Legislature(2015 - 2016)SENATE FINANCE 532

04/15/2015 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 26 Presentation: Overview FY17 Operating Budget TELECONFERENCED
Heard & Held
+ HB 116 EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
+ HB 176 REPEAL ST EMPL WAGE RAISE;LEGIS EMPL BENE TELECONFERENCED
Scheduled but Not Heard
<Pending Referral>
+ HB 178 WORKERS' COMP MEDICAL FEES; DELAY TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled:
+= SB 50 AIDEA: BONDS;PROGRAMS;LOANS;LNG PROJECT TELECONFERENCED
Scheduled but Not Heard
<Pending Referral>
+= HB 106 UNIFORM INTER.CHILD SUPPORT;PARENTAGE TELECONFERENCED
Scheduled but Not Heard
<Pending Referral>
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 15, 2015                                                                                            
                         1:56 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:56:21 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 1:56 p.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                                                                                                                  
                                                                                                                                
Laura  Stidolph,  Staff,  Representative  Kurt  Olson;  Kris                                                                    
Curtis, Legislative Auditor,  Alaska Division of Legislative                                                                    
Audit;  Sara  Chambers, Administrative  Operations  Manager,                                                                    
Division   of   Corporations,  Business   and   Professional                                                                    
Licensing,  Department of  Commerce, Community  and Economic                                                                    
Development; Cynthia Franklin,  Director, Alcoholic Beverage                                                                    
Control    Board,    Juneau;    Conrad    Jackson,    Staff,                                                                    
Representative Kurt Olson;  Mike Monagle, Director, Division                                                                    
of Workers  Compensation, Department of Labor  and Workforce                                                                    
Development.                                                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Deborah   Schneider,  Certified   Direct   Entry  Board   of                                                                    
Midwives, Wasilla                                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 50     AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT                                                                            
          SB 50 was SCHEDULED but not HEARD.                                                                                    
                                                                                                                                
HB 26     EXTEND CERT. DIRECT-ENTRY MIDWIVES BOARD                                                                              
                                                                                                                                
          HB 26 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 106    UNIFORM INTER.CHILD SUPPORT; PARENTAGE                                                                                
                                                                                                                                
          HB 106 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 116    EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD                                                                               
                                                                                                                                
          HB 116 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 176    REPEAL ST EMPL WAGE RAISE; LEGIS EMPL BENE                                                                            
                                                                                                                                
          HB 176 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 178    WORKERS' COMP MEDICAL FEES; DELAY                                                                                     
                                                                                                                                
          HB 178 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HOUSE BILL NO. 26                                                                                                             
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Certified Direct-Entry Midwives; and providing for an                                                                      
     effective date."                                                                                                           
                                                                                                                                
1:57:20 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH, STAFF,  REPRESENTATIVE KURT OLSON, discussed                                                                    
HB  26, which  would  extend the  termination  date for  the                                                                    
Board of  Certified Direct-Entry Midwives to  June 30, 2017.                                                                    
She shared that each year  the Division of Legislative Audit                                                                    
reviewed state  boards and commissions to  determine whether                                                                    
they should be  reestablished per AS 24.44.  The division of                                                                    
Legislative  Audit reviewed  the  activity of  the board  in                                                                    
order to  determine whether there was  a demonstrated public                                                                    
need for the board's continued  existence and whether it had                                                                    
been operating in  an effective manner. She  relayed that it                                                                    
was the opinion  of the division that the  board be extended                                                                    
two  years  to  June  30,  2017.  She  stated  that  in  the                                                                    
auditor's  opinion  the  board   was  serving  the  public's                                                                    
interest  by  effectively licensing  certified  direct-entry                                                                    
midwives  and apprentices.  She furthered  that it  had been                                                                    
found that the board continued  to improve the profession by                                                                    
modifying and  adopting midwifery regulations to  conform to                                                                    
current standards  of care. She  spoke to the  four findings                                                                    
and recommendations  from the  audit, including;  having the                                                                    
department pursue  disciplinary cases,  increasing licensing                                                                    
fees to  eliminate the boards operating  deficit, having the                                                                    
board  communicate  certificate requirements  to  continuing                                                                    
education  providers and  approving apprentice  applications                                                                    
in accordance  with statutes. She  concluded that  the Board                                                                    
of Certified Direct-Entry Midwives  served an important role                                                                    
in  protecting  the  wellbeing of  Alaskans  by  identifying                                                                    
individuals who  were willing  to pursue  technical training                                                                    
and  meet specified  technical qualifications  necessary for                                                                    
licenses  as midwives;  the continuation  of  the board  was                                                                    
important to  the health  and safety  of Alaska's  women and                                                                    
children.                                                                                                                       
                                                                                                                                
2:00:00 PM                                                                                                                    
                                                                                                                                
Senator Olson  asked why the  board was only  being extended                                                                    
for two years.                                                                                                                  
                                                                                                                                
Ms. Stidolph related  that a number of issues  brought up in                                                                    
the audit  had led  to the  recommendation of  the shortened                                                                    
extension.                                                                                                                      
                                                                                                                                
2:00:33 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy understood that the  board was doing a good                                                                    
job in spite of the issues raised in the audit.                                                                                 
                                                                                                                                
Ms. Stidolph replied that the  responsibility for the issues                                                                    
highlighted  by  the  audit  was   found  to  lie  with  the                                                                    
Department of Commerce,  community and Economic Development.                                                                    
She  assured the  committee that  the  department had  taken                                                                    
action on the issues.                                                                                                           
                                                                                                                                
