Legislature(2007 - 2008)SENATE FINANCE 532
03/25/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB28 | |
| SB152 | |
| HB125 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 152 | TELECONFERENCED | |
| += | HB 125 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 28 | ||
SENATE FINANCE COMMITTEE
March 25, 2008
9:07 a.m.
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:07:47 AM.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
None
ALSO PRESENT
Darwin Peterson, Staff, Co-Chair Stedman; Tim Lamkin, Staff,
Senator Gary Stevens; Eddy Jeans, Director, Education
Support Services, Department of Education and Early
Development; Representative Mike Hawker; John Boucher,
Senior Economist, Office of Management and Budget, Office of
the Governor
PRESENT VIA TELECONFERENCE
None
SUMMARY
SB 28 "An Act relating to limitations on mandatory
overtime for registered nurses and licensed
practical nurses in health care facilities; and
providing for an effective date."
CSSB 28(FIN) was REPORTED out of Committee with
"no recommendation" and with zero fiscal note #4
by the Department of Administration, zero fiscal
note #6 by the Department of Health and Social
Services, zero fiscal note #8 by the Department of
Health and Social Services, a new zero fiscal note
by the Department of Commerce, Community and
Economic Development, a new zero fiscal note by
the Department of Health and Social Services, and
a new fiscal note by the Department of Labor and
Workforce Development.
SB 152 "An Act relating to charter school funding."
SB 152 was heard and HELD in Committee for further
consideration.
CSHB 125(FIN)
"An Act relating to budget planning and a fiscal
plan for the State of Alaska."
SCS CSHB 125 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a new
fiscal note by the Office of the Governor and a
new indeterminate fiscal note by the Department of
Revenue.
9:09:04 AM
SENATE BILL NO. 28
"An Act relating to limitations on mandatory overtime
for registered nurses and licensed practical nurses in
health care facilities; and providing for an effective
date."
Co-Chair Hoffman MOVED to REPORT CSSB 28(FIN) out of
Committee with individual recommendation and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 28(FIN) was REPORTED out of Committee with "no
recommendation" and with zero fiscal note #4 by the
Department of Administration, zero fiscal note #6 by the
Department of Health and Social Services, zero fiscal note
#8 by the Department of Health and Social Services, new zero
fiscal note by the Department of Commerce, Community and
Economic Development, new zero fiscal note by the Department
of Health and Social Services, and new fiscal note by the
Department of Labor and Workforce Development.
9:10:22 AM
SENATE BILL NO. 152
"An Act relating to charter school funding."
Co-Chair Hoffman MOVED to ADOPT a new CS for SB 152, labeled
25-LS0754\K, Mischel, 3/17/08.
Co-Chair Stedman OBJECTED for discussion purposes.
DARWIN PETERSON, STAFF, CO-CHAIR STEDMAN explained the
changes in the new CS. If the average daily membership
(ADM) in a charter school is less than 150, the adjusted
student count will be calculated by multiplying the ADM by
1.08 instead of by 1.27 as in the original bill.
9:11:07 AM
Co-Chair Stedman WITHDREW his OBJECTION.
Senator Dyson OBJECTED. He questioned why the funding level
was changed. Mr. Peterson explained that it was at the
request of Senator Stevens and the Senate Special Committee
on Education. Mr. Peterson said it was considered to be a
more reasonable funding level for charter schools. Senator
Dyson requested an explanation from the bill sponsor.
Senator Dyson MAINTAINED his OBJECTION.
9:13:28 AM
Senator Thomas, sponsor, explained that the 1.08 level was
more palatable and better than nothing.
9:13:59 AM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, explained the
increase in funding was a compromise and would represent a
modest increase, but not one as substantial as in the
original bill.
Co-Chair Hoffman asked how the new number would affect
Bethel's Yup'ik Immersion Charter School and Fairbanks'
Effie Kokrine School. Senator Thomas explained that Effie
Kokrine School is above 150 now and will have no problem.
He did not have the status of the Yup'ik Immersion School.
9:15:51 AM
EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, reported that the Yup'ik
Immersion program in Bethel has over 150 students and is
funded as a separate site.
Senator Olson asked about Nome's school. Mr. Jeans related
that the Nome school has remained at about 44 students each
year and receives supplemental grants outside of the
foundation formula. The Juneau Charter School and the
Fireweed Charter School in Homer also fall into this
category.
