Legislature(2021 - 2022)SENATE FINANCE 532

04/21/2021 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 88 STATE INSUR. CATASTROPHE RESERVE ACCT. TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
-- <Time Limit May Be Set> --
+= SB 10 FREE/REDUCED TUITION FOR ESSENTIAL WORKER TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 04/20/2021>
+= SB 71 COUNCIL ON ARTS: PLATES & MANAGE ART TELECONFERENCED
Moved CSSB 71(FIN) Out of Committee
+= SB 20 OUT OF STATE TEACHER RECIPROCITY TELECONFERENCED
Moved CSSB 20(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 21, 2021                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:04:31 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Bishop called the  Senate Finance Committee meeting                                                                    
to order at 9:04 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Erin  Shine,  Staff,  Senator   Click  Bishop;  Senator  Tom                                                                    
Begich, Sponsor;                                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Scott  Jordan, Division  of Risk  Management, Department  of                                                                    
Administration; Paloma Harbour,  Fiscal Management Practices                                                                    
Analyst,  Office of  Management and  Budget; Charles  McKee,                                                                    
Self,  Anchorage;  Noah   Klein,  Counsel,  Legal  Services,                                                                    
Legislative Affairs Agency;  Sana Efird, Executive Director,                                                                    
Alaska Commission on  Postsecondary Education, Department of                                                                    
Education and Early Development;                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 10     FREE/REDUCED TUITION FOR ESSENTIAL WORKER                                                                             
                                                                                                                                
          SB 10 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 20     OUT OF STATE TEACHER RECIPROCITY                                                                                      
                                                                                                                                
          CSSB 20(FIN) was REPORTED out  of committee with a                                                                    
          "do pass" recommendation and with   one new fiscal                                                                    
          impact note  from the Department of  Education and                                                                    
          Early Development.                                                                                                    
                                                                                                                                
SB 71     COUNCIL ON ARTS: PLATES & MANAGE ART                                                                                  
                                                                                                                                
          CSSB 71(FIN) was REPORTED out  of committee with a                                                                    
          "do pass"  recommendation and with one  new fiscal                                                                    
          impact note  from the Department of  Education and                                                                    
          Early  Development  and one  previously  published                                                                    
          fiscal impact note: FN 1(ADM).                                                                                        
                                                                                                                                
                                                                                                                                
SB 88     STATE INSUR. CATASTROPHE RESERVE ACCT.                                                                                
                                                                                                                                
          SB 88 was HEARD and  HELD in committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 20                                                                                                            
                                                                                                                                
     "An Act relating to recognition of certificates of                                                                         
     out-of-state teachers."                                                                                                    
                                                                                                                                
9:05:14 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop relayed that the bill was being heard in                                                                        
committee for the third time.                                                                                                   
                                                                                                                                
Senator Wilson MOVED to ADOPT proposed committee substitute                                                                     
for SB 20, Work Draft 32-LS0202\G (Klein, 4/19/21).                                                                             
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
9:05:52 AM                                                                                                                    
                                                                                                                                
ERIN SHINE,  STAFF, SENATOR CLICK  BISHOP, relayed  that the                                                                    
committee   substitute  (CS)   incorporated  the   amendment                                                                    
adopted in the previous hearing  on the bill. She noted that                                                                    
on Page  2, lines  20-21, and lines  24-25, the  time period                                                                    
for an out of state  teacher to complete course training, as                                                                    
lined out in AS 14.20.020(K),from 2 years to 90 days.                                                                           
                                                                                                                                
Co-Chair  Bishop  WITHDREW  his objection.  There  being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
9:06:45 AM                                                                                                                    
                                                                                                                                
Senator von  Imhof discussed a  new fiscal impact  note from                                                                    
the  Department of  Education and  Early Development.  There                                                                    
was an  appropriation of $6,000  for FY 22. The  fiscal note                                                                    
stated that an  educator with a valid out  of state teaching                                                                    
certificate   would   qualify   for   an   Alaska   teaching                                                                    
certificate and had two years  to satisfy the Alaska Studies                                                                    
and Multicultural coursework. She  read from the analysis on                                                                    
page 2 of  the fiscal note, which read that  a process would                                                                    
be adopted to  issue a certificate to a spouse  of an active                                                                    
duty member of the Armed Forces of the United States.                                                                           
                                                                                                                                
9:07:36 AM                                                                                                                    
                                                                                                                                
Senator  Hoffman asked  whether the  state could  afford the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
Co-Chair  Bishop replied  that  it remained  to  be seen  as                                                                    
budget discussions were still underway.                                                                                         
                                                                                                                                
Senator  Wilson   MOVED  to  report  CSSB   20(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB 20(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department of Education and Early Development.                                                                                  
                                                                                                                                
9:08:32 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:08:51 AM                                                                                                                    
                                                                                                                                
RECONVENED                                                                                                                      
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 71                                                                                                            
                                                                                                                                
     "An  Act  relating   to  special  request  registration                                                                    
     plates  celebrating the  arts; relating  to artwork  in                                                                    
     public  buildings  and   facilities;  relating  to  the                                                                    
     management of  artwork under the  art in  public places                                                                    
     fund; relating to  the powers and duties  of the Alaska                                                                    
     State  Council  on  the  Arts;  and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
Co-Chair Bishop  announced that this  was the  third hearing                                                                    
of the bill in committee.                                                                                                       
                                                                                                                                
Senator Olson  MOVED to ADOPT proposed  committee substitute                                                                    
for SB 71, Work Draft 32-LS0310\W (Fisher, 4/19/21).                                                                            
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
9:09:37 AM                                                                                                                    
                                                                                                                                
Ms. Shine relayed that the  proposed CS contained amendments                                                                    
adopted  in  the previous  bill  hearing  in committee.  She                                                                    
noted that  the first  change was  a title  amendment, which                                                                    
added  the establishment  of the  Alaska  Arts and  Cultural                                                                    
Investment fund.  She furthered that  in Section 1,  page 2,                                                                    
lines  12-13,  were conforming  changes  to  Section 6.  She                                                                    
added that  Section 2, page  2, lines 14-15, added  the fund                                                                    
created in Section 6, to  AS 37.05.146(C). She detailed that                                                                    
Section 4,  page 3, line  11, which added the  management of                                                                    
the fund  as they duty  of the  Alaska State Council  on the                                                                    
Arts. The new  Section 6 detailed that the  fund was created                                                                    
in the general  fund and consisted of  money appropriated by                                                                    
the  legislature,  including  donations, monies  from  other                                                                    
sources, and interest  earned on the fund.  She related that                                                                    
Section 5 had been removed.                                                                                                     
                                                                                                                                