2:01:08 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  directed the committee's attention  to a                                                                    
report from Legislative Budget and Audit (copy on file).                                                                        
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE   AUDIT,  testified   that   the  division   had                                                                    
performed and audit of the board and recommended a short                                                                        
extension. She spoke to the four recommendations:                                                                               
                                                                                                                                
     Recommendation No. 1                                                                                                     
                                                                                                                                
     The  Department of  Commerce,  Community, and  Economic                                                                  
     Development's   (DCCED)    commissioner   should   take                                                                  
     immediate action  to pursue disciplinary  sanctions for                                                                  
     certified  direct-entry   midwives  (CDM)   cases  when                                                                  
     warranted.                                                                                                               
                                                                                                                                
     Disciplinary  sanctions were  not actively  pursued for                                                                    
     four  CDM-related investigations  which were  completed                                                                    
     during the audit  period. The investigations, involving                                                                    
     two people, supported  disciplinary sanctions including                                                                    
     probation   with  continuing   education  and   license                                                                    
     revocation.                                                                                                                
                                                                                                                                
     However,   Division  of   Corporations,  Business   and                                                                    
     Professional Licensing (DCBPL)  investigative staff did                                                                    
     not actively  pursue disciplinary sanctions  to protect                                                                    
     the public's safety.                                                                                                       
                                                                                                                                
     In all four CDM cases,  the respondents refused to sign                                                                    
     a  CA. Rather  than file  an accusation  and pursue  an                                                                    
     administrative hearing, DCBPL  staff followed alternate                                                                    
     procedures.  Two of  the four  cases were  forwarded to                                                                    
     the Department of Law's  Office of Special Prosecutions                                                                    
     and Appeals  (OSPA) without  a sufficiency  of evidence                                                                    
     review  by  an  AAG.  A   year  after  the  cases  were                                                                    
     forwarded to OSPA, no action  had been taken. According                                                                    
     to OSPA,  the cases represent their  lowest priority as                                                                    
     the  related  offenses  were  categorized  as  Class  B                                                                    
     misdemeanors. The  other two  cases were held  by DCBPL                                                                    
     investigators  with the  understanding  that the  cases                                                                    
     would be  forwarded to OSPA  once the other  cases were                                                                    
     addressed.  Due to  staff turnover,  it is  unclear why                                                                    
     DCBPL staff did not pursue  a civil licensing action as                                                                    
     required  by   standard  operating  procedures.   At  a                                                                    
     minimum,   licensing    action   should    be   pursued                                                                    
     concurrently  to ensure  the public  is protected  from                                                                    
     incompetent,  negligent,  or unlicensed  practitioners.                                                                    
     By not pursuing licensing  action, the respondents were                                                                    
     allowed  to  continue   practicing,  and  the  public's                                                                    
     safety was placed at risk.                                                                                                 
                                                                                                                                
2:04:08 PM                                                                                                                    
Ms. Curtis discussed the three remaining recommendations:                                                                       
                                                                                                                                
     Recommendation No. 2                                                                                                     
                                                                                                                                
     DCBPL, in consultation with  the board, should increase                                                                  
     licensing  fees  to  eliminate  the  board's  operating                                                                  
     deficit.                                                                                                                 
                                                                                                                                
     As  of  March 31,  2014,  the  board had  an  operating                                                                    
     deficit of $115,261.                                                                                                       
                                                                                                                                
     Recommendation No. 3                                                                                                     
                                                                                                                                
     The board  should communicate  certificate requirements                                                                  
     to   continuing  education   providers  to   facilitate                                                                  
    compliance with centralized licensing regulations.                                                                        
                                                                                                                                
     Recommendation No. 4                                                                                                     
                                                                                                                                
     The    board   should    approve   apprentice    permit                                                                  
     applications in accordance with statutes.                                                                                
                                                                                                                                
     For two of two  apprentice applications tested, permits                                                                    
     were  inappropriately   issued  by   DCBPL's  licensing                                                                    
     examiner rather than by the board.                                                                                         
                                                                                                                                
Senator  Bishop asked  whether the  word "apprentice"  was a                                                                    
term of  art, and  was the  occupation of  midwife federally                                                                    
recognized by the United States Department of Labor.                                                                            
                                                                                                                                
Ms. Curtis deferred the question to the department.                                                                             
                                                                                                                                
2:04:48 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon welcomed Co-Chair Kelly to the table.                                                                        
                                                                                                                                
2:05:14 PM                                                                                                                    
                                                                                                                                
SARA CHAMBERS,  ADMINISTRATIVE OPERATIONS  MANAGER, DIVISION                                                                    
OF  CORPORATIONS,   BUSINESS  AND   PROFESSIONAL  LICENSING,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
related  that  she was  unsure  whether  "apprentice" was  a                                                                    
federally  recognized term;  however, the  term was  created                                                                    
through  the board  statutes  and  regulations to  recognize                                                                    
someone who  had yet to  fully meet the  technical standards                                                                    
to  become  a midwife,  but  was  in  training to  meet  the                                                                    
standards.                                                                                                                      
2:05:49 PM                                                                                                                    
                                                                                                                                
Senator Bishop requested further clarification.                                                                                 
                                                                                                                                
2:06:04 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon   asked  for  the  name   of  the  board                                                                    
president.                                                                                                                      
                                                                                                                                
