                                    
Personnel   and   Labor   Relations  (DOPLR)   managed   the                                                                    
centralized  human  resources  (HR) functions,  as  well  as                                                                    
labor  relations and  contract bargaining.  He spoke  to the                                                                    
Department  of Finance  (DOF), which  managed the  statewide                                                                    
payroll system, financial audits,  and various other systems                                                                    
of financial support.                                                                                                           
                                                                                                                                
9:20:50 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher  presented  Slide  7,  "DOA  Services  to  State                                                                    
Agencies."  He noted  that  the  Division of  Administrative                                                                    
Services (DAS) was consistent  across agencies. The Division                                                                    
of  Risk  Management  (DRM)  administered  the  department's                                                                    
insurance  policies and  programs  and  was funded  entirely                                                                    
from interagency  transfers. He relayed that  the budget for                                                                    
the  Office of  Administrative Hearings  was largely  inner-                                                                    
agency transfers, but included some GF.                                                                                         
                                                                                                                                
9:21:31 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher explained  Slide 8,  "DOA  Budget by  Division,"                                                                    
which  was a  diagram  that highlighted  the  DOA budget  by                                                                    
division; the GF only, FY  15 Management Plan was charted in                                                                    
the thousands. He  pointed out to the committee  that of the                                                                    
$88  million budget,  $49 million  had been  associated with                                                                    
PDA and OPA.                                                                                                                    
                                                                                                                                
9:22:00 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher presented  Slide 9,  "DOA  Budget by  Division,"                                                                    
which organized by  bar graph the percent of  UGF changes in                                                                    
DOA  divisions between  the UGF  FY2015 Management  Plan and                                                                    
the FY2016  Governor Amended UGF  totals. He noted  that the                                                                    
budget for OPA and PDA had  been held flat from year to year                                                                    
and costs had  been spread across other  divisions. He spoke                                                                    
of the request for information  (RFI) that had been sent out                                                                    
by ETS  with respect  to maintenance  and management  of the                                                                    
State  of Alaska  Telecommunications System  (SATS) and  the                                                                    
Alaska Land  Mobile Radio (ALMR) programs  and the accepting                                                                    
of proposals.  He stated  that financial  bids had  not been                                                                    
sought  for   the  RFI.  He   thought  that   combining  the                                                                    
management of the two systems would improve efficiencies.                                                                       
                                                                                                                                
9:23:16 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher continued  to Slide  10, "DOA  Budget Change  by                                                                    
Division," which  showed the DOA  budget change  by division                                                                    
and ranked by percentage from  highest to lowest. He pointed                                                                    
out to the committee that  GF for ETS, general services, and                                                                    
personnel  labor  relations  had  been reduced  by  over  20                                                                    
percent.                                                                                                                        
                                                                                                                                
9:23:57 AM                                                                                                                    
                                                                                                                                
Mr. Fisher explained  Slide 11, which contained  a pie chart                                                                    
depicting the same percentages illustrated on Slide 10.                                                                         
                                                                                                                                
9:24:14 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher  showed slide  12,  "DOA  All Funding  Sources,"                                                                    
which  contained a  bar graph  focused on  fund sources.  He                                                                    
spoke to  the question of forecasting  reductions associated                                                                    
with  changes in  other departments.  He  reiterated that  a                                                                    
substantial percentage  of DOA services related  to services                                                                    
that were provided to other state agencies.                                                                                     
                                                                                                                                
9:25:15 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche referred  to  Slide 10,  and asked  how                                                                    
Risk Management was funded.                                                                                                     
                                                                                                                                
Mr.  Fisher   explained  that  the  departments   that  took                                                                    
advantage  of the  insurance Risk  Management provided  paid                                                                    
for the service through an interagency transfer.                                                                                
                                                                                                                                
Vice-Chair Micciche suggested that  Risk Management was in a                                                                    
category  by  itself and  was  not  charged through  federal                                                                    
receipts.                                                                                                                       
                                                                                                                                
Mr.  Fisher stated  that he  was  not aware  of any  federal                                                                    
receipts that applied to Risk  Management. He continued that                                                                    
the department actively worked  to reduce insurance premiums                                                                    
and cuts costs wherever possible.                                                                                               
                                                                                                                                