9:11:05 AM                                                                                                                    
                                                                                                                                
Co-Chair  Bishop  WITHDREW  his objection.  There  being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
9:11:16 AM                                                                                                                    
                                                                                                                                
Senator   Wielechowski   discussed   a  fiscal   note   from                                                                    
Department   of  Education   and   Early  Development,   OMB                                                                    
Component number  3193, which listed a  one-time expenditure                                                                    
of  $6,000  for  legal  fees   to  implement  the  necessary                                                                    
regulation changes and for policy review.                                                                                       
                                                                                                                                
Senator  Wielechowski  addressed  a  fiscal  note  from  the                                                                    
Department  of  Administration,   which  projected  expected                                                                    
revenue  from  license  plate   cost  increases  that  would                                                                    
annually raise 55,560 between FY22-FY27.                                                                                        
                                                                                                                                
9:12:05 AM                                                                                                                    
                                                                                                                                
Senator Olson MOVED to report  CSSB 71(FIN) out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
CSSB 71(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department  of  Education  and  Early  Development  and  one                                                                    
previously published fiscal impact note: FN 1(ADM).                                                                             
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 88                                                                                                            
                                                                                                                                
     "An Act relating to the state insurance catastrophe                                                                        
     reserve account; and providing for an effective date."                                                                     
                                                                                                                                
9:12:57 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:13:57 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SCOTT  JORDAN, DIVISION  OF RISK  MANAGEMENT, DEPARTMENT  OF                                                                    
ADMINISTRATION    (via    teleconference),    discussed    a                                                                    
presentation "Senate Bill No 88" (copy on file).                                                                                
                                                                                                                                
Mr. Jordan  spoke to slide  2, "History of  the Catastrophic                                                                    
Reserve Account (CATFund)". He detailed  that the purpose of                                                                    
the  bill was  to allow  a change  of the  CAT fund  from an                                                                    
unencumbered  balance of  $5 million  to $50  million, which                                                                    
would allow the state  to self-insure for property coverage.                                                                    
He  shared  that  the  state  currently  had  two  lines  of                                                                    
business  that it  self-insured  for: Worker's  Compensation                                                                    
(1992)  and General  Liability (2002).  He  stated that  the                                                                    
global  property insurance  markets  had  hardened over  the                                                                    
last  3 years,  resulting in  a 30  percent increase  in the                                                                    
previous year's premium  costs, with an additional  15 to 20                                                                    
percent increase in FY22. He  relayed that the current limit                                                                    
that could  be purchased  for catastrophic coverage  was $50                                                                    
million  for annual  premium, which  would be  saved through                                                                    
self-insuring.                                                                                                                  
                                                                                                                                
9:15:52 AM                                                                                                                    
                                                                                                                                
Mr.  Jordan  discussed  slide   3,  "Expenditures  from  the                                                                    
CATFund since inception," which showed a data table.                                                                            
                                                                                                                                
9:17:53 AM                                                                                                                    
                                                                                                                                
Senator  von  Imhof  noted  that  the  title  of  the  slide                                                                    
differed from what was before the committee.                                                                                    
                                                                                                                                
[It was  determined that the  presentation being  viewed was                                                                    
old and a new presentation was uploaded.]                                                                                       
                                                                                                                                
9:19:04 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:19:54 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:19:56 AM                                                                                                                    
RECESSED                                                                                                                        
                                                                                                                                
9:30:53 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair   Bishop   asked   Mr.  Jordan   to   restart   his                                                                    
presentation.                                                                                                                   
                                                                                                                                
Mr. Jordan spoke to slide 1, "Purpose":                                                                                         
                                                                                                                                
[paste in ]                                                                                                                     
                                                                                                                                
                                                                                                                                
Mr.  Jordan  discussed  slide  2,  "What  other  states  are                                                                    
doing?":                                                                                                                        
                                                                                                                                
9:32:48 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman asked  whether a  "sinking fund"  would be                                                                    
included set  up as a  result of  not being required  to pay                                                                    
the previous premiums.                                                                                                          
                                                                                                                                
Mr. Jordan  was not familiar  with the term  "sinking fund,"                                                                    
and  explained  that  the  state would  not  be  paying  any                                                                    
premiums to excess insurance for  property loss, which would                                                                    
result in a reduction to agencies and rates.                                                                                    
                                                                                                                                
Co-Chair Stedman  asked where the savings  from reduction of                                                                    
premiums in agencies would go.                                                                                                  
                                                                                                                                
Mr. Jordan  replied that he  was not sure what  every agency                                                                    
would do to offset the reductions.                                                                                              
                                                                                                                                
9:34:01 AM                                                                                                                    
                                                                                                                                
Senator von Imhof  asked about the amount  of annual savings                                                                    
with  unpaid premiums.  She wondered  whether it  would make                                                                    
sense  to set  aside part  of the  savings for  catastrophic                                                                    
losses.                                                                                                                         
                                                                                                                                
Mr. Jordan  anticipated that the  savings in the  first year                                                                    
would be approximately  $3 million; $6 million  by FY25. The                                                                    
set-aside amount  would be the  catastrophic fund,  with the                                                                    
maximum amount being $50 million.                                                                                               
                                                                                                                                
Senator von  Imhof understood that  the fund would  start at                                                                    
zero, and eventually increase to $50 million over 8 years.                                                                      
                                                                                                                                
Mr. Jordan  replied that there  was currently $5  million in                                                                    
the  fund, which  was the  maximum amount  allowed. He  said                                                                    
that the annual sweep done  by the Division of Finance would                                                                    
allow the fund to increase to  $50 million. He hoped most of                                                                    
the increase would occur in the coming year.                                                                                    
                                                                                                                                
9:36:15 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman   thought  his   question  had   not  been                                                                    
answered.  He  wanted  to  track the  cash  flow.  He  asked                                                                    
whether agencies would still be  billed $5 million. He asked                                                                    
for history on the state's  losses. He wanted a conversation                                                                    
concerning  risk exposure  to the  state and  why the  state                                                                    
differed from the broader marketplace.                                                                                          
                                                                                                                                
Mr.  Jordan stated  that the  anticipated  reduction was  $3                                                                    
million and would be passed  to agencies. He thought someone                                                                    
from  the  Office  of  Management  and  Budget  (OMB)  could                                                                    
address what agencies would do with the savings.                                                                                
                                                                                                                                
9:38:40 AM                                                                                                                    
                                                                                                                                
PALOMA HARBOUR, FISCAL  MANAGEMENT PRACTICES ANALYST, OFFICE                                                                    
OF  MANAGEMENT AND  BUDGET  (via teleconference),  explained                                                                    
that any  savings would be  spread out across  agencies, who                                                                    
would be billed less in their rates.                                                                                            
                                                                                                                                
9:39:14 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  asked for an explanation  of the legal                                                                    
obligation of the CAT Fund.                                                                                                     
                                                                                                                                