Senator Olson asked about a comparison of the multipliers,
as found in the two fiscal notes, resulting in different
funding levels. Mr. Jeans explained that the fiscal note
for SB 152 for $648.8 reflects 1.27. Another fiscal note to
CSSB 152(FIN) reflects the 1.08 level.
9:17:58 AM
Senator Dyson requested a copy of the new fiscal note
accompanying the new CS. He voiced appreciation for the
intent of the bill and for Senator Davis' work on charter
school legislation. He spoke of the financial burden on
charter schools.
Senator Dyson maintained his objection to the adoption of
the new CS. He stated support for the original version.
Senator Elton asked for the rational behind the 1.08 number.
Mr. Lamkin explained that the numbers for school size come
from statute. The number 1.27 is reflective of a school
that is between 75-150 students. The number 1.08 represents
a modest increase from what the schools are currently
getting. Senator Elton said he is trying to figure out the
1.08 figure as it relates to school size.
9:22:41 AM
Mr. Jeans said the 1.08 is in statute and is part of the
school size adjustment table for schools. It is the
adjustment factor for schools from 150-250 students. If a
school is under 150, it is funded with the largest school in
the district. For example, the charter school in Juneau is
funded with the high school at a .84. In Kenai the charter
school is funded with the high school at .92, and in Nome
the charter school is funded with the elementary school at
.97. The three schools below 150 all have a different
adjustment factor. This proposal will set one adjustment
factor for all charter schools below 150. It is a policy
call on the Committee's part if it is 1.27 or 1.08. This
applies in the formula to the school size adjustment for
ADM. Then there are cost factor adjustments. It will
establish a uniform application. At 1.08, it provides an
additional $338,922. He explained that the highest
supplemental in the past was $250,000 for charter schools
below 150. He related that during the hearing, Senator
Stevens asked each charter school if they would support the
1.08 and all replied in the affirmative.
Senator Elton noted the pending two-high-school situation in
Juneau and wondered how that would affect charter school
funding. Mr. Jeans related that the charter school would
not receive close to the 1.08 funding level because each
high school would be over 750 students, which is at the top
of the school size adjustment level, and charter school
funding would remain at .84.
9:25:28 AM
Senator Dyson said 1.27 does have a rational base for
schools under 275. He noted that the Winterberry School had
143 students in 2006 and received $400,000. That created a
significant financial crisis.
Senator Dyson opined that charter schools have historically
been very successful. He stated support for such schools
and wished to provide an extra boost in the form of higher
funding.
9:27:09 AM
Senator Thomas referred to a chart in the members' packets
regarding school size and eligibility. He reiterated that
the 1.08 level was acceptable to the charter schools.
Co-Chair Hoffman inquired if the Anvil City Science Academy
would get funded at 1.97 under the new CS. Mr. Jeans
responded that they would be funded at 1.08. They are
currently funded at .97.
Senator Olson clarified that Anvil City Science Academy
would be funded at 1.08 under the new CS instead of 1.27
under the original bill. Mr. Jeans said that was correct.
Senator Dyson thought the real issue was an attempt to keep
spending down. He agreed that 1.08 was better than nothing.
He thought the original bill was better.
A roll call vote was taken on the motion.
IN FAVOR: Stedman, Hoffman
OPPOSED: Elton, Olson, Thomas, Dyson
The motion FAILED (2-4).
SB 152 was heard and HELD in Committee for further
consideration.
9:30:41 AM
CS FOR HOUSE BILL NO. 125(FIN)
"An Act relating to budget planning and a fiscal plan
for the State of Alaska."
Co-Chair Hoffman MOVED to ADOPT a new CS for CSHB 125(FIN),
labeled 25-LS0546\N, Cook, 3/24/08.
Co-Chair Stedman OBJECTED.
Mr. Peterson explained three changes in the new CS. The
first change is on page 1, line 6. The language "except
during the first year of the governor's first term of
office" was removed. The reason was in order to have the
fiscal plan provided every year.
The second change is on page 2, lines 11-15. This is a new
section which requires the fiscal plan to include
assumptions and projections, especially in the area of major
operating increases. An example of how this would be useful
would be an unexpected shift in the population of school age
children in a community and how that would affect school
funding.