9:26:27 AM                                                                                                                    
                                                                                                                                
Mr. Fisher  referred back to  Slide 12, and the  question of                                                                    
how  the  DOA  budget  interacted  with  other  departmental                                                                    
budgets.   He  explained that  as other  departments shrank,                                                                    
their need  for space reduced  as well. He shared  that when                                                                    
this occurred,  the department  would attempt  to reorganize                                                                    
and move  other groups into  the space in order  to maximize                                                                    
the  benefit, while  recognizing that  sometimes the  leases                                                                    
that the department entered into  might be multi-year leases                                                                    
that limited flexibility within the fiscal year.                                                                                
                                                                                                                                
9:27:38 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher   moved  to  Slide  13,   "Position  Changes  By                                                                    
Division,"   which    showed   the    headcount   reductions                                                                    
contemplated  by  the  amended   budget.  He  spoke  to  the                                                                    
question of how to think  about a vacancy factor. He related                                                                    
that  vacancy  factors  were  typical;  if  there  were  100                                                                    
position control  numbers (PCN), and  a vacancy factor  of 5                                                                    
percent were applied, the budget  would only need to reflect                                                                    
funding  for  95  PCNs. He  said  accompanying  the  vacancy                                                                    
factor was  the need to  recognize that there would  be some                                                                    
attrition throughout  the year. The positions  would need to                                                                    
be filled slowly in order to achieve the vacancy factor.                                                                        
                                                                                                                                
9:28:39 AM                                                                                                                    
                                                                                                                                
Senator Dunleavy  asked if the  department had  budgeted for                                                                    
PCNs at 95 or 100 percent.                                                                                                      
                                                                                                                                
Mr.  Fisher shared  that OMB  had  mandated certain  vacancy                                                                    
factors doe  every department, which  varied by the  size of                                                                    
the organization. He stressed that  cutting a vacant PCN had                                                                    
an  effect  due to  the  way  that  the vacancy  factor  was                                                                    
applied.                                                                                                                        
                                                                                                                                
9:29:40 AM                                                                                                                    
Senator Dunleavy restated the question.                                                                                         
                                                                                                                                
Mr. Fisher replied that in his  example he had budget for 95                                                                    
percent.  He  said that  the  actual  vacancy factor  varied                                                                    
depending on the size of the organization.                                                                                      
                                                                                                                                
9:30:07 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  referred to the negative  PCN changes on                                                                    
Slide 13,  she asked  whether the number  represented people                                                                    
or positions.                                                                                                                   
                                                                                                                                
Mr. Fisher replied  that it varied throughout  the chart. He                                                                    
said  that if  there was  not a  note written  into the  far                                                                    
right-hand column  for the division,  then the  position was                                                                    
vacant. He  observed that the  majority of the  15 positions                                                                    
reduced positions had  been vacant. He felt  that the impact                                                                    
was real when the vacancy factor was applied.                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  said  that  the  state  required  other                                                                    
communities  to perform  a termination  study to  understand                                                                    
the  impact of  reducing  either positions,  or people.  She                                                                    
asked whether  reducing positions  would affect  the state's                                                                    
ability to meet its  obligations under the retirement system                                                                    
formula  and   whether  the  administration   would  support                                                                    
elimination  of the  termination  studies.  She queried  the                                                                    
state's  responsibility, as  compared to  the responsibility                                                                    
of   municipalities,  of   the  debt   within  the   state's                                                                    
retirement system,  and whether the reductions  would impact                                                                    
future   calculations  on   termination  studies   of  local                                                                    
communities.                                                                                                                    
                                                                                                                                
Mr.  Fisher  responded  that   when  agencies  or  political                                                                    
subdivisions  eliminated  an  entire  class,  a  termination                                                                    
study  was required.  He said  that the  cuts that  had been                                                                    
made to date would not  implicate the need for a termination                                                                    
study by  the state.  He thought that  it was  unlikely that                                                                    
there would be  a requirement that the  department perform a                                                                    
termination  study. He  furthered  that  the elimination  of                                                                    
termination studies was under  consideration and an approach                                                                    
was  being sought  that  would eliminate  the  need for  the                                                                    
studies  while  protecting  the system.  He  felt  that  the                                                                    
administration recognized  that termination studies  had, at                                                                    
times, gotten in  the way of good business  decisions at the                                                                    
municipal  level,  and  that   a  balance  between  rational                                                                    
decision making and the sustainability  of the system needed                                                                    
to be struck.                                                                                                                   
9:34:17 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon reiterated  her  question pertaining  to                                                                    
the responsibility  of local municipalities for  the overall                                                                    
debt of the retirement system.                                                                                                  
                                                                                                                                
