Legislature(1997 - 1998)
04/07/1997 09:12 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
7 April 1997
9:12 a.m.
TAPES
SFC-97, #84, Side 1 (000 - 592)
84, Side 2 (592 - 000)
CALL TO ORDER
Senator Bert Sharp, Co-chairman, convened the meeting at
approximately 9:12 a.m.
PRESENT
In addition to Co-chairman Sharp, Senators Phillips,
Torgerson, Parnell and Adams were present. Senators Pearce
and Donley arrived shortly thereafter.
ALSO ATTENDING: Brett Huber, staff to Senator Halford;
Larry Wiget, Director, Government Relations, Anchorage
School District; Annalee McConnell, Director, Office of
Management and Budget; Sharon Barton, Director, Division of
Administrative Services, Department of Administration; Jim
Baldwin, Assistant Attorney General, Department of Law; and
aides to committee members and other members of the
legislature.
SUMMARY INFORMATION
CS FOR SENATE BILL NO. 11(HES)
"An Act relating to state aid for school construction
debt; and providing for an effective date."
Senator Sharp convened the session and outlined the schedule
for the morning. He first called SB 11. He noted the
session was to be on teleconference but there were no
available operators this morning. However, the bill will
not be moved out of committee today and there will be
further opportunity for teleconference.
Brett Huber, staff to Senator Halford was invited to join
the committee. This bill was introduced to re-establish a
program for the state to share in the cost of school
construction in the municipal school district. AS 14.11.100
provides the mechanism for local government to be re-
imbursed for a portion of the debt service they pay on
school construction projects, providing they have received
Department of Education approval and have been approved by a
local vote. In unorganized areas it is usually done by
capital appropriation. Municipal districts and their
taxpayers have been left with virtually no state assistance
for school construction. Passage of this bill would re-open
the debt re-imbursement program to new projects and allow
municipal school districts and their taxpayers help in
meeting the demands of growing student population. He
further described the operative sections of CSSB 11(HES) for
the benefit of the committee at the request of Senator
Parnell.
Senator Phillips referred to section 9, page 4 and noted the
original bill did not have anything. Mr. Huber said the
original bill was at a prospective re-imbursement of 50%.
He said there was an amendment offered by the sponsor that
both opened the retroactive window of the bill and set the
prospective re-imbursement level at 70%. The HES committee
further amended and adjusted the amount to 75%. Senator
Phillips said he would wait to pose further questions until
the department could be present and would propose amendment
at that time.
Senator Adams said that he supported the bill but that it
had inequities. He noted that the fiscal note had errors.
Mr. Huber said he also had a question regarding the
operating expenditure in FY '99. This was attributed
because of the local bond package that was passed in the
Mat-Su for the schools in October 1995. The bonds have not
been sold, the funds would not be encumbered and the
district would not have the opportunity to make a debt
service in time to meet the qualifications for FY '99. In
speaking with the school district he said they advised the
first year the bill would have a determinable fiscal impact
would be FY 2000. Senator Adams further noted there was a
retroactive clause. This would go back and pick up
something the voters had already voted for. A new fiscal
note would show the debt service. Mr. Huber noted a new
fiscal note of 24 March 1997. While he understood the
problem with certain areas of the State that did not have
local bonding capacity that was something the sponsor,
Senator Halford, chose to address. This related only to the
municipal school districts.
Co-chair Sharp noted the 24 March 1997 fiscal note. He
voiced concern over who the retroactive clause would affect
by municipality, by school and by the amount of the bond
issue. He assumed the allocation to those municipalities on
the previous legislation several years ago was all used up
and then additional bonding was passed where it was agreed
to pay 100%. Information would be needed to see what the
impact was on the retroactive part of it and also what did
this legislation propose to do. He wanted to make sure
there would be no recreation facilities or administrative
facilities allowed under this legislation. Mr. Huber said
the only bond package passed with prior Department of
Education approval and with 70/30 reimbursement language was
the Mat-Su package passed in October 1995. The fiscal note
did reflect what the cost of that bonding package and
reimbursement would be. He further noted the Mat-Su package
was a 70% state share. He said there was some concern for
the Anchorage packages that would not qualify because of no
prior Department of Education approval and no specific state
share language on the ballot. That would be a policy call
for the committee to address. Anchorage school district
was discussing the matter with the Department of Education.
Senator Adams asked about Sitka and the North Slope Borough
schools. Mr. Huber said only the Mat-Su school would
qualify retroactively. Senator Phillips noted for the
record that the Department of Education was not present. He
felt major efforts had been made throughout the State and
there should be adequate discussion of the bill. Co-chair
Sharp indicated that he would not move the bill today.