The third change is on page 4, lines 6-12. This new section
would require the Department of Revenue to submit to the
legislature a debt affordability analysis each year by
January 31. Currently, Alaska does not produce a document
that meets rating agency requirements for a debt
affordability study. Even thought the Department of
Administration annually publishes the Comprehensive Annual
Financial Report (CAFR), it lacks projections for future
debt issuance.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
further OBJECTION, the new CS was adopted.
9:33:44 AM
REPRESENTATIVE MIKE HAWKER, sponsor, explained the substance
of the bill. The bill represents a critical step forward in
the state in establishing the "holy grail" of state policy;
a fiscal plan. The bill establishes a planning process
rather than a plan itself. The legislature, the
administration, and the public will be able to understand
how financial decisions are made today, in the context of
the consequences of those decisions over time.
The bill requires that each year, along with the annual
spending plan for the budget, the administration submit to
the legislature and the public a ten-year estimate, a
projection, of future sources and uses of state funds.
Representative Hawker emphasized the terms "sources and
uses". He pointed out that nothing in the bill creates a
false sense of accuracy regarding the projections. He
voiced appreciation for the critical assumptions which would
lead to an understanding of the fiscal plan.
Representative Hawker termed the bill profound and elegant
in its simplicity. It will establish an understanding of
the consequences of financial decisions.
9:36:58 AM
Representative Hawker spoke about Section 4, the debt
affordability analysis, which was prepared with advice and
consent from the Department of Revenue. The idea came from
the recent Moody's Evaluation of the State of Alaska, which
indicated state deficiencies, one of which was a lack of an
annual debt affordability study. The capital markets in New
York think very highly of a state that includes an inventory
of state debt, projections of future state debt, and
evaluations of consequential affordability impacts.
In addition, the bill cleans up provisions in the Executive
Budget Act and conforms existing language to terms
established in the bill.
9:39:40 AM
Co-Chair Stedman commented on the debt affordability
analysis. He pointed to the paradox in Alaska with its
sizeable set aside of $37 billion in the Permanent Fund and
other substantial savings, as well as a small debt load.
Yet, the rating agencies consider it a negative mark to not
have a debt affordability analysis.
Representative Hawker commented that the March 2008 Moody's
Investor Service Global Credit Research Report concurs with
Co-Chair Stedman's analysis. The state suffers from several
governance shortcomings. HB 125 would remediate several
Best Practices. The first is that Alaska does not produce
multi-year financial plans with out-year revenue and
expenditure forecasts. The state does not produce a
document that meets Moody's requirements for a debt
affordability study. This bill satisfies both shortcomings.
AT-EASE: 9:42:02 AM
RECONVENE: 9:42:34 AM
Senator Dyson MOVED to ADOPT Amendment 1:
Page 1, line 7:
Estimates of significant sources and uses of funds for
the succeeding 15 [10] fiscal
Page 4, Line 14 through Page 6, Line 8, is amended to
read:
Sec. 37.07.060. Governor's recommendation. (a) The
governor shall formulate the operating and capital
budget, capital improvements program, [PROGRAMS] and
fiscal plan [FINANCIAL PLANS] required to be
recommended to the legislature by AS 37.07.020 after
considering the state agency proposed program and
financial plans prepared in accordance with AS
37.07.050, and other programs and alternatives that the
governor considers appropriate. The governor's
recommended plans must include
(1) the governor's recommended missions and
desired results;
(2) [,] recommended strategies to implement the
missions and desired
results;
(3) [,] recommended measures for determining
whether the missions and desired results are achieved,
including an assessment of whether adequate progress
has been made toward achieving prior year missions and
desired results [HAVE BEEN ACHIEVED];
(4) a recommended operating program for the
succeeding fiscal year;
(5) a [,] recommended capital improvements program
for the succeeding six fiscal years;
(6) [,] recommended programs for the upgrading of
public buildings and facilities prepared in accordance
with AS 35.10.015, including a proposed time to begin
each of the upgrading projects;
(7) [AND] recommended revenue measures to support
the programs;
(8) a projection of revenue for the succeeding 15
years categorized by each major source of revenue and
an explanation of any significant changes from previous
projections;
(9) projections of the expenditures for the
succeeding 15 years listed by each major area of
expenditure and an explanation of any significant
changes from previous projections;
(10) the assumptions on which the 15-year
projections are made;
(11) proposed actions for increasing revenue or
cutting expenditures as necessary to ensure
expenditures do not exceed revenue;
(12) changes in strategy or new strategies needed
as a result of previously unanticipated changes in
expenditures, revenue, or unsuccessful strategies;
(13) an analysis of state debt, identification of
the target maximum debt amount, and, if debt is
projected to exceed the target maximum, strategies to
reduce state debt, satisfy outstanding bonds, and meet
deferred maintenance needs;
(14) the status of unfunded state liabilities, a
trend analysis for the liabilities, and the strategy
for funding the liabilities;
(15) an analysis of anticipated changes in federal
funding and the plan for accommodating the reduced
funding;
(16) the target minimum level of funds in the
budget reserve fund (art. IX, sec. 17, Constitution of
the State of Alaska) and, if the amount is less than
the target minimum level, the target level of
repayments to the budget reserve fund together with the
plan for achieving the repayments;
(17) the target level of funding for an emergency
fund to address state disasters and the plan for
achieving the funding;
(18) a plan for using surplus state revenue if
there is any;
(19) actions the legislature must take for the
state's financial strategy to succeed and the time each
action must be taken.