Ms.  Chambers related  that the  board president's  name was                                                                    
Cheryl   Corrick;   Deborah   Schneider  was   the   board's                                                                    
representative for the hearing.                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  asked how  long  Ms.  Corrick had  been                                                                    
serving as board president.                                                                                                     
                                                                                                                                
Ms. Chambers replied two to three years.                                                                                        
                                                                                                                                
2:06:41 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon   wondered  why  the  board   should  be                                                                    
extended given the mismanagement highlighted in the audit.                                                                      
                                                                                                                                
Ms. Chambers  stated that the  concerns that were  raised in                                                                    
the audit were being addressed.  She shared that the primary                                                                    
concern,  the investigative  procedures, had  been addressed                                                                    
by the  department. She explained that  different management                                                                    
strategies had been implemented,  as well as quality control                                                                    
elements that  served all  licensing programs.  She deferred                                                                    
to the board to speak to the topic of public service.                                                                           
                                                                                                                                
2:08:23 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon asked  whether the  recommendations were                                                                    
reoccurring.                                                                                                                    
                                                                                                                                
Ms.  Curtis  stated  that  the deficit  and  the  fees  were                                                                    
reoccurring  issues.  She  noted  that the  2006  audit  had                                                                    
identified  that the  board's  fee was  the  highest of  any                                                                    
board, over  $2000. She  said that it  had been  a continual                                                                    
struggle, with  the small number  of licensees, to  bear the                                                                    
cost  of investigations  and regulatory  projects. She  said                                                                    
that the  issue of investigative  staff was isolated  to one                                                                    
instance, the  department routinely  went into  the division                                                                    
and scrutinized  their investigative function;  a systematic                                                                    
problem  had   not  been  identified,  the   problem  seemed                                                                    
specific to this particular board.                                                                                              
2:09:23 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon asked if the  deficit the board faced was                                                                    
due to investigations.                                                                                                          
                                                                                                                                
Ms. Curtis  replied that the  audit had determined  that the                                                                    
deficit  was based  on investigative  and regulatory  costs.                                                                    
She  furthered  that  the board  had  recently  undergone  a                                                                    
regulatory  project and  thought that  some of  the incurred                                                                    
costs were due to the project.                                                                                                  
                                                                                                                                
Ms.  Chambers  reiterated  that   it  was  difficult  for  a                                                                    
licensing group  of less  than 50  licensees to  sustain the                                                                    
statutory  requirement  for  all  of their  expenses  to  be                                                                    
covered by revenues. She furthered  that the board currently                                                                    
had the  highest licensing fee  of any other  program, which                                                                    
would continue to  be raised on a regular basis  in order to                                                                    
overcome  the  deficit.  She   expressed  concern  that  the                                                                    
organization was "top  heavy" due to the nature  of the work                                                                    
and fees.                                                                                                                       
                                                                                                                                
2:11:26 PM                                                                                                                    
                                                                                                                                
Senator Hoffman asked if there  were any midwives in Western                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Ms. Chambers  responded that  she would  follow up  with the                                                                    
information at a later date.                                                                                                    
                                                                                                                                
2:11:44 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  asked what would occur  if the legislation                                                                    
did not pass.                                                                                                                   
                                                                                                                                
Ms.  Curtis responded  that the  licensing  function of  the                                                                    
board would revert back to the department.                                                                                      
                                                                                                                                
Ms. Chambers reiterated that there  was a one year period in                                                                    
which  the board  transition  responsibilities  over to  the                                                                    
department. She shared that the  department had 43 licensing                                                                    
programs, only 21 with boards.                                                                                                  
                                                                                                                                
2:13:10 PM                                                                                                                    
Co-Chair MacKinnon pointed out that  over the last two years                                                                    
work  had  been  done  to understand  why  certain  licensee                                                                    
groups in the state had deficit balances.                                                                                       
                                                                                                                                
2:14:16 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon asked  whether the  board was  acting on                                                                    
first recommendation of the audit.                                                                                              
                                                                                                                                
DEBORAH   SCHNEIDER,  CERTIFIED   DIRECT   ENTRY  BOARD   OF                                                                    
MIDWIVES,  WASILLA (via  teleconference),  replied yes.  She                                                                    
said  that  the  recommendations   in  the  audit  had  been                                                                    
addressed  by  the  board.  [The quality  of  the  audio  is                                                                    
failing. This testimony is nearly impossible to decipher.]                                                                      
                                                                                                                                
2:18:03 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:19:45 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon repeated her question.                                                                                       
                                                                                                                                
Ms.  Schneider  stated  that  the   board  had  worked  with                                                                    
investigators  to  address  the  issues in  the  audit.  She                                                                    
stressed  that  the  board  was  working  within  its  legal                                                                    
authority in the investigation issue.                                                                                           
                                                                                                                                
Co-Chair  MacKinnon reminded  Ms. Schneider  that the  legal                                                                    
authority of the board was outlined in state statute.                                                                           
                                                                                                                                
Co-Chair MacKinnon asked how the  board was communicating to                                                                    
its  providers the  certificate requirements  for continuing                                                                    
education.                                                                                                                      
                                                                                                                                
Ms. Schneider  specified that a  letter detailing  the state                                                                    
requirements  had  been  drafted  and sent  to  the  Midwife                                                                    
Association  of  Alaska.  She   said  that  license  renewal                                                                    
certificates  were  being  reviewed  to  assure  that  state                                                                    
requirements  were being  met, and  that agencies  that were                                                                    
providing  continuing  education   were  notified  of  those                                                                    
specific requirements.                                                                                                          
                                                                                                                                