Senator Phillips referred to page 4, subsection 9 and wanted
to know if this would be reduced in the future. Mr. Huber
noted that it was the reimbursement rate. They will balance
what rate will make sense. Again Senator Phillips requests
the bill be held in committee or at least until the arrival
of Senator Halford, sponsor of the bill. Senator Adams
also felt there were questions that needed to be posed to
the Department of Education. However, he did say the
questions could be answered in writing by the department.
Co-chair Sharp requests that the department be notified.
Senator Adams went on further to voice his concern about
rural Alaska being left out and that this was a statewide
problem. He thought the bill should be merged with Senator
Duncan's package.
Larry Wiget, Anchorage School District was invited to join
the committee. He said he would rather wait to testify
regarding the bill but would be happy to answer any
questions he could. He explained their position regarding
retroactive status. Anchorage was able to obtain a matching
state grant. Senator Parnell commented on more school
facilities in Anchorage.
Senator Phillips interrupted asking the co-chair about tort
reform. Co-chair Sharp said that HB 58 would not be heard
and the afternoon meeting scheduled for 6:00 p.m. was
cancelled. He advised those waiting to testify were free to
leave. Further, Co-chair Sharp held SB 11 in committee.
Co-chair Sharp called SB 55.
SENATE BILL NO. 55
"An Act relating to the definition of certain state
receipts; and providing for an effective date."
Annalee McConnell, Director, Office of Management and Budget
was invited to join the committee. She said this bill was
to provide clean-up on last year's bill. She further
referred to the childrens' trust and fiscal note summary.
Senator Parnell asked about designated program receipts.
Ms. McConnell further testified regarding pioneer homes.
With proper supervision and management they have brought
down the amount of general fund. She also offered comments
on the Department of Fish and Game and the Department of
Public Safety paying for their own housing.
Senator Phillips commented on the rental receipts. He then
moved amendment #1. Senator Adams objected, asking how it
affected AHFC. Ms. McConnell responded. Co-chair Sharp
referred to page 2, line 11. Ms. McConnell said that
reference would come under rental receipts. She explained
housing and corporate receipts and noted what would
specifically be listed under corporate receipts, i.e. AHFC.
They were listed in this manner for accounting purposes.
Senator Pearce said at this time she would not support
amendment #1. She referred to the commercial fisheries test
fishing operations that had a very restrictive grants and
gifts as referred to on page 3, lines 12 and 13. With
reference to housing and rental receipts, while she was
somewhat sympathetic with the pioneer homes' situation, what
happens when program receipts are put off of the budget the
Legislature tends to not look as closely at the program
during the budget process. Then it is not noted as the
program receipts are increased. She did not want to see the
pioneer homes raise their fees even higher without the
Legislature being a part of that decision making process.
There is a large subsidy at this time and she would like to
see that brought down. She said Mr. Mike Greany, Director,
Legislative Finance and Mr. Randy Welker, Legislative
Auditor had real concerns about pushing too many program
receipts off budget. They would prefer program receipts be
brought back in as straight general fund receipts and not
try to account for them separately. Before the bill is
moved from committee and before there is further
consideration of amendment #1 she would prefer to have
further conversation with Legislative Finance and in
particular with LB&A and audit staff.
Senator Phillips said the only reason he brought the
amendment up was because he was testing water. Senator
Phillips said he did have concerns about the pioneer home
receipts and wanted the issue flushed out. He felt the
appropriate place was before this committee.
Ms. McConnell said she appreciated the comments raised by
Senator Pearce about whether this gets left to scrutiny. In
talking to AHFC staff or the board or over at occupational
licensing one would find even though those have not been in
the same GF category, the Administration very much
scrutinized those and actually turned down some of the
requests for increments in both the operating and capital
budget. It was felt even though those areas in AHFC and
some of the other corporations are not part of the GF
picture, money was money and the non-GF areas should not
have less scrutiny than others. However, unless one is
careful, they will get less scrutiny.
Senator Phillips withdrew his amendment #1.
Senator Adams asked about the total amount of program
receipts to date and what would the effect of this
particular piece of legislation be. Ms. McConnell said the
total designated program receipt amount was $53.4 million in
the budget as amended. She did not have the GF figures.
She indicated, however, she would have a tally for the next
meeting. Co-chair Sharp asked that she also include total
housing receipts. Ms. McConnell referred to amendment #1
and said according to Jim Baldwin, Assistant Attorney
General, if it were adopted the AHFC receipts would still
come under the AHFC portion because it clarified all of
them.
Co-chair Sharp further referred to the pioneer home and said
he wanted further information. Since the escalation of
rates in the pioneer homes and the estimate in the FY '97
budget, the total estimated program receipts that were
loaded into the budget for the pioneer homes did not
materialize, thereby resulting in a shortfall for the
pioneer homes. It had been running close to $700 thousand
shortfall. He did not know if this had been narrowed down.
He did not what ramifications this would now have to further
exacerbate the present problems.