Mr. Jordan  noted that there was  a slide that spoke  to the                                                                    
question. He summarized that the  CAT Fund could be used for                                                                    
catastrophic   losses,   claim   settlements,   and   paying                                                                    
insurance  premiums. He  added  that if  the  fund were  not                                                                    
increased, and  current premiums  were paid, there  would be                                                                    
no funds left to pay for catastrophic losses.                                                                                   
                                                                                                                                
Senator   Wielechowski   asked   what   was   considered   a                                                                    
"catastrophic loss".                                                                                                            
                                                                                                                                
Mr. Jordan  thought a typical  catastrophic loss  within the                                                                    
State of Alaska was property  driven and usually involved an                                                                    
earthquake or  a flood. He  said the  fund had been  used to                                                                    
pay  settlement claims  but was  typically  used for  first-                                                                    
party losses to  the state, such as vessels  or aircraft. He                                                                    
noted that a  future slide addressed what the  fund had been                                                                    
previously used for.                                                                                                            
                                                                                                                                
Senator Wielechowski understood the  fund only covered state                                                                    
assests.                                                                                                                        
                                                                                                                                
Mr. Jordan answered in the affirmative.                                                                                         
                                                                                                                                
Senator  Wielechowski noted  that  Per- and  polyfluoroalkyl                                                                    
substances (PFAS)  claims were listed in  an upcoming slide.                                                                    
He asked whether those payments  were to private individuals                                                                    
or corporations.                                                                                                                
                                                                                                                                
Mr.  Jordan  stated  that  those claims  were  paid  out  to                                                                    
individuals and  were considered  state claims  because they                                                                    
were liabilities to the state.                                                                                                  
                                                                                                                                
9:42:08 AM                                                                                                                    
                                                                                                                                
Senator von Imhof referenced slide  7 and confirmed that the                                                                    
discussion  pertained to  property  only  and not  liability                                                                    
associated with property.                                                                                                       
                                                                                                                                
Mr. Jordan responded  that the fund could pay  a property or                                                                    
a  liability claim.  He  explained that  the  intent of  the                                                                    
legislation was to insure for property claims.                                                                                  
                                                                                                                                
Senator von  Imhof expressed  concern with  the wide-ranging                                                                    
coverage.  She   referenced  the  November   2018  Anchorage                                                                    
earthquake  and recalled  that repairs  cost the  state over                                                                    
$35  million  in  undesignated   general  funds  (UGF).  She                                                                    
referenced wildfires  in Southcentral  Alaska that  had cost                                                                    
the  state hundreds  of millions  of  dollars. She  wondered                                                                    
whether this  fund would help  to pay for events  similar to                                                                    
the earthquake and wildfires.                                                                                                   
                                                                                                                                
Mr. Jordan  stated that currently  the fund was used  to pay                                                                    
what the state  would pay on insurance claims.  He said that                                                                    
property  losses  due  to  the  earthquake  had  been  paid;                                                                    
however,  coverage  for  things  like  collapsed  roads  and                                                                    
bridges would not have been paid out of the fund.                                                                               
                                                                                                                                
9:44:38 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  asked people  to  avoid  acronyms in  the                                                                    
conversation.                                                                                                                   
                                                                                                                                
9:45:00 AM                                                                                                                    
                                                                                                                                
Senator Wilson  asked about the  space center in  Kodiak. He                                                                    
wondered whether the  fund would pay out the  claim made due                                                                    
to an explosion.                                                                                                                
                                                                                                                                
Mr.  Jordan  shared  that  the state  had  paid  about  $1.5                                                                    
million out  of the CAT  fund and the insurance  company had                                                                    
paid the balance  of the claim while  collecting against the                                                                    
customer who had owned the rocket that exploded.                                                                                
                                                                                                                                
9:46:11 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski asked  whether the  proposed bill  was                                                                    
like increasing the state's deductible.                                                                                         
                                                                                                                                
Mr. Jordan thought  it was possible to look  at the proposed                                                                    
change  that  way,  currently the  state's  excess  property                                                                    
coverage had  a $1 million retention,  which was essentially                                                                    
a deductible.  He detailed that the  legislation would self-                                                                    
insure  the state;  a deductible  would not  be paid,  there                                                                    
would simply be a fund available to cover claims.                                                                               
                                                                                                                                
9:47:01 AM                                                                                                                    
                                                                                                                                
Senator  von  Imhof  had  concerns   about  the  fund  being                                                                    
depleted from  one or two catastrophic  events. She wondered                                                                    
if it  made sense  to pay a  higher deductible  and maintain                                                                    
insurance for catastrophic events with insurance companies.                                                                     
                                                                                                                                
Mr. Jordan  noted that  some other  states were  raising the                                                                    
deductible up  to $40  million or $50  million. In  2012 the                                                                    
state had  self-insured property under $5  million and those                                                                    
properties  were  not  on  the  state's  insurance  property                                                                    
schedule. He said that insurance  markets had suggested that                                                                    
it was  better to lower  total insured values than  to raise                                                                    
deductibles.                                                                                                                    
                                                                                                                                
9:48:47 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  asked if  the raising from  $5 million                                                                    
to  $50 million  meant that  the maximum  liability was  $50                                                                    
million. He wondered whether the  bill would cap the state's                                                                    
maximum liability for catastrophic events.                                                                                      
                                                                                                                                
Mr.  Jordan stated  that the  bill did  not cap  the state's                                                                    
liability.                                                                                                                      
                                                                                                                                
9:49:56 AM                                                                                                                    
                                                                                                                                
Co-Chair  Bishop  mentioned  premiums  increases  and  asked                                                                    
whether  states   went  to  the  same   insurance  pool  for                                                                    
purchasing  insurance.  He  asked  whether  Mr.  Jordan  had                                                                    
spoken  with other  states to  for a  coalition in  order to                                                                    
keep insurance premiums down.                                                                                                   
                                                                                                                                
Mr. Jordan did  not believe that states had tried  to form a                                                                    
coalition.  He  affirmed  that states  went  to  the  London                                                                    
market, the Bermuda market, and  the domestic market. It was                                                                    
typical  for the  insurance amounts  to be  so high  that it                                                                    
took five  or six  companies, and two  and three  layers, to                                                                    
insure states.                                                                                                                  
                                                                                                                                
9:51:35 AM                                                                                                                    
                                                                                                                                
Mr.  Jordan  reviewed  slide  3,   "What  other  states  are                                                                    
doing?":                                                                                                                        
                                                                                                                                
Through the State risk  and Insurance Management Association                                                                    
(STRIMA)  we asked  other  states what  they  were doing  to                                                                    
combat the rising premiums in property coverages;                                                                               
                                                                                                                                