2:22:29 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  asked whether the board  understood that                                                                    
they  were responsible  for approving  apprenticeship permit                                                                    
applications in accordance with state statutes.                                                                                 
                                                                                                                                
Ms. Schneider  explained that  the board  was aware  and had                                                                    
directed that  the apprentice permits come  before the board                                                                    
for approval.                                                                                                                   
                                                                                                                                
2:23:11 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon wondered why  the board' authorization in                                                                    
state statute should be extended.                                                                                               
                                                                                                                                
Ms.  Schneider explained  that the  board  worked to  ensure                                                                    
that midwives practiced under  the most current regulations.                                                                    
She stated  that midwifery was  a growing practice  and that                                                                    
well  written  regulations  and experienced  oversight  were                                                                    
important.  She shared  that  Alaska was  one  of the  first                                                                    
states  to have  licensure of  direct-entry midwives,  which                                                                    
had been a  blueprint for many other  states when developing                                                                    
their own guidelines.                                                                                                           
                                                                                                                                
2:24:55 PM                                                                                                                    
                                                                                                                                
Senator Bishop asked how many  midwives and apprentices were                                                                    
currently licensed in the state.                                                                                                
                                                                                                                                
Ms. Schneider replied that there  were 34 licensed midwives.                                                                    
She said she was unsure on the number of apprentices.                                                                           
                                                                                                                                
2:25:38 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
2:26:07 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
2:26:13 PM                                                                                                                    
                                                                                                                                
Senator  Olson  assumed  that the  licensing  fee  was  paid                                                                    
biannually.                                                                                                                     
                                                                                                                                
Ms. Chambers replied yes.                                                                                                       
                                                                                                                                
Senator  Olson  asked  if investigators  were  shared  among                                                                    
other boards and departments.                                                                                                   
Ms. Chambers said that the  department adhered to a positive                                                                    
time  keeping practice  to  assure  that investigators  were                                                                    
being used that  had the highest skillset  in the healthcare                                                                    
community,  while  spreading  resources across  the  various                                                                    
competing,  and ever-changing,  needs of  the division.  She                                                                    
stated that  the investigator was  not a  full-time position                                                                    
for the board.                                                                                                                  
                                                                                                                                
Senator  Olson expressed  concern  that  the public  welfare                                                                    
could be harmed due to malpractice.                                                                                             
                                                                                                                                
2:28:33 PM                                                                                                                    
                                                                                                                                
HB  26  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 116                                                                                                            
                                                                                                                                
     "An  Act   extending  the   termination  date   of  the                                                                    
     Alcoholic Beverage Control Board;  and providing for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
2:29:15 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH, STAFF,  REPRESENTATIVE KURT OLSON, testified                                                                    
that  HB  116  would  extend the  termination  date  of  the                                                                    
Alcoholic  Beverage  Control Board  to  June  30, 2018.  She                                                                    
shared  that each  year the  Division  of Legislative  Audit                                                                    
reviewed state  boards and commissions to  determine whether                                                                    
they should be  reestablished per AS 24.44.  The division of                                                                    
Legislative  Audit reviewed  the activity  of the  board and                                                                    
determined  that there  was a  demonstrated public  need for                                                                    
the  board's  continued  existence  and  that  it  had  been                                                                    
operating  in an  effective manner.  She furthered  that the                                                                    
board had addressed  all issues found in  prior audits, with                                                                    
two  being resolved  and one  being partially  resolved. She                                                                    
noted the  five findings  and recommendations from  the most                                                                    
recent legislative audit (copy on file):                                                                                        
                                                                                                                                
     Recommendation No. 1                                                                                                     
                                                                                                                                
     The  board's  director  should ensure  that  all  board                                                                  
     meetings are  properly published on the  State's Online                                                                  
     Public Notice System.                                                                                                    
                                                                                                                                
     Prior Finding                                                                                                            
                                                                                                                                
     From FY 07 through FY 09,  11 of 16 board meetings were                                                                    
     not adequately  publicly noticed  per statute  or board                                                                    
     policy requirements. Four  meetings were not advertised                                                                    
     on the State's Online  Public Notice System; the venues                                                                    
     for  seven board  meetings were  not advertised  in the                                                                    
     local   newspaper;   and   seven  meetings   were   not                                                                    
     advertised timely.                                                                                                         
                                                                                                                                
     Current Status                                                                                                           
                                                                                                                                
     From FY  09 through  February 2014,  three of  25 board                                                                    
     meetings  were  not  published on  the  State's  Online                                                                    
     Public   Notice   System.   Although  the   board   has                                                                    
     procedures   for   public   noticing,   Department   of                                                                    
     Commerce,  Community,  and Economic  Development  staff                                                                    
     did not adhere to procedures due to general oversight.                                                                     
                                                                                                                                
     Alaska Statute 44.62.310(e)  requires reasonable public                                                                    
     notice  be  given  for meetings.  Failure  to  publicly                                                                    
     notice  board meetings  may limit  public input  in the                                                                    
     regulatory  process. Lack  of public  input may  reduce                                                                    
     the   board's   effectiveness  in   addressing   public                                                                    
     concerns.                                                                                                                  
                                                                                                                                
     We  recommend the  board's  director  ensure all  board                                                                    
     meetings are  properly published on the  State's Online                                                                    
     Public Notice System.                                                                                                      
                                                                                                                                