Sharon Barton, Department of Administration was invited to
join the committee. She said that though it looked early on
in the fiscal year the pioneer homes' revenue would be
short, during the last half of the year revenues have been
coming in much better. It is looking much better now and
the full amount may be achieved as projected for this fiscal
year. She offered her comments on the proposal for the
pioneer homes and asked the committee to take another look
at it and said the department would be happy to provide any
background information that helped. They do work with the
residents, families of residents and staff of the homes to
achieve full cost of care. Full cost of care means that
full cost of care is charged, but full cost of care will
never be collected because many can not pay it. It is
difficult to sell the proposal because the money is just
considered as general funds. They believe they are paying
for their cost in the home and it makes the job of selling
the full cost of care a very difficult one. General fund
program receipts are now $9.9 million in the '98 budget out
of a proposed total $31 million budget. She believed that
with a remaining $20 million in straight general funds the
program would receive a very close scrutiny both from the
Administration and from the Legislature for years to come.
She felt the scrutiny issue was therefore moot.
Co-chair Sharp referred to the screening process and what
about those who cannot pay or can only partially pay. He
felt the reference to full cost of care would put extreme
pressure on those screened for admittance and screening
those out that do not have the funds to meet the increased
rates. That would force those not being able to pay
anything or in the least not the full rate to end up in
facilities that would cost twice as much as the pioneer
home. The State would not win in that situation. The
screening process has been very fair, he noted, at least
from his district. It would seem, however, the pressure
would get a little greater on the screening people as the
responsibility of the full cost of care fell on new people
coming in. Ms. McConnell said this had been a valid concern
and the department had been careful to be very clear in
their policy that full cost care was for those who could
afford it and if full cost of care could not be afforded
still no one would be denied admission or kicked out.
Senator Pearce again referred to page 3, line 13. Language
would be added that would include contracts. Gift, grants
and bequests were already included. She asked for an
example of contracts or dollars restricted by federal law.
Ms. McConnell indicated that the best example under federal
law was the WIC program. They are not actually a federal
fund but they come restricted by federal law as to how they
can be used. They must be used for the WIC nutrition
program. There are very few examples under federal law. In
the attachment to the fiscal note they are broken down by
category and one can see what is listed under each category.
She also noted contractual arrangements with local
governments. They would also be covered under that portion
of the bill. Contracts with private industry, specifically
AVTECH, and other training courses to be paid for by an
employer that has requested specifically the training be
held at AVTECH. Other contracting could be done with
departments, i.e. a local road project contracted to the
Department of Transportation who is already doing a road
project in the community. She continued on with restricted
fees which included teacher certificates, followed by state
and federal law restrictions. Most of those were in the
Department of Commerce or Department of Health and Social
Services.
Senator Donley referred to page 2, line 11 of the bill,
corporate fees, and asked if Alaska Tourism Marketing
Council was included under that. Ms. McConnell said they
were listed under contractual arrangements. It was shown as
a designated program receipt rather than a corporate
receipt. The corporate receipts would cover AHFC, permanent
fund corporation and AIDEA.
Senator Adams referred to the last page of the bill and
asked what would happen if the Alaska Railroad Corporation
were to be deleted so that the program receipts would come
to the Legislature and then they could be reappropriated.
Jim Baldwin, Assistant Attorney General, Department of Law
was invited to join the committee. He said that just to
take the Alaska Railroad out would not change the section.
Senator Adams asked what would happen then if a new section
were added. Mr. Baldwin continued saying that under the
present section it only defines program receipts. Using
Senator Adams suggestion, the Railroad's income would be
considered unrestricted general funds. He said that was
similar to another bill moving through the Legislature in
both the House and the Senate, which would accomplish that
purpose. The Legislature has the power of appropriation
over all funds in the state treasury. There had never been
a definition of what the term "state treasury" included.
Nor a court case defining it. It would be legally possible
to do that, but he was not sure the title in this bill was
broad enough.
Senator Torgerson also referred to page 3, line 13. Ms.
McConnell said funds were restricted by federal law. WIC
was not federal funds but its' use was federally restricted.
Senator Adams referred to legislative oversight. Ms.
McConnell concurred and said there would still be
legislative oversight.
In response to a previous question by Senator Parnell, Ms.
McConnell said the police standards academy was added back
in when it was reevaluated this year.
Co-chair Sharp asked committee members and the
administration to be ready with additional information and
amendments. He held the bill in committee. There was no
one available in the audience, either from agencies or the
public that wished to offer any testimony. He reviewed the
schedule for tomorrow, including tomorrow morning at 9:00
a.m. full closeouts for the University and the Department of
Natural Resources. He further reminded committee members
the 6:00 p.m. meeting tonight was cancelled. Senator Pearce
indicated that if the closeouts moved quickly tomorrow
morning the evening ones would be moved up accordingly.
ADJOURNMENT
Co-chair Sharp adjourned the meeting at 10:22 a.m. until
tomorrow morning at 9:00 a.m.
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