    Just pay the higher premiums. Some states, mostly                                                                        
     Southeast   states  are   forced  to   maintain  excess                                                                    
     coverage due  to benefits paid  by FEMA  which requires                                                                    
     "Obtain and  Maintain" agreements when FEMS  pays for a                                                                    
     catastrophic loss.                                                                                                         
                                                                                                                                
    Set up Captive Pans                                                                                                      
                                                                                                                                
    Increase self-Insured Retentions (SIR), in some cases                                                                    
     $40mil to $50mil retention                                                                                                 
                                                                                                                                
    Some states are coming off multi-year premium price                                                                      
     guarantees.                                                                                                                
                                                                                                                                
We received responses from 12 states                                                                                            
                                                                                                                                
9:54:14 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  wanted  more  detail  about  the  Federal                                                                    
Emergency Management Agency (FEMA).  He asked whether states                                                                    
could be limited by entering into agreements with FEMA.                                                                         
                                                                                                                                
Mr. Jordan detailed  that FEMA had an  "obtain and maintain"                                                                    
provision. He had  spoken with FEMA about  the state meeting                                                                    
the "obtain and  maintain" requirement if the  CAT fund were                                                                    
increased. He  had learned that  a new agreement  would need                                                                    
to be submitted to FEMA to maintain the requirement.                                                                            
                                                                                                                                
Co-Chair  Stedman asked  whether  the FEMA  claims had  been                                                                    
from state claims.                                                                                                              
                                                                                                                                
Mr.  Jordan replied  in the  affirmative. He  said that  the                                                                    
state was  requesting that FEMA  pay the claims  for several                                                                    
structures  that  had been  damaged  in  the earthquake.  He                                                                    
added  that agencies  had requested  FEMA  funds for  things                                                                    
that were not covered by the state.                                                                                             
                                                                                                                                
Co-Chair Stedman  asked whether  the state paid  premiums to                                                                    
FEMA.                                                                                                                           
                                                                                                                                
Mr. Jordan  stated there were  no premiums paid to  FEMA. He                                                                    
explained that once FEMA made  a payment the state agreed to                                                                    
maintain insurance on the structure  into the future. Should                                                                    
the state  fail to  maintain the  building, FEMA  could stop                                                                    
coverage.                                                                                                                       
                                                                                                                                
9:57:00 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  related that his office,  while working on                                                                    
a  FEMA package  for  the state,  had  discovered that  FEMA                                                                    
premium   payments   were  structured   in   classifications                                                                    
nationwide, which meant that Alaskans were paying premiums                                                                      
driven  out of  the Gulf  of Mexico  and of  the East  Coast                                                                    
hurricanes. He  lamented that the state  was paying premiums                                                                    
to FEMA  and receiving very  little in claims.  He expressed                                                                    
concern  that,  in  addition  to  other  states  driving  up                                                                    
premiums, FEMA  had building restrictions. He  worried about                                                                    
the threat  of FEMA refusing  assistance to states  that did                                                                    
not pay premiums, while those  rates were inordinately high,                                                                    
higher than any  rate the division of  insurance would allow                                                                    
under regulations. He believed the issue was significant.                                                                       
                                                                                                                                
9:58:44 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop  wanted to discuss  the obtain  and maintain                                                                    
agreements  as previously  discussed by  Mr. Jordan  and Co-                                                                    
Chair Stedman.  He understood that the  agreement meant that                                                                    
if FEMA paid for work on  a building, in order for the state                                                                    
to get FEMA payments into  the future an obtain and maintain                                                                    
agreement must be entered into.                                                                                                 
                                                                                                                                
Mr. Jordan  stated that Co-Chair  Bishop was  correct. There                                                                    
was no  written agreement. He  said that FEMA kept  track of                                                                    
the  buildings and  could elect  to not  pay for  damages on                                                                    
buildings outside of the agreement.                                                                                             
                                                                                                                                
10:00:09 AM                                                                                                                   
                                                                                                                                
Mr. Jordan referenced Co-Chair  Stedman's comments and noted                                                                    
that  that the  state  had seen  similar  issues within  the                                                                    
global market.  He remarked that  Alaska did not  have large                                                                    
claims and had  to deal with the capacity  issues from other                                                                    
states and countries. He stressed  that payments made out on                                                                    
other catastrophic losses were affecting the state's rates.                                                                     
10:00:50 AM                                                                                                                   
                                                                                                                                
Mr. Jordan referenced slide 4,  "History of the Catastrophic                                                                    
Reserve Account (CATFund)," which showed //                                                                                     
                                                                                                                                
[paste ?]                                                                                                                       
                                                                                                                                
10:01:32 AM                                                                                                                   
                                                                                                                                
Mr. Jordan  turned to  slide 5,  "Expenditures from  the CAT                                                                    
Fund since inception,"  which demonstrated expenditures from                                                                    
the  fund since  its  inception  in FY88.  A  total of  $149                                                                    
million had  been expended  out of the  fund since  1988, or                                                                    
$4.5  million per  year. He  believed that  this illustrated                                                                    
the need for a raising of the cap.                                                                                              
                                                                                                                                
Co-Chair Bishop  observed the $4.5 million  per year average                                                                    
claims.                                                                                                                         
                                                                                                                                
10:02:45 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  wondered whether  the amount  that was                                                                    
needed to pay  out claims would rise to the  amount that was                                                                    
used from year to year.                                                                                                         
                                                                                                                                
Mr. Jordan hoped  that was not the case. He  had an upcoming                                                                    
slide that showed claims paid  within the previous 10 years.                                                                    
He  noted  that, historically,  large  claims  had not  been                                                                    
made. He pointed out that  the largest claim was the Crystal                                                                    
Lake Hatchery  in Petersburg  for $4.2  million. He  did not                                                                    
believe  that there  would be  an  increase in  the size  of                                                                    
claims.                                                                                                                         
                                                                                                                                
Senator Wielechowski  looked at FY05 and  observed the whole                                                                    
$5 million was used in that year.                                                                                               
                                                                                                                                
Mr. Jordan answered affirmatively.                                                                                              
                                                                                                                                
Senator  Wielechowski noted  that  in FY06,  and FY07,  less                                                                    
than $100 remained  in the account at the end  of the fiscal                                                                    
year. He  said that there  were years when the  payments had                                                                    
been  very close  to $5  million  and wondered  if how  much                                                                    
would have been  spent had the fund had been  at $50 million                                                                    
in those previous years.                                                                                                        
                                                                                                                                