     Recommendation No. 2                                                                                                     
                                                                                                                                
     The  board  should  notify local  governing  bodies  of                                                                  
     applications for  new and  transfer licenses  within 10                                                                  
     days of receipt.                                                                                                         
                                                                                                                                
     Prior Finding                                                                                                            
                                                                                                                                
     The board did not  consistently adhere to the statutory                                                                    
     requirement  of  notifying  the  local  governing  body                                                                    
     within 10 days of  receiving an application as required                                                                    
     by  AS  04.11.520.  This requirement  allows  time  for                                                                    
     local  governments to  review  and  possibly protest  a                                                                    
     license   being   issued,    renewed,   relocated,   or                                                                    
     transferred.                                                                                                               
                                                                                                                                
     Local governing  bodies were not  consistently notified                                                                    
     because board members and the  director did not provide                                                                    
     appropriate guidance  and oversight to staff  to ensure                                                                    
    compliance with state laws, and with its decisions.                                                                         
                                                                                                                                
     Current Status                                                                                                           
     For  two of  10 new  or transfer  licenses tested,  the                                                                    
     board did  not inform  the local governing  body within                                                                    
     10   days   of    receiving   the   application.   Both                                                                    
     notifications were  sent between  11 and 20  days after                                                                    
     the   board  received   the  application.   The  errors                                                                    
     resulted  from prior  board staff  not adhering  to the                                                                    
     board's  policies and  procedures  which require  local                                                                    
     governing bodies be notified in a timely manner.                                                                           
                                                                                                                                
     Alaska  Statutes specify  a timeline  for the  board to                                                                    
     review  applications,  notify local  governing  bodies,                                                                    
     and   receive   protests.  Alaska   Statute   04.11.510                                                                    
     requires  the board  to review  applications within  90                                                                    
     days of receipt. Alaska  Statute 04.11.520 requires the                                                                    
     board to  notify local governing bodies  within 10 days                                                                    
     of  receiving an  application. A  local governing  body                                                                    
     may  protest   within  60  days   as  provided   by  AS                                                                    
     04.11.480. Delays  in notifying local  governing bodies                                                                    
     may  result in  inappropriately limiting  the time  the                                                                    
     local  governing body  and/or the  board has  to review                                                                    
     applications.                                                                                                              
                                                                                                                                
     We recommend  the board  notify local  governing bodies                                                                    
     of applications  for new  and transfer  licenses within                                                                    
     10 days of receipt.                                                                                                        
                                                                                                                                
     Recommendation No. 3                                                                                                     
                                                                                                                                
     The board  should issue catering permits  in accordance                                                                  
     with statutory requirements.                                                                                             
                                                                                                                                
     Catering permits  may be issued to  beverage dispensary                                                                    
     licensees   (BDL)  to   sell  alcoholic   beverages  at                                                                    
     conventions,   picnics,  social   gatherings,  sporting                                                                    
     events, or  similar affairs.  The permits  expire after                                                                    
     seven days and  can only be used for  events hosted off                                                                    
     licensed premises.                                                                                                         
     Alaska Statutes 04.11.230(a) states:                                                                                       
                                                                                                                                
          A  caterer's permit  authorizes  the  holder of  a                                                                    
          beverage  dispensary license  to sell  or dispense                                                                    
          alcoholic   beverages  at   conventions,  picnics,                                                                    
          social  gatherings,  sporting events,  or  similar                                                                    
          affairs held  off the holder's  licensed premises.                                                                    
          The  permit  may  only be  issued  for  designated                                                                    
          premises  for  a  specific   occasion  and  for  a                                                                    
          limited period of time.                                                                                               
     A review of four licensees  that received more than six                                                                    
     consecutive  catering permits  during the  audit period                                                                    
     yielded  three  instances  of noncompliance.  Two  were                                                                    
     related to catering permits issued  to serve alcohol in                                                                    
     another  room of  the same  premises. The  permits were                                                                    
     issued for six to 14  consecutive weeks while the board                                                                    
     processed  the licensee's  application for  a duplicate                                                                    
     BDL.  A  duplicate  BDL  allows  a  licensee  to  serve                                                                    
     alcohol in another room of an establishment.                                                                               
     The third  noncompliant permit resulted from  the board                                                                    
     issuing  a catering  permit to  one  licensee to  serve                                                                    
     alcohol for  another business with  an expired  BDL. In                                                                    
     this   case,  the   permits  were   issued  for   eight                                                                    
     consecutive  weeks   while  the  board   processed  the                                                                    
     licensee's renewal application.                                                                                            
                                                                                                                                
     Each  of  the  three variances  represent  a  statutory                                                                    
     violation  because the  permits  were  issued with  the                                                                    
     intention to  serve alcohol on a  licensed premises and                                                                    
     to maintain  daily operation of a  business rather than                                                                    
     for  a short  term social  gathering or  similar event.                                                                    
     Circumventing licensing  laws weakens the  board's role                                                                    
     as regulator  and may  result in  inequitable treatment                                                                    
     of  applicants. Inquiries  with board  members revealed                                                                    
     that  the board  considered the  issuance of  the noted                                                                    
     catering permits  a convenience  to both  licensees and                                                                    
     the  public.  At  the time,  the  board  believed  that                                                                    
     issuing  the  license  or  permit  was  appropriate  to                                                                    
     ensure the businesses could continue to operate.                                                                           
                                                                                                                                