JOHN   BOUCHER,    DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                    
ADMINISTRATION,  explained that  the  breakdown was  roughly                                                                    
60/40. He said  that it varied from year to  year because it                                                                    
was allocated  on the  payroll at the  time; as  the payroll                                                                    
shifted the number could change.                                                                                                
                                                                                                                                
Co-Chair  MacKinnon  wondered   whether  payment  was  being                                                                    
shifted  onto smaller  communities.  She  asked for  further                                                                    
explanation  regarding   the  elimination  of   job  classes                                                                    
triggering a termination study.                                                                                                 
                                                                                                                                
Mr. Fisher understood that an  entire job classification had                                                                    
to be eliminated before a termination study was required.                                                                       
                                                                                                                                
Mr.   Boucher  added   that  it   was  unusual   to  require                                                                    
termination studies for job classes with minimal positions.                                                                     
                                                                                                                                
9:36:52 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher  moved  to  Slide  14,  which  showed  that  the                                                                    
department had no  FY 16 capital budget  requests. He shared                                                                    
that the  department had $3 million  in deferred maintenance                                                                    
in the Public Building Fund.                                                                                                    
                                                                                                                                
9:37:28 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  asked for an  update on  the Integration                                                                    
Resource Information  System (IRIS) project, and  whether it                                                                    
was on schedule.                                                                                                                
                                                                                                                                
Mr. Fisher stated  that the current projection  was that the                                                                    
project would  go live  in July  of 2015.  He said  that the                                                                    
project was on target.                                                                                                          
                                                                                                                                
Co-Chair  MacKinnon  asked  whether  simulated  models  were                                                                    
being run in expectation of Medicaid expansion.                                                                                 
                                                                                                                                
Mr.  Fisher  explained that  he  was  very cognizant  failed                                                                    
implementations that  had happened  in the past.  He assured                                                                    
the  committee  that  extensive  testing  and  modeling  was                                                                    
underway. He  expressed optimism  that the project  would be                                                                    
smoothly executed.                                                                                                              
                                                                                                                                
9:39:28 AM                                                                                                                    
                                                                                                                                
Mr.  Fisher  explained  slide   15,  "Core  Initiatives  and                                                                    
Challenges":                                                                                                                    
                                                                                                                                
     Personnel Costs Savings                                                                                                
     •Wage Negotiations - remain competitive and balanced                                                                     
     •Improve employee productivity                                                                                           
                                                                                                                              
Mr.  Fisher  asserted  that  having  a  motivated,  engaged,                                                                    
effective workforce was a critical asset to the state.                                                                          
                                                                                                                              
Co-Chair Kelly  said that he  had heard complaints  that the                                                                    
business   community  had   experienced  trouble   retaining                                                                    
employees because  everyone wanted  a state job.  He thought                                                                    
that perhaps  the state was  too competitive and  was paying                                                                    
employees more than the market preferred.                                                                                       
                                                                                                                                
Mr.  Fisher  intuited  that  the  state  started  by  paying                                                                    
employees  below  the  market  average, but  had  a  steeper                                                                    
growth in  the outer years,  which resulted in  above market                                                                    
wages  in some  cases.  He though  that  the numbers  varied                                                                    
depending on  the class of  employee; highly  skilled people                                                                    
were paid below market. He felt  that it was important to be                                                                    
fair to the state and to employees.                                                                                             
                                                                                                                                
Co-Chair  Kelly   shared  that   when  he  worked   for  the                                                                    
university  he saw  employees leaving  not  for the  private                                                                    
sector, but  for other governmental  agencies. He  felt that                                                                    
the  private sector  was having  difficulty keeping  up with                                                                    
the wages that the state could offer employees.                                                                                 
                                                                                                                                
9:43:21 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche  asked if  there  was  a plan  for  re-                                                                    
evaluating the continuous COLA increase.                                                                                        
                                                                                                                                
Commissioner  Fisher  stated  that  DOA  was  continuing  to                                                                    
examine all of  the pay structures in order  to assess where                                                                    
the state was compared to the market.                                                                                           
                                                                                                                                
Vice-Chair Micciche  noted that there  did not seem to  be a                                                                    
salary cap for state employees at the higher pay levels.                                                                        
Commissioner  Fisher   thought  that  the  issue   could  be                                                                    
examined.                                                                                                                       
                                                                                                                                