Mr. Jordan  thought that expenditures in  previous years had                                                                    
included claims  that could have  been paid  under Judgement                                                                    
Claims  expenses  rather  than  the CAP  fund.  His  planned                                                                    
practice was to continue to  pay claims that were unexpected                                                                    
to  Risk Management.  He did  not  anticipate paying  claims                                                                    
larger than what had been previously paid. He said that                                                                         
there  had been  years (such  as  FY92) where  the fund  had                                                                    
expended $10  million. He related  that some funds  could be                                                                    
encumbered and not paid out until several years later.                                                                          
                                                                                                                                
10:06:22 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  considered changes  in the fund  since its                                                                    
inception. He  asked Mr. Jordan to  discuss using inflation-                                                                    
adjusted numbers.                                                                                                               
                                                                                                                                
Mr.  Jordan  acknowledged  there had  been  inflation  since                                                                    
1988. He  said that  the Risk Management  appropriations had                                                                    
increased since  1988. He stated  that when he  started with                                                                    
the division  in 1998,  the budget was  $32 million  and was                                                                    
currently at $41  million. He felt the  budget had increased                                                                    
to  accommodate increase  standard costs  of claims  and not                                                                    
because of unexpected claims.                                                                                                   
                                                                                                                                
10:07:56 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop  interjected that  the state did  not follow                                                                    
the one percent rule on deferred maintenance.                                                                                   
                                                                                                                                
10:08:19 AM                                                                                                                   
                                                                                                                                
Mr.  Jordan showed  slide 6,  "10-year  history of  property                                                                    
premiums/losses,"  which showed  a  small table  and a  line                                                                    
graph.  He  pointed  to  the blue  line,  which  showed  the                                                                    
property premiums that  had been paid over  the past decade.                                                                    
He noted that  the coverage had doubled over  10 years, with                                                                    
a substantial increase  between FY 11 and FY  12. The orange                                                                    
line showed  property losses paid  by the state and  did not                                                                    
include  funds from  insurance companies.  There had  been a                                                                    
spike in  FY 15  due to the  Crystal Lake  Hatchery. Another                                                                    
spike in  FY 20 was  due to  claims from the  earthquake and                                                                    
retention   paid   on   a   Department   of   Transportation                                                                    
maintenance shop that had been damaged by snow.                                                                                 
                                                                                                                                
10:11:10 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof thought Mr.  Jordan had mentioned  it was                                                                    
getting  harder   to  find   insurers.  She   asked  whether                                                                    
companies  were being  forced  to leave  the  market due  to                                                                    
excessive payments.  She wondered what was  happening to the                                                                    
insurance market.                                                                                                               
                                                                                                                                
Mr. Jordan mentioned there had  been companies that went out                                                                    
of  business due  to catastrophic  losses Down  South, while                                                                    
other companies  were increasing premiums and  becoming more                                                                    
selective  in their  coverage. He  said  that when  capacity                                                                    
went down it raised premiums, which was a problem.                                                                              
                                                                                                                                
10:12:46 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman was curious about  the $1 million retention                                                                    
paid for a  DOT maintenance shop snow  collapse. He wondered                                                                    
why the amount was not  absorbed within the normal operation                                                                    
of the agency.                                                                                                                  
                                                                                                                                
Mr.  Jordan affirmed  that the  state's program  covered the                                                                    
loss.  He  knew that  in  some  cases the  agency  requested                                                                    
additional   appropriation  if   the  replacement   building                                                                    
exceeded the amount of the original building.                                                                                   
                                                                                                                                
Co-Chair  Bishop  added  that  DOT  should  know  snow  load                                                                    
factors on its buildings.                                                                                                       
                                                                                                                                
10:14:27 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  thought that  if the bill  passed, the                                                                    
state could be  paying out up to $50 million,  per year, and                                                                    
he wondered  whether that  was an  actual savings  over just                                                                    
paying the insurance premiums.                                                                                                  
                                                                                                                                
Mr. Jordan relayed that the  $5 million premium was strictly                                                                    
for  property coverage.  The CAT  Fund had  paid for  losses                                                                    
other than property; the bill  proposed the increase so that                                                                    
the  state could  completely self-insure.  He stressed  that                                                                    
savings to  the state are anticipated.  He acknowledged that                                                                    
it  was difficult  to determine  if the  state was  going to                                                                    
save  by self-insuring  rather than  buying  at high  excess                                                                    
limits.                                                                                                                         
                                                                                                                                
10:16:06 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof queried the payments  other than property                                                                    
payments.  She wondered  about state  workers  who might  be                                                                    
killed or  injured in the  collapse or damaging of  a state-                                                                    
owned  building.  She asked  how  the  state would  pay  the                                                                    
liability claims.                                                                                                               
Mr.  Jordan noted  that worker's  compensation claims  would                                                                    
cover  the event  of employee  loss  of life  or injury.  He                                                                    
related that  in the  case of the  snow collapse,  the total                                                                    
coverage anticipated by the state  was $3.8 million. He said                                                                    
that the state's  retention at the time of  the collapse was                                                                    
$1 million  and the  insurance company would  eventually pay                                                                    
the  additional $2.8  million. He  felt that  the issue  was                                                                    
that the excess  insurance was $2.8 million, and  a CAT fund                                                                    
of $50  million would  have covered  that without  the state                                                                    
having  to  pay the  $5  million  premium  to get  the  $2.8                                                                    
million back.                                                                                                                   
                                                                                                                                
Senator von Imhof asked whether  the graph on slide 5 showed                                                                    
what the  state paid, and  what it received  from insurance.                                                                    
She probed the  value the state had  received from insurance                                                                    
premium payments since 1988.                                                                                                    
                                                                                                                                
Mr. Jordan responded  that the numbers had been  run back to                                                                    
FY  10. He  noted that  the only  claim that  the state  had                                                                    
collected excess  insurance on between  FY 10 and FY  20 was                                                                    
for  the  Alaska  Aerospace Kodiak  Launch  Facility  rocket                                                                    
explosion.                                                                                                                      
                                                                                                                                
Senator  von  Imhof thought  it  would  be helpful  for  the                                                                    
committee to see a report on  how much the state had paid in                                                                    
premiums, how  much the state  had been paid in  claims, and                                                                    
how much  the state  had paid  each year from  FY 10  to the                                                                    
present.                                                                                                                        
                                                                                                                                
Mr. Jordan stated that slide  6 showed property losses shown                                                                    
on the  table indicated  funds that the  state had  paid. He                                                                    
said that  in FY  18 the  state recouped  the funds  for the                                                                    
Alaska  Aerospace rocket  explosion.  He  admitted that  the                                                                    
state  benefitted  from  insurance   in  that  instance  but                                                                    
believed  that  increasing the  fund  to  $50 million  would                                                                    
cover  the losses,  without requiring  premium payments.  He                                                                    
agreed  to   provide  the   requested  information   to  the                                                                    
committee.                                                                                                                      
                                                                                                                                