     We recommend  that the board issue  catering permits in                                                                    
     accordance with statutory requirements.                                                                                    
                                                                                                                                
     Recommendation No. 4                                                                                                     
                                                                                                                                
     The board  should issue  recreational site  licenses in                                                                  
     accordance with statutory requirements.                                                                                  
                                                                                                                                
     Recreational site licenses may  be issued to businesses                                                                    
     that host  non-school-related recreational  events held                                                                    
     during a season.                                                                                                           
                                                                                                                                
     Of  the 32  recreational licensee's  active during  the                                                                    
     audit period, the audit found 15 businesses                                                                                
     (47  percent)   did  not  meet   the  criteria   for  a                                                                    
     recreational  license.  Ineligible  businesses  include                                                                    
     bowling alleys,  a sports center  and pub,  an exercise                                                                    
     gym,  a  gift shop,  theatres,  and  pool halls.  These                                                                    
     business  types  did  not  meet  the  definition  of  a                                                                    
     recreational  site nor  were  operations  limited to  a                                                                    
     season.  The issuance  of these  licenses expanded  the                                                                    
     number of establishments licensed  to sell alcohol over                                                                    
     the number allowed by statute.                                                                                             
                                                                                                                                
     According  to   AS  04.11.210(a),   the  holder   of  a                                                                    
     recreational site license  may sell beer and  wine at a                                                                    
     recreational  event  during  and one  hour  before  and                                                                    
     after  recreational  events.  AS  04.11.210(c)  defines                                                                    
     recreational  events  as  baseball  games,  car  races,                                                                    
     hockey games, or curling  matches regularly held during                                                                    
     a season.                                                                                                                  
                                                                                                                                
     Inquiries   with  board   members  revealed   that  the                                                                    
     improper  issuance of  recreational  site licenses  was                                                                    
     caused   by  an   historic  misunderstanding   of  what                                                                    
     qualifies as a recreational event.                                                                                         
                                                                                                                                
     We  recommend that  the board  issue recreational  site                                                                    
    licenses in accordance with statutory requirements.                                                                         
                                                                                                                                
     Recommendation No. 5                                                                                                     
                                                                                                                                
     The  board should  implement a  process to  monitor and                                                                  
     track all complaints  to ensure they are  resolved in a                                                                  
     timely manner.                                                                                                           
                                                                                                                                
     The board has not established  a process to monitor and                                                                    
     track all complaints  to ensure they are  resolved in a                                                                    
     timely  manner.   The  board  does  have a  process  to                                                                    
     receive  complaints from  licensees or  law enforcement                                                                    
     agencies through  their website, telephone,  or emails.                                                                    
     However, complaints are only  tracked if they result in                                                                    
     an  inspection or  investigation. If  the complaint  is                                                                    
     deemed invalid, it is  not documented. Furthermore, the                                                                    
     basis  for  a  decision   not  to  investigate  is  not                                                                    
     documented and maintained.                                                                                                 
     The efficiency  with which complaints  are investigated                                                                    
     is one  of the sunset  evaluation criteria used  in the                                                                    
     legislative    oversight   process.    Alaska   Statute                                                                    
     44.66.050(c)(6)  specifies   the  sunset   review  must                                                                    
     evaluate:                                                                                                                  
                                                                                                                                
          The efficiency with which public inquiries or                                                                         
          complaints regarding the activities of the board,                                                                     
          commission,  or agency  filed  with  it, with  the                                                                    
          department  to  which  a board  or  commission  is                                                                    
          administratively assigned,  or with the  office of                                                                    
          victims'  rights or  the office  of the  ombudsman                                                                    
          have been processed and resolved.                                                                                     
                                                                                                                                
     By not tracking complaints,  there is an increased risk                                                                    
     that  board   staff  may  not   investigate  complaints                                                                    
     received and/or not investigate  complaints in a timely                                                                    
     manner.  Such   instances  could  reduce   the  board's                                                                    
     ability  to  effectively   enforce  alcoholic  beverage                                                                    
     laws.  Additionally,  complaints received  directly  by                                                                    
     board  staff  via  telephone  or  email  may  never  be                                                                    
     resolved in the event  of staff turnover. Because there                                                                    
     was no  statutory mandate, the  board director  did not                                                                    
     consider tracking all complaints as necessary.                                                                             
                                                                                                                                
     We  recommend that  the board  establish  a process  to                                                                    
     monitor and  track all complaints  to ensure  that they                                                                    
     are resolved in a timely manner.                                                                                           
                                                                                                                                
She  relayed that  it was  the  opinion of  the Division  of                                                                    
Legislative Audit that the board  be extended three years to                                                                    
June 30,  2018. She said  that had the  marijuana initiative                                                                    
not  passed, the  board would  have been  extended for  five                                                                    
years.  She  noted  that the  regulation  of  the  marijuana                                                                    
control board  established in HB  123, would fall  under the                                                                    
ABC  board, which  was  why the  fiscal  note reflected  the                                                                    
expenditures  for the  regulation  of  marijuana. She  added                                                                    
that  the  money had  not  been  appropriated and  would  be                                                                    
removed if HB  123 passed. She concluded that  the ABC board                                                                    
served an important  role in guarding the  health and safety                                                                    
of  Alaskans by  protecting the  general public  through the                                                                    
issuance, renewal,  revocation, and suspension  of alcoholic                                                                    
beverage licenses.                                                                                                              
                                                                                                                                