Vice-Chair Micciche  asked about  the results of  a recently                                                                    
completed salary study.                                                                                                         
                                                                                                                                
Commissioner  Fisher  relayed  that the  last  salary  study                                                                    
occurred in 2009.  He said he would share  the findings with                                                                    
the committee.                                                                                                                  
                                                                                                                                
9:45:39 AM                                                                                                                    
                                                                                                                                
Commissioner Fisher returned to Slide 15:                                                                                       
                                                                                                                                
     Reduction of Unfunded Liability                                                                                        
     •Health Care Spend - continue to bend the cost curve                                                                     
                                                                                                                              
                                                                                                                              
     Procurement Savings - Lower costs for what we already                                                                  
     buy                                                                                                                      
     •IRIS - updated core statewide administrative systems                                                                    
                                                                                                                              
     Information Technology (IT) - Improved services and                                                                    
     cost                                                                                                                     
                                                                                                                              
     Improve Facility Management                                                                                            
     •Utilization of Space - better use our space                                                                             
                                                                                                                                
Commissioner Fisher spoke to the  Unfair Labor Practice that                                                                    
had  been  filed  against  the state  with  respect  to  the                                                                    
implementation of Universal Space  Standards. He said that a                                                                    
number  of space  standards had  been implemented,  but work                                                                    
had paused  because the  administration needed  to determine                                                                    
what the government  would look like moving  forward and did                                                                    
not want  to spend  money on  spaces that  would have  to be                                                                    
rebuilt in the future.  He  said that the pause had provided                                                                    
the opportunity to review the  situation with the bargaining                                                                    
unit that had filed the  claim, which questioned whether the                                                                    
state   was   even   achieving   cost   savings,   and   the                                                                    
administration  had agreed  to examine  the dozen  completed                                                                    
projects in  order to determine  any achieved  cost savings.                                                                    
He  added  that  he  had   received  grievances  from  other                                                                    
commissioners and was attempting  to address those concerns.                                                                    
He asserted  that in a  world where  the state had  a bottom                                                                    
line, saving on space was necessary.                                                                                            
                                                                                                                                
9:48:26 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:49:16 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator  Dunleavy  asked  about consolidation  of  insurance                                                                    
plans  and whether  the administration  had looked  that the                                                                    
cost savings of consolidating teacher health care plans.                                                                        
                                                                                                                                
Commissioner Fisher replied  that the Hay Group  had done an                                                                    
estimate in 2013,  and the results had indicated  a range of                                                                    
potential  savings  of  $22  million   to  $33  million.  He                                                                    
understood  that  the  savings  were  largely  driven  by  a                                                                    
difference between  the employee  contributions made  in the                                                                    
teacher  plans, versus  what the  state  applied. He  stated                                                                    
that  some  school  districts had  managed  effectively  and                                                                    
efficiently, and to move to  a state plan would increase the                                                                    
costs to those districts. He  added that for other districts                                                                    
the   move   could   reduce  costs.   He   said   that   the                                                                    
administration   would  be   supportive  of   any  political                                                                    
subdivision  that  found  it beneficial  to  function  under                                                                    
Alaska Care.                                                                                                                    
                                                                                                                                
9:51:15 AM                                                                                                                    
                                                                                                                                
Senator  Dunleavy asked  what  role  the teacher  bargaining                                                                    
unit played  in collecting  premiums, and were  the premiums                                                                    
remitted to the provider  or maintained within the financial                                                                    
accounts of the bargaining unit.                                                                                                
                                                                                                                                
Commissioner  Fisher understood  that  the bargaining  until                                                                    
collected  the  premiums,  which stayed  within  the  health                                                                    
trust.                                                                                                                          
                                                                                                                                
9:51:41 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche referred  to  Slide 4.  He queried  the                                                                    
$2.3  million  UGF  expense   for  retirement  and  benefits                                                                    
stating  that,  the  UGF cost  for  managing  pension  funds                                                                    
should  be zero;  generally revenue  charged the  retirement                                                                    
system for costs.                                                                                                               
                                                                                                                                
Commissioner  Fisher  explained   that  the  number  related                                                                    
largely to two  closed retirement systems that  had the need                                                                    
for ongoing  support, and was  not related to PERS  and TRS.                                                                    
He added that a modest  amount of those funds was associated                                                                    
with  actuarial studies  that could  be required  to support                                                                    
legislation and  other things that  could not be  charges to                                                                    
the trust.                                                                                                                      
                                                                                                                                