10:20:52 AM                                                                                                                   
                                                                                                                                
Mr.  Jordan showed  slide 7,  "10 year  history of  property                                                                    
payments compared  to all lines  of business."  He explained                                                                    
that the top  portion of the slide  showed property premiums                                                                    
paid by  the state since  FY 10. He  noted that half  of the                                                                    
premiums paid  out every year  for excess insurance  was for                                                                    
property.  He cited  that worker's  compensation was  one of                                                                    
the largest  areas for payout  every year. He said  that the                                                                    
majority  of the  premiums  were paid  out  in aviation  and                                                                    
property.                                                                                                                       
                                                                                                                                
10:22:15 AM                                                                                                                   
                                                                                                                                
Mr. Jordan reviewed slide 8,  "Larger claims paid out of the                                                                    
CRA(CATFund)":                                                                                                                  
                                                                                                                                
         AMHS LeConte Grounding May 2004 $1,187,330                                                                          
         F&G Crystal Lake Hatchery fire March 2014                                                                           
          $4,078,137                                                                                                            
         Alaska Aerospace Kodiak Launch Facility rocket                                                                      
          explosion August 2014 $1,513,667                                                                                      
         PFAS claims starting in November 2017 $5,877,555                                                                    
         Earthquake  related    claims   November    2018                                                                    
          $1,263,631                                                                                                            
                                                                                                                                
     *In the last 10 years, this is the only claim the                                                                          
     State has collected excess insurance on.                                                                                   
                                                                                                                                
10:23:33 AM                                                                                                                   
                                                                                                                                
Senator  Wielechowski asked  why the  state was  paying PFAS                                                                    
claims. He thought the claims  should be paid by the private                                                                    
companies  that   were  responsible  for  the   water  table                                                                    
pollution.                                                                                                                      
                                                                                                                                
Mr. Jordan explained that the  state had initially looked at                                                                    
the  PFAS  issue as  a  potential  liability claim  and  had                                                                    
started  looking  into  providing clean  drinking  water  to                                                                    
residents by bringing  in bottled water. He  shared that the                                                                    
eventual solution had been to  connect residents to the city                                                                    
water system. He  lamented that the division  had never been                                                                    
advised   of  the   potential   PFAS   pollution  in   other                                                                    
communities.  He said  that the  state's policy  was to  not                                                                    
collect a  premium for this  type of incident;  the policies                                                                    
did not cover hazardous release.  He relayed that there were                                                                    
5 areas  currently covered for  temporary water  and working                                                                    
toward a  final solution.  He believed  DOT would  be taking                                                                    
the  lead   on  cleanup   areas.  The  state   was  pursuing                                                                    
litigation against  3M and Dupont  for the  initial chemical                                                                    
pollution.                                                                                                                      
                                                                                                                                
Co-Chair Bishop  understood that the state  would be joining                                                                    
a  class action  suit with  numerous other  states regarding                                                                    
the issue.                                                                                                                      
                                                                                                                                
Mr. Jordan was  not involved in the  litigation. He believed                                                                    
there were other states pursuing litigation.                                                                                    
                                                                                                                                
10:26:03 AM                                                                                                                   
                                                                                                                                
Mr.  Jordan   looked  at  slide  9,   "Lapse  Appropriations                                                                    
Summary":                                                                                                                       
                                                                                                                                
     The State  Insurance Catastrophic Reserve Fund,  Fund #                                                                    
     3209, (Cat Fund) is part  of the General Fund and Other                                                                    
     Non-segregated Investments  (GeFONSI). The  GeFONSI are                                                                    
     funds  that have  been pooled  together for  investment                                                                    
     purposes. The  Cat Fund  is part  of the  NonMOU group,                                                                    
     which allows  for the interest  earned to  be deposited                                                                    
     back into the General Fund.                                                                                                
                                                                                                                                
     ? The budget includes  lapse appropriations to shore up                                                                    
     certain state accounts up to statutory limits                                                                              
     ? The  Risk Management  lapse appropriation is  last to                                                                    
     ensure sufficient lapse for the other accounts                                                                             
     ?  The  total  FY2021  projected UGF  lapse  is  $110.7                                                                    
     million                                                                                                                    
                                                                                                                                
10:27:37 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  understood that  the proposal was  to take                                                                    
the unused  surplus at the end  of the fiscal year  and move                                                                    
it to create the $50 million account.                                                                                           
                                                                                                                                
Mr. Jordan answered in the affirmative.                                                                                         
                                                                                                                                
Co-Chair  Stedman stressed  the  importance of  transparency                                                                    
when  discussion  the  financial  state  of  the  state.  He                                                                    
wondered whether an appropriation  from the legislature into                                                                    
the fund  would be  a cleaner. He  thought that  if agencies                                                                    
had surplus  money, their budget  could be trimmed,  and the                                                                    
surplus could  be deposited  into the  constitutional budget                                                                    
reserve  (CBR). He  thought that  the inter-agency  receipts                                                                    
that were  charged to create  the funds  could be used  as a                                                                    
self-funding mechanism, which could be easily tracked.                                                                          
                                                                                                                                
10:29:50 AM                                                                                                                   
                                                                                                                                
Senator von Imhof referenced lapsed  funds and asked, in the                                                                    
event  that the  reverse sweep  did  not occur,  a sweep  of                                                                    
excess funds in  various accounts would be used  to fund the                                                                    
$50 million.                                                                                                                    
                                                                                                                                
Mr. Jordan deferred to OMB.                                                                                                     
                                                                                                                                
Co-Chair Stedman asked whether the fund would be sweepable.                                                                     
                                                                                                                                
Ms. Harbour  stated that the  lapsed balances that  would be                                                                    
moved to the CAT fund would  be put into the fund before the                                                                    
timing of the  reverse sweep from the general  fund into the                                                                    
CBR.  She  affirmed that  the  CAT  fund was  not  sweepable                                                                    
because it is not subject to further appropriation.                                                                             
                                                                                                                                
10:31:48 AM                                                                                                                   
                                                                                                                                
Senator von Imhof  wondered how the fund would  be funded to                                                                    
$50 million.                                                                                                                    
                                                                                                                                
Ms.  Harbour  responded  that   a  considerable  amount  was                                                                    
expected to lapse  in FY 21 because of  the federal Covid-19                                                                    
dollars; specifically, the federal match for Medicaid.                                                                          
                                                                                                                                
Senator  von Imhof  thought Ms.  Harbour had  indicated that                                                                    
OMB  would  be  eyeing  federal  Covid-19  dollars  for  the                                                                    
building of the insurance fund.                                                                                                 
                                                                                                                                
Ms. Harbour clarified  that the state had not  spent as much                                                                    
general fund on Medicaid  as was anticipated when developing                                                                    
the   FY   21   budget   because   of   additional   federal                                                                    
participation in  the program. She  added that there  may be                                                                    
other areas of general fund lapse.                                                                                              
                                                                                                                                