2:32:13 PM                                                                                                                    
                                                                                                                                
Ms.  Curtis spoke  to the  recommendations  outlined in  the                                                                    
legislative audit.  She noted that the  first recommendation                                                                    
was a repeat recommendation from  the prior sunset. She said                                                                    
that in  2014, 3 of 25  board meetings had not  been noticed                                                                    
during  the   audit  period.  She  touched   on  the  second                                                                    
recommendation,  stating that  the  division  had tested  10                                                                    
licenses,  2 of  which were  not communicated  to the  local                                                                    
governing bodies  within the 10  day time frame.  She stated                                                                    
that  under  the  third   recommendation  the  division  had                                                                    
reviewed 4  licensees, with  6 consecutive  catering permits                                                                    
issues during the  period; 3 of the 4 were  discovered to be                                                                    
statutory violations  because the  permits were  issued with                                                                    
the intention to  serve alcohol on a  licensed premises that                                                                    
would maintain  daily operations of a  business, rather than                                                                    
for  a short-term  social gathering  or  similar event.  She                                                                    
said that the board issues  the permits to ensure that those                                                                    
businesses  could continue  to operate.  She continued  that                                                                    
that of the  32 licensees that were active  during the audit                                                                    
period,  15 did  not meet  the criteria  for a  recreational                                                                    
license.  She detailed  that  ineligible business  included:                                                                    
bowling alleys, a  sports center and pub,  and exercise gym,                                                                    
gift  shops, theatres,  and pool  halls. She  said that  the                                                                    
businesses  did not  meet the  definition of  a recreational                                                                    
site, nor were  operations limited to a  season. She relayed                                                                    
that the  issuance of  the licenses  expanded the  number of                                                                    
establishments  licensed to  sell  alcohol  over the  number                                                                    
allowed for  in statute.  She furthered that  inquiries with                                                                    
board  members had  revealed that  the improper  issuance of                                                                    
the  recreational site  licenses  was caused  by a  historic                                                                    
misunderstanding of  what constituted a  recreational event.                                                                    
She shared that under  the final recommendation the division                                                                    
had  found  that   the  board  had  a   process  to  receive                                                                    
complaints; however, if complaints  were not investigated or                                                                    
inspected, they were not documented.  She concluded that the                                                                    
board  and the  department  had concurred  with  all of  the                                                                    
recommendations.                                                                                                                
                                                                                                                                
2:35:39 PM                                                                                                                    
                                                                                                                                
CYNTHIA  FRANKLIN,  DIRECTOR,   ALCOHOLIC  BEVERAGE  CONTROL                                                                    
BOARD, JUNEAU,  testified that she had  supervised the final                                                                    
responses  to the  audit  and had  provided  details to  the                                                                    
auditors  regarding the  fixes to  the issues  identified in                                                                    
the  audit.  She  discussed the  first  audit  finding.  She                                                                    
explained that the  director now reviewed all  of the public                                                                    
notices that  were issued  by the  administrative personnel.                                                                    
She spoke  to the  second recommendation.  She said  that in                                                                    
many cases same day  public notification of applications was                                                                    
occurring,  which   was  well  within  the   10  day  notice                                                                    
requirement. She continued to  the third recommendation. She                                                                    
shared that the catering permit  had been an issue with both                                                                    
the board  and the  agency. She  assured the  committee that                                                                    
the board  had instituted the practice  if strictly adhering                                                                    
to the statute regarding  when catering permits were issued.                                                                    
She moved to  the fourth recommendation and  shared that the                                                                    
board had  demonstrated understanding  of the  parameters of                                                                    
the  recreational  site licenses.  She  spoke  to the  fifth                                                                    
recommendation. She  said that complaints  for investigators                                                                    
were charted  on a spreadsheet,  the agency was  paper based                                                                    
and  the  information  was  placed  in  a  paper  file.  She                                                                    
concluded  that the  agency  had  undergone several  changes                                                                    
over the  past 4  years that  had enhanced  its performance:                                                                    
the audit, the move from  the Department of Public Safety to                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development,  and the  stakeholder review  of statutes.  She                                                                    
felt  that the  board was  taking strong  and strict  action                                                                    
regarding violations of statute and regulation.                                                                                 
                                                                                                                                
2:42:59 PM                                                                                                                    
                                                                                                                                
Senator  Bishop wondered  how  quickly  complaints would  be                                                                    
resolved by the board.                                                                                                          
                                                                                                                                
Ms. Franklin  relayed that  her agency had  a 24  hour rule;                                                                    
complaints were directed to  the Enforcement Supervisor upon                                                                    
receipt and were investigated within 24 hours.                                                                                  
                                                                                                                                
Senator  Bishop asked  how long  an initiated  investigation                                                                    
would take to close out.                                                                                                        
                                                                                                                                
Ms. Franklin replied  that it would depend  on the activity.                                                                    
She said  that she  generally checked in  with investigators                                                                    
after 3 days, but most were same day resolution.                                                                                
                                                                                                                                
2:45:07 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  felt that the  departmental move  of the                                                                    
board had led to more errors but less complaints.                                                                               
                                                                                                                                
Ms. Franklin said that the  board was working on a community                                                                    
policing   approach  to   their  licensees;   5  enforcement                                                                    
officers were  working on  the issue.  She believed  that an                                                                    
argument  could be  made for  the appropriateness  of either                                                                    
department to  house the  board; however,  being in  DOC had                                                                    
made  the board  itself more  attuned to  its public  safety                                                                    
obligations, and less reactive  to the enforcement duties of                                                                    
the board.                                                                                                                      
2:48:00 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
2:48:34 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
HB 116 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 178                                                                                                            
                                                                                                                                