9:52:55 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  asked  how  many  retirees  were  being                                                                    
managed in the closed plans.                                                                                                    
                                                                                                                                
Commissioner Fisher  replied that he  would get back  to the                                                                    
committee on the numbers.                                                                                                       
                                                                                                                                
Co-Chair MacKinnon considered that  if the number were under                                                                    
100, $2 million seemed exorbanent.                                                                                              
                                                                                                                                
Commissioner  Fisher thought  that  the $2  million was  for                                                                    
management and a  portion of the benefits  that the retirees                                                                    
revived.                                                                                                                        
                                                                                                                                
9:53:44 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:54:19 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:54:28 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly noted  that the  department  had received  a                                                                    
list  of  questions  from   Senator  Dunleavy's  office  for                                                                    
subcommittee purposes.  He said that the  responses would be                                                                    
distributed to member's offices.                                                                                                
                                                                                                                                
9:54:50 AM                                                                                                                    
                                                                                                                                
Senator Dunleavy asked when the answers could be expected.                                                                      
Commissioner Fisher thought within the next week.                                                                               
                                                                                                                                
9:55:17 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:57:00 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
^OVERVIEW: FY 16 DEPARTMENT OF REVENUE                                                                                        
                                                                                                                                
9:57:25 AM                                                                                                                    
                                                                                                                                
Co-Chair Kelly requested, for the purpose of time, that the                                                                     
organizational and philosophy slides be skipped                                                                                 
                                                                                                                                
9:58:07 AM                                                                                                                    
                                                                                                                                
RANDALL HOFFBECK, COMMISSIONER, DEPARTMENT OF REVENUE,                                                                          
briefly overviewed Slide 2:                                                                                                     
                                                                                                                                
     Alaska Department of Revenue                                                                                             
     The  Department  of  Revenue  mission  is  to  collect,                                                                    
     distribute and invest funds for public purposes                                                                            
                                                                                                                                
     Programs, Authorities, and Corporations                                                                                  
     Tax Division                                                                                                               
     Treasury Division                                                                                                          
     Permanent Fund Dividend Division                                                                                           
     Child Support Services Division                                                                                            
     Alaska Housing Finance Corporation                                                                                         
     Alaska Permanent Fund Corporation                                                                                          
     Alaska Mental Health Trust Authority                                                                                       
     Alaska Municipal Bond Bank Authority                                                                                       
                                                                                                                                
Commissioner  Hoffbeck  related  that  the  department  also                                                                    
oversaw: unclaimed  property, investments,  cash management,                                                                    
debt    management,   administrative    services,   criminal                                                                    
investigation unit, and the film office.                                                                                        
                                                                                                                                
9:58:31 AM                                                                                                                    
                                                                                                                                
Commissioner Hoffbeck moved to Slide 3, "Major Department                                                                       
Accomplishments in 2014":                                                                                                       
                                                                                                                                
     Collections and Enforcement                                                                                              
                                                                                                                                
                                                                                                                                
     taxes on time                                                                                                              
                                                                                                                                
                                                                                                                                
     Tax  Revenue  Management  System  (TRMS).  This  is  an                                                                    
     integrated system  for all taxpayers to  use for filing                                                                    
     and paying  their taxes online.  It is scheduled  to be                                                                    
     fully implemented in early 2016.                                                                                           
                                                                                                                                
                                                                                                                                
     Support Division collects $3.88.                                                                                           
                                                                                                                                
                                                                                                                                
     qualified   staff,   and   a  growing   caseload,   the                                                                    
     percentage   of  child   support   cases  with   orders                                                                    
     increased to the target goal of 93.5%.                                                                                     
                                                                                                                                
                                                                                                                                
     Department-high    39   Child    Support   cases    for                                                                    
     prosecution. This is up from 35  in FY 13, and 21 in FY                                                                    
     12.                                                                                                                        
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
030415 Alaska Court System Budget Overview.pdf SFIN 3/4/2015 9:00:00 AM
SB 27
030415 DOA Budget Overview.pdf SFIN 3/4/2015 9:00:00 AM
SB 27
030415 DOR Budget Overview.pdf SFIN 3/4/2015 9:00:00 AM
SB 27