10:33:20 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman referenced his  earlier point that Covid-19                                                                    
funds coming from different  sources would offer opportunity                                                                    
to  offset general  funds. He  cautioned that  the committee                                                                    
should be careful when offsetting  general funds that it was                                                                    
clearly  understood  what  was being  offset.  He  expressed                                                                    
concern that  that it  could become  difficult to  track the                                                                    
funds overtime. He urged the  committee to error on the side                                                                    
of transparency.                                                                                                                
                                                                                                                                
10:35:43 AM                                                                                                                   
                                                                                                                                
Senator Olson thought  it looked as though  the lapsed funds                                                                    
should go  through the  reappropriation process  rather than                                                                    
being shuffled around by a non-appropriating body.                                                                              
                                                                                                                                
Ms. Harbour  stated that the operating  budget bill included                                                                    
language  specifically  stating  that if  there  was  excess                                                                    
general  fund at  the  end  of the  fiscal  year that  would                                                                    
lapse, it could be used to  replenish the CAT fund up to the                                                                    
amount set in statute.                                                                                                          
                                                                                                                                
Senator Olson asked about the  difference between the intent                                                                    
of  the bill  and going  through the  normal reappropriation                                                                    
guidelines. He  asked wondered whether  this was  an attempt                                                                    
of trying to avoid the reappropriation process.                                                                                 
                                                                                                                                
Ms. Harbour referenced that it  was the legislature's choice                                                                    
whether  or not  to fund  the program.  She said  that lapse                                                                    
fund balances  had been used  in the  past to keep  the fund                                                                    
balance up.                                                                                                                     
                                                                                                                                
10:37:54 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman understood  that the  language section  of                                                                    
the  operating budget  had limits  and gave  the legislature                                                                    
power of  appropriation. He  asked that  the fiscal  note be                                                                    
reconsidered, and thought it would  be cleaner and easier to                                                                    
follow the money.                                                                                                               
                                                                                                                                
10:39:26 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop OPENED public testimony.                                                                                        
                                                                                                                                
10:39:36 AM                                                                                                                   
                                                                                                                                
CHARLES   MCKEE,  SELF,   ANCHORAGE  (via   teleconference),                                                                    
mentioned  the  bill.  He mentioned  the  Court  system.  He                                                                    
referenced corporations. He shared  that he had been charged                                                                    
with   a    crime.   He   discussed   the    Department   of                                                                    
Administration.                                                                                                                 
                                                                                                                                
Co-Chair Bishop set the bill aside.                                                                                             
                                                                                                                                
SB  88  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:42:33 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:43:50 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 10                                                                                                            
                                                                                                                                
     "An  Act establishing  a grant  program  to provide  to                                                                    
     essential  workers the  tuition  and fees  to attend  a                                                                    
     state-supported        postsecondary        educational                                                                    
     institution."                                                                                                              
                                                                                                                                
10:44:19 AM                                                                                                                   
                                                                                                                                
SENATOR TOM  BEGICH, SPONSOR, discussed the  legislation and                                                                    
introduced  his support  staff. The  bill would  provide for                                                                    
essential workers  up to  4 years of  free tuition  at state                                                                    
institutions.                                                                                                                   
                                                                                                                                
10:45:28 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop MOVED to ADOPT Amendment 1:                                                                                     
                                                                                                                                
     Page 3, Line 4:                                                                                                            
          Delete "$10,000,000"                                                                                                  
          Insert "2,500,000"                                                                                                    
                                                                                                                                
Co-Chair Stedman OBJECTED for discussion.                                                                                       
                                                                                                                                
Co-Chair  Bishop spoke  to Amendment  1. He  noted that  the                                                                    
amendment sought to fix an  inconsistency between the intent                                                                    
of the bill and the language in the legislation.                                                                                
                                                                                                                                
Co-Chair  Stedman WITHDREW  his OBJECTION.  Amendment 1  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Senator Wilson  MOVED to WITHDRAWN Amendment  2. There being                                                                    
NO OBJECTION, it was so ordered.                                                                                                
Senator Wilson MOVED to ADOPT Amendment 3:                                                                                      
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
Senator Wilson  spoke to  Amendment 3.  He relayed  that the                                                                    
amendment would add a section  to the bill recommending that                                                                    
at least 20 percent of the  grants went to trade schools. He                                                                    
said  that there  was a  shortage  of skilled  labor in  the                                                                    
state and the  amendment would insure the  preparation for a                                                                    
skilled workforce in the state.                                                                                                 
                                                                                                                                
Co-Chair Bishop asked for the  Division of Legislative Legal                                                                    
to speak to the amendment.                                                                                                      
                                                                                                                                
10:47:40 AM                                                                                                                   
                                                                                                                                
Senator Wilson referenced a memo.                                                                                               
                                                                                                                                
NOAH  KLEIN, COUNSEL,  LEGAL  SERVICES, LEGISLATIVE  AFFAIRS                                                                    
AGENCY (via  teleconference), said  that Article  1, section                                                                    
7, of the Constitution of  the State of Alaska prohibits the                                                                    
expenditure  of  public  funds for  the  direct  benefit  of                                                                    
private educational  institutions. He said that  amendment 3                                                                    
raised  questions because  it allowed  for the  potential of                                                                    
fund to be spent to the direct benefit of a private school.                                                                     
                                                                                                                                
Senator   Wilson   noted   that   the   Alaska   Performance                                                                    
Scholarship  provided funds  for many  vocation and  skilled                                                                    
labor schooling. He said that  previous Covid-19 funding had                                                                    
gone to  Alaska Bible College and  Alaska Christian College.                                                                    
He  felt  that the  state  had  consistently funded  private                                                                    
programs and  if there was  a constitutional issue  with the                                                                    
amendment then  the state  should cease  funding all  of the                                                                    
programs he mentioned.                                                                                                          
                                                                                                                                
Mr.  Klein offered  to  get  back to  the  committee on  the                                                                    
issue.  He  pointed  out   Alaska  Supreme  Court  precedent                                                                    
involved  a postsecondary  school, Sheldon  Jackson College,                                                                    
and provided  a three-part test to  determine whether public                                                                    
funds were being provided to a private entity.                                                                                  
                                                                                                                                
10:50:19 AM                                                                                                                   
                                                                                                                                
Senator Begich asserted that CARES  Act funding had included                                                                    
a requirement  to fund private  schools. He was  not opposed                                                                    
to  the principal  of the  amendment, but  he was  concerned                                                                    
with   the   legal    memo   questioning   the   amendment's                                                                    
constitutionality.                                                                                                              
                                                                                                                                
Senator Wilson  asked whether there  was someone  online who                                                                    
could speak to the issue.                                                                                                       
                                                                                                                                