     "An  Act relating  to  workers'  compensation fees  for                                                                    
     medical  treatment  and   services;  providing  for  an                                                                    
     effective date  by amending the effective  date of sec.                                                                    
     5, ch.  63, SLA  2014; and  providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
2:49:28 PM                                                                                                                    
                                                                                                                                
CONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, offered a                                                                     
sponsor statement of the legislation:                                                                                           
                                                                                                                                
     For many  years Alaska  has faced the  highest workers'                                                                    
     compensation  rates in  the nation.  During the  second                                                                    
     session  of the  28th Legislature,  House Bill  316 was                                                                    
     passed. The  bill was a  more sweeping solution  to the                                                                    
     challenge   of  the   previous  medical   services  fee                                                                    
     schedule than we have experienced in many years.                                                                           
                                                                                                                                
     HB  316 tasked  the Medical  Services Review  Committee                                                                    
     (MSRC)  with   setting  a   conversion  factor   and  a                                                                    
     geographic differential to be  used in conjunction with                                                                    
     a basic  fee schedule  based on  a relative  value unit                                                                    
     methodology. Once  set, the  conversion factor  will be                                                                    
     approved  by  the  Commissioner of  the  Department  of                                                                    
     Labor prior  to adoption by regulation  by the Workers'                                                                    
     Compensation Board. All this  was to be accomplished by                                                                    
     July 1, 2015.                                                                                                              
                                                                                                                                
     Since passage of HB 316,  the MSRC has been reactivated                                                                    
     and  met numerous  times.  They  have nearly  completed                                                                    
     their  part  in  establishing the  conversion  factors.                                                                    
     More work remains  to be done to ensure  the reform can                                                                    
     take effect.                                                                                                               
                                                                                                                                
     House Bill 178  grants a 5 month  extension to complete                                                                    
     this important step in lowering  workers' comp costs in                                                                    
     both  the  public  and  private  sector.  Without  this                                                                    
     extension, time  may run  out before  the comprehensive                                                                    
     reforms instituted last year can be implemented.                                                                           
                                                                                                                                
Mr. Jackson noted the zero  fiscal note and stated that once                                                                    
the  new  fee schedules  were  in  place  there would  be  a                                                                    
realized reduction in worker's compensation rates.                                                                              
                                                                                                                                
2:52:15 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:52:44 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator Dunleavy asked what  impact the five-month extension                                                                    
would have on the fee rate changes.                                                                                             
                                                                                                                                
Mr. Jackson responded  that there was no  impact expected on                                                                    
the fee schedule.                                                                                                               
                                                                                                                                
2:53:28 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
2:54:09 PM                                                                                                                    
                                                                                                                                
MIKE  MONAGLE, DIRECTOR,  DIVISION OF  WORKERS COMPENSATION,                                                                    
DEPARTMENT OF  LABOR AND WORKFORCE DEVELOPMENT,  stated that                                                                    
the committee was  formed in 2005, but  had remained dormant                                                                    
since 2009.  He said that  when HB 316 passed  the committee                                                                    
experience a  rebirth, new committee members  were appointed                                                                    
and   medical  data   was  gathered   through  the   state's                                                                    
procurement  process. He  shared  that  an upcoming  meeting                                                                    
would establish  the adoption of a  final conversion factor,                                                                    
at   which    time   the   committee   would    submit   its                                                                    
recommendations  to the  commissioner. He  relayed that  the                                                                    
commissioner  would  review  the  recommendations  and  take                                                                    
public comment,  and then  all of  the information  would be                                                                    
forwarded to  the board. He  explained that the  board would                                                                    
then  propose regulations  and return  after public  comment                                                                    
for  final adoption.  He asserted  that the  extension would                                                                    
allow  the  commissioner, and  the  board,  to complete  the                                                                    
regulatory work by the end of summer 2015.                                                                                      
                                                                                                                                
2:56:28 PM                                                                                                                    
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
HB  178  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair MacKinnon discussed housekeeping.                                                                                      
ADJOURNMENT                                                                                                                   
2:57:22 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:57 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB26 Sponsor Statement.pdf SFIN 4/15/2015 1:30:00 PM
HB 26
HB26 Supporting Documents-Legislative Audit 6-30-2014.pdf SFIN 4/15/2015 1:30:00 PM
HB 26
HB116 Sponsor Statement.pdf SFIN 4/15/2015 1:30:00 PM
HB 116
HB116 Supporting Document - Legislative Audit 05-30-14.pdf SFIN 4/15/2015 1:30:00 PM
HB 116
HB 176 Legal Opinion re Geo Diff.pdf SFIN 4/15/2015 1:30:00 PM
HB 176
HB 176 Sponsor Statement (2).pdf SFIN 4/15/2015 1:30:00 PM
HB 176
HB178 Sponsor Statement.pdf SFIN 4/15/2015 1:30:00 PM
HB 178
HB178 Supporting Documents-CSHB316(FIN) Sectional Analysis ver R.pdf SFIN 4/15/2015 1:30:00 PM
HB 178
HB 316
HB178 Supporting Documents-HB316 enacted in 2014.PDF SFIN 4/15/2015 1:30:00 PM
HB 178
HB 316