Page 5, Line 1: AS 37.07.060(b) is amended as follows:
Preceded [ACCOMPANIED]
Co-Chair Stedman OBJECTED for discussion purposes.
Senator Dyson voiced appreciation for the intent of the
bill. The amendment tightens up language and clarifies the
content of the governor's fiscal plan. It also says the
report will be given to the legislature before the
governor's state of the state address. It expands the time
period from 10 years to 15, due to expected major
developments exceeding the ten-year window.
9:44:58 AM
Senator Olson requested a response from Representative
Hawker. Representative Hawker thought that 15 years was too
long. The current state revenue forecast is based on 10
years.
Senator Elton also thought that 15 years was problematic
because of the potential for change. He wondered if this
amendment would change the fiscal note.
9:47:18 AM
JOHN BOUCHER, SENIOR ECONOMIST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, said it appears that the
scope of work in the fiscal planning document could be
significantly expanded, especially regarding changes in
strategy.
Representative Hawker echoed Mr. Boucher's sentiments. He
noted that the discussion about the duration of the fiscal
plan has taken place. The result was an attempt to make it
the least constraining course on the administration. The
bill is about creating a verb, not a noun, as this amendment
appears to do. At this time in the process, it is too soon
to require a specific list of outcomes.
9:50:12 AM
Senator Dyson maintained that the amendment does not expand
the scope of the work. He challenged the Committee to show
that any of the items should not be included. He noted that
BP has a 50-year plan, Brazil has an 80-year plan, and the
European Union is currently considering a 20-year plan. He
reminded the Committee that once the plan is done, it just
needs to be updated yearly.
A roll call vote was taken on the motion.
IN FAVOR: Dyson
OPPOSED: Thomas, Elton, Olson, Hoffman, Stedman
The motion FAILED (1-5).
9:53:33 AM
Mr. Boucher spoke in favor of HB 125 and most of the
proposed changes in the CS. He referred to line 6 where it
had previously said "except during the first year of an
administration", which he preferred to be left in the bill.
He explained that the in-coming administration may have a
fiscal plan in opposition to the previous administration.
Due to the timing of the fiscal plan, the new administration
would probably strip many of the provisions of the previous
administration's fiscal plan. He noted in the last
administration change, the director of OMB was not on board
until January 15.
Co-Chair Stedman asked if the incoming administration could
file an amendment to the plan. Representative Hawker
replied that there is nothing that would prevent that from
happening. He opined that it was important that the
legislature send a message to potential governors to be
prepared to lead and to have a vision.
Co-Chair Stedman commented on the need to continue the on-
going plan, even though it may be amended.
9:56:26 AM
Senator Dyson agreed that the first year's work could be
subject to revision.
9:57:01 AM
Co-Chair Hoffman MOVED to REPORT SCS CSHB 125(FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CSHB 125 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new fiscal note by the
Office of the Governor and a new indeterminate fiscal note
by the Department of Revenue.
ADJOURNMENT
The meeting was adjourned at 9:57 AM.
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