10:51:18 AM                                                                                                                   
                                                                                                                                
SANA  EFIRD,   EXECUTIVE  DIRECTOR,  ALASKA   COMMISSION  ON                                                                    
POSTSECONDARY EDUCATION,  DEPARTMENT OF EDUCATION  AND EARLY                                                                    
DEVELOPMENT  (via  teleconference),  stated  that  under  AS                                                                    
14.43.830,  the  state  had institutional  authorization  to                                                                    
qualify   certain   postsecondary  institutions   based   on                                                                    
specific  eligibility criteria  to  be  eligible to  receive                                                                    
public funds.                                                                                                                   
                                                                                                                                
10:52:16 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:53:35 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Senator  Wielechowski wondered  whether the  amendment would                                                                    
allow for  funds to  be expended to  schools outside  of the                                                                    
state.                                                                                                                          
                                                                                                                                
Senator Wilson  stated the intent  was for the  provision to                                                                    
apply to schools within the state of Alaska.                                                                                    
                                                                                                                                
Co-Chair Bishop thought Amendment 3 needed more scrutiny.                                                                       
                                                                                                                                
Co-Chair Bishop MAINTAINED his OBJECTION.                                                                                       
                                                                                                                                
Senator  Wilson   WITHDREW  Amendment  3.  There   being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
10:55:00 AM                                                                                                                   
                                                                                                                                
Senator Wilson MOVED to ADOPT Amendment 4.                                                                                      
                                                                                                                                
Co-Chair Bishop OBJECTED for discussion.                                                                                        
                                                                                                                                
Senator  Wilson  spoke to  Amendment  4.  He said  that  the                                                                    
intent  was to  replace  the  state supported  postsecondary                                                                    
institution  with a  postsecondary  institution approved  by                                                                    
the  Commission  on  Postsecondary  Education,  which  would                                                                    
allow  grants  to  be  used for  both  state  supported  and                                                                    
private institutions.                                                                                                           
                                                                                                                                
Senator   Wielechowski  asked   for   an   opinion  from   a                                                                    
legislative attorney. He thought  the amendment had the same                                                                    
problem as the previous amendment.                                                                                              
                                                                                                                                
Co-Chair Bishop agreed.                                                                                                         
                                                                                                                                
10:56:22 AM                                                                                                                   
                                                                                                                                
Mr.  Klein thought  the same  constitutional question  arose                                                                    
from Amendment 4 as had for the previous amendment.                                                                             
                                                                                                                                
Senator Wilson believed that there  were mechanisms in place                                                                    
in  statute  allowed  for  public dollars  to  be  spent  on                                                                    
private schools.  He stressed that  if the practice  was not                                                                    
constitutional then the statutes should be changed.                                                                             
                                                                                                                                
Co-Chair Bishop WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Senator Wielechowski OBJECTED.                                                                                                  
                                                                                                                                
Senator Begich  shared that he  did not think  the amendment                                                                    
met the intent of the bill.                                                                                                     
                                                                                                                                
10:58:35 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop asked how much,  if any, money did the state                                                                    
approve  for   money  going  out-of-state   for  educational                                                                    
training.                                                                                                                       
                                                                                                                                
Ms. Efird stated that money  that was appropriated as grants                                                                    
under  the Alaska  Performance  Scholarship  and the  Alaska                                                                    
Education  Grant did  not go  to students  out of  state. In                                                                    
statute,  the funds  were to  provide scholarships  for high                                                                    
school   graduated,   who    are   Alaska   residents,   for                                                                    
institutions within the State of Alaska.                                                                                        
                                                                                                                                
Co-Chair  Bishop  queried the  wording  needed  to make  the                                                                    
amendment more constitutionally palatable.                                                                                      
                                                                                                                                
Ms. Efird thought the amendment  might need work to add that                                                                    
she  was  happy  to  work  with  the  amendment  sponsor  to                                                                    
determine  how  the amendment  could  be  best crafted.  She                                                                    
reiterated that currently  performance scholarship money and                                                                    
education grants did not go to out-of-state institutions.                                                                       
                                                                                                                                
11:00:27 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof thought perhaps if  the amendment sponsor                                                                    
could refine  the language  to add  a reference  for Alaska-                                                                    
based  schools   only.  She  shared  that   she  would  feel                                                                    
comfortable waiting for a day to  act on the bill. She asked                                                                    
the  sponsor  of the  bill  about  the language  surrounding                                                                    
"essential workers".                                                                                                            
                                                                                                                                
Senator  Begich stated  that the  bill was  not intended  to                                                                    
limit  "essential  workers"  in  the state  to  only  Alaska                                                                    
residents. He added that he had  received a loan in the past                                                                    
from  the  APEC  to  attend   an  out-of-state  college.  He                                                                    
clarified  that   the  state  approved  student   loans  for                                                                    
students going to institutions outside of the state.                                                                            
                                                                                                                                
11:02:53 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked whether  the bill  would provide  for a                                                                    
student attending a private  facility or institution outside                                                                    
of the state.  He noted that there was not  a medical school                                                                    
or law school in the state.                                                                                                     
                                                                                                                                
Senator  Begich explained  that the  bill had  been narrowly                                                                    
designed  to take  advantage of  the current  moment and  to                                                                    
apply it  to Alaskan  institutions to avoid  the anticipated                                                                    
constitutional  challenges.  The  bill was  to  ensure  that                                                                    
essential workers  in the state  would have  the opportunity                                                                    
to pursue  a four-year education  within the limits  of what                                                                    
is available within the state.                                                                                                  
                                                                                                                                
11:04:04 AM                                                                                                                   
                                                                                                                                
11:04:05 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:04:57 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
                                                                                                                                
Senator Wilson MOVED to WITHDRAW Amendment 4.                                                                                   
Senator  Begich clarified  that  Page 2,  line 7,  specified                                                                    
that the  recipient must be a  resident of the state  for at                                                                    
least 12 months.                                                                                                                
                                                                                                                                
SB  10  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Bishop discussed housekeeping.                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
11:05:32 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:05 a.m.                                                                                         

Document Name Date/Time Subjects
SB 88 Sectional Analysis version A 2-23-21.pdf SFIN 4/21/2021 9:00:00 AM
SB 88
SB 88 Sponsor Statement 2-17-21.pdf SFIN 4/21/2021 9:00:00 AM
SB 88
SB 10 Amendments 4.21.2021.pdf SFIN 4/21/2021 9:00:00 AM
SB 10
SB 10 Amendment 4 Wilson.pdf SFIN 4/21/2021 9:00:00 AM
SB 10
SB 88 4.21.21 Senate Finance presentation.pdf SFIN 4/21/2021 9:00:00 AM
SB 88